Thursday, September 15, 2011

Prajna Capital

Prajna Capital

Read The Fine Print before buying a Health Cover

Posted: 15 Sep 2011 07:51 AM PDT

Sub-limits on ailments can cap your claim despite a large sum insured

Buying a medical policy at that age will be expensive and difficult, given the number of conditions attached. The earlier Desai shifts his insurer, the better. Insurance advisors say it is imperative to compare the features on offer before buying a policy. A careful perusal of wordings will highlight the policy clauses unfavourable for you. Here are some points worth consideration: Exclusions: This is, perhaps, the most important part of your policy document. It mentions a host of exclusions or ailments which will not be covered under the cashless or reimbursement plans. Though the policies vary, certain norms remain unchanged across the industry.

Thus, illnesses arising within 30 days of buying a policy are not covered and neither are pre-existing diseases. While certain age-related diseases like rheumatoid are covered, they have a long waiting period.

Loading: If you make a claim on your policy, you are liable to pay an extra amount or, loading, on your next premium. Companies may differ in the way they calculate this extra amount. And, this is what makes the difference, say health insurers.

While some companies link it to their claim ratio slabs, others link it to the percentage of sum insured claimed. For instance, for customers making a claim of 30,000 in two consecutive years, Bajaj Allianz General Insurance raises premium by as much as 30 per cent.

The feature will not be favourable for policy holders having a smaller sum insured. For instance, for a sum insured of `1lakh, the limit of using just 30,000 in a year may not really cover one's medical expenses.

Sub-limits on aliments: Over the past year-and-a-half, some insurers have introduced sub-limits on specific illnesses. So, the amount you can claim on these ailments is capped, irrespective of the amount of sum insured.

Most players have decided a cut-off amount one can claim for minor surgeries such as cataract, where the operation date can be decided in advance. However, United India Insurance has even put a cap on major ones like cardiac, brain, cancer and joint replacement surgeries. It pays either the actual expenses or just 70 per cent of the sum insured, whichever is less. And, if the claimant is more than 60 years old, it deducts 20 per cent of every claim as co-pay.

Sadly, these products have been filed with (and approved by) the regulators. So, it is up to the customer to view every purchase with a magnifying glass to get the fine print.

Co-pay: Most companies levy a co-pay condition for pre-existing diseases and senior citizens. Some, like Bajaj Allianz General Insurance, levy a co-pay of 10 per cent in case their Health Guard policyholders approach hospitals outside of its network.

Typically, co-pay customers are made to pay a percentage of the total payable claim. So, 10 per cent co-pay on a total claim of `38,000 means the customer will have to bear 10 per cent of the amount, or, 3,800.

Renewal age: Insurance companies also follow the cut off rule for policy renewals. Most private players limit the renewal age to 60 or 75 years. However, lifetime renewals are offered by private players like Apollo Munich Health Insurance and Max Bupa Health Insurance, besides all PSU health insurers. Financial planners advise opting for policies which offer lifetime renewals as the products for senior citizens offer very low sum assured, which, combined with the sub-limit, gets restricted further. Also, these products have a higher waiting period for pre-existing diseases.
 

Mutual Funds type by Market Capitalization mandate

Posted: 15 Sep 2011 07:17 AM PDT

 

If you plan to invest your money in mutual funds or have already plunged into the market with little research, you must read this. To begin with, you must understand the concept of mutual funds. Mutual funds collect money from investors and invest these funds in different avenues in order to earn money. Since the volume of transaction is high, mutual funds enjoy the benefit of lower transaction costs. Further, investors automatically get a diversified portfolio with mutual fund investments. This is because fund houses invest money in different sectors, different companies and different types of investments. So, if you are a novice to the stock markets, mutual funds are a better option for you.

How well a mutual fund does largely depends upon the performance of companies in which its funds have been invested. So, before choosing a mutual fund you have to understand the companies that these funds are investing in. Mutual funds are basically categorized into three: Small Cap, Mid Cap and Large Cap.  Most fund houses offer products in all three categories.

Cap stands for capitalization. It is the market value of the total shares of a company.  So, you can get the market cap of a company by multiplying the total number of shares by its current market price. As the name suggests, small cap funds invest in companies that have small market capitalization. Small, mid and large are relative terms and each fund house decides the limit for themselves. Some fund houses relate their cap with BSE cap index. For example, a small cap fund invests a majority of its funds( 65 - 100 percent) in companies whose market cap are lower than or equal to the market capitalization of the stock in BSE Cap Small Cap Index with the largest capitalization.

