Prajna Capital

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• Adjust your investments over time to have a good portfolio
• Mutual Fund Review: HDFC Premier Multi-Cap
• Mutual Fund Review: FRANKLIN INDIA BLUECHIP
• Smart ways to save money
• Thematic and Sectoral Funds from ICICI Prudential AMC
• Mutual Fund Review: HDFC Long Term Advantage Fund (ELSS)
• Re-balance Your Portfolio
• In case of Mutual Funds merger, see to it new fund meets your goal
• Mutual Fund Review: SBI Short Horizon Debt Fund Ultra-Short Term Fund
• Birla Sun Life Gilt Plus

Adjust your investments over time to have a good portfolio Posted: 12 Sep 2011 06:58 AM PDT   MUTUAL fund investors often look for a long-term plan that would help them accumulate capital. That is the reason why they consider the amount that should be invested each month to help them achieve their financial goal. Starting a systematic investment plan (SIP) is an easy way to start the process, where the details about the investment being made are known, so the investor is able to implement the plan. Increase investments: The investor must ensure that there is an increase in investments over time. For example, in the first year, an investor might be contributing Rs 10,000 a month, which could go up to Rs 12,000 a month in the third year and then up to Rs 15,000 a month in the fifth year. This will ensure that there is some amount of funds that is regularly going into the mutual fund each month. Income would be higher than what the individual had been earning at the start of the process. At the same time, there is also the need for investors to ensure that the amount accumulated is higher to factor in inflation and what might have been planned earlier, might not be enough to meet future financial needs. Challenges: A lot of people question whether this kind of an investment plan is possible and also whether it is difficult to implement. In terms of possibility, there is not much difficulty at all, because it can be done by being vigilant and ensuring that there is an increase in the investment amount from what the person might have started off with in previous years. In terms of implementation, it is easier once the plan has been formulated because once the amount has been set aside for investment, it is not difficult to actually ensure that this is achieved or that the process for this goal is set into motion. Variety: It is also not necessary that this kind of activity is restricted to a few investments or to a specific type of investment because the actual implementation can be across a wide variety of areas. When it comes to the route of equity mutual funds, this kind of higher investments will ensure that the corpus is being built up faster and the real benefit will be visible in the future when the compounding impact ensures that the benefit is tangible. There is a similar kind of benefit for the amount when it comes to an investment in debt funds because it will help the investor to build a larger portfolio and guide the investments systematically. The same strategy would be effective in a gold fund too, where the final aim is to accumulate a specific amount of gold after a certain number of years. Financial planning: On the financial planning side, the entire process becomes easier because there is a provision for the higher needs that would arise in the future. Good financial planning also ensures that there is a change in the investment pattern depending upon the changing needs of the individual. There could be changes in the circumstances of the person making the investment on various fronts, including the financial part, and when the higher amount is brought into the picture, it will provide the required benefit over a period of time.   -----------------------------------------------------------------   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: HDFC Premier Multi-Cap Posted: 12 Sep 2011 04:43 AM PDT Objective To generate capital appreciation in the long term through equity investments by investing in a diversified portfolio of Mid Cap and Large Cap `blue chip` companies. Option/Plan Growth Plan,Dividend Plan. The Dividend Plan offers Dividend Payout and Reinvestment Facility. Entry Load (as a % of the Applicable NAV) In respect of each purchase / switch-in of units less than Rs. 5 crore in value, an Entry Load of 2.25% is payable. In respect of each purchase / switch-in of Units equal to or greater than Rs. 5 crore in value, no Entry Load is payable. Exit Load (as a % of the Applicable NAV) In respect of each purchase / switch-in of Units less than Rs. 5 Crore in value, an Exit Load of 1% is payable if units are redeemed / switched-out within 1 year from the date of allotment. In respect of each purchase / switch-in of Units equal to or greater than Rs. 5 Crore in value, no Exit Load is payable. Minimum Application Amount For new investors :Rs.5000 and any amount thereafter. For existing investors : Rs. 1000 and any amount 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

