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- REITs are good portfolio diversifiers
- Debt Funds - Increase in Long Term Capital Gain Tax
- Close Ended Mutual funds
| REITs are good portfolio diversifiers Posted: 19 Aug 2014 03:37 AM PDT Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Leave a missed Call on 94 8300 8300 REITs are good portfolio diversifiers Want to participate in the real estate boom without the hassles of complicated documentation? Real Estate and Infrastructure Investment Trusts, or Reits, might be a good option. With the Securities and Exchange Board of India (Sebi) clearing the deck for launch of Reits on Sunday, investors will have another option – besides direct purchase of property or direct stocks of real estate companies – to participate to the sector's fortunes. However, the market regular has kept a higher threshold limit of ₹ 2 lakh for investment in Reits, much like the limit in the BSE SME stocks, thereby making it a tad more difficult for retail investors. Reits would be safer for individual investors who would otherwise invest on their own in some property or land parcel. Investing in Reits would be passive investing in real estate market. Also, the minimum threshold is much lower than investing in any property, which can cost anywhere above ₹ 40- 45 lakh even in city suburbs
There are several other safeguards as well. Not less than 80 per cent of the value of the Reit assets shall be in completed and revenue- generating properties – a good move because it ensures that investors enter an instrument that is already generating revenues and not something that will only generate revenues in the future. This will bring down the risk because entire investment in under- construction properties that promise the moon to investors can hurt badly, if the construction gets stuck due to litigation or other issues. Similarly, Reits cannot invest more than 60 per cent of the value of assets in two projects. Besides these checks and balances – high threshold limit and controls over investment – Reits will give an added advantage of dividend distribution on an annual basis and that too, 90 per cent of distributable post- tax income. At present, dividends would be subject to the dividend distribution tax ( DDT) at 16.995 per cent. Dividend subject to DDT is exempt from tax in the hands of the investors. The yield, as a result, will be 8- 9 per cent. Add to that, capital appreciation and the total annualised returns may come to 14- 15 per cent. Though post- tax returns depend on the overall yield, they will certainly be higher than fixed deposits by around three per cent. The liquidity may also not be an issue, according to Rahul Rai, head - real estate investment business at ICICI Prudential, because they will be listed at the stock exchanges. Reits will be riskier than debt products because the underlying security is real estate, which can take a hit when economic conditions aren't very suitable since the exposure will only be in commercial properties. The long- term and short- term capital rates of taxation are unclear. However, the taxation of Reits may have some similarity to that for listed equities, with long- term capital gains on transfer of Reits being exempt ( provided it has been subject to STT), and short- term capital gains being subject to a 15 per cent tax, plus applicable surcharge and cess. However, Reits units to qualify as a long- term capital asset, they would need to be held for a period of three years For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call
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--------------------------------------------- Invest Mutual Funds Online
Download Mutual Fund Application Forms from all AMCs Download Mutual Any Fund Application Forms ---------------------------------------------
Best Performing Mutual Funds
B. Large and Midcap Funds Invest Online
C. Mid and SmallCap Funds Invest Online
D. Small and MicroCap Funds Invest Online
E. Sector Funds Invest Online
F. Tax Saver Mutual Funds Invest Online 1. ICICI Prudential Tax Plan 2. HDFC Taxsaver
G. Gold Mutual Funds Invest Online
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 | ||||||||
| Debt Funds - Increase in Long Term Capital Gain Tax Posted: 19 Aug 2014 12:53 AM PDT Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Leave a missed Call on 94 8300 8300 Debt Funds - Hike in long-term capital gains
Hike in long-term capital gains, tax on non-equity funds to 20 percent and extending the holding period to three years will be a damper for debt funds
THE Budget comes as a mixed bag of blessings and disappointments for mutual fund investors. While the increase in tax exemption limit under Section 80C of the Income Tax Act will benefit equity fund investors, the changes in tax structure on debt funds may prove to be a drag on their finances. Here's how the maiden Budget presented by Finance Minister Arun Jaitley will affect the mutual fund investors.
People in the higher tax bracket, who preferred mutual funds because of the 30 percent tax implication on the interest earned from bank fixed deposits, will be the worst hit. This makes investments in debt schemes, including FMPs, for less than 36 months, unattractive. The changes proposed in dividend distribution taxes (DDT) would also hurt debt investors.
Some experts feel investors should take a look at arbitrage funds as they can offer better post-tax returns. Arbitrage funds, as the name suggests, look for an arbitrage opportunity among different markets. They are treated as equity funds for taxation purposes, that is, investments held for over one year will not attract taxes. Investors with no risk appetite and an investment horizon between one and three years can consider investing in arbitrage funds.
