SBI Magnum Tax Gain Fund Scheme 1993 dividend for 2014 has been announced by SBI MF

With over 14 lakh investors and a stable track-record of over 20-years SBI Magnum Tax Gain Fund ELSS Scheme 1993 has proved to be one of the most consistent performer amongst the tax saving schemes category in the Indian Mutual Fund Industry. See previous dividends declared

Dividend for 2014

Magnum TaxGain ELSS Scheme : 35%

Magnum Tax Gain ELSS has generated excellent returns over past 20 years and continues to provide retail investors a profitable avenue with constant stream of fat dividends. The SBI TaxGain Equity Linked Savings Scheme is also one of the largest equity scheme in India with corpus of over 4074 Crores. SBI Mutual Fund is India’s largest bank sponsored mutual fund and has an enviable track record in judicious investments and consistent wealth creation.

After an long delay it had become almost imperative for the fund manager/investment managers at SBI MF to declared a dividend no matter how small the dividend amount be. The scheme’s rivals like HDFC TaxSaver and HDFC Long Term Advantage Fund had already declared decent and timely dividend income in the past. Irony of dividends in falling markets is that, it lowers already low NAV.

Dividend Income Bigger than Annual Bonus/Increment:

In fact, for many Salaried Investors of this scheme, due to economic downturn the Dividend Income received from SBI Magnum Taxgain has ironically outstripped their annual bonus/incentive and annual increment incomes in their current profession.

The record date for dividend is 28-Mar-2014. Post declaration of the dividend the NAV of the scheme will fall to the extent of the dividend payout. Check NAV of the scheme.

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What are the features and benefits of International Feeder Funds?

International Feeder Funds offer a diversification tool which can be added to your investment Portfolio for more balanced returns.

Let’s understand the concept of feeder funds, before we delve into their International feeder funds.

What are Feeder Funds?

Feeder Funds are those funds which feed the pooled investor money into another Master Fund which carries out the investing and trading activities. The trading or investment profits derived by Master Fund on behalf of feeder fund are divided on a

pro-rata basis depending on the proportion of such investments. Various fees and charges are also paid at the feeder fund’s level.

What are International Feeder Funds?

Feeder Funds which gather investor’s money to invest predominantly in overseas fund to take advantage of investment opportunities in those markets are called International Feeder Funds. These funds enables local investors access to international offshore funds with varied investment and portfolio management strategies.

What are the features and benefits of International Feeder Funds?

Geographical Diversification: Feeder funds which feed into Offshore Funds offer unparalleled diversification tool to expand investment horizon beyond local markets. Often due to various reasons local markets may or may not offer attractive returns to investors. Such investors tend to benefit by investing in markets which offer higher potential returns.

Economies of Scale across multiple markets: Managing offshore portfolios needs local expertise, knowledge and involves several other overheads, including creating offshore entities, securing Trading licenses, employees etc. These establishment and other costs, are mitigated by feeder funds by using the Master Fund/Offshore Fund route which enables pooling of resources to reduce costs and provides efficiency. These efficiency enables economies of scale by allowing international transactions to be conducted at nominal costs without creating the need of establishing own proprietary desk in such locations.

INTERNATIONAL FEEDER FUND STRUCTURE

INTERNATIONAL FEEDER FUND STRUCTURE

Benefits from Currency Hedging: The International feeder funds structure provides multiple hedging and arbitrage opportunities to investors seeking higher returns or safe bet against currency fluctuations. Though the quantum of such opportunities are fairly limited and often erased due to time zone differences during trading sessions. Often feeder funds can be utilised to take advantage of depreciation of local currency to Offshore Feeder’s base Currency. Investors can benefit from arbitrage opportunities that arise on account of such appreciation of Offshore Feeder’s base currency. Due caution needs to be taken into account while dealing in such transactions due to risks associated with the same.

Example:

Australian investors investing in US Offshore feeders can benefit from appreciating US Dollar (USD) v/s Australian Dollar (AUD).

Indian investors investing in US Offshore feeders can benefit from appreciating US Dollar (USD) v/s Indian Rupee (INR).

Risk mitigation of large investments in local markets alone: Often investors who have large exposure to domestic markets alone tend to have unbalanced portfolios during times when those markets under-perform due to various issues like growth, inflation, business cycle changes, political changes etc.

When should you invest in International Feeder Funds?

Usually there exists no thumb rule for right or wrong time to invest in markets. However, investments in such mutual funds should be done only after you have diversified adequately across domestic markets. The basket has different assets and different classes which adequately provide support in times of distress. Usually, when the local currency is appreciating is also a suitable time to begin such investments. In due course the portfolio would gain value in future, when the offshore currency depreciates.

What are the various taxation matters that should be considered while investing in International Feeder Funds?

Each country has various taxation models developed which needs to be considered while in making such investments. Varied tax definitions and accounting treatments to these complex structures have to be given due importance.  

Hottest Colour Fashion Trends for investing in Mutual Funds.

If you don’t know what the hottest colour trends are for 2013 then you’re in the right place. We’ve rounded up the hottest colours from the investment runways in our spring/summer 2013 trend round up. Mutual Funds would now flaunt new hottest fashion colours to help help you decide best ones for your profile. Now investing in mutual funds is a lot simpler as you need to select only the colour that looks best on you.

Wondering what’s latest runway fashion and colours connection to Mutual Funds. Well actually there none. Its simple attempt to make you all grab the attention to new changes in the Indian Mutual Fund industry. You can now invest in funds which have colour codes pre-defined as per set criteria.

RISK, COLOURS

RISK PROFILE FOR MUTUAL FUNDS

DECODE THE COLOURS 

The blue colour coded box indicates low risk, 

The yellow colour coded box indicates medium risk, 

The brown colour coded box indicates high risk. 

Market regulator Securities and Exchange Board of India (SEBI) has put in place a broad guidelines for “product labelling” with colour coding for mutual funds (MF). This move is with an aim to assist each individual investor assess risk associated with the respective schemes. SEBI said these guidelines would be implemented from 1 July 2013, for all existing and forthcoming Mutual Fund Schemes.

According to these guidelines, product labels carrying different colours along with details about the schemes need to be disclosed on front page of the Mutual Fund Initial Offering Application Forms.

A blue colour coded box would indicate low risk, yellow would signify a medium risk, while brown would represent schemes with high risk. Essentially in future all Initial Offering Application Forms would carry such colours which denote the investment parameters of that specific scheme.

According to the Indian Securities Market Regulator SEBI the move was undertaken to address the issue of rampant mis-selling in the past. A committee comprising of Senior Members of Securities and Exchange Board of India Officials was set up to examine the system of product labelling that would provide potential investors an easy understanding of the kind of scheme in which they are investing in and its corresponding suitability to them. The labels would include details about the scheme including nature of schemes. Indicators would provide insights if the scheme if likely to create wealth or provide regular income. It would also provide an indicative minimum time horizon for such schemes.

DECODE THE INVESTMENT HORIZON

The coded box indicates Short term investment horizon,

The coded box indicates Medium investment horizon,

The coded box indicates Long Term investment horizon.

Moreover, each mutual funds would have to state a brief about the investment objective in a single sentence followed by kind of product in which investor is investing (equity portfolio or debt portfolio).

Investing in Mutual Funds – Know your charges.

When investing in mutual funds – know your charges, so you will not be caught off guard while calculating the total returns on your investments. Investors in Mutual Funds do always consider various fund related factors like Manager, performance, ratings, returns etc prior to making a decision. However, one aspect that few look into are the charges paid to make these investments.

All investors investing in mutual funds conduct some background checks on schemes and fund houses they invest their hard earned money into. Is the Fund manager experienced, are the returns consistent etc, are few aspects which are considered. As this factors do have a major bearing on the overall performance of the money that you have invested. The lesser known fact is that recently many banks and other Mutual Fund agents have started charging their customers through what are called are Transaction Charges or Transaction Fees.

Recent mandate by SEBI, a government body which regulates the Indian Mutual Fund Industry allowed agents/brokers to charge the every new customers Rs.150 as transaction charges for first transaction where the total value exceeds Rs.10000. This includes new Systematic Investment Plan investors as well.
Existing investors of Mutual Fund schemes are charged. They also need to pay Rs.100 as transaction charges for first transaction where the total value exceeds Rs.10000. This includes existing Systematic Investment Plan investors as well provided the total commitment towards SIP is for Rs.10000/- or above.
In respect of systematic investment plan (SIP only), a transaction charge of Rs.100/- is payable in 4 equal instalments, starting from the 2nd to the 5th instalment. So read your statements to know your charges of Rs.25 from your 2nd to 5th SIP instalment. These charges would be deducted from your total amount invested by the Fund in which you are investing then the balance would be your net investment in the scheme. So look out for those innocuous charges ranging from Rs.25 to Rs.150 in your next Mutual Fund Account Statement. If you do notice those charges on your Mutual Fund Account Statement, you know you read it first here at OnlineMF.

MF CHARGES

MUTUAL FUND TRANSACTION CHARGES

I hate these charges, we all do. So is there a solution?

Not all investors would be charged these fees. If your total investments do not go beyond Rs.10000, you would be not charged. SEBI has also granted an option for agents/brokers to not charge their customers for these fees. Many have opted not to charge these fees to their customers. Brokers can decide category of schemes they intend to charge depending on the same, investors can opt for such brokers. So next time you can ask your broker about these fees and can decide knowing if it’s worth opting for it.

Final Word

The Mutual Fund industry has some of the lowest charges paid by investors compared to other products available in the market. The Mutual Fund government regulator is very proactive towards the interest of the investors. The Indian Mutual Fund Industry strives to portray transparency to its investors to the extent possible. It’s always good to be an informed investor, however, not making an investment would be a bigger mistake. So next time you invest in mutual fund, keep in mind the these charges, do not be much concerned and go ahead with your planned investments in the Funds to suit your goals.

Wishing you all Happy Investing In Mutual Funds.
© OnlineMF

How to file a mutual fund complaint with SEBI?

Often many investors ask how to file a mutual fund complaint with SEBI after their numerous attempts to resolve their mutual fund related queries. OnlineMF tries to explain to the entire process of filing a online mutual fund complaint form with the mutual fund regulator SEBI.

USE THIS AS THE LAST MEANS OF PROBLEM SOLUTION

All investors should knock on the doors of the regular SEBI only after all the other means of finding a resolution for investor complains are not met. Mutual Fund Complaints should be addressed with the respective Mutual fund companies before you adopt this route.

