Prajna Capital

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• Share Buyback - What you should do?
• Term Insurance Riders
• Whar are Feeder Mutual Funds or Fund of Funds?

Share Buyback - What you should do? Posted: 22 Feb 2014 05:12 AM PST Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   The past few months have seen a number of companies offering to buy back their equity through either open- market purchases or tender offers. Companies have announced ₹ 7,800 crore worth of buybacks in six months. For shareholders, the big question is:   Should one sell holdings in the market to benefit from a buyback?   Buyback announcements often drive stock prices higher if the market price is lower than the price at which the buyback is announced. There are various circumstances under which managements might announce a share buyback. If a management feels that its share price is undervalued, or when the company has surplus cash and lower capital expenditure plans, managements may announce a buyback. The company then extinguishes the shares bought back, reduces outstanding share capital, helping boost its return ratios such as earnings per share. Buybacks support the stock price if it has fallen too much. If a company has surplus cash and does not need it for capital expenditure, it might utilise the cash to make a buyback. This helps boost return on equity. As buybacks are open for a limited period, it can get a little tricky to decide whether to sell a stock. Often stock prices tend to dip after the buyback period is over. Hence, experts advice it's better to evaluate the merits of each separately. For example, companies might announce a buyback despite having huge debt on the books. Investors should evaluate whether the company ought to be paying off its debt ( with its surplus cash) instead of going for a buyback. One should evaluate the circumstances and then decide whether to hold one's shares. If it's value- accretive, one should see how much benefit the company could derive from a buyback and how much its return ratios are likely to improve. Experts also say one should keep in mind the nature of the buyback and whether such transactions are conducted through the open market or a tender route. The tax treatment for each is different. Buybacks conducted through the open- market route are done in the stock market. Investors selling during this period pay a securities transaction tax (STT). The sale works like any other stock- market transaction. Therefore, the capital gains tax on this will be lower; that is, short- term capital gains will be taxed at 15 per cent, while long- term capital gains are exempt from taxes. A buyback conducted through a tender is an off- market transaction and not subject to STT. Like other open offers or de- listing offers, a buyback through this is subject to tax as in any other capital asset. That is, long- term gains will be taxed at 10 per cent without indexation, or 20 per cent with indexation whichever is lower. Short- term gains are taxed at normal slab rates. Buybacks can be beneficial to shareholders but one should consider the net benefit after taxes. If the buyback price is good, one can consider selling shares in the open market at a discount of two to three per cent, rather       For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call     Leave a missed Call on 94 8300 8300   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 Invest Any Mutual Fund Online   Download Mutual Fund Application Forms from all AMCs Download Mutual Any Fund Application Forms ---------------------------------------------   Best Performing Mutual Funds Largecap Funds             Invest Online DSP BlackRock Top 100 Fund ICICI Prudential Focused Blue Chip Fund Franklin India Bluechip ICICI Prudential Top 100 Fund B. 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Term Insurance Riders Posted: 22 Feb 2014 04:28 AM PST Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300     Riders in Term Insurance Cover Accidental Rider You must be knowing that in this policy you have to pay an additional premium called the rider in order to procure the benefits of this policy .If you have taken a term insurance policy with a sum assured of 40 Lakhs you can pay an additional premium called the accidental rider for a sum assured of 20 Lakhs If you were to die in an accident then you would get the sum assured of 40 Lakhs and an additional 20 Lakhs owing to the accidental rider benefits, Critical Illness Rider You must be knowing that term insurance policy is a pure protection policy. There are no survival benefits if you survive the term of the policy. You know the cost of health care nowadays has gone through the roof? Imagine if you were to get a heart attack during the course of your term policy. You would get nothing isn’t it? You can take a critical illness rider on paying an additional premium called critical illness rider premium. These policies cover Heart Attack, Kidney Failure, Stroke, Coronary artery bypass and so on. By taking this kind of a policy you can save yourself from serious financial damage. Waiver Of Premium Rider You must be knowing that during the course of your life and work you can suffer from a permanent disability or lose your job which can result in a permanent or temporary loss in income. This would result in the lapse of your term policy .If you were to die you would get nothing as your policy has lapsed. On payment of an additional premium you can continue to enjoy the protection of your term insurance policy even if you were to lose your source of income or suffer from a serious permanent disability. This would be valid until the policy expiry date. Income Benefit Rider Let us consider that you have taken this rider .In case of your death your family will get the sum assured as well as an additional income. On payment of the premium you will get a 10% additional amount on the sum assured maybe for a period of 5 years depending on how the policy is structured. I would like to end this article with the famous phrase ” If You Were Born Without Wings Do Nothing To Prevent Them From Growing “.The term insurance policy with a critical illness rider is a must have for a young working individual during his initial working years as it serves as a wealth builder during the time in which his earning are relatively lesser. So you do not have that term insurance policy? What are you waiting for? Book it Now. For further information on the topic you can CONTACT Prajna Capital on 94 8300 8300 by leaving a missed call.     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 Invest Any Mutual Fund Online Download Mutual Fund Application Forms from all AMCs Download Mutual Any Fund Application Forms ---------------------------------------------   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 B. Large and Midcap Funds         Invest Online ICICI Prudential Dynamic Plan HDFC Top 200 Fund UTI Dividend Yield Fund C. Mid and SmallCap Funds          Invest Online Reliance Equity Opportunities Fund DSP BlackRock Small & Midcap Fund Sundaram Select Midcap IDFC Premier Equity Fund D. Small and MicroCap Funds        Invest Online DSP BlackRock MicroCap Fund E. Sector Funds          Invest Online Reliance Banking Fund Reliance Banking Fund F. Tax Saver Mutual Funds      Invest Online 1. ICICI Prudential Tax Plan 2. HDFC Taxsaver DSP BlackRock Tax Saver Fund Reliance Tax Saver (ELSS) Fund G. Gold Mutual Funds        Invest Online Relaince Gold Savings Fund ICICI Prudential Regular Gold Savings Fund HDFC Gold Fund H. International funds         Invest Online 1. Birla Sun Life International Equity Plan A 2. DSP BlackRock US Flexible Equity 3. FT India Feeder Franklin US Opportunities 4. ICICI Prudential US Bluechip Equity 5. Motilal Oswal MOSt Shares NASDAQ-100 ETF Invest in Tax Saving Mutual Funds Download Any Application Forms Buy Mutual Funds Online Invest Online Buy Gold Mutual Funds Invest Now

