Quote of the day

Tuesday, June 10, 2014

Time to review your portfolio

Today NSE is trading at a trailing PE of 20.80 At this point of time one should start thinking of portfolio balancing if one is not rebalancing over a period of time. Time to step up and call your financial doctor for your portfolio health checkup. Certainly this is the decade to make money like anything. Happy investing!!!

Thursday, April 11, 2013

SEBI prevents attempt to mis-sell an investment product

SEBI today prevented an attempt to mis-sell an investment product to an investor in Delhi by a person claiming as agent of mutual funds.

SEBI had received a complaint from an investor (hereinafter referred to as ' complainant') that some unknown persons claiming to be 'agents' and 'brokers' of Mutual Funds and insurance companies have been contacting the complainant saying that the deceased son of the complainant had invested in Mutual Funds and they are maturing in a short while. In order to get the full amount, the complainant must issue a cheque in advance for a new mutual fund scheme or insurance policy failing which the complainant will lose a substantial portion of the maturity amount as broker commission. The 'agent' informed the complainant that the son had made investments in Mutual funds which are about to mature and on maturity the complainant will get only Rs. 5 lacs. However, the 'agent' further stated that if the complainant makes a further investment of Rs.2.5 lacs, the complainant will get maturity proceeds to the tune of Rs.12.5 lacs.

Thereafter, the Investigations Department of SEBI conducted preliminary investigations where it was found that the phone numbers from which the 'agent' had called were in some others' name and the Company was also in a different name. Sensing a clear attempt to defraud, cheat and misappropriate as well as missell financial products, SEBI deputed an official to visit the 'complainant' at the time of the visit of the 'agent'. The assistance of the Economic Offences Wing of the Delhi Police was also taken. On perusal of the forms and after preliminary enquiries, the suspicions were confirmed that indeed there was an organised attempt by several people to defraud and missell and accordingly an FIR to that effect is being lodged with Delhi Police.

It is suspected that the number of victims of such fraudulent attempts could be much higher, which would be revealed in due course after further investigations by Delhi Police and SEBI.

SEBI cautions investors that investors should verify the credentials of people approaching them as agents / employees before making any investment through such agents / employees.

Direct, Indirect or Nothing?

Investing through direct plans of funds makes sense when investors are certain that going through an intermediary offers no value...
Since the beginning of this year, mutual fund investors have had the option of investing in funds directly with the fund companies in special 'direct' plans of all funds. While investors could have invested directly earlier too, there was no advantage in doing so. However, since January 1, SEBI has asked fund companies to create special direct plans in which the commission that would otherwise have been paid to intermediaries goes to the fund's NAV, and thus to investors.

Even though it's early days yet, a handful of investors have started coming in through direct plans. This number could only grow in the future. It appears that compared to corresponding indirect plans, direct ones will have higher returns of the order of 0.4 per cent to 0.7 per cent per year. Over a long period, that does accumulate. During the last decade, the median large cap equity fund had returns of 18.81 per cent a year. That means an investment of Rs 1 lakh would have grown to Rs 5.37 lakh. A direct plan with returns of half a per cent more would have delivered Rs 5.60 lakh.

Investors should maximise value but you have to decide whether over ten years this differential is large enough to forego the services of an intermediary. The answer depends entirely on what services your fund advisor offers you and whether you can substitute them yourself. Ideally, an advisor would be helping you with investment advise as well procedural help. If you don't think these are worth the extra money and you are confident of your do-it-yourself abilities, then you should go direct.

However, I find that the most important service that intermediaries provide is often not given enough importance--many a time, their sales pitch goads you into investing when you may not have done so. The worst investment is often when you don't invest at all and making you invest could be the most valuable service of all.

Source: http://www.valueresearchonline.com/story/h2_storyview.asp?str=22627

Wednesday, March 20, 2013

Mutual fund products: Sebi issues colour codes, labelling

Market regulator Sebi has issued a guidelines on 'product labelling' with colour coding for mutual funds (MFs), a move that would help investors assess the risk associated with the schemes.

The guidelines would be effective from July 1, 2013, for all existing and forthcoming schemes, Securities and Exchange Board of India (Sebi) said in a circular yesterday.

