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| Posted: 12 Oct 2012 07:28 AM PDT Tax Saving Mutual Funds Online Current open Infra Bond Application form
Till 2007 it was a volatile player in terms of performance. When Jain took over in 2008, the fund witnessed improved performance and asset growth.
From 2005, the fund's assets dropped drastically. From Rs 122.62 (December 2004), it dropped to 2.41 crore the very next month and never exceeded Rs 2 crore till August 2008. With no money, the investments were in T-bills and call money. Consequently, the average maturity of the fund was always much lower than the category average.
The change in performance from 2008 onwards began to attract flows. The fund manager got his calls right in 2008 and it was the best performer in its category. The average maturity of the fund touched 6.81 years in the last four months of that year. The fund was invested in a mix of Certificates of Deposit, Commercial Paper, G-Secs and debentures. Though the fund hit a rough patch in the last two years, it is still a good offering with a high expense ratio though.
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| Consider Inflation while Making Investment Plans Posted: 12 Oct 2012 06:08 AM PDT Download Mutual Fund Application Forms
External factors such as inflation, government regulations, interest rates and volatile stock markets can have a major impact on the financial planning exercise of an individual. These factors, especially inflation, hurt our standard of living. Rising prices mean you have to pay more for the same goods and services. If your income increases at a slower rate than inflation, your standard of living declines even if you are making more money. When we consider an investment option or a financial product, we need to evaluate the expected rate of return in real terms, i.e. if an investment option offers 10% pre-tax return in 1 year and the current inflation rate is 5% then the 'real' pre-tax return from the investment is approximately 4.8%.
The survey results show a low level of financial literacy in urban India, both in terms of events (expected, unexpected, and external factors) that need to be considered and the product choices available to mitigate the various life risks. A deeper reading of the findings reveals that consumer awareness (aggregate score of 28.2 on a scale of 0-100) about important events around which they need to plan finances, borders on being extremely poor. Although they score better (aggregate score of 58.3 on a scale of 0-100) in terms of knowledge about the various financial instruments available, the score still falls in the low range. This indicates that although urban consumers have some level of knowledge about various financial products, they appear completely out of sync when it comes to deciding where, when and how they need to allocate their finances. These findings bring to the fore the core essentials of a financial plan as below: Identify and quantify your goals Once the goals are identified, you may approach the target investment across diverse financial asset classes – fixed income, market-linked insurance products etc. However, to arrive at the investment target, you must consider external factors, especially inflation. Let me cite an example. You are 30 years old and plan to retire at 60. Your current annual expenditure is . 3,00,000. This means you would need a corpus in excess of . 2,00,00,000 to maintain your living standards, assuming you live till 85 years and the inflation rate is 4%. To build this retirement corpus, you need to invest . 3,60,000 per annum in a retirement plan that offers 8% returns per annum. Now, how do you arrive at a savings figure that you will need to cover your liabilities and family needs if you die prematurely? Let's consider a healthy 25-year old guy with an income of . 1,00,000 per annum. Let's assume his income will increase at a rate of 10% per annum, while the inflation rate will be 4%. At 50 years of age, his real income would be around . 10,00,000 per annum. However, in case of his unfortunate demise at an early age of 42 years, the loss of income to his family would be nearly . 5,00,000 per annum. This means, if he is investing in a protection plan, he must aim for . 10 lakh life cover. Revisit, evaluate & realign your investment Once you have zeroed in on a financial plan, it is important to revisit, evaluate, and realign it periodically. For example, if you have invested in an equity-linked product for your retirement, and if you are nearing maturity, you should consider shifting the corpus to a debt-fund for security of the returns on investment. Certain government regulations or interest rate changes can have an impact on personal finance. Financial plans must be revisited and evaluated in line with macroeconomic situations and life stage needs. A visit to a certified financial advisor can serve useful. 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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| Posted: 12 Oct 2012 04:50 AM PDT Download Mutual Fund Application Forms Why do you buy stocks / equity oriented mutual funds? Your obvious response would be to generate capital appreciation, right? Don't you find this question a bit bizarre? However, the basic purpose of buying stocks seems to have been forgotten these days – and that is to get a share in company's profits by way of dividend. Dividend yield is nothing but dividend per share which you receive, as against the market price at the time of your investment. Thus if we have to obtain it mathematically; it is simply the dividend per share divided by the market price at the time of your investment. Dividend yield funds invest in stocks which have a consistent record of dividend distribution and have a higher dividend yield at the time of investing. It is believed that companies which distribute higher dividend are slow growth companies and hence they usually trade at a discount to their fair value. After all everyone wants to chase 'growth', and stocks with high dividend yield are often overlooked in the broader market. But if you are a long-term investor and look at investing in the equity markets traditionally (by eyeing a share in the profits of the company), dividend yield stocks, or even dividend yield mutual funds is a good investment avenue for you. At least the track record of funds investing in high dividend yield stocks says so. Here let's talk about ING Dividend Yield Fund (IDYF). It is an open-ended diversified equity fund from the stable of ING Mutual Fund. Launched in October 2005, the fund has been in existence for over 6 years now.
