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| Birla Sun Life Medium Term Plan Posted: 23 Jul 2013 04:24 AM PDT Invest In Tax Saving Mutual Funds Online Call 0 94 8300 8300 (India) Birla MF Medium Term Plan
The repo rate cut by RBI would send most funds hunting for opportunities in the interest rate curve. But if you wish to look at a less tapped area in the debt market for potential returns then you should probably look at credit opportunities. Birla sun Life Medium Term Plan (Birla MTP) offers such a strategy. With a return of 9 per cent in the last three years, this fund has been in the top quartile of the performance chart of income funds. But given that its portfolio maturity has mostly been short-term since its launch so far, a comparison with short-term fund category may be more appropriate. This showcases the fund in the top three list.
Features
How does increasing exit load help? One, the fund's core portfolio (about 40%) will mostly comprise of non-AAA rated instruments that will be held to maturity. That means, there would be no trading or price risk. But to do this the fund should not have undue redemption pressure. Higher exit load will reduce such liquidity pressures. The interest on the instrument would accrue and be passed on as NAV gains to investors. The rest of the portfolio (60%) will remain liquid and also traded if need be. Now, non-AAA does not mean poor quality of credit. This could be an area of mis-priced credit or short-term financing requirements not met by capital markets. Currently close to 20% of the portfolio comprises of instruments with less than AA ratings. How does the fund mitigate the risk inherent in lower-rated instruments? One, it builds covenants and structures in some instruments, that can safeguard it, wherever needed. Two, although the fund can invest with an average tenure of 2-2.5 years, it has mostly held its average maturity to less than a year. Lower period reduces risks of uncertainty relating to the credit worthiness of the instruments. Given the current low in the economy and corporate performance, this could be a good time for the fund to pick up plenty of temporarily mis-priced instruments and those waiting to be upgraded. Suitability
Still, the fund can at best form a small proportion of such an individual's portfolio. Given the higher period of exit load, small lump sums would be suitable for investments. Investing now (before March 31) would provide you with capital gains indexation benefits of 3 years, even if you exit after 2 years. Given its exit load, Birla MTP may seem almost like a FMP. Only, it is much more actively managed than an FMP, given that it has more liquid papers and is also likely to actively scout for opportunities as it remains open ended. Returns, therefore, can be expected to be superior to FMPs with similar tenure. Performance
The key difference is their holding is the average maturity. Templeton currently has a portfolio maturity of 2.84 years as against just 0.83 years of Birla MTP. Templeton, in fact, has an exit load of up to 900 days in its fund as a result of its higher average holding period. Birla MTP has beaten its benchmark almost always on a rolling one-year return since its launch. While the average outperformance over the benchmark has been little less than 1 percentage point over the life of the fund, the margin of outperformance has gone up in the last one year. Since, the fund changed it strategy, it has, on an average, outperformed the benchmark by 2 percentage points and as high as 3 percentage points. That is clearly the reward for higher risks. Birla MTP currently has a yield to maturity of 10.29%. The fund is managed by Rohit Murarka from January 2013. He was earlier part of the research team, when Maneesh Dangi (now Co-CIO) was managing this fund.
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: 23 Jul 2013 12:44 AM PDT Invest In Tax Saving Mutual Funds Online Call 0 94 8300 8300 (India)
Franklin Taxshield
A tax plan for the cautious investor
If you have limited risk appetite and are looking for tax-saving equity options, then Franklin India Taxshield is a good scheme to invest in the ELSS universe. With a return of 25.4 per cent compounded annually in the last 10 years, the fund convincingly beat its benchmark S&P CNX 500's return of 19.8 per cent over the same period.
Suitability
Franklin Taxshield is suitable only for investors who cannot stomach too much risk and are content with reasonable returns that compensate the limited risk assumed. The fund fits such investors for the following reasons: one, it predominantly invests in large-cap blue chip stocks that are relatively less volatile in terms of earnings performance. Two, such exposure also contains downside risk during steep market falls, when mid-cap stocks typically bear the brunt of the market rout.
Three, except in 2009 when the fund preferred to participate in the market rally that just began, it has since 2004, been a regular dividend distributor for those who opted for a payout. As is the case with many funds from the Franklin house, the fund often pays dividends when it anticipates markets to peak.For instance, it paid hefty dividends twice in 2007, once at the beginning and once closer to the end of that year when markets rallied. To this extent, it is suitable for investors who wish to take some money off the table, given that their investment is otherwise subject to a three-year lock-in.
Performance
Franklin India Taxshield has a good record in the diversified fund universe, making it to the top quartile of performance chart over 3, 5, 7 and 10 year time frames. Unless you need the money after the three-year lock-in, you can consider holding this fund for longer time frames as well.
