Prajna Capital

---

• Reliance Mutual Fund signed possible stake sale to Nippon
• Hedge funds & Mutual funds – What is the difference?
• Mutual Fund Review: LIC Nomura MF Opportunity Fund
• Tata Life Sciences and Technology Fund
• Dividend Yield Mutual Funds pay off well
• HDFC Bank Starts Tax Payment Through ATMs
• The UTI Mutual Fund has changed the fund managers of the following schemes
• Mutual Fund Review: Templeton India Income Builder Account Plan A
• Health Cover - Check for renewal ceasing age, co-pay norm and sub-limits
• Mutual Fund Review: HDFC Liquid Fund Premium Plan

Reliance Mutual Fund signed possible stake sale to Nippon Posted: 02 Sep 2011 02:05 AM PDT   TAKING their partnership beyond life insurance, Anil Ambani-led Reliance Capital and Japan's Nippon Life have signed a pact for a possible stake sale in its mutual fund company. In a release issued from Tokyo, Reliance Capital chairman Ani Ambani said, "Nippon Life and Reliance ADAG share an identical vision to create superior value for all stakeholders, including customers, employees and shareholders, by building long-term relationships. Nippon Life has already agreed to be our partner in the life insurance business, and we see great potential to work together across other financial services businesses." Nippon Life's Yoshinobu Tsutsui said, "We are delighted to have an opportunity to expand our relationship with Reliance, one of the most respected business groups in India," Reliance Capital Asset Management (RCAM) is the largest AMC in India and manages over Rs 1,04,136 crore across mutual funds, pension funds, managed accounts, hedge funds and has over 7 mil lion investors. In February this year, Reliance Capital sold 26 per cent stake in Reliance Life Insurance to Nippon Life Insurance for Rs 3,062 crore. The transaction pegs the valuation of Reliance Life Insurance at approximately Rs 11,500 crore. Reliance Capital's core businesses include insurance, asset management, broking, consumer and commercial finance. -----------------------------------------------------------------   Also, know how to buy mutual funds online:   Invest in DSP BlackRock Mutual Funds Online   Invest in Reliance Mutual Funds Online   Invest in HDFC Mutual Funds Online   Invest in Sundaram Mutual Funds Online   Invest in Birla Sunlife Mutual Funds Online   Invest in UTI Mutual Funds Online    Invest in SBI Mutual Funds Online   Invest in Edelweiss Mutual Funds Online   Invest in IDFC Mutual Funds Online

Hedge funds & Mutual funds – What is the difference? Posted: 02 Sep 2011 01:20 AM PDT What are hedge funds and what are mutual funds? Let us get it clear — mutual funds are regulated by SEBI, but Hedge funds are not. Both are pools of funds, both have a fund manager, and both are run by a fund manager. So both of them do look like brothers! However Hedge funds, In India hedge funds are created as SPVs — and is tax inefficient, so not very popular. Mutual funds are retail products under a lot of supervision, and hence does not deal in the more risky varieties of assets. Hedge funds can run a concentrated portfolio (only equity shares of auto companies for a month for example), or move into full cash when they feel so. Largely hedge fund managers look for absolute returns — over a period of time. Say they may run a fund for 5 years and have very heavy withdrawal penalties. There are times when the fund is closed and times when it is kept open. Mutual funds charge you say 2% of the assets as a fee and no share of the profit. This means the fund manager is purely acting as a professional. In case of a hedge fund the fund manager acts like a manager as well as a part owner. The hedge fund manager gets 2% of the assets and 20% of the profits. Big hedge funds move across world markets looking for arbitrage opportunities, reducing risk, leveraging (hedge funds can borrow, while mutual funds are specifically prohibited from borrowing for investing). Hedge funds are a product meant for the real rich who can afford to risk a big part of their capital. Mutual funds on the other hand is for people who can invest an amount as small as Rs. 500 per month. -----------------------------------------------------------------   Also, know how to buy mutual funds online:   Invest in DSP BlackRock Mutual Funds Online   Invest in Reliance Mutual Funds Online   Invest in HDFC Mutual Funds Online   Invest in Sundaram Mutual Funds Online   Invest in Birla Sunlife Mutual Funds Online   Invest in UTI Mutual Funds Online    Invest in SBI Mutual Funds Online   Invest in Edelweiss Mutual Funds Online   Invest in IDFC Mutual Funds Online