Investment Objective and Proposition
The fund's primary investment objective is "to provide medium to long term capital appreciation and / or dividend distribution by investing predominantly in equity and equity related instruments, which offer high dividend yield". And as a mandate, IDYF invests 65%-100% of its total assets in equity and equity-related instruments of high dividend yield companies, upto 35% in other equity and equity related instruments and rest (i.e. upto 25%) in debt instruments and cash.
Portfolio Characteristics
In the last one year, the fund's investment in large-cap stocks has been in the range of 53%-77%, while that in mid-cap and small-caps has been in the range of 19%-40%. IDYF has refrained from taking any aggressive cash calls as revealed by its cash and cash equivalent holdings which is in the range of 4%-11%.
Past performance is also considered, but essentially focuses on long-term fundamental driven values.
Equity Portfolio
As per the portfolio disclosed on February 29, 2012, the fund holds in all 43 stocks. Top-10 stocks constitute 43.6% of the portfolio, while its exposure to top-5 sectors has been 46.4% of its total portfolio. As on February 29, 2012, the large caps accounted for 77.0% of the portfolio and midcaps formed 19.3% while it held 3.7% in cash and equivalent assets. The fund manager of IDYF has not indulged in momentum playing, but instead preferred to stay invested as evident by its petite portfolio turnover ratio of 0.73 times. Dividend yield of the fund as on February 29, 2012 was 2.29%.
How IDYF has fared vis-Ã -vis its peers?
The table above reveals that IDYF's performance has been quite luring. The fund has outperformed the benchmark index, BSE 200, across time frames, and has clocked returns of stunning 38.7% & 15.9% CAGR over the 3-Yr and 5-Yr respectively, as against the 27.5% CAGR and 7.3% returns generated by its benchmark BSE 200 over the similar time frame.
Year-on –Year Performance
Further even if we assess over how the fund has performed on a year-on-year basis, the table above makes it evident that barring the year 2007-08; IDYF has outperformed its benchmark in 4 out of last 5 years.
Performance across Market Cycles
It is noteworthy that the exuberant bull market of 2005-08 made a mockery of dividend yield stocks as well as mutual funds investing in such stocks. Dividend Yield Funds were completely bulldozed by sector and growth oriented funds, as everyone was chasing 'growth', and 'value' wasn't available either. But then began the bear market of 2008-09, which took the Indian equity markets into a tizzy. Growth stocks melted under the heat of heavy selling, funds investing in such stocks doomed (in fact fell more than their benchmark with of course a few exceptions), and investors' too lost faith. In our view, chasing 'growth' investors' were looking foolish while being bullish. But an interesting observation; when the Indian equity markets went into a tizzy, value funds and dividend yield funds in particular, regained their lost fame and IDYF was no exception to this.
Fund Manager Profile
As seen above the performance of ING Dividend Yield Fund has been extremely attractive, notably over last 5 years. The fund has not only beaten its benchmark, BSE 200 but also its peers. It has managed to outpace the competition quite convincingly by generating returns in excess of those generated by the category as a whole over 3-Yr and 5-Yr period. The fund generated 40.8% and 16.0% over 3-Yr and 5-Yr, as against the category average of 34.7% and 11.4% over the respective time frames. Consistent performance year after year has made this fund a compelling proposition for those who wish to invest in a value style fund and also want to earn regular dividend income. Needless to say, no mutual fund can guarantee you any dividend though they might exhibit a track record of distributing dividends regularly. Thus given the consistent performance and also appealing portfolio characteristics, we believe the fund is worth a buy.
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
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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