The fund performs particularly well in volatile markets as demonstrated in the last three years. Its compounded annual return over this period, at 10.6 per cent, is higher than top peers such as ICICI Pru Tax Plan. On a risk-adjusted basis (measured by Sharpe Ratio), the fund stands out as the top player in the ELSS universe over the last three years, suggesting that it delivers adequately for the measured risk it undertakes.
Over the same period, the fund beat its benchmark close to 90 per cent of the times on a rolling return basis. Over the last one year though, the fund lagged its benchmark by a percentage point. It also lagged quite a few peers. This could be primarily attributed to the rally in midcaps. The fund's benchmark has a good proportion in mid-cap stocks. Top peers in the last one year, such as Reliance Tax Saver also held as much as two-thirds of their holding in mid-cap stocks to ride the rally. Franklin Tax Shield, though, held about a fourth in midcaps.
Portfolio
Besides lower exposure to mid-caps, Franklin India Taxshield's exposure to certain sectors until the beginning of 2012 did not help either. Higher exposure to sectors such as software, which underperformed, and lower exposure to the robust pharma sector a year ago, may also have resulted in marginal underperformance. But the fund had by mid 2012 pruned exposure to software by reducing stakes in stocks such as Infosys and by also upping its holding in the pharma space. Holding in the telecom stock Bharti Airtel was also reduced. Gateway Distriparks, Gujarat Pipavav Port and Jagran Prakashan are some of the interesting mid-cap stocks that the fund holds.The fund is managed by Anand Radhakrishnan and Anil Prabhudas
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
|
| Reliance Monthly Income Plan (MIP) Posted: 22 Jul 2013 10:58 PM PDT Invest In Tax Saving Mutual Funds Online Call 0 94 8300 8300 (India) Reliance MIP
If you can stomach risks that are somewhat higher than holding pure debt funds then Reliance Monthly Income Plan (MIP) is a good option. With a return of 11 per cent annually in the last five years as well as since its launch in December 2003, this debt-oriented fund is amongst the top performers in the monthly income scheme category. This return is also a good five percentage points over its benchmark Crisil MIP Blended index.
Suitability If you have no penchant for risk then Reliance MIP will not suit you. For one, it is a debt-oriented fund, but can invest 20-25 per cent in equities as well. That means in times of steep equity declines, the fund can slip in to negative returns. Two, even among the category of debt-oriented funds, Reliance MIP can be risky as it tends to take aggressive debt calls in anticipation of interest rate movements. Still, thus far, it has compensated investors with returns for the risk assumed. Performance Reliance MIP tops the five-year chart of debt-oriented funds and is in the top three over a longer period of 7 years. The fund's three-year rolling return, since its inception is an average 11.7 per cent compounded annually. That means, irrespective of when you invested, your average three-year returns would have been around this figure. HDFC MIP Long Term comes close to this number on a rolling return basis. But it is to be noted that HDFC MIP Long Term, often times, goes over 20 per cent on equities. For instance, as of November HDFC MIP had a 25 per cent exposure to equities as against Reliance MIP's 19 per cent. Among the universe of MIP funds, Reliance MIP also scores well on a risk-adjusted basis too, measured by the sharpe ratio. Over a three year period, Reliance MIP would have delivered an IRR of 10 per cent annually had you invested through SIP. Lump sum returns over this period was 8.4 per cent. That said, Reliance MIP has had a taste of bitter pill too. It did not have a great period between late 2007 and the first half of 2008, Besides being hurt by the equity downfall in early 2008, the fund had also anticipated an interest rate decline a little too early. As a result it suffered negative returns in the first quarter of 2008 and remained lack luster up to mid-2008. But to its credit, it made up by gaining 14 per cent in the December 2008 quarter, when interest rate cuts began. The above is an illustration of the risky call the fund took, albeit delivering in the end. Portfolio Reliance MIP currently sports a portfolio with average maturity of 7.49 years. That's far higher than the maturity profiles of HDFC MIP Long Term Plan or Canara Robeco MIP. But if interest rate cuts act in its favour, then the fund can deliver more. The fund has a fifth of its assets in government securities and about 38 per cent in corporate bonds. While a good proportion of corporate bonds have top rating, the fund has less than AAA-rated securities from Reliance Infrastructure and Hindalco Industries. As the interest accrual on these slightly riskier bonds could be higher, the fund may well adopt a hold on them to mitigate risks. Equities account for a fifth of portfolio value. SML Isuzu, Mahindra Forgings and Torrent Power are some of the interesting stock picks.
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
|
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