UTI MF to start financial literacy drive; partners HDFC Bank

UTI Mutual Fund is starting its second round of pan- India .investor education and financial inclusion initiative from February 2 to spread awareness about benefits of investing in mutual funds .

As part of the initiative, christened as Swatantra, two UTI knowledge caravans will travel across Kerala, Karnataka and Tamil Nadu, starting from Thiruvananthapuram, to spread awareness about financial planning, UTI MF CMO Jaideep Bhattacharya said.

For this, UTI MF has tied up with HDFC Bank, the largest distributor of mutual fund products, which would arrange the investor meets across rural areas in Southern India. "We aim to impart financial literacy to a larger subset of rural customers across the 250 rural and semi-rural branches of HDFC Bank," HDFC Bank Senior Executive VP (Third Party Products & Private Banking) Nitin Rao said.

During the journey of 56 days, investors meets would be held in various centres across 130 towns. The initiative is in partnership with the Ministry of Corporate Affairs.

"With the high prices of essential commodities it is very essential that investors get high return on their investments. We are customising the initiative as per the local language to spread awareness about the convenience of buying and selling MFs," Bhattacharya said.

UTI MF hopes the initiative would help expand the fund industry's reach and bring in new investors as HDFC Bank will ask its customers to invest in mutual funds. "If savings has to move to investments, it is necessary that financial literacy is imparted to people in regional language," he added.

In its first leg of investor education initiative beginning July 6, 2010, UTI MF had arranged for three specially-designed vans to move across the country over 100 days. During this journey, more than 1,300 investor meets will be conducted in 300 cities and 100 days with an estimated 15 lakh participants.

The investor education initiative would see UTI MF officers and advisors talking about financial literacy, that would help individuals take prudent investment decisions.

Source: http://economictimes.indiatimes.com/personal-finance/mutual-funds/mf-news/uti-mf-to-start-financial-literacy-drive-partners-hdfc-bank/articleshow/7389520.cms

Fidelity India Children's Plan: Towards a set goal

Investing with a pre-determined goal in mind helps investors choose the right kind of investment avenues besides systematically saving over the given time-frame.

Fidelity India Children's Plan, is an open-ended mutual fund scheme which, through different asset allocation patterns, allows investors to invest towards a set goal. The plan has three different funds in which to invest in – Education Fund, Marriage Fund and Savings Fund.

Investments in the schemes are allowed only on behalf of a minor by parents and a few others.

Balanced style

The Education Fund has a mandate to invest up to 70 per cent of its portfolio in equity and the rest in debt instruments; the strategy being similar to a balanced fund. It would be interesting to take note of the kinds of returns equity-oriented balanced funds have managed in the past.

Some of the best performing funds such as HDFC Prudence, DSPBR Balanced and Birla Sun Life 95 have delivered compounded annual returns in the range of 18-27 per cent over a 10-year period. Over a five-year time-frame the returns hover around the 18-20 per cent levels. Equity-oriented balanced funds as a category, have delivered around 13 per cent compounded annual return over a five-year horizon.

Investments in balanced funds through the SIP (systematic investment plan) mode too would have delivered impressive returns, although a few percentage points less than the lump-sum returns mentioned above over a 10-year period.

Overall, while balanced funds have lagged market returns over short time-frames of, say, six months, their long-term track record has been impressive.

Asset-allocation

The second product – Marriage Fund has a mandate that allows it to invest 70 per cent in equity, 20 per cent in gold ETFs (exchange traded funds) and 10 per cent in debt instruments.

With gold being an important ingredient in Indian marriages, the fund seeks to provide a hedge against rising gold prices. In rupee terms, gold has delivered a compounded annual return of nearly 22 per cent over the last five years.

The Savings Fund has a mandate to invest its entire portfolio in debt. Switching between goals is allowed and investors can also consider moving the proceeds to the Savings Fund, once their return expectations are met.

A higher equity portion in the first two plans increases the risk profile, with the second also having to contend with volatility in gold prices, which can be considerable.

Long-term wealth

Equity-oriented balanced funds have turned out to be good options for investors to build long-term wealth even while protecting their portfolio from wild market swings.

Fidelity's Children's Plan may see stability in assets managed, as the fund has a relatively steep exit load (a possible deterrent to redemption) in the initial years in the case of its Education and Marriage funds.

Source: http://www.thehindubusinessline.com/features/investment-world/mutual-funds/article1137799.ece