Mutual Fund Review: FRANKLIN INDIA BLUECHIP Posted: 12 Sep 2011 04:15 AM PDT   Franklin India Bluechip's conservative investment approach makes it a good pick for those who have a low risk appetite. The scheme's sound performance is reason enough for existing investors to stay invested and get rewarded. • BENCHMARK: Sensex • NET ASSETS (Cr) 3,396 (Mar 2011) • EXPENSE RATIO 1.83% Franklin India Bluechip has emerged as an all weather diversified equity scheme over the past two decades despite bouts of market turbulence. During the market meltdown of 2008, it not only managed to cushion its downfall, but also made a smart recovery in 2009. This consistency is also reflected in its performance last year when despite extreme volatility on the bourses, the scheme comfortably outperformed indices and most of its peers to top the rating charts. But Franklin India Bluechip's conservative investment approach makes it a more suitable investment option for those who would not like to take undue risks that are inherent in equity investments.   -----------------------------------------------------------------   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

Smart ways to save money Posted: 12 Sep 2011 02:40 AM PDT You don't have to play Uncle Scrooge to be penny wise and hoard for the future! The journey is the key. We will discuss here how to exercise a bit of restraint in a number of small-yet-effective ways, so that you can maintain your lifestyle, discover new and better habits, as well as save along the way! Where do you actually spend your money? Typically, if you are an earning member of the family, and assuming that basics have been taken care of, then your outlay will range over expenses to do with food, entertainment, and shopping. EATING OUT 1) When you eat out, you expect high standards in terms of quality, ambience and service. So how do you make the most of it? 2) Try eating out at lunch instead of dinner. There are some great deals and great value to be had at lunch time set menus and buffets. 3) Ask suggestions from friends and relatives. The best bargains are usually discovered by word of mouth. 4) Enjoy a drink at home before you head out to the restaurant. This is a good option if you want to cut your bill by half. 5) Cash in your vouchers. Many places offer deals on meals - scope local magazines for the latest on what's hot, when. 6) Eat out in a group. It will be more cost effective 7) Many restaurants offer discounts to prospective customers via SMS. Read your message carefully before discarding it. 8) Order an appetizer as a main, or split a main course with a friend. Ditch dessert. 9) Skip the fancy places and check out the neighbourhood dhaba. 10) Be sure to ask for a doggy bag for anything you can't finish. Leftover restaurant meals make great lunches for the following day. 11) Fill up on the extras. Snacking on the complimentary peanut masala or bread sticks means more of your meal will go home with you. 12) And to complete the experience, drop by earlier to identify the best table, reserve in advance and don't forget to tip well, so they remember you the next time. Or you could just forget dining out and order in! ENTERTAINMENT a) Check your paper and local magazines for events in the city. You will be surprised at the number of cultural, literary and spiritual happenings that occur on a weekly basis, and a lot of them for free, or a fraction of the price of your movie ticket. b) Indulge in a hobby. Not only will you learn something new, or revive a past craft, but you will also derive satisfaction from it and meet new people at the same time. c) Rediscover your city. Whether it's the local park or library, or a visit to a museum or an architectural site, revisit places you'd taken for granted until now. d) If you can, catch a movie on a weekday. Ticket prices could be cheaper for morning shows, Monday to Thursday. e) Entertain at home. But be smart about it. Suggest a pot-luck and BYOB, throw in a good movie and you have the makings of an excellent evening with friends. SHOPPING 1) Go generic. Don't always opt for branded products. There are savings to be had when you choose the in house store brand, to a national one. 2) Buy in bulk. This saves you money if you shop smart and buy those items that have a longer shelf life. 3) Don't shop when you're hungry. 4) Avoid the ready-to-eat trap. They are expensive and not healthy. 5) Don't shop with the family. If you have young children, all those extra goodies will add to your bill. 6) Try discount and seconds shops, and the factory outlets. 7) When shopping for clothes mix and match. A word on online shopping a) Shop online for bargains. You save on the cost of the product, as well as on petrol, by shopping through the Internet.  However take care not to compromise to security. Here are some tips: b) Shop from a secure computer which has up-to-date anti-virus and security features. c) Use only specific trusted sites d) Try alternative payment methods like a virtual card, which is a one time card with a specified credit limit that you need to use within a specified time frame, usually 24 hours. Or try a prepaid credit card. e) Go ahead and adopt some of the ways suggested above and optimize your resources for maximum fun.

