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Old 9th July 2012, 10:01   #196
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Default Re: The Mutual Funds Thread

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Originally Posted by sgiitk View Post

Iam currently out of town or else I will have sent you a scan of a very old article by Shanbagh. I
Here is the link to the article by Mr. Shanbhag. I hope you are referring to the same:
Sandeep Shanbhag: Make no mistake, a PPF account is forever - Analysis - DNA

My father checked with another senior lady at the bank and confirmed that he can extend indefinitely in blocks of 5 years. So, this part is now settled. But read on below.

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Originally Posted by akj123 View Post
The PPF info is there on SBI site,
Thanks akj123
For the other part (the combined limit of 1 lac across parent and minor account,) the same lady at the bank informed that this is not the case. She even showed us the interest that they have paid in the two passbooks.
So, according to her, we don't need to worry about this at all.
I sent an email to Mr. Shanbhag, but I don't know if he would have time to reply.

Coming to the topic of the thread - mutual funds.
I did not know that ET has good amount of details available for MF's.
This link shows the performance of various funds and the ranking.

As per this information, the number 1 fund (since launch) is Principal Emerging Bluechip Fund - Growth (31% return?)
Any comments?
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Old 9th July 2012, 11:09   #197
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Default Re: The Mutual Funds Thread

Quote:
Originally Posted by S_U_N View Post
Here is the link to the article by Mr. Shanbhag. I hope you are referring to the same:
Sandeep Shanbhag: Make no mistake, a PPF account is forever - Analysis - DNA

My father checked with another senior lady at the bank and confirmed that he can extend indefinitely in blocks of 5 years. So, this part is now settled. But read on below.
This was not the note I referred tobut this will do fine. The one was by AN Shanbagh, probably the father.

Quote:
For the other part (the combined limit of 1 lac across parent and minor account,) the same lady at the bank informed that this is not the case. She even showed us the interest that they have paid in the two passbooks.
I will still be sceptical, but will also check with my CA. If so then it is great.

Quote:
Coming to the topic of the thread - mutual funds.
I did not know that ET has good amount of details available for MF's.
Many people have many ratings of MFs, all are subjective and one major parameter is the time scale. The best reputed site is valuresearchonline.com: The Leading Value Research Online Site on the Net of Dhirendra Kumar whom you may have seen often on the box. This is dedicated primarily to Mutual Funds.
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Old 9th July 2012, 11:21   #198
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Default Re: The Mutual Funds Thread

As much as I like reading the articles and reviews on Value Research, it has acquired a historical viewpoint. Morningstar India, though a new kid on the block; is doing a way better job. For example, they have a rating system similar to Value Research which is based on past performance. In addition to that, they also have something called "Analyst Rating" and this is based on a forward view of the Asset Management Company, the fund manager and other such variables.
When Fidelity sold it's business to L&T and when ICICI switched the fund manager for it's flagship scheme "Focused Bluechip Equity", this was reflected on Morningstar immediately.
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Old 9th July 2012, 17:38   #199
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Default Re: The Mutual Funds Thread

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Originally Posted by sgiitk View Post
I will still be sceptical, but will also check with my CA. If so then it is great.
It would be great if you can check with your CA.

Quote:

Many people have many ratings of MFs, all are subjective and one major parameter is the time scale. The best reputed site is valuresearchonline.com: The Leading Value Research Online Site on the Net of Dhirendra Kumar whom you may ...
That URL above takes you to another site. There is an 'e' missing.

I have a basic question.
e.g. I took the first fund from the page here. DSPBR Top 100 Eqt Reg-G - Fund Snapshot - Value Research Online

For this example which is rated as a top fund, the 5 year return is 8.26%.
Is this really much better than say bank FD guaranteed at 9-10% (yes, that is taxable, but just comparing the growth aspect here).
Or, is 5 years too short time frame?
The assumptions made everywhere for corpus calculation is that investment in equity will give 12% growth say across 15-20 years.

