Refrain these mistakes while rebalancing the portfolio

Rebalancing portfolio has its own compulsion as rebalancing can help you to return on the route if you have deviated away from your primary asset allocation. Also, rebalancing can secure your portfolio from the volatility of the market in the case you want to minimize your investment risk. There can be several reasons that may lead you to rebalance your portfolio like a change in your financial situation or in the case if you have acquired your goals, rebalancing the portfolio is a must.


But there is a set of rules while rebalancing the portfolio otherwise you will end up going beyond the defined level for your debt as well as an equity component. There are a lot of consequences and implications in terms of taxes, the effect on goals etc. while rebalancing the portfolio.

There are some common and avoidable mistakes that one must not do while rebalancing.

Focusing on the losers only rather than current winners

While rebalancing, it is a most important thing to keep in mind that it is necessary to take a look at the investments that are performing well while it’s alright to replace the investments that are leading you to lose your money otherwise you will end up exposing yourself to a big risk. It’s always a better plan to take a step back if you are willing to reorganize things throughout your portfolio.


To manage rebalancing by presumptions

Rebalancing is too important to be done only by one’s presumptions as you may assume that rates are going to get down in upcoming months and you move your debt portfolio in favor of funds that are long-dated. Reversely, you may have a feeling that the equities are going to get overpriced and a result of that you may want to shift more into low beta equities. Both views are based on just presumptions and may vary in reality. So, it is good to do rebalancing according to the rules.

Disregarding the tax factors

It’s very important to rebalance carefully when it comes to the tax bill. One must be attentive to how it might affect. You need to know while rebalancing that even the equity funds have to pay the LTCG tax on profits more than ₹1 lakh per year which is 10%. When you are exiting out of debt funds, tax bills can be higher. The taxes can be at the highest rate that is 20% after evaluating the benefit of indexation if you are selling out in less than 3 years. The tax costs can change the economics of rebalancing the portfolio.

Rebalancing without any supervision

It’s always a great decision to be on yourself and to do things on your own but sometimes a little guidance can take you out of the future risks. Like in rebalancing, it is always a better decision to take an advice of any expert while rebalancing your portfolio. An expert can help you in making quick and fruitful decisions and may tell you the do’s and dont’s of rebalancing. Those will make more comfortable for you to make further decisions about your long-term goals.

Rebalancing without any particular investment goal

One of the most common mistakes is rebalancing without any particular investment goal. Also, It is always a better decision to stay in liquid funds and not to rebalance it when you are close to your goals. Rebalancing is an important decision concerning the portfolio, the only thing is it must always be linked with your long-term goals and the costs do not exceed your benefits of rebalancing.

Conclusion –

Rebalancing portfolio is not as hard as it seems but if one is willing to take proper gains from the benefits it gives, then there is a necessity to follow some rules and take some guidance in order to maximize the returns of your investments and minimize the risk factor.


HDFC AMC IPO Review, Current GMP and List of Anchor Investors

HDFC Asset Management Corporation (HDFC AMC) coming up with an IPO. The company got SEBI’s nod for the initial public offer. The company incorporated in 1999 based in Mumbai. HDFC Mutual Fund is asset management company which provides services in savings and investments. The company is JV between Housing Development Finance Corporation Limited (“HDFC”) and Standard Life Investments Limited (“SLI”). HDFC is a bigger name in finance and housing market. The company is doing well in India and the coming years will be good for the company as per the financial results. It caters various products portfolio covering five principal segments across the individual and group categories, namely participating, non-participating protection term, non-participating protection health, other nonparticipating and unit-linked insurance products. HDFC Standard life has 66,372 individual agents along with 414 branches across India.

HDFC AMC offers a wide range of savings and investment products across asset classes. As of December 31, 2017, it offered 127 schemes categorized into-

  • 28 equity-oriented schemes
  • 91 debt schemes
  • 3 liquid schemes
  • 5 other schemes (including exchange-traded schemes and funds of fund schemes).

The company also provides portfolio management and segregated account services to HNIs, family offices, trusts, domestic corporates and provident funds etc. As of December 31, 2017, it managed a total AUM of ₹75.78 billion as part of its portfolio management and segregated account services’ business.

HDFC AMC raises Rs 732 cr from anchor investors.