What you should know though is which funds are good for you? The answer to that question depends upon your appetite for risk and the current market situation. Small cap and mid cap funds are generally considered to be riskier than large cap funds. This is because the former invest in start ups and smaller, less established companies while the latter mostly invest in blue chip, reputed companies.

Small and mid cap companies have a larger potential to grow hence they promise greater returns on your investment. Start ups generally fall in this category and offer the opportunity of greater capital appreciation. Here there is potential for high returns but they are unpredictable too.  Large cap companies have generally established their growth and have stable, predictable pattern of returns.

Small and mid cap companies have the ability to instantly react to market situations. Large companies with tiered management may not have that ability built into their system. Hence, small and mid cap funds can react faster to market opportunities. However, they are more volatile too compared to large cap funds.

The advantage of large cap funds is that they invest in reputed companies with large profits. Hence the probability of regular returns is high! However, since these companies are giants in their sector, they are also priced higher. Further, they have a greater ability to stand thick in bad economic times.

Sundaram BNP Paribas Select Midcap,  Kotak Indian Mid Cap Fund and HSBC Midcap Equity Fund are some of the popular mid cap funds in India. HDFC Top 200, Kotak 30, Reliance Growth Fund and UTI Large Cap Fund are some of the large cap funds.  BNP Sundaram Paribas, HSBC Small Cap Fund etc are some of the notable small cap funds in India.

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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

 

 

 

 

DSPBR Savings Manager Renamed to DSPBR MIP

Posted: 15 Sep 2011 05:59 AM PDT

DSP BlackRock Mutual Fund has announced a change in the name of DSPBR Savings Manager, with effect from August 22. 2011.


The new name of DSP BlackRock Savings Manager will be DSP BlackRock MIP Fund.
 

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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

 

Baroda Pioneer Mutual Fund – Its Schemes

Posted: 15 Sep 2011 05:25 AM PDT

About the Company:

 

This mutual fund company was formed as a partnership between Bank of Baroda and Pioneer Investments. Pioneer investments are the third oldest mutual fund in the world and it has its presence in 25 countries.

 

Products:

 

Equity Schemes:

 

The mutual fund invests majority of the funds in the equities and very less portion of the funds in debt and money market instruments.

The schemes introduced by this mutual fund are:

·                           Baroda Pioneer PSU Equity Fund

·                           Baroda Pioneer ELSS 96

·                           Baroda Pioneer Growth Fund

·                           Baroda Pioneer Infrastructure Fund

·                           Baroda Pioneer Balanced Fund

 

Debt Schemes:

 

The mutual fund invests majority of the funds in debt and debt related instruments. The schemes introduced in this category are:

·                           Baroda Pioneer Income Fund

·                           Baroda Pioneer Treasury Advantage Fund

·                           Baroda Pioneer  Short Term Bond Fund

·                           Baroda Pioneer Public Sector Undertaking Bond Fund

·                           Baroda Pioneer Gilt Fund

·                           Baroda Pioneer Monthly Income Plan

 

How to Contact?

 

Baroda Pioneer Mutual Fund
501, Titanium, 5th Floor,
Western Express Highway
Goregaon (E)
Mumbai - 400 063
Phone: 022-3074 1000 / 022-4219 7999
 

All about Travel Insurance

Posted: 15 Sep 2011 01:27 AM PDT

With global travel becoming easier and airlines slashing prices, anyone who ever wanted to travel can easily do that today. However, when you travel abroad, what can give you protection against any accident or illness? Something that can help in such a situation is Travel Insurance.

What is Travel Insurance?

Travel insurance is insurance that is intended to cover medical expenses and financial (such as money invested in non-refundable pre-payments) and other losses incurred while travelling, either within one's own country, or internationally. For example, Travel Insurance covers:

  • Trip Cancellation/Interruption
  • Medical emergency
  • Events like delay or missed departure
  • Delayed arrival or Loss of baggage
  • Passport loss and legal expenses  and much more.

Who is eligible to avail this insurance?