Scenario:
I have 10,000 Rs. per month which I can invest.
Horizon: 15-20 years.
Risk appetite: risk up to 30% loss of principal
Goal: Returns around 12% after all tax deductions

It goes without saying that I should put in maybe 6000 per month into a 5 star fund with Risk = Low and Returns = High.
Or perhaps split that Rs. 6000 into two equal parts and pick two funds?

Should I go with 5 star funds which have Risk = Low/ Avg.?
Or should I just select a couple of funds which have the best performance in the last 5 years irrespective of ratings?
e.g. The highest returns are from SBI Magnum FMCG (24% in last 5 years)


With DTC coming in April, should I wait to begin my systematic investment or should I start this month before getting into a new venture?




Quote:
Originally Posted by Pedaltothefloor View Post
As much as I like reading the articles and reviews on Value Research, it has acquired a historical viewpoint. Morningstar India, ....
Good site. I will bookmark the same.
For a new user, both sites give the same kind of information, though Morningstar is easier to use. The section "Best in Mutual Funds" is all I am looking at for the moment.
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Old 9th July 2012, 19:18   #200
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Default The Mutual Funds Thread

Quote:
Originally Posted by S_U_N View Post
I have a basic question.
e.g. I took the first fund from the page here. DSPBR Top 100 Eqt Reg-G - Fund Snapshot - Value Research Online

For this example which is rated as a top fund, the 5 year return is 8.26%.
Is this really much better than say bank FD guaranteed at 9-10% (yes, that is taxable, but just comparing the growth aspect here).
Or, is 5 years too short time frame?
The assumptions made everywhere for corpus calculation is that investment in equity will give 12% growth say across 15-20 years.

Scenario:
I have 10,000 Rs. per month which I can invest.
Horizon: 15-20 years.
Risk appetite: risk up to 30% loss of principal
Goal: Returns around 12% after all tax deductions

It goes without saying that I should put in maybe 6000 per month into a 5 star fund with Risk = Low and Returns = High.
Or perhaps split that Rs. 6000 into two equal parts and pick two funds?

Should I go with 5 star funds which have Risk = Low/ Avg.?
Or should I just select a couple of funds which have the best performance in the last 5 years irrespective of ratings?
e.g. The highest returns are from SBI Magnum FMCG (24% in last 5 years)

With DTC coming in April, should I wait to begin my systematic investment or should I start this month before getting into a new venture?
There is one basic thing which everyone should bear in mind while investing in MFs.

"Mutual Funds are subject to market risks"

When the Index (nifty) was at 4500 levels one could have aggressively invested in MFs.

Basically there is a cycle in equities (MFs) / gold / real estate / FDs.

So if someone invests in MFs when the NIFTY is at 6000 there is great risk of loosing money and it is usually the small retail investor who comes to invest when the market begins to peak.

Coming back to specifics you can begin investing at this point of time by selecting 4 funds to divide your Rs.10,000/-

Kindly see posts 1 to 4 of this thread for a guide.

Do divide your savings into FDs/Insurance/Health Insurance/MFs(equity)/Gold

Last edited by Gautam Misra : 9th July 2012 at 19:22.
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Old 9th July 2012, 20:14   #201
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Default Re: The Mutual Funds Thread

Best way to invest online as already pointed out is through portals like FundsIndia | Online Mutual Funds | SIP | Free Advisory | Shares.

A mutual fund that I recommend is quantum Long term Equity from Quantum mutual fund www.quantumamc.com because of their investing philosophy (long term value) and the stance that they have taken of being no load - also they do not sell through agents. You can invest entirely online. One caution though - Invest with min horizon or 5 years or more as they charge a large exit load if you redeem early

Last edited by chennai-indian : 9th July 2012 at 20:14. Reason: added quantum amc link
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Old 9th July 2012, 20:21   #202
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Default Re: The Mutual Funds Thread

There are some basic steps to investing that you should cover before you take the plunge:
1. Understand Asset allocation
2. Determine your Debt:Equity ratio, this depends on your age, Income, expenses etc.
3. Set up your contingency Fund in a FD or a Liquid Fund
4. Start equity Investment with a good Balanced fund like HDFC Balanced or HDFC Prudence
5. Read up on Valueresearch, Morningstar etc to increase your financial literacy
6. This is purely a personal opinion, but I avoid all brokers, online channels and stock market for mutual fund investments. Invest directly with the Asset Management Company and most of them will give you Online access.