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Outlook of the Firm:

Strong support from established parentage and trusted brand i.e. HDFC, Standard Life;

Reliable and consistent financial performance growth;

Focus towards multi-channel distribution footprint to access the customers;

Leading digital platform which helps customers and distributors.

IPO Dates & Price Band:

IPO Open: 25-July-2018
IPO Close: 27-July-2018
IPO Size: Approx Rs.2800 Crore (Approx)
Face Value: Rs.5 Per Equity Share
Price Band: Rs. 1095 to 1100  Per Share
Listing on: BSE & NSE
Retail Portion: 35%
Equity: 25,457,555 Shares

Market Lot:

Shares: Apply for 13 Shares (Minimum Lot Size)
Amount: Rs.14,300

IPO Allotment & Listing:

Basis of Allotment: 01-August-2018
Refunds: 02-August-2018
Credit to demat accounts: 03-August-2018
Listing: 06-August-2018


Karvy Computershare Private Limited

Lead Managers:

Axis Capital Limited
BoA Merrill Lynch
Citigroup Global Markets India Private Limited
CLSA India Private Limited
HDFC Bank Limited
ICICI Securities Limited
IIFL Holdings Limited
J.P. Morgan India Private Limited
JM Financial Consultants Private Limited
Kotak Mahindra Capital Company Limited
Morgan Stanley India Company Pvt Ltd
Nomura Financial Advisory And Securities (India) Pvt Ltd

Promoters Of the Company:

Housing Development Finance Corporation Limited,
Standard Life (Mauritius Holdings) 2006 Limited,
Standard Life Aberdeen PLC

Objects Of The Issue:-

To avail the benefits of listing the Equity Shares on the Stock Exchanges and;
To carry out the sale of Offered Shares by the Selling Shareholders.


Qualitative factors

Consistent market leadership position in the Indian mutual fund industry;

Trusted brand and strong parentage;

Strong investment performance supported by comprehensive investment philosophy and risk management;

Superior and diversified product mix distributed through a multi-channel distribution network;

Focus on individual customers and customer-centric approach;

Consistent profitable growth; and

Experienced and stable management and investment teams.

HOUSE HOLD SAVINGStrong growth is foreseen in household financial savings

India has historically been and is expected to remain a savings economy. The gross domestic savings rate (as a percentage of GDP) is higher than those of major economies such as the US, the UK, France, Japan and Germany.

As of 2016, India’s gross domestic savings rate stood at 29%, compared with the global average of 25%. Household savings in India has witnessed growth from ₹20.7 trillion in Fiscal 2012 to ₹24.8 trillion in Fiscal 2017, although its share as a percentage of GDP remained subdued during the period. The past two years have seen a quantum spurt in investments into capital markets, with the household allocation to shares and debentures increasing from 2% in Fiscal 2015 to 10% in Fiscal 2017 as well as a sharp increase in the mutual fund assets under management (“AUM”).

MFAUM AS PER GDPFor the period April 2015 to December 2017, the individual investors’ AUM grew at a CAGR of 33% to ₹11.4 trillion. In Fiscal 2018, CRISIL Research expects CPI inflation to fall further and average 4%. Over the long term, too, the RBI is committed to keeping inflation low and range-bound. Lower inflation gives an impetus to overall savings, as people can save more. CRISIL Research expects financial savings to increase with the government’s strong stance against black money and diminishing attractiveness of real estate and gold, along with improvement in financial education among households and measures taken towards financial inclusion.


Reliance Nippon Life Asset Management ( First MF ) IPO Review

Current scenario

Robust AUM growth since Fiscal 2013, due to the rising individual investors’ participation and equity market.

Mutual funds have emerged as a strong counterweight to foreign institutional investors (“FIIs”)

Systematic Investment Plans (“SIPs”) book size has doubled since April 2016

Other revenue streams

Portfolio management services

Alternative investment funds

Offshore management /advisory services

INDIAGrowth Drivers

Equity mutual funds are perceived as long-term wealth creators.

Financial inclusion, investor education and investor-friendly regulations to boost mutual fund penetration.

Growing awareness can boost acceptability of mutual funds as an investment vehicle.

Spending on investor awareness rising.