Thematic and Sectoral Funds from ICICI Prudential AMC Posted: 12 Sep 2011 01:29 AM PDT ICICI Prudential Infrastructure Fund ICICI Prudential Infrastructure Fund is an open-ended equity fund focused on capturing the opportunity presented by the long term growth potential of the Indian Infrastructure sector. It invests across infrastructure sectors such as Cement, Power, Telecom, Oil and Gas, Construction, Banking etc. ICICI Prudential Services Industries Fund ICICI Prudential Services Industries Fund seeks to optimise the risk adjusted return by a mix of top-down macro and bottom-up micro research to identify stocks in the services sector. It is a multi-sector fund and therefore has a much lesser concentration risk than a typical sector fund. ICICI Prudential FMCG Fund ICICI Prudential FMCG Fund is an open-ended equity fund, that predominantly invests in companies with a retail and consumption focus. The portfolio is made up of fewer number of scrips, chosen to reflect the prospects of the FMCG sector. Within the broad definition of the sector, scrips are held across sub sectors like food, retail distribution, apparel, and consumables. ICICI Prudential Technology Fund ICICI Prudential Technology Fund is an open-ended equity fund that predominantly invests in knowledge sectors like IT and IT Enabled Services, Media, Telecom etc. However, in the interest of retaining diversification across companies in the sector, the fund retains a 10% cap on a single company, as is the case for diversified equity funds.   -----------------------------------------------------------------   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: HDFC Long Term Advantage Fund (ELSS) Posted: 12 Sep 2011 12:52 AM PDT Objective To generate long term capital appreciation from a portfolio that is invested predominantly in equity and equity related instruments. Option/Plan Growth Plan,Dividend Plan. The Dividend Plan offers Dividend Payout and Reinvestment Facility. Entry Load (as a % of the Applicable NAV) In respect of each purchase / switch-in of units less than Rs. 5 crore in value, an Entry Load of 2.25% is payable. In respect of each purchase / switch-in of Units equal to or greater than Rs. 5 crore in value, no Entry Load is payable. Lock-In-Period 3 years from the date of allotment of the respective Units. Minimum Application Amount. For new & existing investors :Rs.500 and in multiples 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

