[pnredkar]

Originally Posted by DigitalOne

Similar situation as yours. My investments in Liquid and Ultra Short Term funds are outdoing other debt funds.

Debt funds are tricky. I have even lost money in debt funds (ILFS, DHFL, Zee issues). Also if you get interest rates trends call wrong, there can be significant losses.

We live and learn.

No opinion on the individual funds mentioned.
Please check my post#2617 in this thread.

Thanks for your inputs. Debt funds were supposed to be the safer bet, but doesn't seem so anymore. I will have a look at GILT funds that you recommend.

Originally Posted by bullrun87

Yes, three years is cutoff when long term capital gain starts to apply and one is taxed at 20% with indexation as opposed to one's IT slab rate. Both the schemes you have mentioned take duration risk as well as credit risk. Do not exit the UTI scheme even on completion of 3 years as it has already fully written down DHFL exposure and you may see an NAV bump if some money is recovered from DHFL. ............

Thanks for your detailed inputs. I am looking for long term allocation, will have a look at short term funds. I have also started checking if a fund has a diverse portfolio. I also prefer funds that have 5 years history or more. However, I don't understand your logic about AUM. Larger AUM typically means an older fund and a better chance for portfolio diversification. What are the other benefits of larger AUM? Some clarification would help.

Thanks again.
- Prasad

[DigitalOne]

Originally Posted by pnredkar

I am looking for long term allocation, will have a look at short term funds.

....

What are the other benefits of larger AUM? Some clarification would help.

Maybe you are confused between your investment horizon and the investment duration of the bonds underlying the fund. "Short-term" funds invest in bonds of 1-3 years, are less risky (interest rate risk is less). You can still invest in short-term/Ultra short term/liquid funds even if your investment horizon is long term.

As you yourself pointed out large AUM means better diversification. One credit default in underlying bond may not affect fund NAV too much.

[bullrun87]

Originally Posted by pnredkar

Thanks for your inputs. Debt funds were supposed to be the safer bet, but doesn't seem so anymore. I will have a look at GILT funds that you recommend.

Thanks for your detailed inputs. I am looking for long term allocation, will have a look at short term funds. I have also started checking if a fund has a diverse portfolio. I also prefer funds that have 5 years history or more. However, I don't understand your logic about AUM. Larger AUM typically means an older fund and a better chance for portfolio diversification. What are the other benefits of larger AUM? Some clarification would help.

Thanks again.
- Prasad

Higher aum results in more diversification and lower costs.
Have a look at the portfolio of large funds in the short term category. Kotak short term, icici short term and idfc short term all have between 100-125 papers and hence less concentration risk. Funds with less than 1000 cr aum will have about 20-40 papers and hence will come with more concentration risk. Large funds can also nagotiate better with debt issuers. They can also distribute expenses over more investors and hence provide better returns.

[sgiitk]

Until things normalize my suggestion is to avoid any investments. I expect some trends to emerge in a month or two. Rupee is flirting with the 72/$ levels. We really cannot say what the near future holds. Gold has touched the 40,000 level. Normally gold is an alternative to stocks and is considered somewhat safer, but less volatile.

[JediKnight]

I just called Franklin Tempelton and asked them if i need to do a KYC before i can start investing with them. They asked my PAN number and said my PAN number is already KYC compliant hence no need. This came as a surprise to me. If you do a KYC once does it get linked to your PAN number and then you don't need to do it every time for other AMCs ?

[Chetan_Rao]

Originally Posted by JediKnight

....If you do a KYC once does it get linked to your PAN number and then you don't need to do it every time for other AMCs ?

If you do the full, in-person KYC once, it generates a Central KYC (CKYC) number tagged to your PAN, and KYC requirements for any future investment is verified against it. No need to do KYC for individual AMCs.

If you don't have your CKYC number handy, check your email for a notification from CERSAI (email from address: ckyc@ckycindia.in) or write to them through their website.

[praveen_v]

Originally Posted by JediKnight

I just called Franklin Tempelton and asked them if i need to do a KYC before i can start investing with them. They asked my PAN number and said my PAN number is already KYC compliant hence no need. This came as a surprise to me. If you do a KYC once does it get linked to your PAN number and then you don't need to do it every time for other AMCs ?

Yes. KYC is a one time process and if KYC is already done for your PAN with one AMC you dont need to do it with a different AMC and can start investing straightaway

[AWD]

I have invested a sizeable amount into FMP's. Was reluctant to invest but then gave in last year. There's a three years lock in, should I be worried considering the current situation of markets ?

[Gansan]

I have parked some retirement funds in FD which will mature in about a month. Will it be a good idea to park Rs 10L of it in a PSU Bank Bond, specifically Syndicate Bank (ISIN : INE667A08062).

[AWD]

Originally Posted by Gansan

PSU Bank Bond, specifically Syndicate Bank (ISIN : INE667A08062).

Syndicate merged with Canara, so should be ok.

[bullrun87]

Originally Posted by AWD

I have invested a sizeable amount into FMP's. Was reluctant to invest but then gave in last year. There's a three years lock in, should I be worried considering the current situation of markets ?

It isn't possible to comment without knowing about the bonds your FMP's are holding and the extent of credit risk and concentration risk they are taking. Even AAA rated companies have failed so its best to not take unnecessary risks at this juncture.

[AWD]

Originally Posted by bullrun87

It isn't possible to comment without knowing about the bonds your FMP's are holding and the extent of credit risk and concentration risk they are taking.

C-25 series NFO 1100 days. Already a year into it. AA rated mostly. Moderate risk.

[bullrun87]

Originally Posted by AWD

C-25 series NFO 1100 days. Already a year into it. AA rated mostly. Moderate risk.

The sbi c-25 series is concentrated into only 20 holdings 60% of which are AA. Fortunately for you SBI AMC has done a terrific job staying out of ILFS, DHFL, CCD, SINTEX and the other papers affected by defaults so your investments should be fine. In future try not to take extensive credit risk and invest in open ended funds that aren't so concentrated.

[AWD]

Originally Posted by bullrun87

The sbi c-25 series is concentrated into only 20 holdings 60% of which are AA. Fortunately for you SBI AMC has done a terrific job staying out of ILFS, DHFL, CCD, SINTEX and the other papers affected by defaults so your investments should be fine. In future try not to take extensive credit risk and invest in open ended funds that aren't so concentrated.

Thanks, that's a sigh of relief! I invested in this last year when the picture was rosy. How much of risk is there if markets continue to slide down further? Can I list them for sale through Demat? Will I get buyers in current scenario?

True now Im staying out of lock in products.

[bluevolt]

Originally Posted by sgiitk

Until things normalize my suggestion is to avoid any investments.

I agree. I also recall you strongly recommended to stay away from auto sector stocks in the other thread.

I used to love read economic times especially the weekly ET wealth magazine, now whenever I read it with 'Analysts' recommending to continue SIP even in the current bloodbath in stock market I feel like tearing away the newspaper.

These are the 'Analysts' who recommended investments in the stocks that are suffering the most these days. They used to be their hot picks!

I have become irritated when I read 'Analysts' recommend this and that. Who are these 'Analysts' and from where they derive 'rule of thumb'!

It is very important lesson to learn in the current slowdown - never invest on the basis of some 'analyst' recommendations as most of them will be crap anyways and never believe statements like 'the rule of thumb says, save xyz amount, invest in equities using 100-age ratio'.

The actual rule of thumb is to use your own wit when managing personal finance and make decisions not on basis of any one else's recommendations.