Regulations to incentivise investments in smaller cities

Retirement money can be a big impetus

Tax benefits on equity-linked savings scheme (“ELSS”) a huge draw

Guidelines on a categorisation of schemes to make investing easier

Technology to be a key enabler for growth

Instant access facility a viable alternative to a savings account


Key Challenges

Low level of financial awareness

Competition from other financial instruments

Retail expansion at a reasonable cost


There are outstanding proceedings against us, Promoters, Directors and Group Companies and any adverse outcome in any of these proceedings may adversely affect its profitability and reputation and may have an adverse effect on its business, results of operations and financial condition.

Adverse market fluctuations and/or adverse economic conditions could affect its business in many ways, including by reducing the value of our AUM, causing a decline in its investment management fees, portfolio management fees or fees from advisory services, reducing its systematic transactions, and causing its customers to withdraw their investments, each of which could materially reduce and adversely affect its revenue, business prospects, financial condition and results of operations.

If its investment products underperform, its AUM could decline and adversely affect its revenues, reputation and brand.

HDFC AMC AUM may be constrained by the unavailability of appropriate investment opportunities or if we close or discontinue some of its schemes, products and services.

ICICI Sec. IPO Review and the list of anchor investors

HDFC AMC’s historical growth rates may not be indicative of its future growth and if we do not manage its growth effectively, its financial performance could be adversely affected.

Failure to continue with its existing distribution relationships or to secure new distribution relationships may have a material adverse effect on its competitiveness, financial condition and results of operations.

HDFC AMC rely on third-party service providers in several areas of its operations and may not have full control over the services provided by them to us or to its customers.

If its techniques for managing risk are ineffective, HDFC AMC may be exposed to material unanticipated losses.


HDFC AMC may not be able to implement its growth strategies.

Any concentration in its investment portfolio could have a material adverse effect on its business, financial condition and results of operations.

HDFC AMC is dependent on the strength of its brand and reputation, as well as the brand and reputation of other HDFC group entities and Standard Life Investments group companies.

HDFC AMC face competition from other asset management companies, alternative investment funds and other companies providing portfolio management and segregated accounts services and from alternate investments products available in the market.

HDFC AMC’s business would suffer if we lose the services of its key management and other personnel and we are unable to adequately replace them.

HDFC AMC may have negative cash flows.


Revenues of the company have increased at CAGR of 20% from Rs 858.55 crore in FY2014 to Rs 1759.75 crore in FY2018. The company has posted healthy 19% CAGR growth in net profit to Rs 721.62 crore in from FY2018 from Rs 357.77 crore in FY2014.

The company has consistently delivered RoE of above 40% for last five years to FY2018.

Post-issue valuation is Rs 23319 crore at the upper price band of Rs 1100 per share and Rs 23213 crore at the lower price band of Rs 1095 per share.

EPS for FY2018 works out to Rs 34.04 on post-IPO equity basis. The scrip is offered at P/E multiple of 32.3 times FY2018 EPS at the upper price band.

The post-issue book value (BV) is Rs 101.9. The scrip is offered at a P/BV multiple of 10.8 times at the upper price band of Rs 1100 per share.

The recently listed peer company, Reliance Nippon Life Asset Management Company is trading at P/E multiple of 25.4 times FY2018 EPS and a P/BV multiple of 5.8 times. Reliance Nippon Life AMC is the fourth largest mutual fund in India with average AUM of Rs 244903.56 crore end March 2018, which has recorded RoE of above 24% for last three years to FY2018.


The company posted revenue of 19% CAGR in the last 5 years. It earns decent profits. However, its issue price is highly priced. I would have been excited if the issue price was on the lower side. Considering its brand in the mutual fund business and positive factors, investors can invest in this IPO for 4-5 year tenure.

Grey market premium:

GMP as on 25 July 2018 @ 18.00 is Rs.460 /- to 465/- , Kostak Rs.1650/- 
GMP has remained steady for whole day.



No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here

Mutual funds reached to 21% of total bank deposits

Mutual funds are now 21% of the bank deposits. On the other hand, the Indian mutual fund’s industry still has much to gain on with its worldwide squint regarding of the brisk and massive growth in the recent times.

mutual funds

In spite of a massive rise in the equity market and a stable inflow through the SIPs (Systematic Investment Plans), mutual funds had become successful in enticing the trade investors as their equity AUM (Assets under Management) rated for 8% of the bank deposits in the previous fiscal year. According to the data obtained by the RBI, the equity assets of the mutual funds were ₹9.3 lakh crores in averse to ₹115 lakh crores in bank deposits by March end.