Re-balance Your Portfolio Posted: 11 Sep 2011 08:07 PM PDT      Stocks have touched a one year low. Gold is hitting a new high every other day. And bond prices are inching up on hopes that the central bank will take a breather before hiking rates any further. Such price movements in the various asset classes concern the average investor. That is because investors (deliberately or by following natural instincts) follow the principle of asset allocation — allocating their investment corpus to different assets for diversification in an attempt to minimise risk. The asset allocation depends on the investor's risk profile, investment objective and the time horizon for investments. Most investors, therefore, keep track of the performance of these asset classes because it has a significant impact on their lives (or portfolio). And the current scenario has them wondering if they should have a re-look at their portfolios and reallocate or re-balance them, so that they are in line with the original asset allocation plan. DOES REBALANCING WORK? Asset re-balancing is the act of reviewing investment allocation and making changes if necessary to ensure that the exposure to each asset class is as per the asset allocation plan you had drawn up when you started. But does that help? To understand this, we undertook a hypothetical exercise to look at the performance of investments over four years starting April 2007. The four-and-half-year period starting from April 1, 2007, has witnessed both ups and downs, with the Sensex first touching a high of 21,000 and then falling to as low as 8,500. We used Nifty BeES, Gold BeES, and HDFC High Interest Fund (growth option) as representatives of equity, gold and debt asset classes, respectively. We then constructed portfolios for three people who would represent three categories of investors — aggressive, moderate and conservative. We also assumed that they had . 1 lakh each to invest on April 1, 2007, which they invested as per their asset allocation plan. So, the aggressive investor would have allocated 80% of the money to equities and 10% each to debt and gold. The moderate investor would have had 20% exposure to gold, and 40% each to debt and equity. The extremely conservative investor would have put 80% of his money in debt and allocated 10% each to gold and equities. We then looked how the portfolios would have performed if they had not been rebalanced and also if they had been rebalanced at the start of every financial year after the initial investments. Now, look at the results. The value of the aggressive portfolio without re-balancing would have been . 1.55 lakh. But had it been re-balanced every year, the value would have touched . 1.61 lakh. The moderate portfolio without re-balancing would have grown to . 1.67 lakh; with re-balancing it would have performed better at stood at . 1.74 lakh. Similarly, the conservative portfolio would have become . 1.52 lakh without re-balancing, and . 1.54 lakh after re-balancing. The example clearly illustrates that a portfolio would have performed better with regular re-balancing. HOW RE-BALANCING WORKS? Based on your risk tolerance and needs, you can first make a financial plan for yourself. Generally, the periodicity of review is decided at the time of preparation of the plan. It could vary from three months to one year, depending on the investor's need and risk profile. While aggressive investors with higher exposure to volatile assets like equities may want re-balancing every six months, conservative clients with higher exposure to debt would be happy doing it once a year. Depending on client needs, portfolios are generally re-balanced once in six months or at least once a year. There are various ways of doing it. One way is to put all the new money you have in the asset class whose percentage in your overall portfolio has dipped. So, in the current case, since equities have moved down, fresh money could go into equities. However if you do not have fresh money to put in, then the second way of doing it is to sell some of the assets that have appreciated (gold in this case) in the immediate past and invest the profits in equities until the original asset allocation percentages are achieved. Put simply, you end up selling an asset that has moved much and buy a relatively unmoved asset. This typically brings money from more volatile and risky assets to less volatile and less risky assets. Over a long period of time, re-balancing, thus, ensures that investors get to book profits and take money home. A timely re-balancing exercise not only allows your portfolio to remain on track but also allows you to sense the warning signals ahead of the crowd. Last but not the least, re-balancing helps you overcome greed and fear — the twin formidable enemies of investors. WHAT IF YOU DON'T RE-BALANCE? Well, the numbers give you the answer to that query. For example, had you been re-balancing your portfolio on January 1 of each year, you could have taken home most of your profits in equity investments, before the Sensex plunged from the high of 21,000 to levels of 8,500 in the calendar year 2008. However, there are a host of factors that need to be taken into consideration before re-balancing a portfolio. You have to take into account things like the cost of transaction and tax considerations. If a particular transaction results in shortterm or long-term capital gains, the financial impact has to be taken into consideration. Currently, as per the Income-Tax act, there is no tax on long-term capital gains, while short-term capital gains are taxed at 15% in case of equity investments and equity mutual funds. That makes many financial planners and wealth managers to go for re-balancing once in a year. But never re-balance too often just because there are sharp movements in asset prices. This may burden you with higher taxes and higher transaction costs. To make it a more 'emotionally detached' exercise, many planners prefer to re-balance based on time than based on asset price movements. Re-balancing based on asset price movements need expert hand-holding. If your financial plan calls for a portfolio re-balancing, just go for it. If not, and if you are worried about steep movements in asset prices, consult your advisor, factor in the costs involved, assess the risk and take an informed decision.