Whether you are a first time flyer or a frequent flyer and are going on single trip or multiple, travel insurance can be taken by anyone. The type of traveller does not have any impact on anyone opting for travel insurance.

What is covered by Travel Insurance?

The most common risks that are covered by travel insurance are:

  • Medical expenses
  • Emergency evacuation/repatriation
  • Overseas funeral expenses
  • Accidental death, injury or disablement benefit
  • Cancellation
  • Curtailment
  • Delayed departure
  • Loss, theft or damage to personal possessions and money (including travel documents)
  • Delayed baggage (and emergency replacement of essential items)
  • Legal assistance
  • Personal liability and rental car damage excess
  • What is excluded in the coverage?
  • Medical expenses arising out of:
  • Pre-existing conditions except in case of life-threatening situations
  • Addiction to alcohol, drugs
  • Mental disorder, anxiety, depression
  • Venereal diseases
  • Sexually transmitted diseases, AIDS, HIV
  • Radiation, nuclear weapons induced
  • Sporting activities
  • Loss of passport in public place
  • arising out of loss of valuables, money, securities, and tickets

What is the premium for Travel Insurance?

The premium for travel insurance depends on which part of the world you are travelling to and the duration of your stay. For instance, the premium for travelling to the US and Canada is different from travelling to the rest of the world.

How do you make claims for the reimbursement of expenses covered by the insurance?

With the increasing competition between insurance companies, the procedure for making claims has become very easy. Generally, you need to call up a toll free number of the insurance service provider and register your claim. You will be advised on the documents that would be needed to be submitted to process your claim. A Third Party Administrator (TPA) would then validate your documents and will process your claim.

Tips on buying Travel Insurance

Do not buy travel insurance only till the last day of your trip. An emergency might occur at the last moment and it is better to be prepared for such eventualities.

When comparing travel insurance products, ensure that you not only compare the prices, but also the benefits, exclusions etc.

Check availability of different covers - terrorism cover, hijack distress allowance - apart from the normal coverage provided by travel insurance.

Remember, to always read the policy document carefully and get your doubts clarified.

With the boom in the travel industry and airline offering cheaper airfares, foreign and domestic travel is gaining momentum. At such a time, due to its benefits, travel insurance is also gaining popularity. More and more people are opting for travel insurance.

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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

 

 

 

 

 

Goal Driven Investing in mutual funds

Posted: 15 Sep 2011 12:29 AM PDT

 

 

It's not easy for fund companies. Having run out of new equity themes or sectors, and with SEBI frowning on duplication of schemes, there is a dearth of ideas for new fund offers (NFOs). So, in this super competitive industry, one should not be too surprised at seeing a slew of goal-oriented schemes from fund houses. That's the new buzz in the NFO circles.

 

By introducing goal oriented schemes, fund houses appear to be replicating the strategy followed by insurance companies. The main advantage of such products is that it strikes an emotional chord with investors and helps them relate to the product in a much easier fashion rather than a fund which gets categorized according to market cap, such as a mid- or multi-cap fund.

To be fair, goal driven investing helps investors think through their priorities, identify goals and keeps them focused on what is important, rather than attempting to time the market. But end of the day, you can achieve the same by allocating your money in various investments and fund schemes of your choice. Annual rebalancing of your assets can also be done to ensure that the closer you get to your goal, the more you lower the equity exposure.

 

An investment worth mentioning here is the New Pension Scheme (NPS). Over here, as the investor ages, exposure to equity tapers by a certain percentage every year and gets diverted to debt. Unfortunately, there is a tax liability to consider - the investment in NPS is only eligible for a tax deduction at the time of contribution. However, fund management charges in NPS are just 0.009 per cent, much lower than the charges of a mutual fund. On the flip side, mutual funds provide liquidity that the NPS does not.

 

So do remember, whichever way you plan to invest, the principles of investing stay constant. If you want to invest in equity, it must be for the long haul. As you approach your goal, hike up the debt exposure. Finally, look at the tax aspect as well as the returns when deciding where to invest.

 

Actively Management Funds


Peerless Mutual Fund Child Plan
Launched in March 2011
The allocation varies between equity (5-35%), debt (60-80%) and Gold ETFs (5-35%).


Fidelity India Children's Plan
Launched in January 2011
The investment style of the plans range from aggressive to conservative. It is only the marriage plan that has the gold option for an asset class. The reason is obvious - it will provide a hedge against rising gold prices.