You can Google all of the above for a better understanding.

Last edited by Pedaltothefloor : 9th July 2012 at 20:23.
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Old 9th July 2012, 22:03   #203
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Default Re: The Mutual Funds Thread

Quote:
Originally Posted by S_U_N View Post
There is an 'e' missing.

I have a basic question.
e.g. I took the first fund from the page here. DSPBR Top 100 Eqt Reg-G - Fund Snapshot - Value Research Online

For this example which is rated as a top fund, the 5 year return is 8.26%.
Is this really much better than say bank FD guaranteed at 9-10% (yes, that is taxable, but just comparing the growth aspect here).
Or, is 5 years too short time frame?
Sorry for the missing 'e'. Remember the five year picture includes the Crash of 2008. Also, as you surmised the return from an Equity MF is Tax Free after a year.

Top 100 is a large cap fund, so will be not as great as a diversified fund in terms of returns but will be more stable / less risk. You look at the Equity Fund from the same house. This has a decent mid-cap content so will give a better return in the long run. One more fund with a midcap component is HDFC Equity. ICICI Dynamic is another. I like IDFC Premier which is midcap based with a large cap component. In keeping the corpus small they keep opening and closing it.At the moment it is closed except for SIP. Good Largecap funds include Franklin Blue Chip and many others. I will at this moment not look at Fidelity till they settle down after the L & T takeover.

10% from FD means only 7% for the 30% tax slab! This is worse that PPF and does not even beat inflation. Overall if you are looking over long (5-10 year) time frame then an Equity Fund will outperform any FD type investment. Remember ratings also take into account the risk profile, so are not totally return based.

I will pick up one fund with a mid-cap component (this gives the real juice). If you want you can have two funds (not more) from different houses.

At my age I am reducing risks and slowly moving more into lower risk instruments.

I used to prefer the dividend payout option in Equity as it allowed me to rebalance my portfolio without having to divest. However, with the DTC proposing a 5% tax on Dividends Growth may be the preferred option now. Debt is best kept in Growth, to get benefit of long term capital growth and also indexation.

Last edited by sgiitk : 9th July 2012 at 22:08. Reason: Last paragraph added
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Old 10th July 2012, 12:34   #204
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Quote:
Originally Posted by Gautam Misra View Post
So if someone invests in MFs when the NIFTY is at 6000 there is great risk of loosing money and it is usually the small retail investor who comes to invest when the market begins to peak.
This is what I have been thinking for some time and holding back from investing more -the thought that maybe I am late by 10-15 years to invest seriously in MF now. My mother invested on my behalf from 2005-2007. There are 21 funds in which she put money. Most of them are not giving us any returns. Of course her knowledge back then was as limited as mine.


Quote:
Originally Posted by chennai-indian View Post
Best way to invest online as already pointed out is through portals like FundsIndia | Online Mutual Funds | SIP | Free Advisory | Shares.
Looks very interesting and too good to be free. I am still trying to figure out what is the catch. They are allowing me to file tax return for free too.


Quote:
Originally Posted by Pedaltothefloor View Post
There are some basic steps to investing that you should cover before you take the plunge:
Good tips. Thank you.
However, some of those things will come with time, I cannot leave everything aside and start researching on some of these topics. For now, I can read a little and take some risks.

Quote:
Originally Posted by sgiitk View Post
Remember the five year picture includes the Crash of 2008.
I would anticipate one more crash (or perhaps two) somewhere within the next 15-20 years window of investments. So, gains will get wiped out and then some of those 12% claims would seem to be really tall in that sense, right?

Quote:
You look at the Equity Fund from the same house.
With regards to DSP, we have invested in "DSP BlackRock World Gold Fund - Dividend" in September 2007. We got a dividend in Jul 2009 and Nov 2010. Nothing after that. What does that mean? I checked their site and the dates match with the credits in our bank account. So, is the fund performing bad that they don't have money to pay us?