As per the norms, product labels carrying details about the schemes would be disclosed on the front page of initial offering application forms.

Besides, the labels would have to be placed in common applications forms and advertisements.

The regulator has also decided up on colour codes to indicate the level of risk associated with the product.
A blue colour coded box would indicate low risk, yellow would signify a medium risk, while brown would be represent schemes with high risk, Sebi said.

"In order to address the issue of mis-selling, a committee was set up to examine the system of product labelling that would provide investors an easy understanding of the kind of product/scheme they are investing in and its suitability to them," Sebi said.

Based on the recommendations by the committee, it has been decided that all the mutual funds would 'label' their schemes on certain parameters, it added.

The labels would include details about the nature of schemes "such as to create wealth or provide regular income in an indicative time horizon (short/ medium/ long term)".

Moreover, 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 or debt).

As per the guidelines, mutual funds would also have to include a disclaimer that "investors should consult their financial advisers if they are not clear about the suitability of the product".

Sebi said that the product label has to be placed in proximity to the caption of the scheme in the initial offering -- Key Information Memorandum (KIM) and Scheme Information Documents (SIDs) -- and common applications so that they are prominently visible to investors.

Source: http://www.indianexpress.com/news/mutual-fund-products-sebi-issues-colour-codes-labelling/1090399/0

Thursday, January 17, 2013

AMFI to waive registration fees from first time mutual fund distributors

Industry body Association of Mutual Funds in India (AMFI) today decided to waive registration fees, estimated at Rs 3,000, for first time distributors for a period of five months beginning February 1.

The initiative is aimed at enlarging distribution network and attracting new cadre of distributors or Independent Financial Advisors (IFAs) for selling mutual fund products, AMFI said in a release here.

AMFI has "decided to waive registration fees for all registrations of first time distributors for a period of five months from February 1, 2013 to June 30, 2013."

The objective is to create larger number of 'feet-on-street' to distribute mutual fund products, AMFI Chief Executive H N Sinor said.

In November last year, AMFI had slashed registration fees to Rs 3,000 for three years per distributor from Rs 5,000.

The distributors registering under the category of individuals, including senior citizens and new cadre of distributors, need not pay the registration fees during the five-month period, the release said today.

After two years of successive decline, the mutual fund industry managed to register rise in assets base nearing Rs 8 lakh crore with an increase of about Rs 2 lakh crore in 2012.

As per industry data, the total assets under management (AUM) of all the fund houses put together rose by 30 per cent on strong inflows in fixed income, gold schemes and liquid funds.

Market regulator SEBI last year introduced a new cadre of distributors, who have been allowed to sell units of simple and performing schemes to increase the strength of mutual fund distribution network.

Source: http://www.indianexpress.com/news/amfi-to-waive-registration-fees-from-first-time-mutual-fund-distributors/1060214/0

LIC Nomura Mutual Fund re-launches ULIS with more features

LIC Nomura Mutual Fund has re-launched its open ended Unit-Linked Insurance Scheme (ULIS) today with additional features aiming at Rs 500 crore assets under management (AUM) by the end of FY13, with one lakh new investors.

"ULIS has a good track record since 23 years. With additional features, we expect the fund to have Rs 500 crore AUM, with one lakh new investors," LIC Nomura Mutual Fund CEO Nilesh Sathe told reporters today.

The asset management company has tied up with 14 banks to sell this scheme, he said.

At present, ULIS has Rs 140 crore AUM, he said, adding that in three years, it plans to have Rs 1,000 crore AUM for the scheme.

The scheme's additional features include free accident cover up to Rs 1 lakh, guaranteed maturity bonus of 2.5 per cent to 10 per cent of target amount; no exit load as well as auto cover option, besides low-cost life insurance.

Fund allocation is balanced with 65 to 80 per cent invested in equity and 20 to 35 per cent in debt, he said.

The fund, which has three-year lock-in period, allows partial withdrawal subject to minimum balance requirement and top-up facility.

Investment in ULIS as well as its dividend is tax free.