SEBI INVESTOR COMPLAINT WEBSITE http://scores.gov.in/default.aspx

SEBI SCORES (SEBI Complaints Redress System)

 
ONLINE MODE

1] Log on to SEBI SCORES (SEBI Complaints Redress System)

http://scores.gov.in/default.aspx

2] Select Complaint Registration under Investor Corner

Update all the below information like

  • Name of Investor  :  
  • Complaint Lodged by  :  
  • Address of Correspondence of  Investor  :    
  • City/Location  :  
  • Pin Code  :  
  • State/UT :
  • PAN of Investor  :  
  • Phone Number  :  
  • Mobile Number (For receiving SMS)
  • E-mail Address of Investor 

Ensure the highlighted information are accurately filled up in your mutual fund complain to SEBI.

 3] Select Appropriate Category

  • Listed Companies/ Registrars & Transfer Agents
  • Brokers/Stock Exchanges
  • Depository Participants/Depository
  • Mutual Funds
  • Other Entities
  • Information to SEBI

Click on Mutual Fund Category to register investor complaint

4] Complete the Online Complaint form

Selected Category :   Mutual Funds 

*Complaint Against  : 

*Nature of Complaint Related to  :  MutualFunds 

 Select the appropriate nature of your complaint for any of the below options:

  •  Delay/Non-receipt of dividend on Units 
  •  Delay/Non-receipt of Interest on delayed payment of Dividend
  •  Delay/Non-receipt of Redemption Proceeds 
  •  Delay/Non-receipt of Interest on delayed payment of Redemption
  •  Non-receipt of Statement of Account/Unit Certificate 
  •  Discrepancy in Statement of Account 
  •  Non receipt of Annual Report/ Abridged Summary
  •  Wrong Switch between Schemes
  •  Unauthorised Switch between schemes
  •  Deviation from scheme attributes
  •  Wrong or excess charges/load
  •  Non updation of changes viz.address, PAN, bank details, nomination, etc
  •  Non receipt of Annual Account
  •  Others 

5] Select the mode of your Mutual Fund holdings

  •  Physical Mode
  •  Demat Mode

6] Complete the image verification

Verify and complete the image verification by tying in the numbers/alphabets provided in the image into the comments box in the same format.

7] Click on Submit Button

Once you complete the online mutual fund complaint you would be provided with a registration number. Do remember to store carefully this complaint registration number for future reference.

An email is generated instantaneously acknowledging the receipt of the complaint and allotting a unique complaint registration number for future reference and tracking.

PHYSICAL /OFFLINE MUTUAL FUND COMPLAINT

If you are facing issues registering your online mutual fund complaint form OR you do not have access to Computer or Internet Connection you can register your complain by calling on the phone number of SEBI at 022-26449188/26449199. Investors can also send the complaint physically by post to any of the Offices of SEBI.

 USEFUL MUTUAL FUND RELATED INFORMATION

SEBI TOLL-FREE PHONE NUMBER

SEBI helpline Number: Use the SEBI Mutual Fund helpline number 1800-22-7575 and 1800-266-7575 for your investor related questions.

SEBI INVESTOR’S WEBSITE

Before you register mutual fund complaints to SEBI check the investor website for more details. SEBI INVESTOR’S WEBSITE http://investor.sebi.gov.in

Back to Basics Series II : This article is in response to SEBI’s Public Appeal for following the right approach to Mutual Fund Industry.

SEBI Investor Education
©OnlineMF

Rajiv Gandhi Equity Savings Scheme(RGESS): Tax Saving Scheme now with Mutual Funds

Rajiv Gandhi Equity Savings Scheme(RGESS): Tax Saving Scheme now with Mutual Funds.

The Rajiv Gandhi Equity Savings Scheme (RGESS) which is a Tax Saving Scheme comes now loaded with Mutual Funds for your investments. After considering the various views of the marketmen and general sentiment in the Mutual Fund Industry, the Finance Ministry is now proposing to add Mutual Funds as one of the products to avail the tax rebates under the amended rules for Salaried employees. Managing to do a delicate act of pleasing both the investors as well as marketmen.

Mutual Fund Market Sentiments.

This is in response to the general market sentiments of the Indian Mutual Fund Industry. The Industry was losing direction and focus. The growth had already tappered off and the clearly it was headed for years of down trending. The AAUM were falling, so were the number of new registration of Folio Numbers. The Regulator re-defined couple of rules which made many Asset management Companies reconsider their business models. The regulator set up firewalls between Industry bodies and Self Regulatory Organisations. It also questioned the logic of various fees structures which were being charged to investors. Finally, a change of guard at the Finance Ministry made few changes evident, one of them being the push for adding  ELSS scheme to the RGESS albeit in reincarnated form.

AUM OF TOP 5 CITITES

AUM OF TOP 5 CITIES

Reincarnation of Equity Linked Savings Scheme ELSS

The popular ELSS survives the government wrath to be reborn in a new avatar as RGESS. ELSS which was eligible for Tax rebates under the Section 80 C was proposed to be removed. The new Direct Tax Code which was intended to be rolled out, excluded the rebates provided for the ELSS. Thus effectively putting an end to a succesful product which was gaining popularity among the retail investors. It takes huge and consistent  efforts to educate the investors of benefits of any products. It is certainly a product which was gaining lot of momentum and acceptance since its launch more than 5 years ago.

ELSS SALES

ELSS SALES

(RGESS)Rajiv Gandhi Equity Savings Scheme

The proposed Rajiv Gandhi Equity Savings Scheme scheme would allow income tax deduction of 50 per cent to new retail investors, who invest up to Rs 50,000 directly in equities, and whose annual income is below Rs 10 lakh. To make the scheme more attractive for retail investors, the Finance Ministry is considering reduction in the lock-in period under the scheme to one year from the proposed three years. Now this will make this a truly retail market product for tax saving instrument. Though as an investor benefits of Mutual Fund investments are better realised over a period of at least 3-4 years. If this product gets launched in the market in the proposed form, it would be the only tax saving instrument with least number of years in terms of the lock-in period. However, this is something no one in currently seems to be worried about.

For first time retail investors investing directly in the equity markets, this would be an option which is definitely worth considering.

Rajiv Gandhi Equity Savings Scheme (RESS) : Should you invest in this equity scheme?

Rajiv Gandhi Equity Savings Scheme (RESS) : Should you invest in this equity scheme?

SEBI Chairman UK Sinha certainly does not think so if you are a first time investor into stock markets. On a recent opinion provided by the SEBI to government UK SINHA former Chairman of UTI Assset Management Company indicated his reservations about first time retail investors investing in Rajiv Gandhi Equity Savings Scheme (RESS).

Introduction of RESS(Rajiv Gandhi Equity Scheme)

RAJIV GANDHI EQUITY SAVINGS SCHEME

Finance Minister in his Budget had recommended introduction of Rajiv Gandhi Equity Savings Scheme for investors. The rational was the extremely low penetration of retail investors in the Indian Equity Markets. This scheme is conceived to encourage participation by new retail investors in Indian Stocks.

Why the Government is keen on Retail Participation in Indian Equity Markets?

While average Indian buying into equity markets is increasing by each passing day. However, it still cannot compare to the interests and levels of buying/consumption made by Indians in Gold and other savings instruments. The quantum of investments in Bank Fixed deposits and Gold is multiple times more than the investments in equity markets. Banks are still considered to be safe and sound investment option compared to stocks. Government is keen on changing this investment pattern and move towards enhanced in stock markets. While any economy prefers to have a balanced portflio of spread across various assest classes. The ratio of investments by Indians is skewed towards the Deposits and Gold. Such high is the proportion of these investments that is has become the cause of worry for the government.

Buying Gold means Losing Foreign Currency

India is not a producer of Gold. So all the gold has to be imported, causing huge loss of precious foreign currency. The more gold we buy, the more needs to be imported, causing more drain on the precious little foreign currency (mostly it is US Dollar) India holds. Most of it gets exhausted in buying Gold.

How does the Government encourage you invest in equity markets?

Government is introducing RESS providing Tax Deductions to retails investors participating in the Indian Equity Markets. This deduction would be available under probably section 80C to salaried retail investors. This is an incentive being provided by the government to motivate new investors who trationally invested in bank deposits and gold by granting them tax deduction to the taxable income for that financial year.

Should you invest in this scheme?

Well, that is the million dollar questioon. Though, the purpose of investing in this scheme is to provide a stepping stone into the Indian Equity markets for new investors by the government. SEBI Chairman does not think that the new investors would be exposing themselves to the right platform to begin their journey into the financial markets. I guess the SEBI Chairman who knows markets, marketmen and governments would know, what he is saying.

Is Reliance Mutual Fund giving up the AAUM race for profitability?

Reliance Mutual Fund  is changing its strategy of chasing the AAUM, to now focus on increasing its bottomline. The AAUM of Reliance Asset Management Company (Largest Mutual Fund Manager in India) is slowly tapering off. Does this mean it has given up its self-styled race for size to now focus on making its balance sheet stronger?

Reliance the Undisputed Leader in AAUM: Reliance held the No 1 spot in assets under its management for past many years. Its was originally Reliance’s idea to aggressively market various schemes and garner biggest chunk of new assets under its control. It launched innovative products, schemes and offered large incentives to market its funds. It redefined the Indian Assets Management business by taking a sizeable lead ahead of its rivals. With sustained efforts and aggressive posturing it reached indomitable position in the Indian Mutual Fund Industry in a very short time.

Knowledge, Products, Marketing and Timing: Reliance Group has a firm understanding of the Indian Markets. It has always kept pace with the changing demographics of its consumers. In one of the fastest growing market of the world, it is of utmost importance to connect with your investors and stay ahead of the curve. SIP for just 100, ATM Card for Mutual Fund Investors, First SIP in Gold Fund are few recent examples of innovative concepts by Reliance Capital.

Reliance Mutual Fund

Good management, excellent and timely PR, stable fund managers are a few qualities associated with Reliance Mutual Fund. It managed volatility and downtrends in markets with gusto by being in the public eye when it mattered the most. Able Fund Managers were available in public domain(effectively and efficiently doing a  Public Relations job) to calm investor’s nerves when their portfolios were bleeding. Such hand holding is often the need of the hour in volatile markets.

