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- Know more about risk
- HDFC Mutual Fund New Fund
- Gold - Probably the only asset class with no sovereign risk
| Posted: 02 Mar 2013 08:33 AM PST Invest In Tax Saving Mutual Funds Online Call 0 94 8300 8300 (India) Investors who have invested in tax- free government bonds and want to sell may find it difficult to do so, as the secondary market for such bonds is almost nil. So, while these bonds have no credit risk as they are all top rated companies, they suffer from liquidity risk. Hence, it makes sense for investors to hold onto these instruments till maturity, since the post- tax returns are very competitive.
When it comes to investing not all risk is bad. The trick is in knowing which kind of risk one should take on and at what time. Knowing the kind of risk can also help you decide which product to invest in and for how long you should stay invested.
The concept of risk plays a more important role when you invest directly in equities or debt. When you choose the mutual fund route, to a large extent the risk is reduced since there is a fund manager who decides which stocks or bonds to invest in. High net worth individual investors who have invested in these tax- free bonds in the primary market may find some takers in the secondary market since there could be investors who feel it is better to lock into the high coupon rates now. But it could be particularly tough for retail investors (who have invested up to ₹ 10 lakh), to sell these bonds since they have got 50 basis points higher coupon rate in the primary market, which will not be available for those buying the bond in the secondary market. Hence, a retail investor is not likely to find any buyers.
Another kind of risk in case of debt instruments is the interest rate risk. Interest rate risk is negative when interest rates are headed up and it is positive when these are headed down. Since, interest rates are headed downwards, now is a good time to take on interest rate risk.
A good measure of interest rate risk is 'the modified duration' of the debt instrument. Modified duration is a formula that expresses the measurable change in the value of a security in response to a change in interest rates.
While investing in debt funds, in a falling interest rate scenario one should go for funds with higher modified duration, and conversely, in a rising interest rate scenario one should go for funds with lower modified duration. This data is available in the mutual fund factsheet.
Credit risk can be mitigated by investing in highly rated instruments or choosing mutual funds where the top 10 holdings are highly rated instruments. This data too, is available in the factsheet. In a bad macro economic scenario, investors should only look at 'AAA' rated securities.
If you invest in a bond with lower rating, but one that is offering higher interest rate, then you are exposing yourself to credit risk. If so, then you must ensure that liquidity risk is nil. So, choose bonds which have high liquidity, i. e., are traded actively. Most corporate bonds fall into this category. They offer higher returns than government bonds, but are usually rated a notch below. If you invest in such bonds then it should not be for long term. Knowing which risk to take and when can help in choosing the instruments and for how long you should stay invested
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 in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.
Invest Tax Saving Mutual Funds Online Tax Saving Mutual Funds Online These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)
Download Tax Saving Mutual Fund Application Forms from all AMCs Download Tax Saving Mutual Fund Applications
These Application Forms can be used for buying regular mutual funds also
Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )
------------------ Best Performing Mutual Funds
|
| Posted: 02 Mar 2013 08:33 AM PST Invest In Tax Saving Mutual Funds Online Call 0 94 8300 8300 (India) HDFC Mutual Fund has launched a new plan named as HDFC fixed maturity plan 1198D February 2013 (1). The new issue will close for subscription on February 12. 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 in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.
Invest Tax Saving Mutual Funds Online Tax Saving Mutual Funds Online These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)
Download Tax Saving Mutual Fund Application Forms from all AMCs Download Tax Saving Mutual Fund Applications
These Application Forms can be used for buying regular mutual funds also
Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )
------------------ Best Performing Mutual Funds
|
| Gold - Probably the only asset class with no sovereign risk Posted: 02 Mar 2013 07:39 AM PST Invest In Tax Saving Mutual Funds Online Call 0 94 8300 8300 (India)
GOLD AS an asset class has been one of the best performing asset classes in the last decade due to investors' preference for physical assets, in a world awash with liquidity. It has delivered positive return (USD terms) in every single year during the last decade and has managed to outperform other asset classes over various longer term time frames.
Precious metals, especially Gold, for long has been considered a store of value, hedge against inflation and also one of the best bets in uncertain economic environment. Given the low correlation of Gold with other asset classes it acts a good diversifier in the portfolio. We firmly believe that Gold always acts as an insurance against policy makers losing control of fiscal and quantitative monetary policies. Gold, ultimately being a commodity, the basic factor influencing the price movement is the demand - supply equation. While there have been various factors which have resulted in increased demand for the yellow metal, the supply has however been stable or lower due to the limited resource availability. Owing to this, Gold has not lost its value over a period of time and becomes an important asset as a hedge against inflation. Gold has an inverse correlation with currency, especially US Dollar. A weakening US Dollar would result in the Gold prices moving higher and vice- versa. Globally, apart from the jewellery demand, factors such as, higher level of economic insecurity, low interest rate in most countries around the world creating huge liquidity, inflation expectations and risk aversion have resulted in huge demand creation for the yellow metal in recent years. Currency debasement has emerged as a key issue in recent years due to the unabated currency printing by many developed economies and has resulted in various central banks allocating part of their reserves into gold. Central banks that were once the biggest suppliers of Gold, have now tilted towards buying it. Historically, we Indians have been the largest consumers of gold, the demand partly being driven by jewellery needs and partly as investment requirements. Since the option of investing in gold in a non physical form was not available earlier, people have been investing in the asset class by way of buying jewellery/ bars/ coins etc. Now, with the availability of an option to invest in Gold via an ETF or Fund of Fund, people have the convenience of investing in Gold in a non- physical form. Gold ETF / Gold Funds are passively managed mutual fund schemes which aim to provide investors a medium of participating in the Gold bullion market without taking physical delivery of Gold. These products aim to provide returns that closely correspond to the returns provided by physical Gold, subject to tracking error. We believe that the fundamental/ base drivers for Gold prices ( over and above the jewellery demand) such as Sovereign Debt crisis, Easy liquidity, Global economic uncertainty, Risk aversion, Higher Inflationary expectations etc., still remain in place and make a case for portfolio allocation towards the asset class, subject to individual's investment objective, risk appetite and time horizon. Having said that, one should always be cognizant of the fact that the rally in Gold prices over the last few years has been greatly supported by Investment demand (ETF's globally) and by its virtue, correction (profit booking) would always be a part of the same. Historically, we Indians have been the largest consumers of gold, the demand partly being driven by jewellery needs and partly as investment requirementsHappy 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 in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.
Invest Tax Saving Mutual Funds Online Tax Saving Mutual Funds Online These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)
Download Tax Saving Mutual Fund Application Forms from all AMCs Download Tax Saving Mutual Fund Applications
These Application Forms can be used for buying regular mutual funds also
Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )
------------------ Best Performing Mutual Funds
|
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