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- Axis Long Term Equity Fund - Invest Online
- Tax Advantage with Arbitrage Funds
- How to Pick Top Performing Mutual Fund Schemes
| Axis Long Term Equity Fund - Invest Online Posted: 30 Sep 2014 05:02 AM PDT Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Leave a missed Call on 94 8300 8300 Axis Long Term Equity Fund - Buy Online
The scheme aims to generate regular long term capital growth from a diversified portfolio of equity and equity related securities
A recent entrant, Axis Long Term Equity has proved its mettle by always staying two steps ahead of its benchmark and peers. The fund has been the top ranker in the ELSS category in 3 out of 5 years since inception. We like the fund for its high conviction levels and ability to add alpha through a concentrated focus on successful mid-cap calls.
Equity linked Savings Schemes are usually not known for their good mid-cap calls. But this fund, with a high allocation to mid-cap stocks in its portfolio, has delivered significant out performance. Starting out mainly with large-cap stocks in end 2009, the fund has added aggressively to its mid-caps in the last three years with mid-cap allocations of 30-40 per cent, consistently higher than the category.
The portfolio is compact and displays high conviction levels, featuring 36-40 stocks in recent months, with top five stocks accounting for nearly a third of the portfolio. This fund does not take debt or cash calls and was 98 per cent invested as of end June 2014.
The fund's performance sparkles no matter the time frame taken into consideration. Returns of 21 per cent CAGR since inception is superior to peers in this period which delivered about 14 per cent. The fund's 3 year return of 22.7 per cent has surpassed its benchmark BSE 200 by a full 10 percentage points. The participation in the recent bull run has been equally impressive with a 1-year return of 55 per cent against 30 per cent for the benchmark and 43 per cent for its category. This return has been attained with moderate doses of risk at a beta of 0.86. The fund's small-cap bets are very limited. Churn in the portfolio obviously isn't high with a portfolio turnover of 54 per cent.
The multi-cap strategies may work well in a secular bull market. With its stellar performance record in the last five years, this is a good fund to buy even for investors who aren't really hankering after tax savings. 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 | |||||
| Tax Advantage with Arbitrage Funds Posted: 30 Sep 2014 03:29 AM PDT Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Leave a missed Call on 94 8300 8300 Tax Advantage with Arbitrage Funds Debt mutual funds were a perfect substitute to the conventional fixed deposits ( FDs) because they offered much better post- tax returns. But the Budget 2014- 15 took away the tax advantage of debt funds. Now, for debt funds to enjoy the benefit of indexation (gains after calculating inflation), they have to be invested in for three years or more. Having said that, liquid funds haven't been badly impacted because even though the tax advantage may have lessened, the convenience and better absolute returns they offer for very short term, even overnight investing, is significant. The change in taxation affects investors who have money for one to three years of investment or goals arising within that timeframe the most. If investors invest in FDs, Fixed Maturity Plans (FMPs), or income finds for less than three years, the returns get taxed at their respective marginal tax rate of 10 per cent, 20 per cent or 30 per cent. Most likely, the post- tax return from these FDs, FMPs or income funds will fail to beat current inflation levels. There are three questions that will arise in the minds of investors: [1]Do we have a substitute that could offer improved post- tax returns? How does it work? [1]How safe is the substitute from protecting capital perspective? [1]How will it better the income funds' returns? Fortunately, the arbitrage fund could work as a substitute to the debt funds ( that is, FMPs/ income funds) for a period of more than one year and less than three years. How does it work? As you know, there are two markets –the spot market and the futures market. There is a price difference between the two. The fund manager buys a stock in the spot market. At the same time, he sells an equal quantity in the futures market. By doing this he doesn't take any market risk. A fund manager buys, say, 100 shares of Infosys at ₹ 3,560 in the spot market. At the same time, he sells an equal quantity in the futures market, at say, ₹ 3,585. So the fund manager has booked a ₹ 25 gain — on the expiry date of the future, the price converge providing the fund manager the gain of ₹ 25. The difference typically reflects the interest rate in the economy, mainly the overnight liquid fund rate. Please note the similarity in liquid and arbitrage fund returns When do arbitrage funds work? We need to ask if arbitrage funds are good at capital protection. Most of the time arbitrage funds mimic the liquid fund returns that prevail in the economy, but it may not work as a perfect substitute to liquid funds for three reasons: [1]It is volatile over a short- term period [1]One month in the last five years has seen a very marginal negative return as well [1]On a one- month rolling