Rivals made it easy for Reliance: While Reliance was in race with itself, others like HDFC Mutual Fund had different ideas about the whole concept of increasing the AAUM. It regularly doubted Reliance claims of ever-increasing investors and assets. The measurement of company’s size is a difficult task in a complex Indian financial market. Absence of clear and strict guidelines to calculate various parameters of AAUM made it easier to tweak numbers. Rivals were left with playing the catch-up game to the market leader, Reliance. Many asset management companies, baring few like Quantum AMC and Benchmark AMC failed to offer a different product than the one which Reliance already had in its portfolio.

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Common Benefit and Features of Investing in Mutual Fund.

Mutual Fund is an excellent financial product which allows pooling of resources to reduce overall cost of investing and sharing of risks.

E-Mail/Electronic Communication

Feature of MUtual Fund

Account statements and scheme related documents can be send to your mailbox

Benefit of Fund

Email delivery of your account statements ensure that you do not waste you time in filing your paper statement(physical statements). It also ensures that your account statement do not go to wrong address or unintended/unauthorised person. This benefit of email communication is important from safety and security perspective. It is a eco-friendly option for environment conscious investors. By opting for email statement investors help in saving trees which are destroyed to make paper based physical statements.

Grievance Officer/Customer Complaint/Service Manager

Feature of MUtual Fund

Asset management Companies appoint experience staff to handle customer related complaints.

Benefit of Fund

Unsatisfactory service, delay in credit of dividends, delay in receiving statements, wrong address, incorrect NAV, Incorrect schemes and many other small and major customer service related issues are managed by these officers. They co-ordinate with Local branches and the Main Office of the AMC to resolve issues and ensure good customer service.

Request for Account statement/Annual Reports

Feature of MUtual Fund

Account statement can be requested by customer whenever required.

Benefit of Fund

Customer is provided with an Annual Report of the scheme in which he has invested. One can call on any of the popular Toll free Phone Numbers of Mutual fund to place a request for latest NAV details or updated A/C statement.

Website/SMS Code/NAV on Mobile Phone

Feature of MUtual Fund

All Major Mutual fund companies have active websites which provide scheme related information.

Benefit of Fund

Daily NAV, Dividend details, key persons, registrar company and various other details are regularly published on websites. Various locations where Mutual fund has service desk, branches are also listed on these sites.

Publishing of NAV Rate

Feature of MUtual Fund

Daily NAV Rates are updated by Mutual fund Companies on websites and newspapers.

Benefit of Fund

Everyday Net Asset Values of schemes are updated on the websites of fund companies. These are also uploaded on AMFI Website(Association of Mutual Funds in India). NAV of major fund houses are published in many regional and national dailies like MINT, ECONOMIC TIMES, BUSINESS LINE etc.

Buy Mutual Funds using your VISA ATM Card.

Feature of MUtual Fund

Use your VISA ATM Card to buy Mutual Funds Units at your ATM Center.

Benefit of Fund

Mutual Fund units can now be purchased by using your ATM Card at any VISA Approved ATM Center. This makes the process of investing in Mutual Funds extremely easy and convenient for many people who do not have time to manage their finances. Investments in Mutual Funds can be made on days when the increments/bonus/pending cheque payments are received. This will assist in parking funds for long-term to build an investment nest.

Back to Basics Series I (Part2) : This article is in response to SEBI's Public Appeal for following the right approach to Mutual Fund Industry.
SEBI Investor Education

©OnlineMF.

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What are features and benefits of Mutual Funds?

Unlike most other financial products like provident fund, insurance and post office schemes, Top Mutual Funds not only provides convenience while investing money, but it also offers a variety of features that benefit investors. A few of most common features and benefits of  top mutual funds are highlighted.

Micro SIP/Chota SIP
Feature of Mutual Fund
Invest as low as Rs 100/- in Mutual Fund Companies

Top Mutual Fund Companies offer its investors an option to invest extremely small amounts such as Rs 100/-, Rs 500/-, Rs 1000/- each month depending on individual’s capacity into many of its mutual fund schemes.

Benefits of Mutual Fund: Benefits of Mutual Fund are for people who want to invest small amounts. Daily Wage Workers, Rickshaw Taxi Drivers, Labourers who wish to invest into Mutual Funds.

Flexibility of Dates
Features of Mutual Fund

Ease of investing on convenient dates

Investor can invest in top Mutual Fund Scheme on their choice of dates. Many large Mutual Fund companies offer multiple dates for investing into its top performing mutual fund schemes. E.g Few dates would be 1st, 5th, 10th, 15th, 25th of each month. This makes regular investments on salary dates possible.

Benefit of Mutual Funds:  Benefits Salaried people who receive money at the end of the month and wish to invest in Mutual Funds.

Timely Payments through ECS
Feature of Mutual Funds

Hassle free, Regular Payments to allow you to concentrate on other important things in life

Investors in Mutual Funds need not worry about making timely payments each month through opting for ECS Payment Method. This ensures regular, hassle free, timely and correct monthly payments.

Benefit of Mutual Fund:  Feature is useful for people who are busy or travel a lot, as he does not have time to keep track of his monthly payments.

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Investing Through POA (Power of Attorney)
Feature of MutualFund

Investing without physical presence

Investments in Mutual Funds can be done through Assignment of a Power of Attorney for effective financial planning. Army Personnel, Officers posted on-duty at far off places, owners/directors of limited companies, Non-Resident Indians, Resident Indian posted onsite/outside India can invest through the convenience of POA.

Benefit of Mutual Fund: Your Financial Planning for family’s benefit cannot be discontinued in your absence. Defense and Police Officers can appoint wife or family members to be POA and allow them to invest on your behalf.

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SBI Magnum Taxgain Scheme 1993 dividend for 2009 has been announced by SBI MF

SBI Magnum Taxgain Scheme 1993 dividend for 2009 has been announced by SBI MF. With over 17 lakh investors and a stable track-record of over 15-years SBI Magnum TaxGain ELSS Scheme 1993 has proved to be one of the most consistent performer amongst the tax saving schemes category in the Indian Mutual Fund Industry. See previous dividends declared

Dividend for 2009

Magnum TaxGain ELSS Scheme : 28%

Magnum Tax Gain ELSS has generated excellent returns over past 15 years and continues to provide retail investors a profitable avenue with constant stream of fat dividends. The SBI TaxGain Equity Linked Savings Scheme is also one of the largest equity scheme in India with corpus of over 3,262 Crores (Download Magnum TaxGain April 2009 Fact Sheet).  SBI Mutual Fund is India’s largest bank sponsored mutual fund and has an enviable track record in judicious investments and consistent wealth creation.

After an long delay(and nil dividend in the previous financial year) it had become almost imperative for the fund manager/investment managers at SBI MF to declared a dividend no matter how small the dividend amount be.  The scheme’s rivals like HDFC TaxSaver and HDFC Long Term Advantage Fund had already declared decent and timely dividend income in the past. Irony of dividends in falling markets is that, it lowers already low NAV.

Dividend Income Bigger than Annual Bonus/Increment:

In fact, for many Salaried Investors of this scheme, due to economic downturn the Dividend Income received from SBI Magnum Taxgain has ironically outstripped their annual bonus/incentive and annual increment incomes in their current profession.

The record date for dividend is 29-May-2009. Post declaration of the dividend the NAV of the scheme will fall to the extent of the dividend payout. Check NAV of the scheme.

Related Posts Only (manually created not automatically generated)

Do not go chasing ads, listen to the your needs (Part-1)

Often we come across well drafted advertisements and commercials at the most innocuous of all places. Many of us end up falling prey to some smart ad-men’s near perfect product or advertisement placement.I came across one such advertisement as well. The Ad read ” Save Tax of Rs 42,990 on investments of Rs 1 lacs** “.  The Mutual fund advertisement further explained the benefits of investing in that fund which read as below:

Tax savings: Tax benefits up to Rs 33,990/-* on investment of Rs 1 lac u/s 80c of the Income tax Act, 1961.

Free Life Insurance Cover: 5 times your investment, subject to a minimum cover of Rs 10,000 and a maximum of Rs 5,00,000. Premium on Rs 1 lac cover for 3 yrs would be approximately Rs 9,000 which investors might save.

Capital Growth: ELSS as a medium to long term investment vehicle provides scope for capital growth.

Potential savings on Rs 1 lac investment in ELSS scheme is Rs 42,990.

**Tax saving of Rs 33,990 + Rs 9,000 Life Insurance Premium

*Assuming the investor falls into highest tax bracket and surcharge is applicable.

The advertisement is right in its claims and makes no false promises, mis-selling or overt statements.

Investors would definitely benefit from investments made in such ELSS Tax Saving schemes, however, an investor needs to understand that one of the major highlights of this scheme which is displayed in bold letters above is the charm of saving Rs 42,990.

Do all investors end up saving Rs 42,990?

Simple answer is NO.

Not all investors fall in the highest tax bracket, so savings, for investors in different tax brackets would differ. So it becomes imperative for investors not to chase smart ads and inquire about tax or savings benefits to which accrue to him.

Investors who invest in ELSS schemes are traditionally retail investors who park their money in such scheme as they offer reasonable returns with the shortest possible lock-in period.The government has made a host of individual savings ‘tax-deductible’ under one umbrella called Section 80C and a simple new rule has emerged – if you invest up to Rs. 1 lac in a tax saving instrument or even a combination of them, you effectively reduce your taxable income by up to Rs. 1 lac to save up to Rs. 33,990 in taxes (including applicable surcharge and education cess).

But, you don’t have to invest an entire lac. For example, if your taxable income is Rs. 1,70,000, you would need to invest just Rs. 20,000 in a tax saver to reduce your taxable income to Rs. 1,50,000 and drop your tax to zero!

Below is an indicative table provided for better understanding of tax brackets and applicable effective saving on ELSS schemes for individuals within respective income slabs.

