[S_U_N]

There is a very nice article on debt funds, tax benefits and SWP.
Examples included.

http://economictimes.indiatimes.com/...w/18877163.cms

[Mpower]

Is there any fund that is catering to NRIs specifically ?

[sgiitk]

Originally Posted by S_U_N

There is a very nice article on debt funds, tax benefits and SWP.

Saw the article. SWP is and has always been the way to go. One other trick, look at indexation, it is true after indexation the rate is 20.6% but this may work out to be under 10% as in the current high inflation scenario. With my retirement in under a year, I will look at the debt / money market MF as a better option to FDs.

[mazda4life]

I need some help/advice ... I have invested in a SBI MF and it recently declared a dividend and they sent me a email on the same.The issue is that , the bank a/c where they did a electronic transfer is not being used by me at all for quite some time. I am not sure if the bank ( ICICI) has closed the a/c or what the current status is.

I am trying to get in touch with the bank guys as well as SBI MF folks and getting them from here ( I stay in the US) has been very difficult and I dont want to lose the money in the bargain. So question is , whats the best way to resolve this , I tried logging into the CAMS /Karvy portal and am unable to do so...how can I get to know if the money has been credited to my a/c or has it been kept in abeyance ?.

[Rameshdude]

Friends,
I need some advice.
I had been investing in the following MF 1) SBI tax gain 2) Franklin templeton (equity) 3) DSP (equity) , from 2007 . Investing monthly Rs 5000/ . I stopped investing in 2012 April. It was a long term planned investment. I would be closing it in 2015 or 2016. Now presently, as the market is down. Should I invest again and would be able to purchase more units, presuming that markets might improve in 3 years time. Or should I withdraw the money now or just let it continue in the present manner? And at present, I am investing in ICICI, HDFC and Reliance mutual funds, do I continue?
Thanks
Ramesh

[sgiitk]

@Rameshdude; Nobody can predict the market. I expect NIFTY may correct to possibly as low as 5200. So I am not investing at the moment. Of course you can go into debt / money since as interest rates fall they will gain. On the other hand the FSA may mess up things.

I do not think I will be investing in Equity until we have a clear upwards trend or hit 5350.

I see only one bright spot as Gold is falling, sales and imports will take a hit, helping the rupee and the CAD. As for the rest things will be shakier (and get worse) until the elections, and hopefully a stable govt will emerge.

[S_U_N]

Moneycontrol reports these as the best funds under equity section:

Large cap:
BNP Paribas Equity Fund (G)

Small/ Mid cap:
Birla Sun Life MNC Fund (G)

Diversified equity:
Birla SL India GenNext (G)

What combined returns should I expect 12-24 months down the line?

I am looking at invest 100-200K in lump-sum and not via SIP, since I already have a 10K/ month SIP in the equity MF's from Franklin, ICICI, et. al.

[gaurav_chopra04]

Originally Posted by S_U_N

Moneycontrol reports these as the best funds under equity section:

Large cap:
BNP Paribas Equity Fund (G)

Small/ Mid cap:
Birla Sun Life MNC Fund (G)

Diversified equity:
Birla SL India GenNext (G)

What combined returns should I expect 12-24 months down the line?

I am looking at invest 100-200K in lump-sum and not via SIP, since I already have a 10K/ month SIP in the equity MF's from Franklin, ICICI, et. al.

In the large cap funds, after Franklin and ICICI, BNP Paribas has performed rather well in the last three years. If you look at a five year period, BNPs return is pretty low and that of DSPBR Top 100 Equity Inst is good.

Also, both Birla MNC and India GenNext are extremely volatile funds. Same goes for SBI emerging business. Investing a lump sum for a short tenure in these funds might not be a good idea. In fact, I believe you should invest your money in debt funds if its short term.

[sgiitk]

@S_U_N; There is no best. This selectioon changes every month (or even week). Take a look at valueresearchonline.com and select any of the 5* or 4* funds. I prefer the IDFC Sterling or Premier Equity, or FT Equity Income for Small/Mid cap. Realistically assuming that yesterday was an aberration expect about 10-15% over a year.

Let me say I prefer the established fund houses, DSPBR, FT, HDFC, IDFC and L&T (yes I will now look at them again).

Also, if you want to avoid being reported under AIR (and a scrutiny thereafter) invest less than 2L in any single fund in a day.

[S_U_N]

Originally Posted by gaurav_chopra04

Investing a lump sum for a short tenure in these funds might not be a good idea. In fact, I believe you should invest your money in debt funds if its short term.

While debt funds are good, I will pay tax, so even with slightly better returns on paper, I will still not be making anything more than fixed-deposits, after say 18 months or so.
So far debt funds have been giving decent returns for me, but still post-tax returns are not going to be great.

Originally Posted by sgiitk

I prefer the IDFC Sterling or Premier Equity, or FT Equity Income for Small/Mid cap. Realistically assuming that yesterday was an aberration expect about 10-15% over a year.

Let me say I prefer the established fund houses, DSPBR, FT, HDFC, IDFC and L&T (yes I will now look at them again).

Also, if you want to avoid being reported under AIR (and a scrutiny thereafter) invest less than 2L in any single fund in a day.

I will look at some of those, but I think I have IDFC and Franklin already under SIP scheme.
But 10-15% is good enough for me.