10 things I have learned about investing

Progressively, the latest data reveals that the mutual funds are getting well-liked among the investors. The AUM of the mutual funds was counted at 10.44% of the total bank deposits by March 2013. This percentage has increased to 17.44% in March 2017 and then gains a hike to 21% in December 2017. In past 4 and half years, the mutual fund industry has added an amount of ₹ 14.25 lakh crores meanwhile ₹33.79 lakh crores increased the bank deposits.

Also, mutual funds AUM stances at 18% in March 2017, on the other side this ratio was 100% in the US. A huge growth possibility can be seen in India in terms of population dispersion and increasing per capita income from ₹75,000 to ₹2.5 lakhs. The mutual fund industry has attempted several campaigns like ‘Jan Nivesh’ and ‘Mutual Fund Sahi Hai’ to attract the investors towards MF. Also, in the past six years, the mutual fund industry has acquired the growth of 20%. Mutual fund AUM will touch ₹95 lakh crores by 2025 if the industry gets to attain this rate.

mf1Source– RBI, IRDAI (Insurance Regulatory and Development Authority of India)

How to choose the best mutual fund for your portfolio

mf2One of the biggest macroeconomic improvements in MFs is AUM to GDP ratio. Vast change can be seen between the percentage of GDP in FY 2000 and the GDP of FY 2018. Where the GDP was 5.6% in FY 2000, now it has risen to 12.8% and this growth indicates the huge growth potential of the MF industry.

mf3The chart shows that developed countries like the US (101%), France (76%), Canada (65%) and the UK (57%) have listed high-level mutual fund penetration. Similarly, the emerging countries like South Africa (49%) and Brazil (59%) have an outrageous allocation in mutual funds in comparison to India. The distribution of India indicates a significant scope for growth as the average of the mutual fund penetration of the world stances at 62%.

mf4This chart shows that the highest allocation percentage of equity mutual fund AUM to market cap ratio is of Germany that is 51%, the US stands second with 41%. While India has only 4% allocation and such low penetration suggests that there is a steady growth prospect for the MF industry, especially in equity mutual funds.

How to disclose mutual funds capital gains while filing ITR

Here’s what constitutes capital gains for mutual funds and how your existing investments need to be accounted for in your IT return.

Those who’ve sold mutual funds also fall under this ambit and have to declare their gains or losses. Let us find out what constitutes capital gains for MFs and how your existing investments need to be accounted for.

What is Capital Gain?

Capital assets could be any form of wealth like land, building, house property, vehicles, patents, trademarks, leasehold rights, machinery, jewellery, stocks and even mutual funds. Any profit or gain that arises from the sale of any of these ‘capital assets’ is a capital gain. These gains could be taxable in your hands, subject to the taxation rules of the year in which they occurred. The rules of taxation differ from one capital asset to another. For example, the rules for capital gains on equity mutual funds are different from those of debt mutual funds.

Fact sheet of Women fund managers who have outperformed or Underperform over the long-term

Mutual Fund Gains & Losses

Investing in MFs does not immediately concern the I-T Department. However, if you make a profit or loss after redeeming your MF investment, the I-T Department wants to know about it. The nature of the investment, whether it is a debt fund or an equity fund, determines the exact tax impact on the investor.

In a debt MFs, capital gains earned on investments held for under three years are called Short Term Capital Gains. Gains on investments held longer than three years are called Long Term Capital Gains. For equity MFs, gains become long-term if held for one year.

Depending on what your gains (or losses) are, they need to be disclosed appropriately while filing your tax returns.


All funds will attract tax to some level on redemption. The short-term taxes are higher, of course, as shown in the table above, while long-term taxes are lesser. One can also claim short-term and long-term capital losses incurred during redemption of both debt and equity mutual funds.


Mutual fund schemes have dividend plans where the fund house releases dividends to investors periodically. The dividend that is received in the hands of the investor is tax free up to Rs 10 lakh in a year. The dividend earnings of a large majority of retail MF investors would fall within this limit. However, the income still needs to be declared.

