Prajna Capital

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• Choose Bond funds that invest in instruments with good credit quality
• Dynamic Bond Funds helps to deal with volatility
• Begin planning for child education and marriage soon after birth

Choose Bond funds that invest in instruments with good credit quality Posted: 25 Jun 2013 03:55 AM PDT Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)     Fixed income investors keenly watch interest rate movement in the economy to shift their investments in either short term or long-term debt mutual funds. While short-term debt funds benefit in a high interest rate scenario, long term debt funds generate higher returns in a falling interest rate scenario. This is because long-term bond prices (net asset values, or NAVs) and interest rates (yields) move in opposite directions. A fall in interest rates will result in a rise in bond prices and positively impact long-term debt and gilt fund NAVs (returns). Talking about interest rates, RBI has lowered its repo rate by 125 bps (1.25%) to 7.25% between April 2012 and now. Investors who entered long-term debt funds since April 2012 have gained 14% annualized returns until May 31, 2013. But should investors continue to invest in these funds until the rates bottom out or book profits and invest in funds with more stable returns such as short-term debt funds? This is the time to look at dynamic bond funds, because — as the name suggests —these funds have the flexibility to adapt to changing market situations. The increasing popularity of dynamic bond funds can be gauged from the sharp rise in their average assets under management (AUM) from Rs 2,048 crore in March 2011 to Rs 23,113 crore in March 2013 (more than 10 times). They have also provided superior returns when compared with its category benchmark An analysis of dynamic bond fund portfolios reveals that the average maturity of these funds is dynamically managed vis-à-vis interest rates to maximize their returns. Further, in terms of portfolio quality, dynamic bond funds have maintained optimum credit quality of their debt investments. In the past three years, they invested over 70% of total assets in sovereign and highest rated debt instruments, that is, Gilt, AAA rated and P1+ papers. It is difficult for retail investors to take a call on interest rate movement and decide on the type of fund to invest in. Dynamic bond funds help address this uncertainty as fund managers take the call and tactically manage interest rate risks for the fund to earn superior returns. However, investors must note that these funds carry the likely risk of a fund manager's call going wrong and result in under-performance. Hence, checking the track record of the fund house and the fund manager is important while selecting a good fund. A typical investment horizon for these funds is at least three years and is suitable for investors with a moderate risk-return profile. Most funds levy a 1% exit load in case of redemption within one year. 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 ) ICICI Prudential Tax Plan Invest Online HDFC TaxSaver Invest Online DSP BlackRock Tax Saver Fund Invest Online Reliance Tax Saver (ELSS) Fund Invest Online Birla Sun Life Tax Relief '96 Invest Online IDFC Tax Advantage (ELSS) Fund Invest Online SBI Magnum Tax Gain Scheme 1993 Invest Online Sundaram Tax Saver Invest Online Edelweiss ELSS Invest Online ------------------ Best Performing Mutual Funds Largecap Funds Invest Online DSP BlackRock Top 100 Fund ICICI Prudential Focused Blue Chip Fund Birla Sun Life Front Line Equity Fund Large and Midcap Funds Invest Online ICICI Prudential Dynamic Plan HDFC Top 200 Fund UTI Dividend Yield Fund Mid and SmallCap Funds Invest Online Reliance Equity Opportunities Fund DSP BlackRock Small & Midcap Fund Sundaram Select Midcap IDFC Premier Equity Fund Small and MicroCap Funds Invest Online DSP BlackRock MicroCap Fund Sector Funds Invest Online Reliance Banking Fund Reliance Banking Fund Tax Saver MutualFunds Invest Online ICICI Prudential Tax Plan HDFC Taxsaver DSP BlackRock Tax Saver Fund Reliance Tax Saver (ELSS) Fund Gold Mutual Funds Invest Online Relaince Gold Savings Fund ICICI Prudential Regular Gold Savings Fund HDFC Gold Fund Invest in Tax Saving Mutual Funds Download Any Application Forms Buy Mutual Funds Online Invest Online Buy Gold Mutual Funds Invest Now