Mutual Fund Review: LIC Nomura MF Opportunity Fund Posted: 02 Sep 2011 01:03 AM PDT Objective: The investment objective of the scheme is to provide capital growth in long-term with reasonable risk levels by investing mainly in companies which are in sector/s, which have a high growth potential at that point of time. Entry Load: Investment upto 1 Crore : 2.25% Investment above 1 Crore: Nil Options: The scheme offers investment under two options namely Dividend & Growth. In Dividend option, one can choose from Dividend re-investment or Dividend pay-out. Special facilities: Systematic Investment Plan (SIP), Systematic Withdrawal Plan (SWP), Systematic Transfer Plan (STP) and Preset Trigger Options. SWP, STP, and Preset Trigger Option will be available under growth option only. Offer Price: Rs. 10/- per unit at par during new fund offer and subsequently at NAV related price on an ongoing basis. Minimum Investment: Rs. 5000/- and thereafter in multiples of Re.1/-.   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   Invest in DSP BlackRock Mutual Funds Online   Invest in Reliance Mutual Funds Online   Invest in HDFC Mutual Funds Online   Invest in Sundaram Mutual Funds Online   Invest in Birla Sunlife Mutual Funds Online   Invest in UTI Mutual Funds Online    Invest in SBI Mutual Funds Online   Invest in Edelweiss Mutual Funds Online   Invest in IDFC Mutual Funds Online

Tata Life Sciences and Technology Fund Posted: 02 Sep 2011 12:05 AM PDT Objective To provide medium to long term capital gains and/or income distribution along with capital gains tax relief to its unitholders, while at all times emphasising the importance of capital appreciation. Option Available Growth & Dividend Entry Load For Each Investment amount < Rs. 2 Crores - 2.25%. For Each Investment amount >= Rs. 2 crore - Nil. Exit Load For investments greater than or equal to Rs.2 crore: Nil For investments less than Rs.2 crore: 1%, if redeemed with in 6 months from the date of allotment. No exit load will be charged on investment made by the fund of fund scheme Minimum Application Amount Rs.5,000/- and in multiples of Re.1/- thereafter.   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   Invest in DSP BlackRock Mutual Funds Online   Invest in Reliance Mutual Funds Online   Invest in HDFC Mutual Funds Online   Invest in Sundaram Mutual Funds Online   Invest in Birla Sunlife Mutual Funds Online   Invest in UTI Mutual Funds Online    Invest in SBI Mutual Funds Online   Invest in Edelweiss Mutual Funds Online   Invest in IDFC Mutual Funds Online