10 things I have learned about investing

Listing on the Correct ITR Form

ITR Form 2 is for Individuals and HUF not carrying out business or profession under any proprietorship, but having income from sources other than salary. Make sure to take out FY-2017-18’s transaction statements from all your fund holding platforms before you get ready to file the ITR.

Remember that tax is calculated on the entire value of redeemed funds and not on an individual fund. For instance, you will be liable to pay LTCG of 10% only if gains from your entire portfolio exceed Rs 1 lakh, and not from a single fund.

Unlike ITR-Form 1 and For 4, you cannot file this form online. You will have to download the Income Tax XML for ITR 2 from the Income Tax Department’s website, fill it, and submit a return by logging in and uploading the XML, in the income tax portal.

For those seeking deductions, if you have not claimed the same while submitting investment to your employer, you can do that in the form here. Remember for MFs, only pension and ELSS category of funds can be claimed for deductions under Section 80C up to a maximum of Rs 1,50,000.

Remember that other than MFs if you hold other capital assets like property, gold and more and have made gains by their sale, you will have to list the same in the same XML form. Income accumulated from renting out property also has to be listed on the form.


Why should you get a standalone cancer insurance plan?

According to a report by the Indian Council of Medical Research (ICMR) based on its National Cancer Registry Programme, the number of new cancer cases is expected to rise from 13 lakhs in 2015 to 18 lakhs in 2020. Around 60-70 percent cancer cases are in the age group of 35-64 years.

The cost of treating this dreaded disease can range anywhere between Rs 15 lakhs and Rs 25 lakhs, or even more, which makes it imperative to have an insurance cover. Since the amount of coverage provided by a normal health insurance policy is likely to be inadequate, many insurance companies offer stand-alone policies that cover all types of cancers.


Standalone cancer insurance plans are fixed benefit plans that offer lump-sum payouts at different stages. The sum assured for these policy starts from Rs 200,000 and goes up to Rs 50 lakhs. The term of the policy can range from five to 70 years. As these are pure protection plans, they do not offer any benefit in case the policyholder survives the policy term.

Cancer-specific policies cover different stages of diagnosis, be it minor, major or critical. They cover various treatments, including chemotherapy, radiation therapy, hospitalization, and surgery.

What is the treatment cost of Cancer and how to protect it Financially?

The three stages of cancer that are covered include Carcinoma in Situ (CIS) or the making of a tumour, minor stage, and major or critical stage. The pay-out happens depending on the stage the person is diagnosed with. Around 20-25 percent of the sum assured is paid out if the policyholder is diagnosed at an early or minor stage (the exact percentage varies from one insurer to another). If partial payment has been made by the insurer at an early stage, it is then deducted from the payment at the major stage. For instance, if 25 percent payment has been made in the minor stage, then only 75 percent of the sum insured will be paid at the major stage.

Pre-existing cancer is not covered by these policies. Certain cancers such as skin cancer and cancer caused by sexually transmitted diseases are also not covered by these policies. “Exclusions are important and those buying these policies should read the policy wording carefully,”


Critical illness covers too provide lump sum cover for a number of critical illnesses, including cancer. But they don’t cover all the expenses incurred during cancer treatment. They pay only a pre-defined amount upon diagnosis of any critical illnesses listed in the policy document. If you have a mediclaim policy, it will pay for the cost of treatment up to a certain limit. On the other hand, these standalone cancer covers will pay a pre-defined amount on diagnosis of the disease, and at a couple of other stages, which you can use for treatment and meet various other expenses that may arise.

A health insurance policy provides cover for hospitalization expenses, but there are always several additional expenses that are not covered. These cancer plans act as a supplementary cover in addition to the basic health insurance plans. “If one is at an average risk of developing cancer depending on one’s family history, one should have a standalone cancer product. But one should remember that a cancer plan cannot be a substitute for a basic health insurance policy,”

On diagnosis of cancer, future premiums are waived off. One can also claim tax benefit under Section 80D on the premium paid. The premium for this cover is calculated based on the sum assured, policyholder’s gender and age, term of the policy, existing health issues, and family history. A person is not covered if he has already got cancer due to the risk of recurrence.