return basis it has underperformed 19 out of 40 quarter periods over the last 10 years However, arbitrage funds work as a good substitute for income funds over a one- to three- year time horizon. Rolling return analysis The three months and above rolling returns of arbitrage funds over a period of five years show that they have never been negative. However, the returns fluctuate quite a bit, with the worst three months rolling return being 0.55 per cent absolute. The rolling returns over one, two and three years gain steadiness with the maximum returns being in the 9 per cent region, whereas the worst return is four to six per cent. The volatility in returns is a function of the arbitrage spread. It widens during uncertain and volatile times. Hence, it delivers a slightly better return during such times. However, the same typically narrows when the stock market is unidirectional. Better returns than income funds The worst return of arbitrage funds over two and three- year period equals post- tax FD returns. The upside of this strategy is that it can generate a post- tax return in the range of 9- 9.5 per cent per annum. Arbitrage funds qualify as equity investment, resulting in tax- free returns for investments of over one year periods. So, on the downside, long- term investors have very little to lose, but the upside offers good 9per cent tax- free returns. What to watch out for: One has to be careful in selecting arbitrage funds because some of them have higher exposure to the debt category. The equity and equity- related instruments must cross the minimum average of 65 per cent to qualify as equity funds and to get the tax advantage associated with it. The whole purpose of using arbitrage in this situation is tactical. If this point is overlooked, the purpose itself will get defeated. 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 | |||||
| How to Pick Top Performing Mutual Fund Schemes Posted: 30 Sep 2014 02:06 AM PDT Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Leave a missed Call on 94 8300 8300 How to Pick Performing Schemes Funds that continue to stay in the top grade of performance over longer periods are the ones to bet on, advise investment experts
The mutual fund performance charts of the past few months make for an impressive reading. Funds across all categories boast of stellar returns. Sample this: The mid and small cap category has averaged 77 percent return over the past 12 months, with the best fund delivering a staggering 120 percent. The tax-saving funds also average an impressive 51 percent, including a fund which has soared 92 percent. Many of the table-toppers are funds of proven quality and track record. However, there are also schemes that are not that well-known. Some of these have rarely made it to the performance charts in the past, yet, of late, they boast of big-ticket returns that could easily lure investors. You would be wise not to touch them blindly. As any advisor would suggest, it is better to invest in funds with a track record of delivering high returns, than opt for schemes temporarily reining the performance charts. Sure, past performance is no guarantee of returns in the future, but if this performance has been delivered consistently, you can be reasonably assured that your money is in safe hands. So, how best can the investor narrow down his options?
One may choose to look at the fund's performance across, say, 1-year, 3-year and 5-year periods. If the fund has fared well across all the time frames, it would typically make for a sound bet. However, as the return across all periods will be based on the fund's net asset value (NAV) on a given date, this method may present an inaccurate picture. For instance, a scheme's portfolio construction may have improved substantially in the past one or two years. This will not only boost its short-term returns, but will also be reflected in its 3-year and 5-year performance. So, even if the fund has not performed well earlier, its performance in the last stretch will enhance its return profile over longer time frames. A better way to gauge performance would be to look at yearly returns and opt for funds that consistently feature in the top quartile of performance every year. Top-quartile (or the fourth quarter) refers to the top 25 percent of the schemes in the universe, in terms of returns. Third quartile refers to funds that fall in the top 50 percent of the uni verse but below the top 25 percent. A quality fund is one that appears in the top quartile or the third quartile year after year. However, not all funds that come in the top quartile in a given year or period can do so in the next year or period. For instance, only five of the 10 funds that ranked in the top quartile five years ago, appear in the top quartile again this year. Among those that have slipped, there are some that feature in the bottom half of the performance charts. This clearly shows the importance of tracking a fund's performance on a continuous basis. So which funds figure high on consistency? We have crunched the numbers for your benefit, based on the data available with mutual fund tracker Value Research. For each category of funds, we have calculated the annual quartile rank of all funds for each of the past five years, starting from 2009. For obvious reasons, we limited our search to funds that have a minimum five year track record.