Tata Retirement Fund
Offer document filed with SEBI
The assets under these plans will be allocated based on the age of the investor. This fund offers an auto switch facility based on a pre-defined trigger, which is the age of the investor. It is available for the Progressive and Moderate plan. Under this facility, when a person reaches the age of 40, his investment will automatically move from a Progressive to Moderate plan. On reaching 60, it will move to the Conservative one.


The auto switch facility ensures that the corpus accumulated is invested in a more conservative manner so that capital erosion does not take place. But do note, a switch from one plan to another will be treated as a redemption and fresh purchase and will be liable for capital gains tax as well as Security Transaction Tax (STT).


For investors who do not wish to opt for the auto switch facility, they can stay or exit whenever they want to.

 

Fund of Funds (FoF)
There are two FoFs which follow the same goal-oriented style of investing. The fundamental difference being ICICI Prudential Lakshya restricts the investment universe only to the schemes of ICICI Prudential Mutual Fund. In the case of ING Optimix Financial Planning Fund, the universe includes schemes from 14 asset management companies (AMCs) and will not invest in any of the schemes from ING Mutual Fund.


ICICI Prudential Lakshya
Offer document filed with SEBI
This FoF has 10 plans of varying objectives such as child's education and retirement. Each plan has a specific target date according to which the asset allocation is based. As the target date approaches, exposure to equity reduces while that to debt increases. At the time of maturity, the investor has the option to either switch units to ICICI Prudential Liquid Plan, switch to a subsequent plan or redeem the units.


ING Optimix Financial Planning Fund
Launched in May 2011
The fund offers four plans- Cautious, Conservative, Prudent and Aggressive with investments made in four asset classes. Being a FoF, the investment will take place in a fund which invests in those assets. Investors can opt for any plan depending on their financial goals and can also invest in more than one plan simultaneously.

 

The online solution
Franklin Templeton Mutual Fund recently launched the Family Solutions Planner. It is a software tool which helps investors formulate an investment plan.


The individual needs to fill up a questionnaire online which will ask for certain basic details and specific goals. Three funds, from the fund house, are then recommended in each portfolio based on the portfolio style. There are five such portfolios - ultra conservative, conservative, moderate, aggressive, highly aggressive.


Similarly, Kotak Mutual Fund has also introduced a financial tool called Personal Goal Planner. On taking various inputs and preferences from the investor, it will provide information on the amount of money that an investor needs to invest per month in order to achieve his goal.

 

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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

 

 

 

 

 

Gold Funds

Posted: 14 Sep 2011 10:35 PM PDT

 

Gold Exchange Traded Funds (ETFs) are a fairly new phenomenon in India with the first one being launched four years ago. In February 2007, Gold Benchmark ETF raised Rs 96.26 crore. Today, its average assets under management (AUM) stands at Rs 1703.49 crore as on March 31, 2011.

 

It is the arrival of commodity exchanges, Gold ETFs and gold stock funds that has made it trivially easy to invest in gold without having to worry about purity, storage and security. Just as important is the fact that these have made gold easily comparable to other investments. When an investor looks at fund performance data on ValueResearchOnline.com, he can't help comparing the returns of gold-based investments with equity-based ones. No longer is investing in gold an out-of-sight and out-of-mind phenomena. It is convenient and accessible and has a simplicity in decision making (not hundreds of funds to choose from).

 

Since February 2007, Gold ETFs in India raised around Rs 941 crore in their respective new fund offers (NFOs). As on May 31, 2011, their current assets total at more than Rs 5,463 crore! Interestingly, most of the money has entered over the past one year. In FY 2010-11, net inflows into Gold ETFs have been around Rs 2,250 crore. The number of retail folios in Gold ETFs have doubled over the last financial year.

 

Unfortunately, investments in any ETF require the investor to own a demat account since the units are listed on the stock exchange. That apart, mutual fund companies were not able to leverage their key strength, their agent and distribution network. To circumvent this issue, fund houses came out with open-end schemes that would invest in their own Gold ETFs, thus doing away the need for a demat account. While three such schemes already exist, HDFC Mutual Fund, SBI Mutual Fund, Axis Mutual Fund and Religare Mutual Funds have filed their respective scheme information documents with the Securities and Exchange Board of India (SEBI) for similar schemes.
 

