[sgiitk]

Originally Posted by S_U_N

I have not understood this. What has been relaxed upto 6th July?
Please also elaborate on the indexation related changes.

Waiting for the finance bill. I expect the three year limit relaxed to one year at 10% tax, without indexation. So get out as you complete one year and one day. I have a lot of my retirement money in there. I was expecting 2 year indexation benefits on or after 1 April 2015, since I invested in the last half of March 2014.

[JMaruru]

I am in the process of moving all my MF investments held via ICICIDirect to 'Direct Fund' option. The expense ratio for 'Direct Fund' plan will be at the least a percentage lower than regular funds, as they save on the trailing commission paid to the brokers. Also, I would save on the fees charged by ICICIDirect on each SIP.

I suggest members here to consider this option, as there would be substantial savings over a period of time.

[Deep Blue]

I too have moved all my SIPs to online investment into the direct plans of the MFs. ICICIDirect was proving too expensive. A SIP of 5000 would actually cost me 5033. Downside is to maintain a separate excel sheet or enter manually into a value research or money control portfolio to see all the MF investments in one place.

[sgiitk]

Originally Posted by Deep Blue

enter manually into a value research or money control portfolio to see all the MF investments in one place.

You can set up a SIP there, and avoid having to make repeated entries.

[JMaruru]

Originally Posted by Deep Blue

ICICIDirect was proving too expensive. A SIP of 5000 would actually cost me 5033. Downside is to maintain a separate excel sheet or enter manually into a value research or money control portfolio to see all the MF investments in one place.

ICICIDirect is expensive, like they charge you for each SIP and also avail the trailing commission from the AMCs. One can select a MF based on the research in 'Value Research' or 'Morningstar', and invest directly through online option of AMCs.

Originally Posted by sgiitk

You can set up a SIP there, and avoid having to make repeated entries.

+1. Just setup the SIP in moneycontrol simultaneously and rest is taken care of by them.

[shipnil]

Originally Posted by Deep Blue

I too have moved all my SIPs to online investment into the direct plans of the MFs. ICICIDirect was proving too expensive. A SIP of 5000 would actually cost me 5033. Downside is to maintain a separate excel sheet or enter manually into a value research or money control portfolio to see all the MF investments in one place.

Originally Posted by sgiitk

You can set up a SIP there, and avoid having to make repeated entries.

I have gone through all of this. When I started investing for the first time, I started through an advisor. Then sometime in 2007/8, the entry load was removed so I started investing directly through MF offices. Then came online of same MFs.

In between I tried HDFC banks MF account. Initially it was free. But the year in which the entry load was removed, they started charging money quarterly. So closed that account and continued with online directly of MF sites. Like you guys suggested, I started maintaining portfolio with moneycontrol. But when the schemes grew and different methods were adopted, the thing simply became unmanageable. I had to remember so many passwords and had to do many entries with moneycontrol for all transactions. (I was not an SIP guy although I invest regularly. The reason is I want to control how much I can invest in a specific month). The moneycontrol PF was rarely in sync with what was there. So I had to find a better method.

Then I came across fundsindia.com. They do not charge any fee for investing through them. As per them, they survive on trailing commissions. This, I think, we have to pay irrespective of method of investing. So one fine day, I exited all schemes, direct, indirect, online, offline etc. and started investing through fundsindia. Now all my investments I route through them. So far the experience has been good. Here I don't have to do any accounting for my portfolio. As I place any transaction, new investment or redemption, it is automatically included in my PF. So I have clear picture of my portfolio

Disclaimer: I am not associated in any way with fundsindia.

[vasanthjn]

Originally Posted by shipnil

Then I came across fundsindia.com. They do not charge any fee for investing through them. As per them, they survive on trailing commissions. This, I think, we have to pay irrespective of method of investing.
Disclaimer: I am not associated in any way with fundsindia.

Shipnil,
The Direct Plans of MFs doesn't have any trail commissions. Thats the reason why their returns are marginally higher.

[S_U_N]

Originally Posted by shipnil

......Now all my investments I route through them. So far the experience has been good. Here I don't have to do any accounting for my portfolio. As I place any transaction, new investment or redemption, it is automatically included in my PF. So I have clear picture of my portfolio

....

Originally Posted by vasanthjn

Shipnil,
The Direct Plans of MFs doesn't have any trail commissions. Thats the reason why their returns are marginally higher.

While it is true that this is a features v/s price comparison, I would be interested in knowing how much is the extra gain by going through direct route. Has someone got an actual calculation here?

For me, at the moment, time is precious and so, FundsIndia seems to be a good option. In two years, I have a fairly large portfolio and this will just keep growing each year.

[shipnil]

Originally Posted by vasanthjn

Shipnil,
The Direct Plans of MFs doesn't have any trail commissions. Thats the reason why their returns are marginally higher.

Do you mean to say, MFs report two NAVs, one with trail commissions and one without it? AFAIK, all my redemptions are paid out based on the NAV of that fund on that day so I don't know how I lose out on returns.