Your annual taxable income (Rs) Your applicable tax before investment (Rs) Optimal amount to invest (Rs) Your ‘new’ taxable income (Rs) Your applicable tax after investment (Rs) Your savings (Rs)
1,70,000 2,000 20,000 1,50,000 0 2,000
1,90,000 4,000 40,000 1,50,000 0 4,000
2,50,000 10,000 1,00,000 1,50,000 0 10,000
3,00,000 15,000 1,00,000 2,00,000 5,000 10,000
4,00,000 35,000 1,00,000 3,00,000 15,000 20,000
5,00,000 55,000 1,00,000 4,00,000 35,000 20,000
7,00,000 1,15,000 1,00,000 6,00,000 85,000 30,000
9,00,000 1,75,000 1,00,000 8,00,000 1,45,000 30,000

Gold ETF beats it all …Again(October Review)

A Review of performance of GOLD ETF based on earlier post Gold ETF beats it all

Gold Exchange Traded funds have performed exceptionally well since their inception in India. One of the primary reasons attributed to it could be inherent bias of Indians towards gold as a precious metal. However, recently Gold is receiving a fair share for investment purposes as well. In times of economic and financial turmoil it is a safe heaven for many.

Gold EFT’s which are primarily traded on NSE (see codes) have outperformed many local and International equity indices(BSE, NIFTY, Dow Jones, Nikkei, Hang Seng).
At a time when equities valuations around the world were getting beaten down Gold ETF has provided investors promising returns of more than 15%. Comparing this returns to double digit negative returns of equity indices, surely makes a case for many investors to diversify their existing portfolios and include any of the available Gold ETF’s (BeEs, Kotak, Quantum, Reliance, and UTI)

Listed below is a comparison of returns of Gold ETF with various indices around the world. The NAV for 29-Oct-2008 is considered for comparison. Some data is proportionately adjusted for comparative study.

Scheme Name 1 mth % 3 mths % 6 mths % 1 yr % 3 yrs % NAV Category Structure
UTI Gold ETF (10.52) (8.45) 1.19 16.39 NA 1164.88 ETF Open Ended
Gold BeES (10.51) (8.46) 1.18 16.32 NA 1162.31 ETF Open Ended
Kotak Gold ETF (10.52) (8.44) 1.15 16.29 NA 1165.41 ETF Open Ended
Quantum Gold Fund – Growth (10.51) (8.35) 1.31 NA NA 580.25 ETF Open Ended
Reliance Gold ETF – Dividend (11.07) (9.48) (0.01) NA NA 1136.79 ETF Open Ended
Average performance of similar category funds (10.63) (8.64) 0.96 16.33 NA 1041.93
S&P Nifty (32.64) (38.03) (47.25) (52.63) 5.04
BSE Sensex (31.25) (37.22) (47.06) (52.90) 5.43
Nasdaq (7.32) (5.95) 0.78 (12.73) 1.18
FTSE (2.13) (6.46) (6.23) (14.07) 0.26
Dow Jones (1.89) (5.93) (5.68) (14.03) 2.25
Strait Times (8.74) (14.88) (11.90) (26.62) 3.40
KLSE (6.68) (14.81) (15.30) (18.77) 4.34
HangSeng (8.80) (12.73) (11.21) (8.07) 12.00
Kospi (8.36) (17.24) (12.81) (16.68) 11.10
MSCI World Index 7.41 2.33 8.16 18.73 16.22
Nikkei (6.06) (6.66) (7.57) (21.20) 0.90
*Note:- Returns calculated for less than 1 year are Absolute returns and returns calculated for more than 1 year are compounded annualized.

Golden Quotes:

James Grant : “Nothing beats a little cash in a bear market and the oldest form of cash is gold.”

Karl Marx : “Although gold and silver are not by nature money, money is by nature gold and silver.”

At the end of the day, bullion is more important than the billion.

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How to buy Gold ETF?

How to buy Gold ETF?

Listed below is a simple way to own a Gold ETF.

Gold EFT are fast becoming a rage in India. One reason attributed to its popularity could be its stellar performance in a relatively subdued market conditions.

When first introduced in India, many were skeptical about its relevance and suitability in Indian markets, however increasing volumes and new scheme launches(Quantum, SBI) indicate its growing acceptance in a naive market like India. It is a complex financial instrument. (read EFT F.A.Q).It involves many different entities apart from usual fund managers who manage the scheme. However, its has its own limitations since it is listed on exchanges.

Many people are unaware of ways to buy a GOLD ETF.

You need a Demat account along with broker who is a member of NSE to buy a Gold ETF.

 

Some of the popular brokerage firms like ICICI Direct, HDFC Securities, KOTAK Securities.

Along with traditional brokerage firms like India Infoline, Geojit, IndiaBulls, Sharekhan also offer a demat account with brokerage facilities.

 

Once you have a brokerage account you can buy Gold ETF by placing an order like a normal stock order to buy listed Gold ETF. Most of the ETF are listed only on NSE. Unfortunately, BSE does not have any Gold ETF listed on it.

Additionally codes like be required to be inputted to buy it online or through telephone, as many brokerage firm’s customer care executives are unaware of the codes.

Benchmark Mutual Fund – Gold Benchmark Exchange Traded Scheme (NSE Symbol: GOLDBEES)

 

See today’s price Nav of Kotak Mutual Fund – Gold Exchange Traded Fund (NSE Symbol: KOTAKGOLD)(See price chart)

 

See today’s price Nav of UTI Mutual Fund – UTI Gold Exchange Traded Fund (NSE Symbol: GOLDSHARE)

 

See today’s price Nav of Reliance Mutual Fund – Gold Exchange Traded Fund (NSE Symbol: RELGOLD)(See price chart)

 

Quantum Gold Fund – Exchange Traded Fund (ETF) (NSE Symbol: QGOLDHALF)

Interesingly, Quantum Gold is also available for 0.5 grams(1/2 gram) of gold. Now that’s truly a product for the masses since the pricing is half of other available Gold ETF.

Apart from Gold ETF, some other mutual funds are also available which invest in different gold mining companies and international gold funds as well.

 

Funds like DSP ML World Gold and AIG Gold Fund have also fared better than indicative markets indices.

 

Since these funds(DSP World Gold, AIG Gold) are not ETF’s, no demat account is required and can be purchased like any other mutual fund schemes.

Update: January, 07, 2009.
Now Kotak Securites has launched a facility where investors can invest in Gold ETF on a regular basis.
These facility in similar to SIP in GOLD ETF, or GOLD ETF SIP.
Kindly comment in case any other brokerage has similar facility.

Why not to invest in Reliance SIP+Insure Plan

Listed below are reasons why you should not invest in Reliance SIP+Insure.

7 Reasons for not investing in Reliance SIP+Insure Plan.

1] The type of Insurance is Group Insurance Policy. The cheapest and easiest form of insurance policy available with any insurance company.

2] Only the 1st Holder is insured. So, in case, a couple subscribes to SIP +Insure then only one person can avail of the insurance benefits.

3] The Sum Assured, in case of death is not paid to the nominee, but shall go back to the scheme of the AMC(Reliance Asset Management Company). Remember, the scheme benfits more than the dependents of the deceased in case of death of the holder.

4] Huge exit load of 2% for discontinued SIP. If you agree to pay your SIP for 11 yrs but pay only for 10 long and tiring yrs, still the scheme charges you 2% for the remaining 1 yr which you do not wish to continue.(learn to calculate exit load charges)

5] No insurance upto 90 days (exception to it is accident cases only) , i.e 3 months. In case of death within 3 months, except of accidental deaths, the scheme shall not pay the dependents a penny.

6] The dependents will end up paying the scheme 2% back if the death occurs within 3 months due to reasons other than accidental death.

7] Minimum period of investment is 3 yrs and Rs 2,000 for each installment, i.e totalling to Rs 36,000 for Group insurance worth less than 10 lacs.

There are group insurance polices availables at a very low costs, which can be availed of for insurance requirements. Insurance worth of Rs 10 lacs may or may not be sufficient for your entire family’s needs.

The Exit loads are relatively very high even if investor is paying his SIP for a long period, if he discontinues even 1 day prior, he ends up paying 2% Exit loads.

Sunny Side to life :

SIP is also available without this offer.

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Reliance SIP + Insure

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SBI MAGNUM TAXGAIN – DIVIDEND HISTORY

SBI MAGNUM TAX GAIN – DIVIDEND HISTORY.

Listed is the dividend history of SBI Magnum TaxGain ELSS Fund. One of the best performing tax saving schemes in India.

Record Date Dividend (Rs/unit)

28-Mar-13                             3.5

22-Mar-12                             3.5

18-Mar-11                              4

05-Mar-10                             4

29-May-09                            2.8

15-Feb-08                              11

02-Mar-07                             11

10-Mar-06                             15

10-Jun-05                             10.2

29-Oct-04                              2.7

29-Mar-04                            1.5

31-Dec-03                              1.5

26-Sep-03                             1.5

15-Dec-99                              2.5

31-Mar-96                             0.8

31-Mar-95                             1

(Open the above EditGrid Spreadsheet in new window)
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NEW FUND OFFER EXPENSES CALCULATOR

Click on the below mentioned link to open spreadsheet to calculate how much an investor ends up paying the AMC as NFO expenses. These amount can assume huge proportions depending upon the size of the NFO.
Any suggestion to this format are welcome.

Invest in China with just Rs 10,000 with Hang Seng BeEs ETF

After the mad rush for Gold ETF Asset Management companies were actively scouting go the next big idea to launch to seek cover for their dwindling Assets Under Management(AUM). Accordingly, Benchmark Mutual Fund will be launching an ETF based on the Hang Seng Index. Hang Seng BeEs as it is called would be listed on the NSE on Monday , 15th February. The Purpose of this EFT is to enable investors track Hang Seng Live and reveal hang seng index chart on real-time basis.

Benchmark AMC and its Niche:

Benchmark has carved a niche for itself in the Indian Mutual Fund Industry by successfully launching first ETF in Asia(not only India) Nifty BeEs. It is also credited with launching the Gold ETF first time in India. Shariah based ETF products were first introduced to the Indian Mutual Fund Investors by Benchmark Asset Management Company.

Trade on Hang Seng Stock Exchange:

Hang Seng BeEs would be the first ETF to introduce Indian Stock Market Investors to a closed market like China. India and China are two of the fastest growing economies in the world. Indian investors would largely benefit by the diversification offered with the launch of hang seng index based ETF. Hang Seng Stock Exchange is one of the largest exchanges in the world. Hang Seng Index Charts, Hang Seng Futures, Hang Seng Historical Data can also be now be determined and tracked on a real-time basis.

Hang Seng Timings:

Hang Seng BEnchmark Exchange traded Scheme(BeEs) will trade during the Hong Stock Exchange Timings. The Heng Seng Stock Exchange closes two and half hours prior to the NSE Closing timings. The corresponding time would be between 7.30 am to 1.30 pm Indian Standard Time. The timings are better suited to Indian Stock Market traders and investors alike, compared to US Markets and European market timings. The NAV for the Scheme would also include the currency fluctuation.