IMPROVED PERFORMANCE FUNDS
There are very few funds that have seen a big improvement, of late, in relative performance compared to earlier years. Principal Growth, Reliance Focused Large C ap, P r i ncip a l T a x S av i n g s, ICICI Prudential Top 100 and UTI Leadership Equity Fund have managed to improve their return profile and have ranked consistently in the top two quartiles over the past three years, having spent earlier years in relative obscurity. Other funds that ranked consistently in the bottom two quartiles in the earlier years have mostly remained stuck in that segment for all five years. Scheme s such a s DWS Investment Opportunity, Sundaram Growth and Taurus Bonanza have been languishing in the b ot tom-r u n g of t he performance charts for each of the years under consideration. Besides, there a re several others that have rarely made an entry into the leading performance charts. Escorts Leading Sectors, Taurus Discovery, Sundaram Equity Multiplier, ING Midcap, HSBC Progressive Themes, SBI Contra, DWS Tax Saving, IDFC Imperial Equity, JM Equity, LIC Nomura Tax Plan, LIC Nomura MF Equity, HSBC Dynamic, Sundaram Select Focus and UTI Equity Tax Savings are some prominent examples.
ONE-YEAR WONDERS Some schemes that have u nder per for med for most part of the cho sen five-year period, have suddenly shown up among the top quartile performers this year. Reliance Vision and Birla Sun Life Special Situations are two such funds. In their respective categories, they rank seven out of 56 and six out of 132 on the performance charts this year. Escorts Tax Plan in the equity-linked savings scheme (ELSS) category is another such fund ranking 16 out of 73 funds in the category. However, a closer look at past performance reveals its abysmal track record. Don't get easily swayed by the performance of these funds. It would be wise to check their historical performance and take a more informed decision. Although some of these funds may genuinely be turning a corner, it would be too early to call it a turnaround. You may opt for the funds if they continue to stay among the leaders over the next couple of years. FUNDS THAT HAVE SLIPPED At the other end of the spectrum, there are funds that figured in the top quartiles till a few years ago, but have seen a downturn of late. In the large and mid-cap funds category, ING Dividend Yield Fund and UTI Dividend Yield Fund have both struggled in the past three years (2011-13), despite being in the top quartile of performance for the first three years (2009-11) of the chosen period. This because value stocks, which these type of funds typically target, have witnessed a climbdown in prices over the past three years. There are several funds in the ELSS space that have witnessed deterioration in their relative performance. Canara Robeco Equity Tax Saver, ING Tax Savings, L&T Tax Advantage and Taurus Tax Shield have seen their rank slip over the past three years. Both Canara Robeco Equity Tax Saver and ING Tax Savings ranked consistently in the top quartile of performance during 2009-11, but have failed to continue with their performance. HDFC TaxSaver, which was among the top rankers during the 2009-11 period, also slipped for a while but has managed to climb up and has delivered top quartile performance, so far, this year. In the large-cap fund basket too, some funds have slipped. Franklin India Bluechip, which enjoyed a 5-star rating from Value Research a while back, has slipped to a 4-star rating, and for good measure. After ranking in the top quartile during 2009-2011, the fund has seen a downturn in performance vis-a-vis its peers. It has failed to rank in the top two quartiles of performance for the past three years, including this year. L&T Equity and UTI Opportunities had both seen a similar downturn in performance, but have managed to pick themselves up by delivering top quartile performance this year. The most consistent outperformers It is very rare to find a fund that manages to rank consistently in the top quartile year after year. The data affirms this. No scheme has emerged as the top quartile performer for each of the past five years. However, there are some funds which have come very close to achieving this feat--having missed out on just one occasion. Axis Long Term Equity in the tax saving funds category, Mirae Asset India Opportunities in the large and mid-cap funds segment, ICICI Prudential Target Returns and UTI Equity in the large-cap funds basket have emerged as the most consisten top-performing funds in the entire universe of diversified equity funds over the past five years. Besides, there are several others that have managed to put up a good show over this period. The maximum consistent per formers belong to the large and mid-cap category of equity funds .Birla Sun Life Frontline Equity, Franklin India Flexi Cap, Kotak Select Focus and Quantum Long Term Equity are all consistent top performers, having ranked in the top two quartiles of performance for each of the past five years. Quantum Tax Saving is another fund in the ELSS basket which ranks high on the consistency scale. 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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