Dynamic Bond Funds helps to deal with volatility Posted: 24 Jun 2013 11:48 PM PDT Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)     Actively managed debt schemes aim at both interest accrual and capital appreciation   Of late, there has been a lot of talk about the rate of interest and also the rate of inflation. This is because the two almost always move in tandem — mainly to keep the real rate of interest positive. This time, of the several types of debt funds available in the market, dynamic bond funds are gaining in popularity among investors. These are actively managed debt schemes in which the fund manager has the discretion to invest the corpus according to his/her outlook on the rate of interest going forward. So, if he thinks that the rate of interest will go down over the next few months, or one-two years, he will shift his/her portfolio more towards long maturity debt instruments. On the other hand, if the outlook on rates is that of upwardly moving, he/she would shift towards short tenure instruments. Before we move forward, a little primer on how bond prices and yield are inversely related will be of some help. For example, the Indian government sells a security of 10-year maturity (G-sec) at Rs 100 each and pays a rate of interest of 9% per annum (Rs 9 as interest). Now, say after a year, the rate of interest in the economy moves up to 10%. In such a scenario, anyone buying the G-sec paper of 10-year maturity sold the previous year would demand a higher rate, that is 10%. But if the holders of that G-sec insist on selling the paper at its original price, that is Rs 100, he/she would hardly get any buyer. So, to sell that G-sec, he/she has to accept a lower price. Eventually, if the G-sec is sold at Rs 90, then the new holder will get Rs 9 as interest, but at his/her market price of Rs 90, this return (called the yield here) will be 10%.   A reverse is also true in the bond market. Suppose the market rate of interest goes down to say 8%, the price of the same G-sec will rise to about Rs 112 to adjust to the 9% return from the same paper to the current market yield. Because here, Rs 9 on Rs 112 is about an 8% yield. So, we can see that yield and price of a bond are inversely related. In a dynamic bond fund, the fund manager takes a call on interest rates and invests accordingly. When the fund manager believes that the rate of interest in the economy is on a southward path, he/she would predominantly invest in long maturity bonds, G-secs, etc. On the other hand, he/she would increase investments in short term debt papers when the view is that the rate of interest rates would go northward. The fund manager manages the duration in such a way that when the interest rate regime in softening, he shifts to longer maturity papers. These funds primarily aim at both accruals as well as capital appreciation. In the last one year, some of these funds have given returns of as high as 16%. These funds are actively managed funds where a lot depend on the view of the fund manager. While the fund manager goes into longer maturity papers when the rate of interest is going down, he/she invests in shorter duration papers, mainly to protect the capital when the view on interest rate is reverse, that is of rising rate. The fund manager also has the leeway to keep the entire portion of corpus in cash and cash equivalents in periods of very high interest volatility. Given these attributes, investors who are willing to accept some amount of volatility in their portfolio can invest in these funds. And usually the duration is about two-three years. 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 ) ICICI Prudential Tax Plan Invest Online HDFC TaxSaver Invest Online DSP BlackRock Tax Saver Fund Invest Online Reliance Tax Saver (ELSS) Fund Invest Online Birla Sun Life Tax Relief '96 Invest Online IDFC Tax Advantage (ELSS) Fund Invest Online SBI Magnum Tax Gain Scheme 1993 Invest Online Sundaram Tax Saver Invest Online Edelweiss ELSS Invest Online ------------------ Best Performing Mutual Funds Largecap Funds Invest Online DSP BlackRock Top 100 Fund ICICI Prudential Focused Blue Chip Fund Birla Sun Life Front Line Equity Fund Large and Midcap Funds Invest Online ICICI Prudential Dynamic Plan HDFC Top 200 Fund UTI Dividend Yield Fund Mid and SmallCap Funds Invest Online Reliance Equity Opportunities Fund DSP BlackRock Small & Midcap Fund Sundaram Select Midcap IDFC Premier Equity Fund Small and MicroCap Funds Invest Online DSP BlackRock MicroCap Fund Sector Funds Invest Online Reliance Banking Fund Reliance Banking Fund Tax Saver MutualFunds Invest Online ICICI Prudential Tax Plan HDFC Taxsaver DSP BlackRock Tax Saver Fund Reliance Tax Saver (ELSS) Fund Gold Mutual Funds Invest Online Relaince Gold Savings Fund ICICI Prudential Regular Gold Savings Fund HDFC Gold Fund Invest in Tax Saving Mutual Funds Download Any Application Forms Buy Mutual Funds Online Invest Online Buy Gold Mutual Funds Invest Now