Besides this, investors' appetite for gold funds is also visible in the new hybrids funds which allocate nearly a third of their assets to gold. Take, for instance, Canara Robeco InDiGo which invested 31 per cent, and Axis Triple Advantage which invested 25.32 per cent, of its total assets in Gold ETFs (as on April 30, 2011). Seven such funds (excluding Sundaram Equity Plus) together raised nearly Rs 831 crore for the gold flavour and their current assets stand at Rs 1,679 crore.

 

Not surprisingly, gold funds also lead the pack of international funds. Two gold funds -- DSP BlackRock World Gold Fund and AIG World Gold Fund which invest in gold mining companies across the globe and Gold ETFs globally, account for nearly 42 per cent of the total money invested abroad through mutual funds.
 

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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

 

 

JP Morgan Mutual Fund - Its Schemes

Posted: 14 Sep 2011 09:37 PM PDT

JP Morgan Asset Management Company is one of the leading Asset Management Financial Company in the world. They manage assets more than $ 1000 billion and have investment centres across Asia, America, Europe and Japan.

JP Morgan has launched equity schemes and other fixed income products. The details of the schemes are.

 

Equity schemes:

·                           JP Morgan India Equity Fund

·                           JP Morgan India Tax Advantage Fund

·                           JP Morgan India Smaller Companies Fund

International Schemes:

·                           JP Morgan Greater China Equity Off Shore Fund

·                           JP Morgan Emerging Europe, Middle East and Africa Equity Offshore Fund

Fixed Income Schemes:

·                           JP Morgan India Capital Protection Oriented Fund

·                           JP Morgan India Active Bond Fund

·                           JP Morgan India Treasury Fund

·                           JP Morgan India Liquid Fund

·                           JP Morgan India Fixed Maturity Plan 400D Series

 

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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: Sundaram S.M.I.L.E Fund

Posted: 14 Sep 2011 07:59 PM PDT

Type: Equity Diversified
Fund Manager: Anoop Bhasker, S Krishnakumar
Launch Date: 21-Jan-2005
 
Sundaram SMILE Fund has been in operations for more than a year and a half now and has grown at a CAGR of 38.16%, which is decent considering the recent upheavals in the market. The primary investment objective of the scheme is to achieve capital appreciation by investing mainly in small and midcap stocks in a diversified manner. The fund house further defines 'small and midcap stocks' as any stock whose market capitalisation is equal or lower than the market capitalisation of the largest market capitalisation stock in CNX Midcap 200 index.

The investment mandate of the scheme states that the asset allocation of the scheme will have 65-100% allocated to small and midcap stocks, other equities 0-35%, Derivatives and IPOs 0-25% and Call/Cash and money market instruments will have 0-15% allocation. The scheme has allocated 92.42% to equities according to the latest disclosed portfolio, and Cash & Equivalent investment form 7.58% of the net assets.
 
Sundaram Smile fund has an asset base of Rs 217.09 crores as on Aug 06, which has seen some erosion in the recent months.

The scheme has invested in as many as 75 scrips and top 5 holdings account for 18.77% of the portfolio and top 10 scrips constitute 31.40% of the portfolio.

Diversified sector is the most favoured sector with an overall allocation of 14.29%, followed by Auto & Auto ancilliaries with 9.34% allocation and Cement sector with 7.65% allocation.
 
 
 
Reliance Industries Ltd has the highest weightage in this month's portfolio and other top holdings in the portfolio are JP Associates, Chettinad Cement Corporation, ACC and L&T Ltd. Fourteen new stocks were added in this months portfolio and some of the new entrants are Banking stocks like Bank of India, SBI and PNB and Oil& Gas stocks like Indian Oil, Indraprastha Gas, BPCL and HPCL, recently listed Tech Mahindra also find a place in the portfolio.

The scheme exited from stocks like Balrampur Chini, Tata Tea, Thirumalai Chemicals ltd and Mcnally Bharat Engineering Corporation among others.
 
