[sgiitk]

Let me join the party. Taxation on debt under growth is after indexation if you hold for three years or more. Indexation reduces it to a near zero effective rate. So yes, if you plan to exit and are in the 30% bracket, then dividend is preferable, but not if you wish to hang on!

[thoma]

If I am to redeem my long term equity funds and park the amount (capital and gain) in my savings bank for some time, does the whole amount have to be considered as income for the year (for tax calculations for the year) or just the interest on the amount for the period in bank? Only the latter, right? The capital has been taxed once before it being invested in MF and the gain is tax free since long term?

[nowwhat?]

Originally Posted by thoma

If I am to redeem my long term equity funds and park the amount (capital and gain) in my savings bank for some time, does the whole amount have to be considered as income for the year (for tax calculations for the year) or just the interest on the amount for the period in bank? Only the latter, right? The capital has been taxed once before it being invested in MF and the gain is tax free since long term?

Yep, tax only on (savings bank) interest income.

[Thebat]

Wait , a mutual fund thread of Team Bhp ! Was researching online about mutual funds for my NISM exam and what do I find , a thread on mutual funds on Team Bhp. This is just an amazing pool for information for someone like me who is just getting started in the industry. Thank you guys , you made my day.

[sups]

Need some advise.

I have been investing in SBI Emerging Business Fund in SIP for the last 5 years. It has given me a good return of little more than 18% CAGR. But the fund is not rated highly now in its midcap category. Should I continue investing here, or start a better ranked scheme like Mirae Asset Emerging Bluechip Fund?

Even if I switch to Mirae, should I remain invested in SBI Emerging business fund without adding fresh investment to it?

[sgiitk]

@sups; In the current volatile scenario it is very tough to take a call, esp in Emerging Business, which means small caps and midcaps. I suggest you look at ratings from multiple sources like ValueResearch and MoneyControl and decide. I personally do not think there is that much between 3* and 5*. Yes, 2* is a watch, and 1* a possible exit. I have a coupld of funds which have dropped to 1* but am sticking with them.

[avingodb]

ICICI Direct is recommending me to switch from UTI Opportunities Fund (G) to SBI Bluechip (G). My investment in UTI is less than one year old. What do you guys recommend?

[sgiitk]

@avingodb; I will take any advice with a big pinch of salt. Very seldom do they take into account the tax considerations.

Also with the Brexit vote tomorrow, I will just hang on. I am no jyotishi?

[pradkumar]

Hi,

First things first, I am not making any recommendations!

Most large cap funds are doing badly. It is not difficult to see why UTI is doing badly. They have 29.71% allocation to the financial sector while SBI Blue Chip has 23%.

UTI has 7.99% of their assets in HDFC Bank. While HDFC Bank is doing extremely well and has less issues with NPAs, I don't know about other banks. It has 4.66% in IndusInd, 4.15 in Axis bank, 2.79 in ICICI, 2.31 in SBI, and so on.

The scenario with banks becomes even more bleak when you read this story:

http://www.thehindu.com/business/Ind...cle8573163.ece

I had UTI Equity (a 4-star fund when I started the SIP), which has a similar kind of exposure to the financial sector. I decided to redeem after less than a year. I was making minor losses, so the question of short term capital gains didn't arise.

I got tired of these equity large cap and multicaps with their dismal performances in the last year and moved to a midcap, Mirae Asset Emerging Bluechip. I am in a risk taking mood at the moment! I do have some balanced and debt funds in my portfolio to balance my portfolio.

Pradeep

Originally Posted by avingodb

ICICI Direct is recommending me to switch from UTI Opportunities Fund (G) to SBI Bluechip (G). My investment in UTI is less than one year old. What do you guys recommend?

[sgiitk]

@pradkumar; The reason that the Prashant Jain funds of HDFC have taken a dive is that apparently he took a long call on PSU banks. But then he has a track record of being proved right in the long run.

With RR taking the tough line of getting the banks to clean up their balance sheets it was not looking likely either. Now with Swamy gunning for the other monetarist Subrahmanyam nothing is clear. Depends on whether the Monetarists survive or we are back to the Keynesian model.

[nowwhat?]

Originally Posted by sups

I have been investing in SBI Emerging Business Fund in SIP for the last 5 years. It has given me a good return of little more than 18% CAGR. But the fund is not rated highly now in its midcap category. Should I continue investing here, or start a better ranked scheme like Mirae Asset Emerging Bluechip Fund?

Originally Posted by avingodb

ICICI Direct is recommending me to switch from UTI Opportunities Fund (G) to SBI Bluechip (G). My investment in UTI is less than one year old. What do you guys recommend?

Consider this analogy. We are all on the same multi-lane highway even though we may be heading towards different destinations. There is quite a bit of traffic now and you see that one of the lanes is moving faster than your current lane and you decide to take that lane. What happens next is anyone's guess. For all you know, that new lane may slow down eventually and your original lane may end up being quicker.

It is therefore very important not to chase star ratings, advice from broking firms or an extra 2% return, but instead go through your rationale on why you invested in that fund in the first place (You did have one, didn't you?) and then identify what has changed in that fund and whether you are comfortable with that change.

Also remember that when markets are bullish, it is very easy to figure out who the segment leaders are, but when markets go sideways like they did for over a year, this isn't always easy.

Originally Posted by sups

Even if I switch to Mirae, should I remain invested in SBI Emerging business fund without adding fresh investment to it?

There are basically 3 approaches.

1. Stop & retain old fund, Start SIP in new fund.
2. Periodically do partial redemption or SWP of old fund, transfer + SIP to new fund.
3. Completely quit old fund, lumpsum + SIP to new fund.

Personally I follow 2 & 3. Once I have firmed up on my decision to quit a fund, I redeem a relatively small amount periodically and invest it in the new fund. Usually I lock in on the same day's NAV in both funds by deploying cash for around 3 business days for the purchase. I keep repeating this until I reach the 1-year mark when capital tax and exit fees kick in, this is usually when I quit the old fund altogether after calculating where things stand.

If you already made a profit in the old fund, this exercise is painless as you have already got the benefit of the SIP in the old fund and you are using the profit to buy additional units in the new fund. Value Research's portfolio tool will factor in your realized gains to tell you exactly where you stand.

Originally Posted by pradkumar

Most large cap funds are doing badly.

True, but my large cap fund has given me 14% annualized returns (Last 1 year is 4% though). Overall better than FD.

Large cap, balanced or diversified is usually required to anchor an equity portfolio.

Originally Posted by pradkumar

The scenario with banks becomes even more bleak when you read this story:

http://www.thehindu.com/business/Ind...cle8573163.ece

Corporates over extending themselves is not a new story. So long as they service their debt regularly, nothing to worry about. Most, if not all, of the groups in the story are invested in infrastructure which has still not fully taken off. Once that sector takes off and interest rates come down (I had posited last year that Rajan would likely not survive past September), it will be a double jackpot and these same companies may become the darlings of investors.

[sups]

Thank sgiitk and nowwhat for your suggestions. I am better informed now.

[sgiitk]

@sups; I have found the best returns over the past year from Equity oriented Balanced Funds. I do expect the market to pick up soon, so I will got for a Diversified Equity Fund. Right now advising a family member I have asked the person to go for ICICI Pru value Discovery plus Franklin India Blue Chip. The former is rated 5* by ValueResearch and the latter 4*.

[inder]

Do we need to have a demat account to invest in MF ?

[saket77]

Originally Posted by inder

Do we need to have a demat account to invest in MF ?

Not at all as of now. But in case you prefer to keep it in dematerialised form, then you should have one.

Regards.