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| Posted: 31 Aug 2013 05:58 AM PDT Invest In Tax Saving Mutual Funds Online Call 0 94 8300 8300 (India) This basically implies sailing against the tide while investing. For example, if a sector is not doing well and the market is taking a bearish view of it, some fund manager still decides to invest in the sector since according to him/ her it has long-term potential for growth and the current valuations look cheap. Such an investing style is called a contrarian style. It's an extremely risky style but at times such investments have rewarded investors with gains accruing in multiples
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--------------------------------------------- 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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| Use accrual strategy in debt markets Posted: 31 Aug 2013 03:30 AM PDT Invest In Tax Saving Mutual Funds Online Call 0 94 8300 8300 (India)
Accrual strategy is to buy a bond & hold it till maturity and earn interest income While investing in bonds, investors can make money either through capital appreciation that is buying and selling, or through interest pay out To beat volatility in equities, the recommended strategy is systematic investment plans or buy when the market falls to average out costs. Similarly, in the debt market, following the accrual strategy can help you beat the volatility of the debt market. While investing in bonds, investors can make money either through capital appreciation that is buying and selling, or through interest payout. The latter strategy is accrual, that is, to buy a bond and hold it till maturity and earn from the accruing of interest. Since the Reserve Bank of India (RBI) started tightening liquidity, debt markets have turned volatile. This has made investors risk averse. It has become difficult to gauge how long this volatility will continue. Such investors can look at funds which follow the accrual strategy, where the income gets accrued, such as an ultra short fund. These are less volatile than an income fund or a bond fund. While investing in such funds one should look for funds which have lower expenses and are highly rated, rather than returns, because the returns are likely to fluctuate. Usually funds which have a lower expense ratio, tend to give higher returns. These are already built into the net asset value. For an accrual strategy, make sure the modified duration of the debt fund should be less than two years, since it is a foreseeable future says Feroze Azeez, Indiadirector and head, investment products, at Anand Rathi Private Wealth Management. Also, make sure the exit load of the fund has some co- relation to the average duration of the bonds that the fund invests in or the exit loads are steep to deter investors from redeeming these before maturity. For instance, if the fund buys bonds with an average life of three years, then according to the accrual strategy, the fund manager should hold the fund till maturity. But if the exit load is applicable for only six months, there could be investors who want to redeem after this holding period. So, the fund manager will be forced to sell the bonds and this will be contrary to the investment strategy. These funds don't invest in government securities. They invest in corporate bonds which don't have very high liquidity. So, if these are sold before maturity, they will not offer the right price. Since these funds invest in corporate securities, investors must look at the credit quality of the underlying papers, says, Amarendra Phatak, director- sales, private wealth, Ambit Capital. The yield- to- maturity of these funds currently stands at about 11- 11.5 per cent. The accrual strategy is good for an investor with an investment horizon of 12– 18 months, since now the view is that there is volatility in short- term rates. Even if there is rate cut within one year, investors will get appreciation in the fund's value. Fixed maturity plans ( FMPs) are one end of the accrual strategy, since they are closed- ended funds and the duration is usually one- two years. But even within the open platform there are specific funds that follow the accrual strategy which one can look at.
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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