Sundaram Smile fund has failed to outperform its benchmark index and its peers in the different time periods. Although most other equity schemes from the same fund house has been doing pretty well, this scheme has failed to live upto expectations. The small cap dominated portfolio has not enhanced the scheme's returns and presence of large number of stocks in the portfolio has lead to over diversification. All is not lost though, as it is still early days for the scheme and looking at the record of some of the other midcap and small cap oriented schemes from the same fund house, and it will be worthwhile to wait and watch for a little while longer. As of now, the scheme faces an uphill task and certainly has a lot of catching up to do to climb the rankings.
 

Mutual Funds: Advantage of Systematic investment plan (SIPs)

Posted: 14 Sep 2011 10:44 AM PDT

Benjamin Graham, the father of value investing, has termed dollar cost averaging as one of the top 3 tenets of investments for a defensive investor. Dollar cost averaging is nothing but the systematic investment plan.

Systematic investment plan is a scheme which allows investors to invest in a mutual fund a certain amount of money over a period. For example, investors can invest Rs 5000 in a mutual fund every month.

Advantage of SIP

Systematic investment plan has many advantages over one time investment. Some of the advantages are mentioned below.

Price averaging: SIP allows you to average the price over long period so that the impact of changing prices of mutual fund is minimized. You can buy more units when the prices drop and buy less when the prices move up. The advantage is that you do not have to worry about price movement.

Discipline: SIP instills in you a sense of discipline towards investment and savings.

Low base requirement: You can start SIP with a much lower investment. Many banks and financial institutions allow investment via SIP as low as Rs 500 a month.

This may not be true when the prices keep going down continuously. We know, however, that prices of mutual fund or stock do not go up or down straight. The short term ups and downs usually happen one after the other. SIP moderates the impact of these short term ups and downs of the mutual fund prices.

How to proceed with SIP:

You can ask your bank to allow a mutual fund of your choice debit a certain amount towards investment every month. You have to specify the amount, date of the month when money will be invested, and duration of SIP. For example, if you choose to invest Rs 3000, 10th of every month, for 3 years, the mutual fund will keep debiting Rs. 3000 from your account towards investment in the fund for 36 months.

You can also follow this on your own by investing Rs. 3000 every month. However you need to be very disciplined with your budget to achieve this.

Variants of SIP:  Daily, Monthly

Daily SIP scheme requires investors to invest daily while monthly SIP allows investors to invest monthly. At first glance, daily SIP seems to take care of volatility better than monthly SIP, but there is no empirical evidence that has shown significant difference in returns.

Key aspects:

1. Daily SIP is not allowed by many mutual funds and hence your options are limited. Monthly SIP options are available in almost all mutual funds.

2. The most important aspect is to do with our habits. We are used to planning for a month. It is more convenient for us to see income, investment, and expenses in a monthly timeframe and hence we can plan better towards a monthly SIP.

3. The final aspect is calculation of taxes. Daily SIP makes tax calculation more complex as you have to evaluate the capital gain by comparing the selling price with everyday price for the last 1 year.

 

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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: DWS Premier Bond Fund - Regular Plan

Posted: 14 Sep 2011 10:29 AM PDT

Name: DWS Premier Bond Fund – Regular Plan - G
Type: Open Ended Debt Income
Fund Manager: Mr. Suresh C. Soni
Inception Date: 21-Jan-2003

The recent hardening of interest rates and indication of rates getting hiked further in the future has made the category of income schemes unappealing to the general investing public. Among the major category underperformers has been DWS Premier Bond Fund – Regular Plan which is an open-ended debt scheme. The investment objective of the scheme is to provide regular income by investing in debt securities including debt and money market instruments.

As per its latest disclosed portfolio the scheme has apportioned 81.45% of its assets in debt instruments and 18.55% in cash and equivalent. In the last one year the fund has actively allocated funds between cash and debt instruments with around 75% of the assets being invested in debt instruments on an average in the last one year.
 
DWS Premier Bond Fund is in its fourth year of operations and has grown at a CAGR of 4.78%. The scheme has not performed well and has been languishing at the bottom of the tables. The scheme has failed to outperform its benchmark in the selected time periods. Over a period of one year it has posted compounded annualized return of 1.708% while its benchmark and peers were ahead with returns of 3.0976% and 4.3718% returns respectively. Expense Ratio of the scheme is 2.01% as on July 31, 2006 and is higher than the category average.
 
 
 
The scheme manages a tiny corpus of just around Rs 3.21 crores, but just a couple of years ago the scheme had over 600 crores worth of assets under management, which is indicative of the lack of interest in income schemes.