Source: http://www.indianexpress.com/news/lic-nomura-mutual-fund-relaunches-ulis-with-more-features/1059685

Sebi cancels registration of Fidelity Mutual Fund

Capital market regulator Sebi has cancelled the registration of Fidelity Mutual Fund following its buyout by L&T Finance.

The decision was taken following the acquisition of Fidelity Mutual Fund by L&T Finance and at the request of FIL Fund Management, the Asset Management Company (AMC) of Fidelity Mutual Fund.

Securities and Exchange Board of India (Sebi), through its letter dated January 14, has "cancelled the certificate of registration of Fidelity Mutual Fund and has withdrawn the approval granted to FIL Fund Management to act as the Asset Management Company."

Consequently, Fidelity Mutual Fund, FIL Trustee Company and FIL Fund Management cannot carry out any activity as a Mutual Fund, Trustee Company and asset management company, respectively, with immediate effect.

In November, L&T Finance, a part of diversified group Larsen & Toubro, had completed the acquisition of Fidelity's mutual fund business in India for an undisclosed amount.

L&T Finance is a part of engineering conglomerate L&T Group and Fidelity Mutual Fund is part of the US-based

Fidelity Worldwide Investment.

Source: http://www.indianexpress.com/news/sebi-cancels-registration-of-fidelity-mutual-fund/1060190/

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Aggrasive Portfolio

  • Principal Emerging Bluechip fund (Stock picker Fund) 11%
  • Reliance Growth Fund (Stock Picker Fund) 11%
  • IDFC Premier Equity Fund (Stock picker Fund) (STP) 11%
  • HDFC Equity Fund (Mid cap Fund) 11%
  • Birla Sun Life Front Line Equity Fund (Large Cap Fund) 10%
  • HDFC TOP 200 Fund (Large Cap Fund) 8%
  • Sundram BNP Paribas Select Midcap Fund (Midcap Fund) 8%
  • Fidelity Special Situation Fund (Stock picker Fund) 8%
  • Principal MIP Fund (15% Equity oriented) 10%
  • IDFC Savings Advantage Fund (Liquid Fund) 6%
  • Kotak Flexi Fund (Liquid Fund) 6%

Moderate Portfolio

  • HDFC TOP 200 Fund (Large Cap Fund) 11%
  • Principal Large Cap Fund (Largecap Equity Fund) 10%
  • Reliance Vision Fund (Large Cap Fund) 10%
  • IDFC Imperial Equity Fund (Large Cap Fund) 10%
  • Reliance Regular Saving Fund (Stock Picker Fund) 10%
  • Birla Sun Life Front Line Equity Fund (Large Cap Fund) 9%
  • HDFC Prudence Fund (Balance Fund) 9%
  • ICICI Prudential Dynamic Plan (Dynamic Fund) 9%
  • Principal MIP Fund (15% Equity oriented) 10%
  • IDFC Savings Advantage Fund (Liquid Fund) 6%
  • Kotak Flexi Fund (Liquid Fund) 6%

Conservative Portfolio

  • ICICI Prudential Index Fund (Index Fund) 16%
  • HDFC Prudence Fund (Balance Fund) 16%
  • Reliance Regular Savings Fund - Balanced Option (Balance Fund) 16%
  • Principal Monthly Income Plan (MIP Fund) 16%
  • HDFC TOP 200 Fund (Large Cap Fund) 8%
  • Principal Large Cap Fund (Largecap Equity Fund) 8%
  • JM Arbitrage Advantage Fund (Arbitrage Fund) 16%
  • IDFC Savings Advantage Fund (Liquid Fund) 14%

Best SIP Fund For 10 Years

  • IDFC Premier Equity Fund (Stock Picker Fund)
  • Principal Emerging Bluechip Fund (Stock Picker Fund)
  • Sundram BNP Paribas Select Midcap Fund (Midcap Fund)
  • JM Emerging Leader Fund (Multicap Fund)
  • Reliance Regular Saving Scheme (Equity Stock Picker)
  • Biral Mid cap Fund (Mid cap Fund)
  • Fidility Special Situation Fund (Stock Picker)
  • DSP Gold Fund (Equity oriented Gold Sector Fund)