Taxation Rules for Trading in Foreign ETF:

The ETF are treated as Debt funds for tax treatment and would therefore attract tax rules which are currently applicable to the non-equity funds in India. The Hang Seng Index currently comprises of 42 Stocks and is the benchmark for the China ETF in India. Rs 10,000 is all you need for your ticket to China: The units are available for a minimum amount of just Rs 10,000. To cater to large masses and enable wider market participation the entry amount is kept at Rs 10000 only. All Major Global Corporations have invested billions of dollars in the Chinese Economy. So why Indian Investor should not join the race and participate to diversify their existing portfolios?

Charges for trading on China ETF:

There are no charges levied by the AMC in form of NIL entry load and NIL exit load for buying and selling on the NSE. A minor bid/ask spread, brokerage for trading and needs to be borne by the investor. Hitherto, only High Net worth Individuals was active in using these innovative financial products. In future retail investors should add such products to their overall portfolio diversification strategy.

SEBI ACTS FINALLY, in interest of Retail Investor.

BUT IS IT TOO LITTLE TOO LATE?

SEBI is now mulling the idea for separating the corporate investor from retail investors in every scheme of mutual funds, so that latter does not suffer at the expense for former. Even, if it suffers it will now come at a cost.

Retail investors until now always had to pay a higher entry load compared to Corporate Investors. The exit loads were also biased to favor the Corporate Investor more than retail investor. It was easier for a Corporate investor to enter and exit a Mutual Fund scheme at minimal transaction costs. However, that lack of barriers came at the expense of retail investors.

Many companies park their Working Capital and short term funds in various mutual fund schemes to seek higher returns for otherwise idle money.

Corporate Investors

Corporate Investors until now had it easy while investing in Mutual Funds of major fund houses. They were offered parking of their idle funds at huge concessional rates compared to retail investor.

Corporates could invest and withdraw funds with ease providing them the ample liquidity, which they relished upon.

Corporate Investors were also provided extra benefits in terms of ease of withdrawal with negligible or zero penalty for early withdrawal of funds.

With the advent for ECS, RTGS and various quick settlement facilities the turnaround time required to process the withdrawals of Corporate funds also reduced considerably. It only made Corporate Investor pour in more money to their existing investments.

RTGS provided ample opportunity to them to receive redemption funds within shortest possible time.

So what was initially an investment vehicle for idle funds could have also evolved into an easy mechanism for producing higher returns with minimal transaction costs.

Retail Investors

It was easier for a Corporate investor to enter and exit a Mutual Fund scheme at minimal transaction costs. However, that lack of barriers came at the expense of retail investors.

They were charged huge sums for early withdrawals compared to corporate Investor. When a Corporate investor exits a scheme (redemption), then the securities held by the fund have to be sold to pay the Corporate Investor in Cash. This results in erosion of NAV. It also results in selling costs which are bourne by the remaining customers (existing unit holders).

Since the barriers (costs as well as time required to encash) to exit a scheme are so less that Corporate find it simple route to make quick buck and exit.

All through this downturn in assets of all major fund houses, retail investor has shown his faith in the abilities of money managers. They have not panicked and not followed a herd mentality unlike Corporates. A Major portion of 47,000 Crs of outflows in October’s AUM has been in Fixed Maturity Plans which are favorites of the Corporate Investors.

Very few retail investors might have redeemed their portfolios in such harsh conditions.

In fact they might have stopped believing in the advices and tips of their favorite Grocery Shop guy who sells less Grocery than stock tips.

In fact during such times retail investors turn to proven records of top Money Managers and trust their instincts more than Grocery Shop advisor with stock TIPS.

Fund Houses (Asset Management Companies)

Even for fund houses it was easy money at cheap rates and in huge amounts. It was a win-win situation for both Corporates and Fund houses. The lone suffer in this party was the gullible and naive retail investor.

It is easy for Fund houses to collect Rs 100 from Single Corporate Investor than to collect Rs 5 from 20 retail investor located at different locations.

The Corporate Investor fulfilled the insatiable desire of marketing and money managers to pump up their AUM. So long the party lasted everybody was cheering. Now the same corporate investor has exited various schemes which were designed for making their life easier and returns higher. The money managers could not keep pace with double whammy of erosion of NAV along with outflows of same easy money.

Many fund houses struggled to keep pace with redemptions. Some had to knock on the doors for the regulators.

Last thing you would wish to do as a fund house.

SEBI

SEBI had all the key records, data with it all along.

This practice was on since many years. Just that the regulator has now chosen to act upon it now, is not surprising.

SEBI at times acts much like the cops in movies which arrive on the scene after the crime has been committed.

SEBI on its part needs to be more proactive and have a firm grip on the nerve of industry. It may also be the case that it does not have the necessary manpower and required expertise to cater to the huge surge in the Indian Mutual Fund Industry.

The regulator woke up after close to 47,000 Crs (See October AUM figures) of erosion and withdraws of funds from the Industry.

However, to be fair to the regulator many people do not like regulatory interference during uptrend in the markets. It’s only during downtrends that regulators are respected and existing regulations are adhered to.

If regulators intervene during uptrend in the markets they are viewed as unnecessary interference and supervision.

SEBI has decided to implement either

Option 1:

Same entry fee for both Corporate and Retail Investor OR

Option 2:

Create separate investor classes and manage both separately within main fund so that both the parties are firewalled.

Onlinemutualfund (OMF) recommends the Option 2 and hopes SEBI and adopts it.

Second option, is to be more reasonable and sound, as it keeps all the players happy.

Hope right decisions are made and retail investors are again a happy lot.

Tell us about your opinion, views, and comments, remember it counts.

AAuM as on 30 September 2008

 

 

Sr No.

Mutual Fund Name

Average AUM For The Month

September

August

July

1

Reliance Mutual Fund

8649446

8861646

8456391

2

HDFC Mutual Fund

5199829

5385863

5075203

3

ICICI Prudential Mutual Fund

4980352

5312445

5516066

4

UTI Mutual Fund

4462319

4694732

4611991

5

Birla Sun Life Mutual Fund

3759536

3820196

3749730

6

SBI Mutual Fund

2924777

2957678

2915112

7

Franklin Templeton Mutual Fund

2856877

2793603

2444095

8

Tata Mutual Fund

2077775

2119726

2044342

9

Kotak Mahindra Mutual Fund

1906501

1867594

1878210

10

DSP Merrill Lynch Mutual Fund

1851211

1941856

1948293

11

LIC Mutual Fund

1616841

1715323

1749913

12

HSBC Mutual Fund

1553282

1690057

1638527

13

Sundaram BNP Paribas Mutual Fund

1261461

1216215

1189826

14

IDFC Mutual Fund

1187192

1227245

1174181

15

Deutsche Mutual Fund

1169367

1146505

1079246

16

JM Financial Mutual Fund

1044691

1198759

1104989

17

PRINCIPAL Mutual Fund

994428

1105854

1135923

18

ABN AMRO Mutual Fund

912347

853216

780266

19

Lotus India Mutual Fund

793707

823475

783075

20

Fidelity Mutual Fund

770613

767706

746382

21

ING Mutual Fund

663614

711353

709057

22

Canara Robeco Mutual Fund

600626

490239

457617

23

Benchmark Mutual Fund

390466

382564

297457

24

AIG Global Investment MF

302569

343938

351317

25

Morgan Stanley Mutual Fund

284485

299756

281399

26

JPMorgan Mutual Fund

240029

272281

305355

27

Mirae Asset Mutual Fund

230983

256327

254600

28

DBS Chola Mutual Fund

160341

161162

185311

29

Bharti AXA Mutual Fund

47049

40844

22911

30

Taurus Mutual Fund

40815

37399

0

31

Edelweiss Mutual Fund

30195

0

0

32

Escorts Mutual Fund

21127

17323

17673

33

Sahara Mutual Fund

18154

17900

17482

34

Quantum Mutual Fund

6943

7140

6568

35

Baroda Pioneer Mutual Fund

5564

6105

5562

36

Goldman Sachs Mutual Fund

0

0

0

37

Religare AEGON Mutual Fund

0

0

0

Grand Total

53015512

54544025

52934068

NAV SBI MAGNUM TAXGAIN SCHEME

HISTORICAL NAV SBI MAGNUM TAXGAIN SCHEME

PERIOD 1-JAN-2008 TO 10-SEP-2008.

SBI MAGNUM TAXGAIN SCHEME NAV Jan – Sep 2008

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Principal MF

AAuM as on 31 August 2008

AAuM as on 31 August 2008

Assets Under Management (AUM) as at the end of Aug-2008 (Rs in Lakhs)

Average AUM For The Month

Mutual Fund Name                                 August     July         % Change