The scheme has invested 40.13% of its assets in NCD, 22.5% in Bonds and 3.01% in Pass through Certificates. Majority of its portfolio comprises of good quality rated papers such as AAA and AA+. It has allocated 53.03% to AAA rated papers, 12.60% in AA+ rated papers and almost 18.81% in Sovereign instruments. The average maturity of the portfolio as on July 2006 is 6.24 years, which is definitely higher than the category averages, thereby forcing the scheme to price risks. Average maturity has gone up over the last quarter when it was 6 years in April 06.

DWS Premier Bond fund's tiny fund size, coupled with its higher average maturity and higher expense ratio has taken its toll on its performance in the last one year, in an otherwise lackluster debt markets.
 
Minimum investment required to enter the scheme is Rs 5000 and offers both growth and dividend options. The scheme is benchmarked against Crisil Composite Bond Fund Index. The scheme charges no entry load but exit load of 0.5% is levied for the investment amount upto Rs 10 lakh and if redeemed within 3 months
 

Capital Gain Tax - Long Term and Short Term

Posted: 14 Sep 2011 09:31 AM PDT

With the tax filing deadline fast approaching, it is time to start planning your tax returns. And as preparation, acquaint yourself with the complex capital gains tax structure first.

Basically, capital gains tax is applicable on sale of capital assets such as property, gold, shares, mutual fund (MF) units, bonds and debentures. Depending upon the holding period, these assets are classified as long-term or short term. The latter are those that are typically held for less three years or lesser. By corollary, assets held for more than three years are termed as long-term.

The only exception are shares, debentures, MF units and deep discount bonds. These assets are considered long-term in nature if held for more than a year. Shares, MF units and bonds need not be listed or quoted. Debentures, however, have to be listed to qualify for the one-year period.

INDEXATION

Starting with FY81-82 as the base year, the RBI notifies the Cost Inflation Index (CII) every year. Indexed cost is arrived at by multiplying the cost with the ratio of CII for the year of sale and year of purchase. Indexation essentially adjusts cost for inflation thereby reducing the amount of capital gains. For example, say a property that was purchased in April 1992 for `10 lakh is sold in February 2011 for `75 lakh. In this case, the capital gain would normally have been `65 lakh ( `75 lakh `10 lakh). However, this would be unfair to the taxpayer since the value of the rupee in 1992 was not the same as it is today. Hence the cost would be suitably inflated as per the indices for the specified year. The CII for FY92-93 was 223 and that for FY2010-11 is 711.

Therefore, the indexed cost in the above example would work out to `31.9 lakh ( `10 lakh multiplied by 711/223). The resultant capital gain of `43.1 lakh is much lower than the non-indexed `65 lakh.

TAX RATES

Long-term capital gain (LTCG) tax rate is 20 per cent after reducing indexed cost. However, only in the case of listed securities, MF units and zero coupon bonds, the taxpayer can also choose to pay 10 per cent after reducing the non-indexed cost from the sale price, if the same works out to be lower.

This is applicable only for transactions not covered by the Securities and Transaction Tax (STT). If the transaction is covered by STT, then there is no LTCG on sale of listed stocks or equity MF units. For other assets such as property or gold, the 10 per cent option isnt available, long-term tax is payable only at 20 per cent after indexation.

Short-term capital gains (STCG) tax on listed shares and MF units is 15 per cent. For other assets, the short-term gains are simply added to the other income and taxed as per slab applicable.

SAVING CAPITAL GAINS TAX

One cannot save on STCG tax. But, depending upon the asset, LTCG tax may be saved by making certain investments. So, LTCG from sale of a residential house may be saved by investing the gains in another residential property, either one year before or within two years after sale. LTCG on assets other than a residential house may be saved by investing the net sale consideration (and not the capital gain), in another residential property again one year before or within two years from date of sale. If only a part of the consideration is used to buy the new property, proportionate deduction will be available. LTCG tax payable on sale of any asset may be saved by investing the gain amount in bonds under section 54EC. NHAI and REC issue such bonds and a maximum of `50 lakh can be invested in a single financial year.
 

Gold Rush: The sharpest spike in four decades is likely to have a limited upside

Posted: 14 Sep 2011 08:44 AM PDT

The yellow metal is back in focus. And, crisis in the Euro zone and fears of US default are only adding to the number of investors in gold.