Dividend Yield Mutual Funds pay off well Posted: 01 Sep 2011 09:59 PM PDT A high-dividend-yield stock assures steady income, underlines company's soundness    It is raining dividends for equity investors. As companies typically announce dividends in July, a chunk of investors starts realigning portfolios based on the dividend yield. Eight mutual fund schemes that build their portfolio to benefit from for high-dividend-yield stocks recognise the importance of this strategy. Investors' sudden interest in the dividend-yield strategy during volatile market is another indication of the relevance of the theme. Stock prices of companies that consistently distribute at least 20% of profits as dividends and that are available at attractive dividend yields will find support early in a falling market,. But, before you go choosing stocks on your own or invest in one such fund, it is better to know how it works. DIVIDEND YIELD For beginners, a dividend is the cash paid out by a company to its equity shareholders. It is expressed as a percentage of face value. For example, when a company with a stock having a face value of . 10 announces a 50% dividend, it means the shareholder is entitled to get . 5 for each stock held. The dividend of a company is not dependent on the price of the stock. To arrive at the dividend yield of a stock, you just have to divide the dividend amount per share in rupees by the stock price. For example, if you get . 5 as dividend for every share held, and if the stock is quoting at . 200, the dividend yield is 2.5%. The higher the dividend yield of a stock, the better it is. A good dividend yield becomes a regular source of income for investors. What's more, the downside of such stocks is also capped. WHY IT IS IMPORTANT A company rewards shareholders in multiple ways — through dividends, bonus shares, stock splits, rights shares issued at attractive prices, share buyback, etc. Bonus and stock splits are looked at as just another book-keeping entry and there is no cash transfer. But dividend is the only way shareholders, especially those who believe in the old adage 'sales are vanity, profit is sanity and cash is reality', get to enjoy a cash flow. There is a little scope for manipulation when it comes to dividend payments to shareholders. A high-dividend payout, thus, reinforces in the minds of the investing public the belief that the business is doing well. It also enhances the image of the management as being shareholder-friendly. High dividends are generally paid by companies that have minimum capital expenditure requirement. These businesses generate high cash flows and generally have low leverage, which makes them perform well in times of uncertainty and in times when the interest rates are high. A strong balance sheet with least borrowings and high cash balance enables a company to look at inorganic growth in bad times, when businesses quote at attractive valuations. As there is minimum borrowing on books, the company can also raise fresh funds easily to facilitate such opportunities. A WORD OF CAUTION A regular income and downside protection is something growth investors will get if they invest in a high-dividend-yield stock. But that does not mean all the stocks offering high dividend yields can be lapped up. Investors have to look at the consistency of the dividends over anything else. If a company has declared a special dividend, the dividend yield goes up. But a dividend may not be sustainable. It is better to look at only the dividends announced in the normal course of a business. Companies announce special dividends if there is an asset sale or a special occasion such as a golden jubilee of the company. Dividend yield numbers are distorted due to business cycles also. A cyclical business typically announces higher dividends at the peak of the cycle, which may push up the dividend yield. But, investors entering the stock at that level may suffer capital erosion, since the business would be entering the down cycle. Similarly one has to account for change in the ownership of a company. When ownership changes, the new owners may not necessarily continue with the business plans of the previous owners. If the new owners decide to take up new investments, dividends may get curtailed to that extent. In such cases, it makes sense to read the fine print of the company's dividend policy. A change in business strategy, if it influences the dividend-payout strategy, gets mentioned in the company's annual report. Then there are stagnant businesses. "Never buy a stock just because it offers good dividend yield. If the business is not expected to grow, you may not get what you seek when you invest in the stock market — capital appreciation," says an analyst with a mutual fund. As complications increase, there will be many investors who prefer to seek professional help. THE MUTUAL FUND ROUTE There are also mutual fund schemes that invest keeping dividend yield as the core investment strategy. Dividend-yield funds are conventionally suited for investors looking for decent capital appreciation in rising markets and cushion from downfall in falling markets. Numbers support the fact that these schemes do well in bear markets. In 2008, when the markets were in the bear phase, the average returns posted by dividend-yield funds was a loss of 49.02%. Over the same time, the average returns posted by diversified equity funds stood at a loss of 55.66%. A point to note is that in 2008, the BSE Sensex had lost 52.45%. But an investor has to be careful while investing in these schemes. Barring Templeton India Equity Income Fund and UTI Dividend Yield Fund, most dividend-yield schemes have decent exposure to mid- and small-sized companies. This makes them riskier than their large-cap counterparts. Of course, such mid-cap-oriented schemes tend to deliver stellar returns when markets rebound. You must have two to three years of investment horizon to see good risk-adjusted returns in a dividend-yield fund. When markets are weak, dividend-yield funds make good investment candidates for equity investors.   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   Invest in DSP BlackRock Mutual Funds Online   Invest in Reliance Mutual Funds Online   Invest in HDFC Mutual Funds Online   Invest in Sundaram Mutual Funds Online   Invest in Birla Sunlife Mutual Funds Online   Invest in UTI Mutual Funds Online    Invest in SBI Mutual Funds Online   Invest in Edelweiss Mutual Funds Online   Invest in IDFC Mutual Funds Online

HDFC Bank Starts Tax Payment Through ATMs Posted: 01 Sep 2011 08:23 PM PDT   Private sector lender HDFC Bank launched a service whereby its 115 lakh debit card holders can pay income tax through the bank's ATMs. With this facility, the bank has given its vast customer base the freedom from waiting in long queues at counters or logging into the internet to pay their taxes. The service was flagged off by Controller General of Accounts CR Sundaramurti at the bank's Deer Park branch here. The service can now be accessed by the bank's 115 lakh debit card holders at 5,998 HDFC Bank ATMs in 1,111 cities across the country   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   Invest in DSP BlackRock Mutual Funds Online   Invest in Reliance Mutual Funds Online   Invest in HDFC Mutual Funds Online   Invest in Sundaram Mutual Funds Online   Invest in Birla Sunlife Mutual Funds Online   Invest in UTI Mutual Funds Online    Invest in SBI Mutual Funds Online   Invest in Edelweiss Mutual Funds Online   Invest in IDFC Mutual Funds Online