For most individuals, the mandatory contributions towards Provident Fund and premiums towards life insurance policies ate up a chunk of the `1 lakh limit. Earlier, many investors had no reason to save further. However, the revised limit now provides more headroom for them to consider good investment avenues. Experts insist that the revised limit should be used to allocate more towards equities. your compulsory savings towards PF and insurance, investors should now make use of this enhanced limit to take exposure to a different asset class, such as equities." A tax-saving equity fund or equity-linked savings scheme (ELSS), which falls under the Section 80C umbrella, is the best option to deploy the surplus savings. Investors should make the most of the additional investments of `50,000 allowed under Section 80C by picking up the right schemes. Not only will it help in saving tax, but also provide more scope for wealth creation over the long term. Besides, with a lock-in period of just three years, these products come with a shorter maturity period than most traditional savings instruments, including the Public Provident Fund, National Savings Certificates and tax-saving FDs. Says Rajesh Kothari, managing director, It is better to invest in equity for the long term compared with fixed income, both from the perspective of liquidity and tax saving. RGESS Apart from ELSS, first-time equity investors looking to save taxes, in addition to Section 80C, can consider investing in the Rajiv Gandhi Equity Savings Scheme (RGESS). If you exhaust the `1.5 lakh limit, you can claim a further deduction of `25,000 on your taxable income by investing in it. Many investment experts were expecting the new government to give it a quiet burial, but nothing of the sort happened. RGESS continues to be intact and first-time investors can continue to invest and claim tax benefits. Those with a gross annual income of `12 lakh or less can invest up to `50,000 under Section 80CCG in the scheme every year, and claim tax benefits for a period of three years.
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
Download Mutual Fund Application Forms from all AMCs Download Mutual Any Fund Application Forms ---------------------------------------------
Best Performing Mutual Funds
B. Large and Midcap Funds Invest Online
C. Mid and SmallCap Funds Invest Online
D. Small and MicroCap Funds Invest Online
E. Sector Funds Invest Online
F. Tax Saver Mutual Funds Invest Online 1. ICICI Prudential Tax Plan 2. HDFC Taxsaver
G. Gold Mutual Funds Invest Online
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 | ||||||||
| Posted: 18 Aug 2014 11:03 PM PDT Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Leave a missed Call on 94 8300 8300 Close Ended Mutual funds Most equity mutual fund schemes available in the market in India are open ended —you can invest whenever you want and redeem money at will. And investment and redemptions happen at a price very close to the net asset value (NAV) of the fund. But there is another variety of equity funds called the close-ended schemes, in which you need to stay invested for the duration of the fund, usually three years or more. Like in open-ended funds, investing in close-ended plans involves risk. Such schemes call for a more discipline approach by the fund manager, industry players said. And since the investor has no chance to redeem investments at will, the fund manager does not have to think about outflows and is not forced to liquidate stocks that could give more returns in another few months of years. The market is not an accommodating machine. Here, the returns usually come in spurts. Often, in an open ended fund, to meet investor redemptions the fund manager is forced to sell a stock before its full value is realised in the portfolio. There could be opposing investment approach in an open-ended fund: While the investor wants to exit after some time, the fund manager may be willing to hold on to the stocks for some more time but is forced to exit prematurely. In a close-ended fund, by the very structure of the scheme, the investment horizon of the investor matches exactly with the investment horizon of the fund manager. In a close-ended fund once the stock hits the targeted price, the fund manager could sell it and return the money to investors in the form of dividend. Alternatively, the manager could reinvest the gains in some other stock(s) that are likely to give returns till the closing date of the scheme. A close-ended structure could also allow the fund manager to have a concentrated portfolio of stocks, meaning he could invest in just a handful of stocks which he believes could be the winners till the close of fund. Also, unlike in an open-ended fund, in a close-ended scheme only those investors who pump in money at launch get rewards at the close. Of late, several fund houses in India have been launching close-ended funds to benefit from the emerging opportunities. Fund managers said there were several reasons for this spurt. The stock market seems to be in a very favourable situation for long term investments. For one, there is an unprecedented electoral mandate after the Lok Sabha polls with a single party getting a simple majority after three decades. On the economic parameters, inflation is showing signs of bottoming out with the government and the RBI's measures to control prices —controlling gold imports, administrative steps to tackle food prices and a limited rise in minimum support prices — showing results. Economists say that if the rate of inflation falls, it could lead to easing of the rate of interest in a few months from now. All these could also lead to credit growth, increase EBITDA (earnings before interest, taxes, depreciation and amortisation) margins and also earnings growth for corporates. These positives are sure to lead to a bull rally in the market, fund managers and analysts said. Most close-ended funds have a three-year tenor. So the fund manager will have these many years to realise the gains from the portfolio of stocks he invests in. There is an emotional reason also for investing in a close-ended fund, industry officials said. Fund industry officials also put forward some caveats for investors in close-ended schemes. For one, these schemes are not a substitute but compliment the open ended ones. Also, these funds lack liquidity. Although closed-ended funds are listed on the bourses, but for most part of its tenure these schemes trade at a value which is discounted to their net asset value (NAV). So if an investor wants to exit much before the close of the scheme, he can expect to get much less than the actual value of his investment. 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
Download Mutual Fund Application Forms from all AMCs Download Mutual Any Fund Application Forms ---------------------------------------------
Best Performing Mutual Funds
B. Large and Midcap Funds Invest Online
C. Mid and SmallCap Funds Invest Online
D. Small and MicroCap Funds Invest Online
E. Sector Funds Invest Online
F. Tax Saver Mutual Funds Invest Online 1. ICICI Prudential Tax Plan 2. HDFC Taxsaver
G. Gold Mutual Funds Invest Online
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 |
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