Begin planning for child education and marriage soon after birth Posted: 24 Jun 2013 10:32 PM PDT Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)     The birth of a child is always a very special and joyful moment in any family. Every parent wants to give the best of everything to the child, be it a great childhood, education, wedding or any other thing. So whenever a child is born, parents usually try to invest some money in the child's name in an LIC policy, fixed deposit or buys gold for his/her illustrious future. Many a times, they just invest some lump-sum amount, thinking it would help meet the child's future goal and then conveniently forget about it. Assuming a rate of interest of 8% in FD, Rs 10,000 invested, after 20 years will be Rs 46,600, which may turn out to be almost nothing when your child goes for higher education. Also, there are people who would initially do an FD for 10 years, and then forget to renew it. Of late, a new trend is observed among the educated lot, that of buying a child insurance policy thinking this as a magic wand to help them plan their children's career. Some of the life insurance companies position this product very smartly by pitching the ads during prime time slots so that when the parents are watching, it becomes an easy sales pitch. This may not be true. When my daughter Aditi was born, I followed a different approach. When she came into our life, there was a feeling of happiness and completeness in the family. I also knew I had an added a responsibility now. So the very first thing I did was to increase my term insurance by Rs 1 crore. Now, I was at peace of mind that even if something were to happen to me, my family will get an additional Rs 1 crore which can be effectively used for my daughter's future and she can enjoy the same benefits which I wish to provide her even if I am not around. Additionally, I started saving for Aditi's education and marriage so that I can easily give her a happy and financially secure future. I started investing Rs 10,000 every month through SIP in a diversified equity-oriented mutual fund. In her naming ceremony, she received Rs 1.2 lakh in cash as gifts from our relatives. Because I thought this money was hers, I thought I should not touch this money for my requirement and instead invested the same into an existing fund. From then on, whenever there is any other occasion like birthdays, marriages in the family, or some other festivals, she again receives cash gifts ranging from Rs 5,000 to Rs 20,000, which we simply reinvest in to the same fund. Normally people buy gold on Akshay Tritya but I went and added Rs 20,000 in the same thing as I definitely believe equity is the best asset class which can deliver inflation beating returns. I am happier when the market falls, as I get more units for the next SIP instalment. As Warren Buffet says, if you are going to be net saver in the market for next 10 years, do you expect the market to go up or fall down and I think we all know the answer. My aim is to continue this investment for the next 25 years. The most important factor is the discipline. If I continue the same, she would receive around Rs 50 lakh when she is 18 for her graduation and approx Rs 1.32 crore for her post-graduation on her 23rd birthday assuming a compounded annual return of 15%. As every Indian parent dreams of organising a big fat wedding for the daughter, so do I. I started another investment of Rs 10,000 for her marriage wherein she would receive approx Rs 7 crore for her marriage when she turns 30. And at that time I will not have to dip into my retirement savings for her wedding, which unfortunately most parents have to resort to because they don't plan in advance. 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 ) ICICI Prudential Tax Plan Invest Online HDFC TaxSaver Invest Online DSP BlackRock Tax Saver Fund Invest Online Reliance Tax Saver (ELSS) Fund Invest Online Birla Sun Life Tax Relief '96 Invest Online IDFC Tax Advantage (ELSS) Fund Invest Online SBI Magnum Tax Gain Scheme 1993 Invest Online Sundaram Tax Saver Invest Online Edelweiss ELSS Invest Online ------------------ Best Performing Mutual Funds Largecap Funds Invest Online DSP BlackRock Top 100 Fund ICICI Prudential Focused Blue Chip Fund Birla Sun Life Front Line Equity Fund Large and Midcap Funds Invest Online ICICI Prudential Dynamic Plan HDFC Top 200 Fund UTI Dividend Yield Fund Mid and SmallCap Funds Invest Online Reliance Equity Opportunities Fund DSP BlackRock Small & Midcap Fund Sundaram Select Midcap IDFC Premier Equity Fund Small and MicroCap Funds Invest Online DSP BlackRock MicroCap Fund Sector Funds Invest Online Reliance Banking Fund Reliance Banking Fund Tax Saver MutualFunds Invest Online ICICI Prudential Tax Plan HDFC Taxsaver DSP BlackRock Tax Saver Fund Reliance Tax Saver (ELSS) Fund Gold Mutual Funds Invest Online Relaince Gold Savings Fund ICICI Prudential Regular Gold Savings Fund HDFC Gold Fund 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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