Whar are Feeder Mutual Funds or Fund of Funds? Posted: 22 Feb 2014 03:33 AM PST Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)   Feeder Mutual Funds To an average Indian investor, global investing is a relatively unexplored territory and would definitely seem like a road less traveled. However, such global funds do exist for Indian investors and are either geographically specific or thematic in nature. They invest into a specific market, such as the US, China or Brazil, or into a region, such as Asia ex-Japan or the emerging markets. The themebased ones focus on gold mining, energy or agri-business. Despite being around for a number of years, global funds have only recently picked up in terms of sheer number available. As per AMFI data, in early 2008 there were around six global feeder funds available in India. By October 2013 that number swelled to 23. This is only poised to increase as a number of fund companies have filed offer documents with Sebi to launch such funds. The total assets managed by these funds stood at around Rs 2,400 crore (less than 1% of Indian fund industry’s assets) at the end of October 2013, as per AMFI data. Compare this with the world’s largest mutual fund market, the US. As per the ICI Factbook 2013, domestic equity funds constitute around 33% of total US fund industry assets, while international equity funds account for 12% of industry assets. Reserve bank of India increased the overseas investment limit for mutual funds in India to $7 billion in April 2008 (from $5 billion at the end of 2007), with an individual fund house limit of $300 million. However, till date the total assets managed by such funds in India is nowhere close to the overall limit. Benefits and Limitations The most obvious benefit of global feeder funds is geographical diversification. Indian investors tend to question the logic of investing in global funds when the Indian market is doing well. It is this mindset that results in such funds gaining traction when the Indian market is underperforming its global peers, as has been the case in 2013. It is worth remembering that all markets go through periodic cycles. There is no certainty that a particular market performing well presently will continue to outperform every year on a regular basis. This year itself, India has under perfor med a number of developed markets by a significant margin. Also, during the market downturn of 2008 and 2011, the Indian market was a relative underperformer when compared to a number of other international markets. An allocation to global funds in a portfolio would have helped to diversify risk. A huge disadvantage of such funds is the unfavourable capital gains tax treatment, as compared to domestic equity funds. Funds investing primarily in foreign securities (even equities) and Fund of Funds (FoF) schemes are not considered as equityoriented funds by the taxmen in India. Thus they lose out on the beneficial capital gains tax treatment of equity-oriented funds, which are presently subject to a short term capital gains tax of 15% (plus surcharge and cess) while long term capital gains is exempt from taxation. However, for other funds (which are not equity-oriented), short-term capital gains are taxed at the applicable income tax rate, and long term capital gains are subject to a tax of 10% (without indexation) or 20% (with indexation). Global funds also carry currency risk. Appreciation in the rupee will drag down returns for global feeder fund investors, while depreciation in the Indian currency against the dollar (in which the underlying parent fund is denominated), helps to boost returns. We have seen the latter scenario play out in 2013, when just a few months ago the rupee fell to historically low levels. It’s difficult for an individual investor to time currency moves, as it can go either way. Therefore, the main premise of investing into global funds should be to diversify one’s portfolio geographically, not to make a currency gain. This helps lower the risk of a portfolio too. As the Indian market matures and opens up, global funds are likely to find wider acceptance amongst portfolios of Indian investors. However, these funds may not be suited for first-time or novice mutual fund investors. The idea should be to first build up a domestic portfolio, and then diversify it using the medium of global funds 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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