The UTI Mutual Fund has changed the fund managers of the following schemes Posted: 01 Sep 2011 08:54 AM PDT The UTI Mutual Fund has changed the fund managers of the following schemes These changes have been affected pursuant to the resignation of Harsha Upadhyaya, effective July 12, 2011.   New Fund Manager    Schemes Anoop Bhaskar, Kaushik Basu, Sachin Trivedi   UTI Energy Kaushik Basu   UTI CCP Advantage, UTI Spread, UTI Nifty Index, UTI Master Index, UTI SUNDER Lalit Nambiar   UTI Gold ETF, UTI India Lifestyle, UTI Wealth Builder - II Arun Khutana   UTI Service Industries Anoop Bhaskar   UTI Opportunities Swati Kulkarni   UTI Wealth Builder, UTI Top 100     -----------------------------------------------------------------   Also, know how to buy mutual funds online:   Invest in DSP BlackRock Mutual Funds Online   Invest in Reliance Mutual Funds Online   Invest in HDFC Mutual Funds Online   Invest in Sundaram Mutual Funds Online   Invest in Birla Sunlife Mutual Funds Online   Invest in UTI Mutual Funds Online    Invest in SBI Mutual Funds Online   Invest in Edelweiss Mutual Funds Online   Invest in IDFC Mutual Funds Online

Mutual Fund Review: Templeton India Income Builder Account Plan A Posted: 01 Sep 2011 08:24 AM PDT Name: Temple India Income Builder Account Plan A-Growth Type: Open-Ended Debt-Income Fund Manager: Mr. Santosh Kamath & Sachin Padwal- Desai Inception Date: 24 June 1997   Templeton India Income Builder Account is open ended income scheme from Franklin Templeton Mutual Fund and seeks to provide regular returns to investors primarily through investment in quality fixed income instrument. Despite initial good run the scheme's performance has taken a beating in recent past. Overall lackluster performance of the debt markets and soaring equity markets had the impact on the returns of the scheme. Its one year and returns three year returns at 1.36% and 2.61% are far below the returns posted by benchmark index and peers. Higher expense ratio and average maturity has dented the returns further. Its asset base at Rs 122.56 crore as on May 2006 has gone down by almost 40% from Rs 206.61 crore a year ago.   The scheme has invested 83.59% of its asset into debt and 16.41% in cash and equivalent as on May 2006. Average allocation in debt and money market instruments has remained at 76.5% and 23.50% respectively in last one year. The fund has allocated 50.86% of the portfolio in commercial bond and 32.72% in gilts. It stepped up its exposure to corporate debt and gilts while pared in money market instruments over the last month. 32.72% of the debt portfolio is invested in Sovereign and 22.72% in AAA rated papers. The scheme's average maturity scheme stands at 1453 days as on May 31, 2006 and is at higher side in the category. The maturity period of the fund has substantially gone up compared to the previous year.   Minimum investment required to enter the scheme is Rs 40,000 and both dividend and growth options are available. No entry is charged for the scheme while exit load of 0.5% is levied for investments amount less than Rs 10 lakh and 0.25% for investment amount greater than Rs 10 lakh if redeemed within six months from the date of allotment. Expense ratio as on May, 06 is 2.10% and is higher than the category average of 1.54%.   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   Invest in DSP BlackRock Mutual Funds Online   Invest in Reliance Mutual Funds Online   Invest in HDFC Mutual Funds Online   Invest in Sundaram Mutual Funds Online   Invest in Birla Sunlife Mutual Funds Online   Invest in UTI Mutual Funds Online    Invest in SBI Mutual Funds Online   Invest in Edelweiss Mutual Funds Online   Invest in IDFC Mutual Funds Online