Financial experts, however, say it isn't the right time to enter the metal. But if you are already in, stay invested. There could even be an opportunity to book profits after there is clarity on whether US is going to raise rates or reduce them.

Gold is expected to touch the $1,600 an ounce in a few days. In fact, it could touch $1,700 per ounce this year.

On Friday, the yellow metal gained on the tenth straight day, when it touched a record high of $1,598 an ounce, the longest winning stretch in four decades.

Besides the debt crisis internationally, other factors supporting this gold price rally are rising crude oil price, US consumer confidence falling to a two-and-a-half year low this month and manufacturing output stalled in June. Experts expect more clarity on US and Euro zone problems in a week's time, which if positive, could soften gold prices or strengthen the rally further on negative news.

Investors should book profits when the US Federal Reserve raises interest rates. That will be the medium-term peak for gold prices. But, till then, keep holding on your investments.

For investors in gold, it has been a lucrative decade, and an even more rewarding two and-half years. In the last ten years, gold has returned over 19 per cent. Since November 2008, when gold prices started rising (from $712.30), this asset class has given back 43 per cent (compounded annual growth rate or CAGR).

Other assets classes have done well over time. But have faltered in the last few years.

The Sensex has returned close to 30 per cent for ten years. But over five and three years, it has given annualised returns 11 and 13.56 per cent, respectively.

Silver has returned 18 per cent in ten years, similar to gold. But in the last three years, it has returned 11 per cent annually. Some sector funds may have performed well but they are much riskier proposition.

Silver is a high-beta metal. It can fall as easily as it moves up. Plus, silver is still around 20 per cent below its all-time high of Rs 50,000 per ounce. For retail investors, gold is a better bet than silver.

But, there is a risk with gold from here on. Even the support levels are not too clear because of the extraordinary circumstances that are driving its demand. "With silver, we know Rs 50,000 is the support level. But with gold, it is difficult to predict anything at this point," adds Shah.

If you are among those who missed this rally, you can buy the yellow metal but the returns would not be as attractive as it has been for the past few years.

You will not see your investments double from here soon. In fact, 15-20 per cent returns are expected.

Any positive news on the international front could see gold correct easily by up to 15 per cent, providing an entry to retail investors. But as financial planners say, one needs to treat gold as just a part of portfolio and not go overboard.

Financial experts say it isn't the right time to enter the metal

Stay put if already invested in gold

Book profits when US raises interest rates as gold will correct by then

New investors could wait for clarity on global debt crisis as returns will decline

Gold will, at best, return 15-20%; not double the investments

Any positive news could soften gold prices by 15%

Silver, being 20% below peak and a high beta counter, may not be as attractive
 

L&T Mutual Fund - Its Schemes

Posted: 14 Sep 2011 08:08 AM PDT

About the Company:

 

It is one of the premier mutual fund companies in India. This company is supported by L&T Finance which is one of the Non Banking Finance Company in India which was incorporated in 1994.

 

Products:

 

 L&T Mutual Fund has launched a lot of schemes in India under the Equity Category, Debt Category and Hybrid Category.

 

Equity Funds:

·                           L&T Growth Fund

·                           L&T Opportunities Fund

·                           L&T Multi Cap Fund

·                           L&T Tax Saver Fund

·                           L&T Small Cap Fund

·                           L&T Infrastructure Fund

·                           L&T Global Advantage Fund

·                           L&T Contra Fund

·                           L&T Tax Advantage Fund – Series I

·                           L&T Midcap Fund

·                           L&T Hedged Equity Fund

Hybrid Funds:

·                           L&T Monthly Income Plan

Debt Funds:

·                           L&T Gilt Fund

·                           L&T Short Term Floating Rate Fund

·                           L&T Freedom Income – Short Term Fund

·                           L&T Liquid Fund

·                           L&T Triple Ace Fund

·                           L&T Select Income Fund

 

Invest Online:

 

Benefits of Investing Online:

·                           You can purchase, redeem and order any transactions online.

·                           There is no need for you to contact the broker or any intermediate person for the transaction.

·                           You can view all the portfolio details of your folios online.

·                           You can generate Account Statements; view the past transactions and any other details.

·                           You can update your personal details online.
 

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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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