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- Sovereign Gold Bonds versus Gold ETFs
- Mirae Asset India Opportunities Fund Dividend
- S4A Restructuring Scheme
| Sovereign Gold Bonds versus Gold ETFs Posted: 22 Jul 2016 08:56 AM PDT With a fresh tranche of sovereign gold bonds on sale, it's a good time to review how these instruments stack up against the earlier favourite, gold exchange traded funds or ETFs. Just based on returns and taxation, the bonds seem better. Sovereign gold bonds (SGBs) are issued by the Government of India. The issue price for the fourth tranche of Sovereign Gold Bond Scheme, opening on July 18 and closing on July 22, has been fixed at R3,119 per gram. One can buy a minimum of 1 gram and a maximum of 500 grams. In comparison, gold ETFs are sold based on net asset value (NAV) through the exchanges. These NAVs currently start below R500 (per unit). Both SGBs and Gold ETFs, which help you to hold gold in paper form have big advantages over physical gold. They don't have purity issues, they don't force you to shell out hefty locker rents and they offer liquidity at prevailing gold prices without ad hoc deductions for wastage or losses.
Advantage SGB
Secondly, SGBs pay you an assured interest over and above the price returns on gold. Gold ETFs do not give you that comfort and rely only on price returns. Gold bonds offer 2.75% per annum (paid half-yearly) on the initial investment. Thus, investors earn returns linked to the gold price (just like in gold ETFs) plus a fixed annual interest income. The tenure of gold bonds is 8 years but exit options are available in the 5th, 6th and 7 year.
SGBs are cheaper to own than gold ETFs too. This is because gold ETFs charge management charges of up to 1% of their net assets every year. But gold bonds do not have any such recurring charges.
Tax sops for gold bonds
Gold ETFs, on the other hand, are treated as non-equity investments. Therefore, short-term capital gains on units held for less than 36 months are added to investor's income and taxed as per the applicable slab rate. Long term capital gains on units held for more than 36 months are taxed at a rate of 20% after providing for indexation benefits on costs. Gold bonds get indexation benefit if they are transferred before maturity.
Given that SGBs score over ETFs on these three counts, will the gold ETF assets in the MF industry see a shift to these bonds? Chirag Mehta, senior fund manager - alternative investments, Quantum AMC, says: 'That kind of shift is not happening right now. Gold bonds are a new product and investors are still learning about them. An issue about gold bonds is that they are not on-tap. Investors have to wait for the government to sell a new tranche. You cannot go and buy them whenever you want. Also, some investors prefer to buy smaller denominations than a gram which can be done via gold ETFs, but not gold bonds.'
Gold bonds and gold ETFs are listed on exchanges, which means you could exit them in the secondary market if you require the money before maturity. The redemption will be done at the prevailing price at the market. However, gold ETFs have better liquidity (than SGBs). They register far higher volumes than gold bonds at present. The liquidity issue is a major one. The exchange bid-ask spread for SGBs, a relatively new instrument with a short trading history, is pretty high compared to gold ETFs.
Gold ETF performance
'Investors should choose based on their liquidity requirements. If liquidity isn't important and investors can hold to maturity, gold bonds are superior. If investors feel they may need liquidity, ETFs are superior ----------------------------------------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saver Mutual Funds to invest in India for 2016Best 10 ELSS Mutual Funds in india for 2016
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Invest in Best Performing 2016 Tax Saver Mutual Funds Online For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call --------------------------------------------- Leave your comment with mail ID and we will answer them OR You can write to us at PrajnaCapital [at] Gmail [dot] Com OR Leave a missed Call on 94 8300 8300 ----------------------------------------------- | ||
| Mirae Asset India Opportunities Fund Dividend Posted: 22 Jul 2016 04:24 AM PDT Invest Mirae Asset India Opportunities Fund Online    ----------------------------------------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saver Mutual Funds to invest in India for 2016Best 10 ELSS Mutual Funds in india for 2016
1. BNP Paribas Long Term Equity Fund 2. Axis Tax Saver Fund 3. Franklin India TaxShield 4. ICICI Prudential Long Term Equity Fund 5. IDFC Tax Advantage (ELSS) Fund 6. Birla Sun Life Tax Relief 96 7. DSP BlackRock Tax Saver Fund 8. Reliance Tax Saver (ELSS) Fund 9. Religare Tax Plan 10. Birla Sun Life Tax Plan
Invest in Best Performing 2016 Tax Saver Mutual Funds Online For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call --------------------------------------------- Leave your comment with mail ID and we will answer them OR You can write to us at PrajnaCapital [at] Gmail [dot] Com OR Leave a missed Call on 94 8300 8300 ----------------------------------------------- | ||
| Posted: 22 Jul 2016 02:24 AM PDT S4A means Scheme for Sustainable Structuring of Stressed Assets. To enable banks to overcome bad loans, RBI has been issuing norms to ensure that economic value of the asset is preserved. Latest norm is S4A 1. What is S4A? It is restructuring large ticket loans where the project is up and run ning. Here the lenders are required to separate a sustainable loan from an unsustainable loan.The bank would convert the unsustainable debt into equity or equity re lated instruments. As a results, on one hand, the debt burden of the bor rower is substantially reduced and on the oth er hand promoter's eq uity stake is also re duced. The idea behind the scheme is that banks would get the upside if the company regains its old glory and it also gives the borrower a sec ond chance to revive the company. 2. What are the pre-conditions to be eligible for the scheme The aggregate exposure of all lenders to the company should be more than `500 crore. The project should have commenced operations An external consultant should endorse it as a viable project through a techno-economic viability (TEV) study and the forensic audit should give a clean chit to the promoter Bankers cannot tinker with the terms of the sustainable loan. This means that banks can not reduce rates or give moratorium on the sustainable loan. 3. How does RBI define sustainable debt? Simply put, the portion of the loan that can be serviced through the existing cash flow is defined as sustainable debt. RBI has said that sustainable loan should be at least 50% or more of the unsustainable debt. The loan can be approved for S4A only if the Overseeing Committee endorses it. 4. What is the role of an Overseeing Committee? Lenders have to submit the res olution plan to the Overseeing Committee that will comprising eminent persons. The OC will review the processes involved in preparation of resolution plan, for reasonableness and adherence to the provisions of these guidelines, and opine on it. 5. Why do we need S4A? This is aimed to revive compa nies that are facing stress due either due to slowdown in the economy or over leveraging. For the fiscal year 2015-16, non performing assets touched `6 lakh crore. ----------------------------------------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saver Mutual Funds to invest in India for 2016Best 10 ELSS Mutual Funds in india for 2016
1. BNP Paribas Long Term Equity Fund 2. Axis Tax Saver Fund 3. Franklin India TaxShield 4. ICICI Prudential Long Term Equity Fund 5. IDFC Tax Advantage (ELSS) Fund 6. Birla Sun Life Tax Relief 96 7. DSP BlackRock Tax Saver Fund 8. Reliance Tax Saver (ELSS) Fund 9. Religare Tax Plan 10. Birla Sun Life Tax Plan
Invest in Best Performing 2016 Tax Saver Mutual Funds Online For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call --------------------------------------------- Leave your comment with mail ID and we will answer them OR You can write to us at PrajnaCapital [at] Gmail [dot] Com OR Leave a missed Call on 94 8300 8300 ----------------------------------------------- |
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