The year that was ................... 2015

The 43 strong mutual funds tallied Rs 13.15 trillion by September 2015. The trend is upbeat in the industry. According to AMFI India, There are 2,191 MF schemes. Of these, about 1,000 are fixed maturity plans (FMPs) that you can just strike off your list if you’re wondering where to start putting your money. Close to 130 schemes are liquid in nature; that’s where you park your money temporarily—a sort of substitute to your savings bank account—till you find a more permanent place to invest. That leaves close to 430 fixed income schemes and an equal number of equity funds. Still, 1,000 is a big number to choose from if you wish to have just five-eight schemes in your portfolio. Therefore, you need expert services to choose the one suitable for you

Another important feature of the industry in 2015, was  the take over of  Deutsche Mutual Fund by Pramerica Mutual Fund when so far the industry witnessed takeover of foreign players by national players.  Nomura reduced its stake from 35% to 19.3% in LIC-Nomura MF and KBC sold out  its 49% stake in UNION-KBC. Reliance Mutual Fund took over the Goldman Sachs Mutual Fund.

The participation of Indian Mutual Funds in the capital markets has outgrown that of FIIs in August 2015 and it is a marked difference in the game from the past decades.

Even though, EPFO having permitted to invest 5% of its Rs 1 trillion assets in ETFs, not much flow has happened so far into the MF industry.

The risk clause of the MF was underlined when the J P Morgan India Short Term Income Fund and J P Morgan India Treasury Fund had to eventually close down due to presence of stressed AmTek Auto  in their portfolios. The Fund house was kind enough to waive fund management fee for rationed redemptions, but investors felt the heat of unindented cashflows.

Those comtemplating retirement in the next one year needs to seriously look at the table below:

Term Deposits
Particulars	Rate% pa	Tenure(Yrs)
SBI	7.20%	10
Post office	8.50%	5
PPF	8.70%	15
SCSS	9.30%	5
NSC IX	8.80%	10

As an add-on, one may look at the Fixed maturity Plans, MIPs and other alternatives. But one needs expert advice to choose what is uniquely suitable for you in your current situation.

Happy investing

The Budget 2015-16 and Mutual Funds

Service Tax exemption given to MF agents of Asset Management Companies (AMCs) has been withdrawn through this budget 2015-16.  A novice investor pays Rs 150.00 and an existing investor pays Rs100 otherwise for services. On top of it, Mutual Fund investing will attract 14% Service Tax on the invested amount which hitherto was not applicable. and do not forget about education Cess 3% which already come with the service tax in addition to the swatch bharat 2% surcharge that will be due once notified in future.



In order to facilitate consolidation of MF schemes, the minister has proposed, ”...To provide tax neutrality to unit holders upon consolidation or merger of mutual fund schemes provided that the consolidation is of two or more schemes of an equity oriented fund or two or more schemes of a fund other than equity oriented fund.”



There is an increase in surcharge on income distribution from debt funds from 10% to 12%


 As an investor, one should consult a distributor for finnacial planning and managing  one's investment just like you consult your doctor.

Conscious planning of expenses and saving would help create a happier world.

Happy investing

Hybrid Funds

At times the Equity markets go bullish leaving ordinary investors in a fix: whether to enter or not now?
Exit, of course people manage depending on their need matetialisation or long bullish trends generally propels repurchases from mutual funds. The animal spirits of the market got into frenzy from 24, 121.74 on 16 May 2014 to 28, 717.91 by 06 February 2015.

 Secular trends in markets generally make people leave to think it will last for more days into the future. However, entering the market is important for an individual to get long term benefits from the market movements.

These are times when hybrid funds come handy. These funds have equity and debt as major parts in the portfolio. Hybrid funds may be those having focussed on debt or equity with 25-35% with equity or debt as the case may be.
Irrespective of prominence for equity or debt, the income distribution is tax frre in the hands of the investor.
However, the debt oriented fund qualify for long term capital gains only when holding period exceeds 36 months; The long term capital gains tax may be with or without inflation index. This when compared to equity funds, is nil and holding period condition is 12 months only.

Hybrid funds taht are debt focussed, when offer income distribution option, it becomes MIPs. Though  there is no guarantee of income distribution, they help in enhancing little more compared to fixed income counterparts.

Happy investing

Retirement Plans from Mutual Funds

In the US, retirement asset to GDP is nearly 80 per cent whereas in India, it is only about 15 per cent and therefore, the market is expected to grow faster in the years to come due to existence of large proportion of  of youth in the Indian population.


The first question may be how to plan for retiremnet? Most of the banks, insurance companies and mutual funds offer such planning facility on their websites. have a look at one such site.


The next question is about choosing your scheme. now a days, you have several options for planning the retirement kitty. the fixed income alternatioves are EPF and PPF of which EPF has become un-accessible to new employees. Then you have the insurance companies offering several shades of protection and income with deffered paymnets. Also one has the national pension plan that offers to build up your fund and makes your choice limited to 40% of the kitty and remaning as a compulsory annuity.


What makes Mutual Fund plans stand out in this segment is the freedom to select the kind of withdrawal from the plan during the golden age.


UTI entered Pension segment in 1994 with UTI Retirement Benefit Pension Plan and offers units without lock-in-period and no  exit load after three years. to qualify for pension, one should have remitted minimum of Rs10,000 by the age of 58.

Franklin India Pension Plan commenced in 1997 offers units with lock-in-period of three years and 3% exit load if comed out before age of 58.



Both of these schemes have one kind of a plan. To the existing line of these  two schemes, comes the Reliance Mutual Fund Pension Schemes with two alternative plans. one offering predominantly equity and the other predominantly debt.





Why pension plans from Mutual Funds ? One gets the tax benfits under Sec 80 C of IT Act 1961. later when you avail the pensions, the capital gains are tax free , the dividends are also tax free in the hands of the investor. And be sure to know protection as different from investing!


Happy Investing

All those who read this also read
 Retirement Planning
New Pension scheme - a Retirement Option
Retirement Planning: NPS Vs. Mutual Funds

The Year Ahead...

The peospects for the Indian Mutual Fund industry cannot be different from that of the Equity and Debt markets in which it opeartes.

India is poised for falling inlfation, gold prices and growing GDP is what experts say . that means, we have a golden era unfolding.

According to Nomura, Japan , Indian economy is set for a 'goldilocks' period -- used to describe a timeframe of high growth and low inflation  while it can become Asia's fastest growing economy in 2016.

The IFRS is aleady speeding up and GST around the corner. GST  would go a long way in making India one single market. The GAAR is a contentious issue among corporates operating globally, which may get resolved with the single party government at the centre..

Rate cuts already underway along with falling crude oil prices leading to price fall domestically.

Sectors like BFSI, Real estate, Auto and Infrastructure stands to gain out of this .

Bond funds will see immediate gains with increasing NAVs.


Happy Investing