I would probably want to split 2L over 4 funds (and 4 fund houses) and perhaps have them spread over a week.

[sgiitk]

@S_U_N; With a fairly large portfolio to manage I am still sticking with only six fund houses, with about 15 funds. I may exit out of one more fund house in the next few months.You will find the portfolios, esp of Large Cap and Diversified Funds very similar between fund houses.

[gaurav_chopra04]

Originally Posted by S_U_N

While debt funds are good, I will pay tax, so even with slightly better returns on paper, I will still not be making anything more than fixed-deposits, after say 18 months or so.
So far debt funds have been giving decent returns for me, but still post-tax returns are not going to be great.


I will look at some of those, but I think I have IDFC and Franklin already under SIP scheme.
But 10-15% is good enough for me.

Totally agree on the tax rebate you will get on equity but with the funds you listed, in a period of 12-18 months, you may even end up with a negative return. Till the time we get a stable government next year, investing lump sum in volatile funds for short term will not really be a calculated risk.

As sgiitk sir said, banking upon DSPBR, HDFC and other established fund houses is a better option.

[sgiitk]

Originally Posted by S_U_N

While debt funds are good, I will pay tax, so even with slightly better returns on paper, I will still not be making anything more than fixed-deposits, after say 18 months or so.
So far debt funds have been giving decent returns for me, but still post-tax returns are not going to be great.

The main reasons for debt are:

1. Insulate yourself against market crashes, in case you need to cash out some money in a recession.
2. You must hold for >12 months. Then taxation is lower (10% without indexation, or 20% with indexation). Hope I am right about the non-indexed figure. With a dividend distribution tax of 25%+ dividend option is a no go.
3. Returns are marginally (typically 1-2%) better than FDRs of the same period, even without the taxation benefits. T the moment they are doing even better due to the downwards interest trend, but this is temporary.
4. I am moving away from Equity oriented Balanced Funds. The reason that they have to maintain 65% in Equity at all times. This means in a recession / market crash they have to keep on shifting more and more into equity. I an now moving to balanced funds without the 65% floor, even though they are taxable. My favourite right now is FT Dynamic PE fund.

If you are a long term investor (horizon >5 years) then Equity has to be the bulwark, but these products do help out to balance the risks.Let me repeating myself once again, the percentage of your investment into Equity should ideally be about 100 minus your age in years.

[S_U_N]

Originally Posted by gaurav_chopra04

... in a period of 12-18 months, you may even end up with a negative return. Till the time we get a stable government next year, investing lump sum in volatile funds for short term will not really be a calculated risk.

As sgiitk sir said, banking upon DSPBR, HDFC and other established fund houses is a better option.

Originally Posted by sgiitk

If you are a long term investor (horizon >5 years) then Equity has to be the bulwark, but these products do help out to balance the risks.Let me repeating myself once again, the percentage of your investment into Equity should ideally be about 100 minus your age in years.

Here is my current portfolio:
Debt:
IDFC Ultra Short Term Fund-Reg(G)
Invested 30,000 in October 2012
DSPBR MIP Fund-Reg(G)
Invested 30,000 in October 2012

Current gain: 6.18%

Equity This in in my son's name - I plan to stay invested for 15 more years, till he turns 18. However, I am not sure if any of these companies will exist (or run away with the money - worst case scenario) till that time.
I plan to continue investing for a few more years - but not sure how many.

IDFC Premier Equity Fund-Reg(G)
Franklin India Bluechip Fund(G)
DSPBR Top 100 Equity Fund-Reg(G)
ICICI Pru Focused BlueChip Eq Fund-Reg(G)
HDFC Equity Fund(G)
HDFC Top 200 Fund(G)

This is SIP of 10K per month distributed across these 6 funds, starting from October 2012. So, expected investment is 1.2 lac in 12 months. Current gain is 3.95%.

My age is 33, which means I need to invest 67% in equity.
I invest 2 -3 lac per year in PPF (for family members and myself).

Now, I wish to invest in my own name (so, this is in addition to the existing SIP amounting to 1.2 lac annual).

I can stay invested as long as I don't buy a property - perhaps 2 years from now.

[sgiitk]

Originally Posted by S_U_N

Debt:
IDFC Ultra Short Term Fund-Reg(G)
Invested 30,000 in October 2012
DSPBR MIP Fund-Reg(G)
Invested 30,000 in October 2012

Current gain: 6.18%

Equity
I plan to continue investing for a few more years - but not sure how many.

IDFC Premier Equity Fund-Reg(G)
Franklin India Bluechip Fund(G)
DSPBR Top 100 Equity Fund-Reg(G)
ICICI Pru Focused BlueChip Eq Fund-Reg(G)
HDFC Equity Fund(G)
HDFC Top 200 Fund(G)

You have a good portfolio. Only I may not have gone in for Ultra Short Term but rather for the Medium Term or Investment Plans. In the Equity both Top 100 and 200 seems a bit odd. Let me give a short summary - Premier - SME with a large cap component, FIBCF- Large/Giant Cap, Top 100/200 Mid cap bias but may be similar to the PEF. I am myself in all but the Focussed BCF and HDFC Top 200.

You can stick to there for your own investments as well. You may also consider TIEIF. I am coming to like FT more and more, conservative and solid.