[JMaruru]

Originally Posted by vasanthjn

Shipnil,
The Direct Plans of MFs doesn't have any trail commissions. Thats the reason why their returns are marginally higher.

+1.

Originally Posted by S_U_N

While it is true that this is a features v/s price comparison, I would be interested in knowing how much is the extra gain by going through direct route. Has someone got an actual calculation here?

Go through the link or the picture below to see the difference between direct plan and regular plan. The difference would be substantial over a period of time, as these commissions are paid annually to the financial advisers/intermediaries/brokers from your investment.

http://www.icicipruamc.com/ICICI-Pru...rent-NAVs.aspx

Originally Posted by shipnil

Do you mean to say, MFs report two NAVs, one with trail commissions and one without it? AFAIK, all my redemptions are paid out based on the NAV of that fund on that day so I don't know how I lose out on returns.

Yes sir! There would be 2 different NAVs for the same fund. One with trailing commission(Regular Plan) and one without the commission(Direct Plan). Trailing commission is paid to the financial advisers/intermediaries/brokers assuming they have brought/educated the investor to the mutual fund.

[nowwhat?]

Originally Posted by tiger_stripes

A less discussed but very effective way to invest in mutual funds is through Exchange Traded Funds (ETFs) or Index funds.

At times, after all the research and brain storming, we still end up selecting an underperforming fund. Passive investing gives a way to avoid the human error.

This is the preferred way in developed markets as has been popularized by the CEO of Vanguard Capital.

But there are problems investing in ETFs in India.

For starters, despite being passive investment vehicles, the expenses charged by Indian ETFs are quite high at 1%+ (typically 1.5%) and are only slightly lower than Direct Plans of large Diversified Equity funds.

Secondly in India, well managed funds typically beat the underlying index. As an example, consider ICICI Value Discovery Regular Plan which has a 1-year trailing return of 88% compared to its index CNX Midcap which gave 62%. It has to be a particularly badly managed fund or a terrible bear market that would make a fund under-perform its underlying index.

Thirdly, ETFs traded on the stock market have poor liquidity. So you have to pay more when you buy an ETF and sell it for less. Selling large quantities may take several days.

These are some of the reasons why ETFs in India all have abysmally low assets under management.

[nowwhat?]

Originally Posted by shipnil

Do you mean to say, MFs report two NAVs, one with trail commissions and one without it?

Yes, all MFs report two NAVs. You can visit the website of any MF to find out.

Calculating the difference between Direct Pan and Regular Plan is not easy as it will all depend on your entry date. Please do not simply assume that you would have lost (or gained) the difference between the two NAVs.

In my case, I canceled and started my SIPs in Direct Plan in January last year and switched all units over a year old (to escape the Exit Load) to Direct Plan. For various reasons, I never made the change in my Value Research portfolio and I can see that I have gained tens of thousands of rupees just by doing this switch.

[Deep Blue]

Originally Posted by shipnil

But when the schemes grew and different methods were adopted, the thing simply became unmanageable. I had to remember so many passwords and had to do many entries with moneycontrol for all transactions. (I was not an SIP guy although I invest regularly. The reason is I want to control how much I can invest in a specific month). The moneycontrol PF was rarely in sync with what was there. So I had to find a better method.

Then I came across fundsindia.com. They do not charge any fee for investing through them. As per them, they survive on trailing commissions.

I am at this stage now, struggling to remember so many passwords. Besides some sites need you to change passwords frequently and some won't allow us to repeat the last 3 passwords. Worse is if I don't remember to enter my excel sheet on the day then I have to go back again and search for the NAVs etc.
I had heard of fundsindia( through tbhp only) but was a bit skeptical as there was another similar site called moneysights.com ( even recommended by value research) which folded up. Fundsindia seems to be holding on well, so maybe time to get on it!

[sgiitk]

For the present I am sticking to normal plans since I get excellent service from StanC.

[tiger_stripes]

Originally Posted by nowwhat?

For starters, despite being passive investment vehicles, the expenses charged by Indian ETFs are quite high at 1%+ (typically 1.5%) and are only slightly lower than Direct Plans of large Diversified Equity funds.

Secondly in India, well managed funds typically beat the underlying index.

Thirdly, ETFs traded on the stock market have poor liquidity.

Yes, high expenses defeats the purpose. There are exceptions, such as the Nifty BeES ETF, which has an expense ratio of only 0.54%.

Regarding well managed funds typically beating the index, now that statement will need some evidence to back it. I just googled to see fund performance vs benchmark in india. As per this article ( http://businesstoday.intoday.in/stor.../1/202704.html ) most Indian mutual funds over the last 3 years have underperformed their benchmarks.

Regarding poor liquidity, that is a valid point. If you are holding for long term and can redeem in stages, there is sufficient volumes.

So yes, the ETF market in India is not yet fully mature, but I hope it develops in the coming years.