Rel MF launches Gold Savings Fund

Anil Ambani group firm Reliance Mutual Fund launched a new Gold Savings Fund, a first-of -its-kind investment scheme focused on gold, to tap a market that it expects to become bigger than even equity mutual funds.

The new fund, which is different from gold ETFs (Exchange Traded Funds) that require subscribers to have a demat account, will also offer investors the option to invest as little as Rs 100 per month, the company said here.

The company said that its Reliance Gold Savings Fund will enable investments in gold without any locker or demat account -- a first in the country.

Announcing the launch of the New Fund Offer -- which will be open from February 14-28 -- Reliance Capital Asset Management CEO Sundeep Sikka said: "We expect this gold investment industry to surpass equity MFs in the next three years."

Sikka said the gold investment opportunity in India was not optimally tapped and the new product will offer a simple, affordable and investor-friendly solution for investing in gold to the masses.

"Indians are known for their love for gold. However, with low demat penetration in India, a lot of investors have not been able to participate in this safe mode of investment.

"This product will create a new avenue for pure gold investments for the retail investor without the need of having a demat account or a locker," he added.

The scheme's performance will be benchmarked against the price of physical gold.

The company said the new fund will enable investors to avail long-term taxation benefits from the first year itself, unlike physical gold, wherein long-term taxation can only be availed after three years.

The investors will not be charged any entry load on the fund, though there would be a 2 per cent exit load if redeemed before completion of the first year.

A part of Anil Ambani group's financial services arm Reliance Capital, Reliance Capital Asset Management is the country's largest fund house and manages assets worth USD 24 billion across mutual funds, pension funds, managed accounts and hedge funds.

Source: http://www.indianexpress.com/news/rel-mf-launches-gold-savings-fund/747938/

HDFC MF unveils 'cancer-based' fund

Amidst a growing interest in philanthropy, HDFC Mutual Fund today announced the launch of an unique debt product to support needy cancer patients, a first for the AMC industry.

Dividend earned under the product christened HDFC Debt Fund for Cancer Cure, a three-year close-ended capital protection oriented income scheme, will be donated to the Indian Cancer Society, HDFC's charity of choice.

"At an individual level, people want to give back to society but do not know where to go. A doctor serves society by treating patients free, we will use our distribution network to get good subscriptions for the scheme and help the cause," HDFC's Chairman, Deepak Parekh, told reporters here today.

Parekh said there are two categories of the product – one in which 50 per cent dividend is given to charity and the other where the entire dividend is donated. At the end of three years, the investor will get back the entire principal with the dividend, if applicable.

HDFC MF has launched the product to commemorate its 10th anniversary and had to take special permission from the capital market regulator Sebi before it launched the product.

The offering will be open for investors between February 18 and March 4 and the minimum application amount is Rs one-lakh.

HDFC will not charge any fees for the investment.

The dividend amount donated to the society will get tax benefits and HDFC will also try to convince corporates and other trusts to invest in the scheme, Parekh said.

The move comes within weeks of Indian business leaders like HCL's Shiv Nadar and Wipro's Azim Premji making headlines for donating substantial amounts to various charities, creating a right traction for social causes.

Source: http://www.indianexpress.com/story-print/747574/

Systematic investment plans deliver double market returns

Over the last three years the Sensex actually went nowhere on a point-to-point basis, yet could you have managed a 30 per cent annual return in this period?

Yes, simply by investing in mutual funds, in the popular Systematic Investment Plans (SIPs). SIPs have scored over investing lumpsum from 2008, when the market correction started, till date.

Investing regular sums every month in ICICI Pru Discovery Fund, for instance, would have given a handsome 36 per cent in the last three years through monthly SIPs. Had you invested a lumpsum three years ago, you would have had to be content with a mere 16 per cent gain.

Even an SIP started in the Sensex in March 2008 and continued till today would have delivered a 15 per cent return though the benchmark has fallen 1 per cent between these two dates (on a point-to-point basis).

Returns higher

A calculation of the SIP returns (through internal rate of return or IRR) for the top 25 equity funds, suggests that SIPs were a far superior option to investing one-time in each of these funds over the last three years.

Investments through SIPs garnered returns 10-20 percentage points higher than the lumpsum invested in all the 25 funds. SIPs allow investors to buy units of mutual funds by putting in small sums on a daily, weekly or monthly basis, through an automated process for a period chosen by investors.

Why SIPs worked

As an investment strategy, SIP has excelled over the last three years simply because this was an exceptionally turbulent period for stock prices. The deep plunge in stock prices in 2008 allowed investors who continued to buy mutual fund units to ‘average' their costs by buying additional units at lower prices. The choppy markets in 2010, too, ensured that additional units were bought at market dips, thus ensuring better returns. For instance, an SIP kicked off in HDFC Top 200 Fund would have allowed you to start investing at a NAV of Rs 141.8 per unit in March 2008, but as markets fell in 2009, the costs would have plunged as low as Rs 82 a unit in March 2009.

Top funds such as HDFC Equity or Quantum Long Term Equity and Birla Dividend Yield Plus, while generating market-beating annualised returns of 13-16 per cent over a three-year period, delivered even better returns through the SIP route, making a 30 per cent return.

Lifting fund performance

SIPs have not just enabled superior returns from top funds. More important, they ensured that investments in funds with mediocre performance did better, too. For instance, Reliance Growth expanded its NAV by merely 5 per cent compounded annually over three years. However, an SIP in the fund would have ensured you a 21 per cent return. This essentially means that investors do not have to worry much, even if they had invested in a middle-of-the road performer. They could still have managed returns that beat the markets by a good margin.

SIPs do not, however, work the same wonder in shorter time-frames of, say, one year.

An SIP in a rising market would mean buying every additional unit at a higher cost. HDFC Equity, for instance, would have delivered a mere 2.8 per cent over the last one year through a monthly SIP, whereas a lumpsum invested a year ago in the fund would have delivered a superior 21 per cent.

Source: http://www.thehindubusinessline.com/markets/stock-markets/article1159502.ece?homepage=true