Health Cover - Check for renewal ceasing age, co-pay norm and sub-limits Posted: 01 Sep 2011 07:53 AM PDT A health insurance policy is a 'must-have' according to financial planners. Yet, picking up the right health insurance is not an easy task, given that there are 23 health insurance companies. Consider the six to eight life insurers offering health benefits and customers can be spoilt for choice. While cost is certainly a deciding factor when choosing a plan, here's a checklist of what else to consider. Renewal ceasing age: Customers buying insurance rarely look at the age of policy renewal. The renewal ceasing age is the one when the insurer, no matter how long you have been with it, will refuse to renew your policy. For instance, health policies from ICICI Lombard cease at age 70. Obviously, the higher the renewal ceasing age, the better. Most companies now offer higher or even lifetime renewal policies to customers. Co-pay options: Typically, as health risks rise with age, companies ask customers to chip in. Besides higher premiums, customers may also have to co-pay for the policy. Companies follow different parameters to decide when they will convert the policy to a co-pay scheme. For instance, Star Health Insurance begins co-pay once the renewal ceasing age sets in. So, customers could extend their period of coverage by changing their existing plan to a co-pay scheme. Bajaj Allianz General Insurance asks to co-pay if the customer goes to a non-network hospital. Exclusions and PEDs: These two factors are the most painful ones. An exclusion is a statement in an insurance policy which describes a condition or type of loss not covered under it. Like, hospital cash plans do not cover dental treatment or surgery, pregnancy-related treatment, childbirth and so on. Check for the coverage in terms of the inclusions and exclusions. These are mentioned in the policy brochure. And, if it does not cover something, you can either opt for other plans or take a rider.  Another important feature, pre-existing disease (PED), may or may not be covered in health policies. PED is an illness or medical condition diagnosed prior to buying the policy. Nowadays, most companies cover PED with a lag of two to four years. Sometimes complications arising from already existing diseases may also not be covered for the first four years of the policy. Senior citizen health plans exclude many ailments and, in many cases, need to be topped up with a rider. Sub-limits: To check for the limit on payments against the health plan. Health insurers reimburse those expenses that have been incurred reasonably. This is one way for insurers to restrict payments, especially when they think there is overcharging by hospitals. Typically, policies have a cap on the hospital room rent, operation theatre, ambulance charges and so on. For instance, ambulance charges on Bajaj Allianz Health Guard are only up to `1,000. All other charges, too, are reduced in proportion to the room rent cap. This is primarily because the charge structures levied by hospitals varies by the type of room chosen by you. But insurers are trying to do away with it. ICICI Lombard Family Protect Premier does not have sub-limits or a cap on room charges. Policy issuer: According to health insurance experts, there isn't much to debate here. A traditional plan from health insurers should be the first medical policy that you buy, as these are exhaustive. Those from a life insurer can be an additional buy. Traditional policies from health insurers or indemnity plans settle claims on a cashless basis or they may reimburse your bills. Life insurers who offer benefit plans or Hospital Cash Benefit Plans pay a fixed amount as soon as the illness is diagnosed. Policies from life insurers offer restrictive coverage. They also have limits on the amount paid per day and the number of days the benefit can be availed. Say, you are supposed to be paid 25,000 for a surgery; you will get it. But if the actual expense rises to `40,000, you will bear the extra `15,000.   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   1) DSP BlackRock Mutual Funds: http://prajnacapital.blogspot.com/2011/05/buying-dsp-blackrock-mutual-funds.html   2) Reliance Mutual Funds: http://prajnacapital.blogspot.com/2011/06/buying-reliance-mutual-funds-online.html   3) Reliance Mutual Funds: http://prajnacapital.blogspot.com/2011/07/buying-hdfc-mutual-funds-online.html   4) Sundaram Mutual Funds: http://prajnacapital.blogspot.com/2011/07/buying-sundaram-mutual-funds-online.html   5) Birla Sunlife Mutual Funds: http://prajnacapital.blogspot.com/2011/06/buying-birla-sunlife-mutual-funds.html   6) UTI Mutual Funds: http://prajnacapital.blogspot.com/2011/06/buying-uti-mutual-funds-online.html    7) SBI Mutual Funds: http://prajnacapital.blogspot.com/2011/06/buying-sbi-mutual-funds-online.html   8) Edelweiss Mutual Funds: http://prajnacapital.blogspot.com/2011/06/buying-edelweiss-mutual-funds-online.html   9) IDFC Mutual Funds: http://prajnacapital.blogspot.com/2011/06/buying-idfc-mutual-funds-online.html

Mutual Fund Review: HDFC Liquid Fund Premium Plan Posted: 01 Sep 2011 07:30 AM PDT Objective To enhance income consistent with a high level of liquidity, through a judicious portfolio mix comprising of money market and debt instruments. Option/Plan Dividend Plan,Growth Plan. The Dividend Plan offers Daily Dividend option (reinvestment facility only); Weekly and Monthly Dividend option (with payout and Reinvestment facility). Minimum Application Amount HLF – Premium Plan (for new investors) : Rs.5,00,00,000 and any amount thereafter for opening an account/ folio (Under each Option). (For existing investors) : Re.1 and any amount thereafter under each Option.   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   Invest in DSP BlackRock Mutual Funds Online   Invest in Reliance Mutual Funds Online   Invest in HDFC Mutual Funds Online   Invest in Sundaram Mutual Funds Online   Invest in Birla Sunlife Mutual Funds Online   Invest in UTI Mutual Funds Online    Invest in SBI Mutual Funds Online   Invest in Edelweiss Mutual Funds Online   Invest in IDFC Mutual Funds Online

You are subscribed to email updates from Prajna Capital - An Investment Guide To stop receiving these emails, you may unsubscribe now.	Email delivery powered by Google
Google Inc., 20 West Kinzie, Chicago IL USA 60610