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- Bank of India Re-enters in Mutual Fund Business
- How to manage monthly income funds Swings?
- Short term corporate debentures
| Bank of India Re-enters in Mutual Fund Business Posted: 11 Oct 2012 03:53 AM PDT Download Mutual Fund Application Forms
Earlier, in 1990, Bank of India entered in Mutual Fund business as principal sponsor of BOI Mutual Fund. At that time, it launched six schemes out of which four were redeemed & two were transferred to Taurus Mutual Fund in 2004.
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| How to manage monthly income funds Swings? Posted: 11 Oct 2012 02:34 AM PDT Download Mutual Fund Application Forms
ONE type of fund that has to face high expectation from investors is monthly income plans as they are meant for a specific purpose. Investors looking to get a regular return from these funds are the ones who invest in them and then they expect that there will be a monthly payout that they will receive. However, this might not work out as expected and there are times when the investors are left wondering how they should try and recover their position.
Here is a look at the issue and what can be done by the investors.
Nature of funds: Monthly income plans are those funds that seek to generate a regular income for their investors. A major difference in this route is that there is no guarantee of income, and, hence, this is just a target that the fund seeks to achieve. To ensure that this is the case, it will invest a majority of its corpus, which can go even up to 90 per cent of the total amount available for investment into debt instruments, and the remaining figure will be invested in equities. The debt portion is expected to provide the required amount of stability, while the equity portion will provide the growth potential to the overall portfolio.
Poor performance: If all goes well, then there is no cause of concern for investors, as they will get a regular payout at the end of each month. However conditions are not always favourable for the fund, and, hence, there are times when the end performance is slightly worse than expected. This can happen either due to a very poor performance from the equity or the debt side, or, in some cases both the assets might not be doing too well. In such a situation the returns could be very low or in some cases even negative as far as these funds are concerned. Investors in such a situation might not get the required amounts that they might be expected as the regular return and this is a condition that they must prepare for.
Dividend low: When this happens there is a direct impact on the dividend that is declared by the fund. The manner in which investors usually get a regular return from the fund is by selecting the dividend option, whereby, the payout comes regularly each month. When the returns are weak, there could be some months when the dividend is skipped by the fund, as there are not enough amounts available for distribution. There is also the quarterly dividend option that is present and if this is the option chosen, then this could also result in a situation where the figure of dividend is negligible.
The moment there is a dip or no dividend that is paid then the performance needs to be checked to see the exact position and how this will actually be tackled in the days ahead.
Investor action: There are couple of things that the investor can undertake when they are faced with this kind of position. In the first option, they can evaluate the position and if they feel that this will improve soon, then they can continue to hold their units, but if, the feeling is that this is not likely to improve as the expectation from the different markets is poor, then alternatives need to be found. The amount can then be transferred to some other area where there is a larger potential to earn some returns. There is also a challenge of finding some other route that will provide for some kind of regular income, and, hence, this will require some effort. Happy Investing!! We can help. Call 0 94 8300 8300 (India) Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com -------------------------------------------- Invest Mutual Funds Online
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| Short term corporate debentures Posted: 11 Oct 2012 01:25 AM PDT Download Mutual Fund Application Forms
Apart from the above money market instruments, certain other short-term instruments are also in vogue with investors. These include short-term corporate debentures, Bills of exchange and promissory notes.
Like CPs, short-term debentures are issued by corporate entities. However, unlike CPs, they represent additional funding for the corporate ie the funds borrowed by issuing short term debentures are over and above the funds available to the corporate from its consortium bankers. Normally, debenture issuance attracts stamp duty; but issuers get around this by issuing only a letter of allotment (LOA) with the promise of issuing a formal debenture later - however the debenture is never issued and the LOA itself is redeemed on maturity. These LOAs are freely tradable but transfers attract stamp duty.
Bills of exchange are promissory notes issued for commercial transactions involving exchange of goods and services. These bills form a part of a company's banking limits and are discounted by the banks. Banks in turn rediscount bills with each other. Call 0 94 8300 8300 (India) --------------------------------------- Invest Mutual Funds Online
Download Mutual Fund Application Forms from all AMCs Download Mutual Fund Application Forms
Best Performing Mutual Funds
Invest in Tax Saving Mutual Funds Download Any Application Forms Buy Mutual Funds Online Invest Online Buy Gold Mutual Funds Invest Now  |
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