FM may offer customs duty, indirect tax cuts: Principal MF

By Sudipto Roy, Business Head, Principal Mutual Fund

While a common man still looks at the budget with lot of expectations, the Union Budget has increasingly resembled an accounting budget. This is because as the finance ministers have cut income tax slabs and rates over the years, there is lesser and lesser scope to do lower it further.

Besides this, all major policy decisions have been taken as on ongoing exercise outside the budget announcement. Yet, the Union Budget is still used as a statement of government’s policy stance towards growth and targeted policy initiatives for specific industries/consumer segments etc.

This year’s budget will be keenly watched for relief on inflation. Infact, inflation is one factor which is on everyone’s mind. Be it RBI, Government or domestic household. This is where most Indian households will be looking at the government for relief in the budget provisions. While for the government and RBI fighting; inflation is an ongoing exercise, yet budget is one event where the government can take further visible steps to fight inflation and connect with common man by aligning itself with their cause.

There are two ways a common man can be provided a direct relief against inflation. First, by increasing the disposable income, lowering taxes. Second, by lowering of direct and indirect taxes to ease the burden of inflation. After the previous budget's move to bring down the income tax impact; there is limited room for further lowering of taxes (Slabs and Rates). Government therefore; may have to take visible steps by lowering of indirect taxes and customs duty on essential household items.

While this will have an impact over the already stressed fiscal situation, yet it appears that the government’s hands might be forced to appear on the right side of fight against inflation. This may take care of the needs of India’s burgeoning middle class, a more direct support may be in the works for the residents below or about poverty line.

We might see government announcing provision for food grains at below market prices through Public Distribution System (PDS). While the efficiency of PDS is a suspect, yet such a move will have a direct impact on the market prices of such products

Source: http://www.moneycontrol.com/news/mf-experts/fm-may-offer-customs-duty-indirect-tax-cuts-principal-mf_523075.html

ICICI Prudential Fusion Fund - Series III to be converted into Open Ended Equity Diversified Scheme

ICICI Prudential Mutual Fund has announced that ICICI Prudential Fusion Fund - Series III which is maturing on 14 March 2011 will be converted into an open ended diversified equity scheme with effect from 14 March 2011.

The salient features of the scheme on conversion into an open ended scheme are as follows:

Scheme Objective: ICICI Prudential Fusion Fund - Series III has the investment objective to generate long-term capital appreciation by investing predominantly in equity and equity related instruments of companies across large, mid and small market capitalization.

Minimum Application Amount: Retail Option: Rs. 5000 (plus in multiples of Re 1 thereafter). Institutional Option: Rs. 1 crore (plus in multiple of Rs. 1 thereafter)

Option / sub-options under the scheme: There are two options under the scheme viz. retail option and institutional option. Unit holders will have the choice of growth or dividend sub-option under both the options. Retail option will be the default option and growth sub-option will be the default sub-option. Under dividend option, dividend payout facility is only available.

Exit load charge will 1% of the applicable NAV, if the amount sought to be redeemed or switched out is invested for period upto 1 year.

The exit load charge will be nil if the amount sought to be redeemed or switched out is invested for period more than 1 year

Source: http://www.indiainfoline.com/Markets/News/ICICI-Prudential-Fusion-Fund-Series-III-to-be-converted-into-Open-Ended-Equity-Diversified-Scheme/3561508258

Reliance Mutual Fund launches first SIP in gold

Reliance Mutual Fund on Thursday launched India's first systematic investment plan (SIP) in Reliance Gold Savings Fund, wherein premium will be made on a monthly basis.

CEO of Reliance Capital Asset Management Sundeep Sikka said it was the first SIP in gold introduced in the domestic mutual fund industry aimed at helping investors to accumulate the yellow metal in small amounts regularly.

Sikka said that in line with the growing gold investment demand, coupled with India's culture for buying gold, "We are introducing SIP in Reliance Gold Savings Fund. This is aimed at cultivating a regular savings habit among investors to accumulate gold in small amount through the SIP mode."

The fund allows small regular investments as low as Rs 100 per month and in multiples of Re one thereafter.

According to Sikka, Reliance Gold Savings Fund is the only fund in the market which will enable investors to invest in gold in a paper form without the need of a Demat account as it provides the facility to invest through online medium and physical application mode.

He said that the new fund offer was a convenient way to diversify investment portfolio and reap the returns of gold from a long-term perspective.

To a query, he said the fund enables the investor to avail long-term taxation benefits from first year.

Source: http://economictimes.indiatimes.com/personal-finance/mutual-funds/mf-news/reliance-mutual-fund-launches-first-sip-in-gold/articleshow/7515392.cms

SBI Mutual Fund launches 5-yr capital protection scheme

SBI Mutual Fund on Wednesday launched a five-year close-ended capital protection scheme targeted at investors with a low-to-medium risk profile.

Under the scheme, Capital Protection Oriented Fund Series II, a minimum of 74% of the corpus will be invested in AAA rated debt instruments, while the balance will go towards equity, SBI Mutual Fund chief investment officer Navneet Munot told reporters here.

"The current environment of volatility in equity markets and higher interest rates in fixed income make the product very timely. This is the best of both worlds (debt and equity) an investor can get," he added.

The scheme, which will be open between February 18 and March 11, entails protection of the principal while the investor also gets a chance to participate in equity markets, Munot said.

It will not have an entry or exit load, while the net asset value (NAV) will be disclosed on a daily basis. The minimum initial investment in the scheme will be Rs 5,000.

In the equity component, there is a cap of 10 per cent on single stock, Munot said, adding that presently the fund house was bullish on scrips from the consumption oriented, healthcare and IT sectors.

Source: http://timesofindia.indiatimes.com/business/india-business/SBI-Mutual-Fund-launches-5-yr-capital-protection-scheme/articleshow/7509565.cms

UTI MF Declares Dividend Under Equity Tax Savings Plan

UTI Mutual Fund has declared dividend under dividend option of UTI Equity Tax Savings Plan, an open-end equity scheme. The record date for the dividend has been set as February 21, 2011.

The fund house has decided to distribute Rs 1.00 per unit (10%) as dividend on the face value of Rs 10 per unit. The NAV of the scheme as on February 14, 2011 stood at Rs 16.3000 per unit.

The fund house shall invest the funds collected under the scheme in equities as well as fully convertible debentures / bonds and warrants of companies. Moreover, the investment may also be made in issues of partly convertible debentures/bonds including those issued on right basis subject to the condition that, so far as possible, the non-convertible portion of the debentures / bonds so acquired or subscribed shall be disinvested within twelve months from their acquisition.

Source: http://money.oneindia.in/news/2011/02/16/uti-mf-declares-dividend-equity-tax-savi.html