Reliance Mutual Fund                             8861646 8456391    4.79%

HDFC Mutual Fund                                 5385863 5075203    6.12%

ICICI Prudential Mutual Fund                  5312445 5516066   -3.69%

UTI Mutual Fund                                     4694732 4611991    1.79%

Birla Sun Life Mutual Fund                     3820196 3749730    1.88%

SBI Mutual Fund                                     2957678 2915112    1.46%

Franklin Templeton Mutual Fund           2793603 2444095  14.30%

Tata Mutual Fund                                   2119726 2044342  3.69%

DSP Merrill Lynch Mutual Fund              1941856 1948293  -0.33%

Kotak Mahindra Mutual Fund                1867594 1878210  -0.57%

LIC Mutual Fund                                    1715323 1749913  -1.98%

HSBC Mutual Fund                                 1690057 1638527  3.14%

IDFC Mutual Fund                                  1227245 1174181  4.52%

Sundaram BNP Paribas Mutual Fund      1216215 1189826  2.22%

JM Financial Mutual Fund                       1198759 1104989  8.49%

Deutsche Mutual Fund                           1146505 1079246  6.23%

PRINCIPAL Mutual Fund                          1105854 1135923  -2.65%

ABN AMRO Mutual Fund                           853216 780266    9.35%

Lotus India Mutual Fund                           823475 783075   5.16%

Fidelity Mutual Fund                                 767706 746382   2.86%

ING Mutual Fund                                       711353 709057   0.32%

Canara Robeco Mutual Fund                     490239 457617   7.13%

Benchmark Mutual Fund                           382564 297457   28.61%

AIG Global Mutual Fund                            343938 351317  -2.10%

Morgan Stanley Mutual Fund                     299756 281399   6.52%

JPMorgan Mutual Fund                              272281 305355   -10.83%

Mirae Asset Mutual Fund                           256327 254600   0.68%

DBS Chola Mutual Fund                             161162 185311  -13.03%

Bharti AXA Mutual Fund                              40844 22911     78.27%

Taurus Mutual Fund                                    37399  N/A        0.00%

Sahara Mutual Fund                                     17900 17482    2.39%

Escorts Mutual Fund                                    17323 17673  -1.98%

Quantum Mutual Fund                                   7140  6568      8.71%

Baroda Pioneer Mutual Fund                           6105 5562     9.77%

Edelweiss Mutual Fund                                         0 N/A       0.00%

Grand Total                                        54544025.48 52934068   3.04%

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AAuM as on 31 July 2008

AAuM as on 31 July 2008

Assets Under Management (AUM) as at the end of Jul-2008 (Rs in Lakhs)
SR No Mutual Fund Name Average AUM For The Month
July June Change(%)
1 Reliance Mutual Fund 8456391 9081345 -6.88%
2 ICICI Prudential Mutual Fund 5516066 5947359 -7.25%
3 HDFC Mutual Fund 5075203 5271081 -3.72%
4 UTI Mutual Fund 4611991 5077057 -9.16%
5 Birla Sun Life Mutual Fund 3749730 4107524 -8.71%
6 SBI Mutual Fund 2915112 3013240 -3.26%
7 Franklin Templeton Mutual Fund 2444095 2474206 -1.22%
8 Tata Mutual Fund 2044342 2385289 -14.29%
9 DSP Merrill Lynch Mutual Fund 1948293 2054042 -5.15%
10 Kotak Mahindra Mutual Fund 1878210 2118330 -11.34%
11 LIC Mutual Fund 1749913 1863347 -6.09%
12 HSBC Mutual Fund 1638527 1735731 -5.60%
13 Sundaram BNP Paribas Mutual Fund 1189826 1284672 -7.38%
14 IDFC Mutual Fund 1174181 1164128 0.86%
15 PRINCIPAL Mutual Fund 1135923 1419921 -20.00%
16 JM Financial Mutual Fund 1104989 1165515 -5.19%
17 Deutsche Mutual Fund 1079246 1103738 -2.22%
18 Lotus India Mutual Fund 783075 740606.1 5.73%
19 ABN AMRO Mutual Fund 780265.8 679100.5 14.90%
20 Fidelity Mutual Fund 746381.7 810434.4 -7.90%
21 ING Mutual Fund 709056.8 849610.7 -16.54%
22 Canara Robeco Mutual Fund 457617.2 393275.3 16.36%
23 AIG Global Investment Group Mutual Fund 351317.1 380887.5 -7.76%
24 JPMorgan Mutual Fund 305355 265470.3 15.02%
25 Benchmark Mutual Fund 297457.2 264180.8 12.60%
26 Morgan Stanley Mutual Fund 281398.6 311083.5 -9.54%
27 Mirae Asset Mutual Fund 254600.1 243665 4.49%
28 DBS Chola Mutual Fund 185310.9 194078.7 -4.52%
29 Bharti AXA Mutual Fund 22911.41 N/A 0.00%
30 Escorts Mutual Fund 17673.15 16246.73 8.78%
31 Sahara Mutual Fund 17481.97 17600.87 -0.68%
32 Quantum Mutual Fund 6567.62 6661.66 -1.41%
33 Baroda Pioneer Mutual Fund 5561.89 5953.67 -6.58%
34 Edelweiss Mutual Fund N/A N/A 0.00%
35 Taurus Mutual Fund N/A 29896.08 0.00%
Total 52934068 56475276 -6.27%

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DSP World Gold Fund-Returns Analysis

DSP Merrill Lynch World Gold Fund

An open-ended fund of funds scheme, investing in gold mining companies through an international fund, with the primary objective of seeking capital appreciation by investing predominantly in units of Merrill Lynch International Investment Funds – World Gold Fund (MLIIF –WGF). The Scheme may, at the discretion of the Investment Manager, also invest in the units of other similar overseas mutual fund schemes, which may constitute a significant part of its corpus.

Returns as on 15-Jul-2008

Period For Period less than 1 Year – Absolute Return
World Gold Fund FTSE Gold Mines (CAP) Index
Since Inception 51.49 % 36.42 %

Past performance may or may not be sustained in the future and should not be used as a basis for comparison with other investments.

The FTSE Gold Mines (CAP) Index is the adopted benchmark of the scheme. The value of the index as on 15-Jul-2008 was as follows:

FTSE Gold Mines (CAP) Index : 142185.2

The NAV as on 15-Jul-2008 was Rs 15.1490

‘NA’ indicates Non-availability of Data for the specific period.

Note: As per the SEBI standards for performance reporting, the “since inception” returns are calculated on Rs. 10/- invested at inception. For this purpose the inception date is deemed to be the date of allotment, i.e. 14-September-2007.

DSP Merrill Lynch World Gold Fund

DSP Merrill Lynch World Gold Fund

An open-ended fund of funds scheme, investing in gold mining companies through an international fund, with the primary objective of seeking capital appreciation by investing predominantly in units of Merrill Lynch International Investment Funds – World Gold Fund (MLIIF –WGF). The Scheme may, at the discretion of the Investment Manager, also invest in the units of other similar overseas mutual fund schemes, which may constitute a significant part of its corpus.

Plans Minimum Investment
• Regular • Regular – Rs 5000
• SIP – Rs 1000 (min 12 installments)
Options Minimum Additional Purchase
• Growth
• Dividend – Payout
Reinvest
• Regular – Rs. 1000
Entry Load Exit Load
Plan % Load Investment Plan % Load Holding Period
Regular 2.25% < Rs. 5 crores Regular* 1% < 6 months
Nil Rs. 5 crores 0.5% 6 months < 12 months
Nil 12 months
SIP 1% SIP 1.25% < 2 years
Nil 2 years
*No entry load on direct applications i.e. applications not routed through an agent/distributor, with effect from January 4, 2008.
*Exit load is not applicable in the case of switch out into DSP Merrill Lynch World Gold Fund and any open ended equity oriented scheme/plan of the Fund (other than DSP Merrill Lynch Balanced Fund)

Indicative Asset Allocation

Under normal circumstances, it is anticipated that the asset allocation shall be as follows:

Instrument Indicative Allocation (% of Corpus) Risk Profile
Units of MLIIF-WGF or other similar overseas mutual fund scheme(s) 90% – 100% High
Money market securities and/or units of money market/liquid schemes of DSP Merrill Lynch Mutual Fund 0% – 10% Low to Medium

Investor Benefits & General Services:

STP, SWP, Nomination & Direct Deposit Application facilities available, subject to applicable conditions as per the Offer Document Redemption proceeds issued normally within 5 Business Days Declaration of NAV on all Business Days Sale and Redemption of units on all Business Days at Purchase Price and Redemption Price respectively Cut Off Time for Subscription, Redemption and Switching : 3.00 p.m.

AS ON 30th JUNE 2008
Top 10 Sectors Top 10 Stocks
Industry % to Net Assets Name of Instrument % to Net Assets
Gold 76.70% Newcrest Mining 7.90%
Platinum 11.30% Barrick Gold 6.90%
Silver/ Gold 8.90% Kinross Gold 6.60%
Cash 2.30% Impala 5.50%
Diamonds 0.80% Minas Buenaventura 5.40%
INDS Penoles 4.10%
Goldcorp 5.40%
Lihir Gold 4.60%
Agnico Eagle Mines 4.00%
Newmont Mining 4.00%

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Reliance SIP+Insure Forms Downloads

Kindly find the link to download forms for Reliance SIP+Insure

Reliance SIP+Insure Form Download(<-Click here) (A new window to a file sharing site shall open)

This forms are for No Broker(ARN-Direct) Applications only. In case you have an existing broker and wish to continue with the same kindly do not download this form.

Reliance SIP + Insure

Reliance SIP Insure (Systematic Investment Plan) facility is an add on feature of life insurance cover under Group Term Insurance to individual investors opting for SIP in the designated schemes.

It helps to encourage individual investors to save & invest regularly through Systematic Investment Plan (SIP) and help achieve their financial objective without any hindrance

What is the Facility?

  • Reliance SIP Insure provides free life insurance cover to investors at no extra cost. In the unfortunate event of the demise of an investor during the tenure of the SIP, the insurance company will pay for the sum assured as per the terms and conditions of the facility.
  • Thus, the nominee* would be able to continue in the scheme without having to make any further contribution. Investor’s long term financial planning and objective of investing through SIP could still be fulfilled as per the targeted time horizon, even if he/she dies prematurely.

Reliance SIP Insure- Benefits to the investor

**The benefit of Long Term Equity Investment

  • Equities provide relatively better returns among all asset classes over a longer period of time

**The benefit of Systematic Investment Plan:

  • Inculcates Savings Habit
  • Rupee Cost Averaging & Eliminates the need to time the market

**Free Life Insurance Cover

  • Helps to complete the planned investments
  • Maturity Proceeds at NAV based prices

**Flexibility

  • Wide choice of eligible schemes

**Convenience

  • Auto Debit from 4 banks namely ICICI bank, HDFC bank, AXIS bank & HSBC
  • ECS facility across – 65 locations

*Nominee account would mean nominee in case of single holding & second or joint holder in case of Joint Holding

Designated Schemes in which Reliance SIP Insure will be offered

  • Reliance Growth Fund – Retail Plan
  • Reliance Vision Fund – Retail Plan
  • Reliance Equity Opportunities Fund – Retail Plan
  • Reliance Equity Fund – Retail Plan
  • Reliance Equity Advantage Fund- Retail Plan
  • Reliance Regular Savings Fund – Equity option
  • Reliance Regular Savings Fund – Balanced option
  • Reliance Banking Fund
  • Reliance Pharma Fund
  • Reliance Media & Entertainment Fund
  • Reliance Diversified Power Sector Fund – Retail Plan
  • Reliance Natural Resources Fund
  • Reliance Quant Plus Fund – Retail Plan
  • Reliance Tax Saver (ELSS) Fund

Amount of Life Insurance Cover Available:

Under Reliance SIP Insure, the investors are provided life insurance cover without any extra cost under a Group Term Insurance scheme.