Quote:

This has a decent mid-cap content so will give a better return in the long run. One more fund with a midcap component is HDFC Equity. ICICI Dynamic is another.
....

I will pick up one fund with a mid-cap component (this gives the real juice). If you want you can have two funds (not more) from different houses.
...
However, with the DTC proposing a 5% tax on Dividends Growth may be the preferred option now.
Thank you for the tips. I will get back with more questions.

Last edited by S_U_N : 10th July 2012 at 12:35.
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Old 10th July 2012, 14:13   #205
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Originally Posted by S_U_N View Post



Looks very interesting and too good to be free. I am still trying to figure out what is the catch. They are allowing me to file tax return for free too.

Well - there is no "catch" per se. They make money through what is known as "Trailing Commissions" that are paid by mutual funds - these are not upfront commissions but is based on volume of business. No impact on you. So higher the volume of business that they can aggregate, better for them.

Also, I think their aim is to offer a one stop solution for all investments - like equity investing etc in which they do charge a certain amount as brokerage charges.
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Old 10th July 2012, 18:17   #206
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Quote:
Originally Posted by S_U_N View Post
I would anticipate one more crash (or perhaps two) somewhere within the next 15-20 years window of investments. So, gains will get wiped out and then some of those 12% claims would seem to be really tall in that sense, right?
Let me put it when I decided to get into MFs Sensex was at <6000 today it is 17000+. The peak in 2008 was 19k and the bottom about 11k. I have averaged over 12% in all these years.

Quote:
With regards to DSP, we have invested in "DSP BlackRock World Gold Fund - Dividend" in September 2007. We got a dividend in Jul 2009 and Nov 2010. Nothing after that. What does that mean? I checked their site and the dates match with the credits in our bank account. So, is the fund performing bad that they don't have money to pay us?
World gold prices dropped from a peak of $1700 to under 1600 today. The WGF is not strictly a Gold Fund, but a fund on the Gold Industry. As per many it is a Gold Fund on Steroids.

There are two views - Gold may drop to $1500 or may go up to $3000. I am also in this fund (but only to a small amount) but in Growth since otherwise dividend is taxed at (I think 20%) at source. Growth mode has taxes on maturity (10% with no indexation or 20% with). This is a sectoral fund and one has to be alert when to get out. DSP has enough funds to stay afloat so do not worry. Now in the DTC 5% tax on dividends on Equity is also envisaged. Those who got it at the $1200 level made a killing! I will not advise sectoral /specialised funds like the WGF to the beginner.
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Old 11th July 2012, 01:07   #207
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Hi everybody
Economic Times on monday the the 11th july recommended Birla Sun Life dividend yield fund.
In 5 years their performance has been good and they have been ranked as no 4.However their performance and ranking for a lesser time frame is not so good.
Moneycontrol compares this fund to ICICI discovery and HDFC midcap oppurtunities.
What i read in the paper that it has some giant,some large,some midcap and some small caps.
Does anybody hold this fund and has an opinion on its performance?
Regards
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Old 11th July 2012, 11:40   #208
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Birla Sun Life Dividend Yield Fund is a 4 star rated fund by valueresearch. It is a Mid cap oriented fund, unlike UTI Dividend yield.
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Old 11th July 2012, 13:31   #209
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Let me make a General comment. Insurance chaps are good at managing money (debt, money market, liquid, etc.) but are not that good in Equity. Similarly, a MF (excellent in Equity) may be be the best if you are looking for a Portfolio Management Service. Brokerage linked financial services may be the better option hare.
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Old 16th July 2012, 15:26   #210
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Found the original Shanbagh article from the Hindustan Times of 1998. Also, have the booklet for the PPF from 1974, It reads simple, 'and an account can be continued even after 15 years'. No qualifications.

I think this lays to rest the ghost of 15+5+5+5!
Attached Files
File Type: pdf Shanbagh_AN.pdf (281.0 KB, 197 views)
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