In case of Mutual Funds merger, see to it new fund meets your goal Posted: 11 Sep 2011 11:10 AM PDT   OFTEN, there are occasions when investors witness a merger of funds and, while there are various implications of such a move, it is important that the investor understands the overall situation and what it means for his finances. This will ensure that there is a check as to whether there are reasons to continue with the new investment after the merger has taken place or whether there is a need to look elsewhere for other opportunities that suits the investor's requirements. Looking at the issue in this manner is important because of the fact that investors have certain goals and these have should match the features of the investment and if there are any changes, they should be in sync with the investor's overall strategy. Similar merger: There could be a situation where there are similar funds with a fund house. The fund house could have several equity diversified funds that have almost similar objectives and after some time, it could realise that it does not make sense to have three funds that have nearly the same investment objectives. If this is the case, the fund house might decide to merge a few funds to man age them better. When this happens, investors can deal with the situation easily. l This might not give rise t to a situation where the investor would have to exit t the investment, however, if the new fund is not performing well and if there is an inconsistency, then there would be a case where the investor might want to take a look at some other option. Different funds: There also could be a situation where dissimilar kinds of funds are merged. For example, there can be a merger of a sector fund like a fast-moving consumer goods (FMCG) fund or a pharma fund or an information technology fund into a diversified equity fund. In this case, there is a large change in the entire situation because the nature of the investment changes with the merger. Their risk decreases due to the fact that this merged fund will have a lower risk compared with the sector fund, but if this is not what the investor actually wants, then there is a need for the investment to be changed. In such a situation, the investor has the option to withdraw the amount with out paying any exit load by the time period that has been specified. Once this has been done, then they can go and invest in the sector fund that they actually want to from some other fund house. The only thing is that there has to be a similar fund available in the market, otherwise, even if they want to, they will not be able to get the kind of exposure that they actually want.   -----------------------------------------------------------------   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: SBI Short Horizon Debt Fund Ultra-Short Term Fund Posted: 11 Sep 2011 10:53 AM PDT CONTINUED volatility in equity markets and rising interest rates has resulted in the emergence of ultra-short term debt funds as a favourable investment choice. Ultra-short-term debt funds invest in short-term corporate debt papers, certificates of deposit (CDs), money market instruments and government securities. They are suitable for investors with investment horizons ranging from three months to one year. Compared to income and short-term income funds, these funds maintain portfolios that are more liquid and less interest rate sensitive. Ultra-short funds delivered an annualised return of 8.7 per cent over the last six months ended August 12. SBI Short Horizon Debt Fund - Ultra-short-term Fund is among the top performing funds in the ultra-shortterm debt funds category, according to the Crisil Mutual Fund Ranking for the quarter ended June. The fund has consistently featured in the top 30 percentile in its category for the last five quarters. The average assets under fund management (AUM) for the quarter ended June were of `7,765 crore. Rajeev Radhakrishnan, head (fixed income) at SBI Mutual Fund, has been managing the fund since July 2008. INVESTMENT OBJECTIVE The fund's investment objective is to generate regular income with high degree of liquidity. The fund will invest in a portfolio comprising predominantly of money market instruments with maturity/residual maturity up to one year and debt instruments, which are rated not below investment grade by a credit rating agency. The fund has outperformed the category and its benchmark (Crisil LiquiFEX) over different time horizons. PORTFOLIO ANALYSIS Apart from performance, an investor should look at a fund's portfolio attributes. Parameters such as the fund's asset quality, concentration and liquidity should also be analysed. Over the last one year, 87 per cent of the portfolio has been invested in the highest rated papers (AAA/P1+ and equivalent), while close to 13 per cent was invested in fixed deposits and cash equivalents. Thus, the fund has maintained high asset quality in its portfolio. Over the last one year, the fund maintained an exposure of 66 per cent towards CDs, higher than its peers which had an average exposure of 59 per cent. The exposure to CDs significantly contributed to the outperformance by the fund. The one-year CD rates increased from 7.4 per cent to 9.8 per cent over the past year. Low average exposure (0.17 per cent) over the year to debentures and bonds helped the fund limit the downside in a rising interest rate scenario. In comparison, the peer group had an average exposure of 7.5 per cent to debentures and bonds over the past year. Higher exposures to securities with a longer tenure increase the portfolio's interest rate risk in a rising yields environment. Concentration is a risk to fund portfolios, wherein funds may be adversely affected by concentrated portfolios in the event of a downturn in a particular company. Crisil assesses concentration at the company level in terms of issuer limits for debt funds. SBI Short Horizon Debt Fund - Ultra Short Term Fund maintained a diversified portfolio at the issuer level. The fund's average maturity varied from 22 days to 84 days over the last one-year. Compared to this, its peers' maturity ranged from 50 days to 101 days. Low average maturity reduces the fund's interest rate risk. The fund maintained lower interest rate risk compared to peers.   -----------------------------------------------------------------   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

Birla Sun Life Gilt Plus Posted: 11 Sep 2011 10:36 AM PDT Birla Sun Life Gilt Plus •  Liquid Plan •  PF Plan Its Objective is to generate income and capital appreciation through investments exclusively in Government securities. •  Regular Plan Birla Gilt Plus invests exclusively in Central Government Securities with an objective of generating income and capital appreciation for the 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

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