The Life Insurance Cover under ‘SIP Insure’ facility will be enhanced as per the following clauses;

  • In the event of death of unit holder within the 1st two years of the commencement of the insurance cover: An amount equivalent to the aggregate balance of unpaid SIP instalments, subject to a maximum of Rs.10 lakhs per investor across all schemes / plans and folios.
  • In the event of death of the unit holder after completion of 2 years (i.e. w.e.f. commencement of 3rd year onwards): An amount equivalent to two times the targeted SIP contribution (committed at the time of registration) i.e. Number of SIP Instalments enrolled for X Amount of Instalment X 2, subject to a maximum of Rs.10 lakhs per investor across all schemes / plans and folios.

The amount of life insurance cover shall be invested in the Nominee’s account in the same scheme* under which the deceased investor has enrolled for SIP Insure at the applicable price based on the closing NAV on the date on which the cheque for insurance claim settlement is received by the AMC from the insurance company, subject to completion of requisite procedure for transmission of units in favour of the nominee.

* Not applicable for Reliance Tax Saver (ELSS) Fund. Investors are requested to note that there will be a lock – in period of 3 years for each SIP Insure installment under ‘Reliance Tax Saver (ELSS) Fund’ as per the Government Notification of 2005 and in the event of demise of the unitholder, the nominee would be able to withdraw the investment amount only after the completion of one year from the date of allotment of the units or anytime thereafter without any exit load. The insurance amount as per the above clauses a) and b) subject to a maximum of Rs. 10 lakhs in a lumpsum in cash will be paid to the nominee in case of death of the unitholder (unlike other schemes, wherein the insurance amount will be compulsorily invested in the respective scheme and the nominee is allotted the units.)

Thus, the amount of free life insurance cover could go upto 360 times of the monthly SIP installment depending upon the enrolled SIP tenure.

Eligibility

  • All individual investors enrolling for investments via SIP & opting for ‘Reliance SIP Insure’
  • Only individual investors whose completed age is greater than 20 years and less than 46 years at the time of investment.
  • In case of multiple holders in the any scheme, only the first unit holder will be eligible for the insurance cover.

Investment Details

  • Minimum Investment per installment: Rs.1000 per month & in multiples of Re 1 thereafter. (Except for Reliance Tax Saver (ELSS) Fund where it is Rs 1000 p.m and in multiples of Rs 500 thereafter). There is no upper limit.
  • Minimum Period of Contribution: 3 years and in multiples of 1 year thereafter.
  • Maximum Period of Contribution: 15 years OR till attaining 55 years of age, whichever is earlier (e.g., a person can register an SIP of maximum 10 yrs at the age of 45 yrs.) The insurance cover ceases when the investor attains 55 years of age.
  • Mode of payment of SIP installments is only through Direct Debit & ECS ( Post Dated Cheques shall not be accepted )

Reliance SIP Insure – How does this work?

  • An investor does a monthly SIP of Rs.5,000 for 5 years in Reliance Growth Fund
  • If he dies after a period of 3 yrs, then his Sum Assured= Number of SIP Instalments enrolled for X Amount of Instalment X 2 = 60 X 5,000 X 2 = Rs 3 lacs X 2 = Rs 6,00,000

This amount will be paid by life insurance company to SIP investor’s nominee account* with Reliance Mutual Fund and will be invested in Reliance Growth Fund (in the same scheme in which the deceased has earlier invested)

Commencement of Insurance Cover: The Insurance cover shall commence after “waiting period” of 90 days from the commencement of SIP installments. However, the waiting period will not be applicable in respect of accidental deaths.

*Nominee account would mean nominee in case of single holding & second or joint holder in case of Joint Holding

Cessation of Insurance Cover:

The insurance cover shall cease upon occurrence of any of the following:

  • At the end of mandated Reliance SIP Insure tenure. i.e., upon completion of payment of all the monthly installments as registered.
  • Discontinuation SIP installments midway by the investor i.e., before completing the opted SIP tenure /installments.
  • Redemption / switch-out of units purchased under Reliance SIP Insure before completion the mandated SIP tenure / installments
  • In case of default in payment of two consecutive monthly SIP installments or four separate occasions of such defaults during the tenure of the SIP duration chosen.

Note -There is no provision for revival of insurance cover, once the insurance cover ceases as stated above

Exclusions for Insurance cover

No insurance cover shall be admissible in respect of death of the SIP-Insure unitholder (the insured person) on account of -

  • Death due to suicide
  • Death within 90 days from the commencement of SIP installments except for death due to accident
  • Death due to pre-existing illness, disease(s) or accident which has occurred prior to the start of cover.

Load Structure

  • The Entry Load under Reliance SIP Insure shall be same as applicable to normal purchase /additional purchase transactions in the respective designated schemes
  • However, there will an Exit Load of 2%, if the accumulated units acquired or allotted under Reliance SIP Insure are redeemed or switched out to another scheme before the maturity of SIP tenure as opted in the respective scheme either by the SIP-Insure unitholder or by the nominee*, as the case may be.

Note:

  • In the event of the death of the investor before completion of SIP Insure Tenure, in case of any contingency there is an option with the nominee* to redeem the amount by paying an exit load of 2% on the repurchase units.
  • However, if the units are redeemed on completing the opted SIP tenure, there will not be any exit load in the respective scheme.

*Nominee account would mean nominee in case of single holding & second or joint holder in case of Joint Holding
The insurance cover for the above schemes is being arranged by the AMC through “Reliance Group Term Insurance Scheme” of Reliance Life Insurance Company Limited. The cost of the insurance premia shall be borne by the AMC.
Free life insurance cover provided as a part of an add on feature called as ‘Reliance SIP Insure’ is arranged and funded by Reliance Capital Asset Management Limited through “Reliance Group Term Insurance Scheme” of Reliance Life Insurance Company Limited.
During the first 2 years of coverage, the sum assured will be limited to the sum of the outstanding SIP instalments from the date of death to be payable in lump sum, subject to a maximum of INR 10 Lakhs. From the third year onwards, the sum assured will be a flat cover equivalent to twice the initial sum assured (i.e., monthly SIP instalment * SIP period in months), subject to a maximum of INR 10 Lakhs. Subject to Conditions.

Source : Reliance Mutual Fund website.

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Kotak Gold ETF Price movement chart.

Kotak Gold ETF Price movement chart.
Below is the price movement chart for Kotak Gold ETF since 01-Jan-2008 till 28-May-2008. A trendline is also added to the chart for better understanding purpose.
The prices are the applicable NAV for corresponding period or dates.

Kotak Gold ETF Price movement chart

Kotak Gold ETF Price movement chart

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Reliance Gold ETF Price movement chart

Reliance Gold ETF Price movement chart.

Below is the price movement chart for Reliance Gold ETF since 01-Dec 2007 till 29-April-2008.

Price movement chart for Reliance Gold ETF

Price movement chart for Reliance Gold ETF

A trendline is also added to the chart for better understanding purpose.

The prices are the applicable NAV for corresponding period or dates.

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F.A.Q’s ETF (PART 3)

ETFs are different from Mutual funds in the sense that ETF units are not sold to the public for cash. Instead, the Asset Management Company that sponsors the ETF (Fund) takes the shares of companies comprising the index from various categories of investors like authorized participants, large investors and institutions. In turn, it issues them a large block of ETF units. Since dividend may have accumulated for the stocks at any point in time, a cash component to that extent is also taken from such investors. In other words, a large block of ETF units called a “Creation Unit” is exchanged for a “Portfolio Deposit” of stocks and “Cash Component”.

The number of outstanding ETF units is not limited, as with traditional mutual funds. It may increase if investors deposit shares to create ETF units; or it may reduce on a day if some ETF holders redeem their ETF units for the underlying shares. These transactions are conducted by sending creation / redemption instructions to the Fund. The Portfolio Deposit closely approximates the proportion of the stocks in the index together with a specified amount of Cash Component. This “in-kind” creation / redemption facility ensures that ETFs trade close to their fair value at any given time.

Some investors may prefer to hold the creation units in their portfolios. While others may break-up the creation units and sell on the exchanges, where individual investors may purchase them just like any other shares.

ETF units are continuously created and redeemed based on investor demand. Investors may use ETFs for investment, trading or arbitrage. The price of the ETF tracks the value of the underlying index. This provides an opportunity to investors to compare the value of underlying index against the price of the ETF units prevailing on the Exchange. If the value of the underlying index is higher than the price of the ETF, the investors may redeem the units to the Sponsor in exchange for the higher priced securities. Conversely, if the price of the underlying securities is lower than the ETF, the investors may create ETF units by depositing the lower-priced securities. This arbitrage mechanism eliminates the problem associated with closed-end mutual funds viz. the premium or discount to the NAV.

F.A.Q’s ETF (PART 2)

Exchange Traded Funds (ETF) and its advantages:

Advantages of ETFs

While many investors have similar outlooks, no two are exactly alike. Due to the unique structure of ETFs, all types of investors, whether retail or institutional, long-term or short-term, can use it to their advantage without being at a disadvantage to others. They allow long-term investors to diversify their portfolio at one shot at low cost and insulate them from short-term trading activity due to the unique “in-kind” creation / redemption process. They provide liquidity for investors with a shorter-term horizon as they can trade intra-day and can have quotes near NAV during the course of trading day. As initial investment is low, retail investors find it simple and convenient to buy / sell. They facilitate FIIs, Institutions and Mutual Funds to have easy asset allocation, hedging, equitising cash at a low cost. They enable arbitrageurs to carry out arbitrage between the Cash and the Futures markets at low impact cost.

ETFs provide exposure to an index or a basket of securities that trade on the exchange like a single stock. They offer a number of advantages over traditional open-ended index funds as follows :

* While redemptions of Index fund units takes place at a fixed NAV price (usually end of day), ETFs offer the convenience of intra-day purchase and sale on the Exchange, to take advantage of the prevailing price, which is close to the actual NAV of the scheme at any point in time.

* They provide investors a fund that closely tracks the performance of an index throughout the day with the ability to buy/sell at any time, whereby trading opportunities that arise during a day may be better utilized.

* They are low cost.

* Unlike listed closed-ended funds, which trade at substantial premia or more frequently at discounts to NAV, ETFs are structured in a manner which allows Authorized Participants and Large Institutions to create new units and redeem outstanding units directly with the fund, thereby ensuring that ETFs trade close to their actual NAVs.

* ETFs are like any other index fund, wherein, subscription / redemption of units work on the concept of exchange with underlying securities instead of cash (for large deals).

* Since an ETF is listed on an Exchange, costs of distribution are much lower and the reach is wider. These savings in cost are passed on to the investors in the form of lower costs. Further, the structure helps reduce collection, disbursement and other processing charges.

* ETFs protect long-term investors from inflows and outflows of short-term investors. This is because the fund does not incur extra transaction cost for buying/selling the index shares due to frequent subscriptions and redemptions.

* Tracking error, which is divergence between the NAV of the ETF and the underlying Index, is generally observed to be low as compared to a normal index fund due to lower expenses and the unique in-kind creation / redemption process.

* ETFs are highly flexible and can be used as a tool for gaining instant exposure to the equity markets, equitising cash or for arbitraging between the cash and futures market.

The first ETF in India, “Nifty BeEs (Nifty Benchmark Exchange Traded Scheme) based on S&P CNX Nifty, was launched in January 2002 by Benchmark Mutual Fund. It may be bought and sold like any other stock on NSE. Its symbol on NSE is “NIFTYBEES”.

F.A.Q’s ETF (PART 1)

ETFs are just what their name implies: baskets of securities that are traded, like individual stocks, on an exchange. Unlike regular open-end mutual funds, ETFs can be bought and sold throughout the trading day like any stock.

Most ETFs charge lower annual expenses than index mutual funds. However, as with stocks, one must pay a brokerage to buy and sell ETF units, which can be a significant drawback for those who trade frequently or invest regular sums of money.

They first came into existence in the USA in 1993. It took several years for them to attract public interest. But once they did, the volumes took off with a vengeance. Over the last few years more than $120 billion (as on June 2002) is invested in about 230 ETFs. About 60% of trading volumes on the American Stock Exchange are from ETFs. The most popular ETFs are QQQs (Cubes) based on the Nasdaq-100 Index, SPDRs (Spiders) based on the S&P 500 Index, iSHARES based on MSCI Indices and TRAHK (Tracks) based on the Hang Seng Index. The average daily trading volume in QQQ is around 89 million shares.

Their passive nature is a necessity: the funds rely on an arbitrage mechanism to keep the prices at which they trade roughly in line with the net asset values of their underlying portfolios. For the mechanism to work, potential arbitragers need to have full, timely knowledge of a fund’s holdings.

In essence, ETFs trade like stocks and therefore offer a degree of flexibility unavailable with traditional mutual funds. Specifically, investors can trade ETFs throughout the trading day as in stocks. In comparison, in a traditional mutual fund, investors can purchase units only at the fund’s NAV, which is published at the end of each trading day. In fact, investors cannot purchase ETFs at the closing NAV. This difference gives rise to an important advantage of ETFs over traditional funds: ETFs are immediately tradable and consequently, the risk of price differential between the time of investment and time of trade is substantially less in the case of ETFs.

ETFs are cheaper than traditional mutual funds and index funds in terms of fees. However, while investing in an ETF, an investor pays a commission to the broker. The tracking error of ETFs is generally lower than traditional index funds due to the “in-kind” creation / redemption facility and the low expense ratio. This “in-kind” creation / redemption facility ensures that long-term investors do not suffer at the cost of short-term investor activity.

ETFs can be bought / sold through trading terminals anywhere across the country. Table No. 1 presents a comparative view ETFs vis-à-vis other funds.
ETFs Vs. Open Ended Funds Vs. Close Ended Funds

Parameter Open Ended Fund Closed Ended Fund Exchange Traded Fund

Fund Size Flexible Fixed Flexible

NAV Daily Daily Real Time

Liquidity ProviderFund itself Stock Market Stock Market / Fund itself
Sale Price At NAV plus load, Significant Premium Very close to actual NAV of Scheme
if any / Discount to NAV

Availability Fund itself Through Exchange where listedThrough Exchange where listed / Fund
itself.

Portfolio Disclosure Monthly Monthly Daily/Real-time

Uses Equitising cash - Equitising Cash, Hedging, Arbitrage

Intra-Day Trading Not possible Expensive Possible at low cost

Applications of ETFs

* Efficient Trading : ETFs provide investors a convenient way to gain market exposure viz. an index that trades like a stock. In comparison to a stock, an investment in an ETF index product provides a diversified exposure to the market. Depending on the index, investors may obtain exposure to countries/ markets or sectors.

* Equitising Cash : Investors with idle cash in their portfolios may want to invest in a product tied to a market benchmark like an index as a temporary investment before deciding which stocks to buy or waiting for the right price.

* Managing Cash Flows : Investment managers who see regular inflows and outflows may use ETFs because of their liquidity and their ability to represent the market.

* Diversifying Exposure : If an investor is not sure about which particular stock to buy but likes the overall sector, investing in shares tied to an index or basket of stocks provides diversified exposure and reduces stock specific risk.

* Filling Gaps : ETFs tied to a sector or industry may be used to gain exposure to new and important sectors. Such strategies may also be used to reduce an overweight or increase an underweight sector.

* Shorting or Hedging : Investors who have a negative view on a market segment or specific sector may want to establish a short position to capitalize on that view. ETFs may be sold short against long stock holdings as a hedge against a decline in the market or specific sector.

AAuM as on 30 June 2008

AAuM as on 30 June 2008

Rank AMC AAuM Rs in lacs.
1 Reliance Mutual Fund 9081345.11
2 ICICI Prudential Mutual Fund 5947358.64
3 HDFC Mutual Fund 5271080.51
4 UTI Mutual Fund 5077056.56
5 Birla Sun Life Mutual Fund 4107523.54
6 SBI Mutual Fund 3013240.09
7 Franklin Templeton Mutual Fund 2474206.35
8 Tata Mutual Fund 2385289.12
9 Kotak Mahindra Mutual Fund 2118330.04
10 DSP Merrill Lynch Mutual Fund 2054041.86
11 LIC Mutual Fund 1863346.86
12 HSBC Mutual Fund 1735730.82
13 PRINCIPAL Mutual Fund 1419920.79
14 Sundaram BNP Paribas Mutual Fund 1284672.32
15 JM Financial Mutual Fund 1165515.19
16 IDFC Mutual Fund 1164128.48
17 Deutsche Mutual Fund 1103737.79
18 ING Mutual Fund 849610.65
19 Fidelity Mutual Fund 810434.39
20 Lotus India Mutual Fund 740606.11
21 ABN AMRO Mutual Fund 679100.47
22 Canara Robeco Mutual Fund 393275.34
23 AIG Global Investment Group Mutual Fund 380887.45
24 Morgan Stanley Mutual Fund 311083.45
25 JPMorgan Mutual Fund 265470.28
26 Benchmark Mutual Fund 264180.76
27 Mirae Asset Mutual Fund 243664.98
28 DBS Chola Mutual Fund 194078.69
29 Taurus Mutual Fund 29896.08
30 Sahara Mutual Fund 17600.87
31 Escorts Mutual Fund 16246.73
32 Quantum Mutual Fund 6661.66
33 BOB Mutual Fund 5953.67
34 Bharti AXA Mutual Fund N/A
35 Edelweiss Mutual Fund N/A
Grand Total 56475275.65

We dont need no ULIP’s anymore.

Now various mutual fund houses have introduced Funds with insurance cover. And the product seems to a good match to ULIP. If product such as RELIANCE SIP, Century SIP from Birla MF catch on, the insurance agent might well be history.

Ganpat Bhai is an insurance agent. Be it the wedding of his friend’s daughter or a relative’s friend never misses a chance to sell a unitlinked insurance plan (Ulip) or two. Ganpat Bhai has sold them for years, playing on the twin emotions of fear and greed commonly found in human beings. For those who feared the future, he sold Ulip as insurance. And, for thhose who wanted their money to multiply, he sold them as investments.
Never mind the fear of mis-selling, client profiling which required, he managed to sell same product to all.
Mutual Funds often lost out because Ulip had this liquid-like property, where they took the shape of whatever vessel they were poured into. MF’s were rigid-they were purely investment products and did not provide for worldly happenings such as death.
Then, fund houses suddenly woke up. Take a leaf out of the insurance companies’ book, they started offering plans that offered insurance, too. DejaVu, the life of insurance agents turned into nightmares all of a sudden. The sky high commissions, mis-selling that they were used to all seemed to disappear in thin air.

Reliance SIP and Birla Sun Life Mutual Fund’s Century SIP is the latest in that line. Birla’s SIP is a systematic investment plan (SIP) that is optional. The plan should not be confused with a mutual fund scheme. While a scheme has a specific investment objective, an SIP is just a mode of investment that can be applies to any of the various schemes offered by a fund house. At present, Century SIP will be available on all 18 open-ended equity scheme offered by the fund house.
To participate in this plan, an investor needs to invest a minimum of Rs.1,000 every month. There is no upper limit for this investment. Under this plan, an MF investor will get insurance cover on his life 45 days after paying the first instalment. While some fund house charge a fee for this cover, Birla MF is offering it free of charge. In the first 45 days, only accidental deaths will be compensated.
The cover will be available to the investor till he or she turns 55. So the tenure of the cover under Century SIP will be 55 years minus the current age of the investor.
For an investor aged 40 years and five months, the tenure of the Century SIP insurance cover will be 14 years and seven months. Let’s say an investor starts an SIP of Rs 5,000 per month. If he dies within the first year of paying his instalments, his nominee is eligible for a cover of 19 times the SIP amount- Rs 50,000. If he dies during the second year of SIP payments, the nominee get 50 times the SIP amount as the life cover – Rs2.5 lakh. And if he dies any time in the third year or after that, the nominee gets 100 times the monthly SIP amount Rs5 lakh. Here again, thecover is subject to a maximum of Rs20 lakh.
The cover cannot be claimed if the SIP is discontinued before the completion of three years or if the investor defaults on payments of instalments on two consecutive occasions.
Investor who can afford to set aside at least Rs. 1,000 every month for equity investments can take this offer, depending, of course, on the underlying scheme’s compatibility with your investment goal. Thus, if none of the Birla schemes fits your needs, you should not take one just because it offers free insurance. But if one does, the Century SIP is a good reason to make that switch.
Ganpat Bhai still believes only insurance companies can offer good insurance. But, sooner or later, as the trend catches on, be sure even he will come around to seeing sense.