Why is Financial Freedom important after being retired?

Starting financial planning for old age after being retired or at the period between 50 and 55 is like “Locking the stable door after the horse is stolen.” So, it is always a better option to initiate saving and making investments as soon as possible. This has to be known to everyone that financial freedom plays a crucial role in securing a healthy life and social relations.

retirement

These days, we can see that going on in most of the families around us that a vast number of old people must live alone and without any support from the family because of the relocation of younger people for better livelihood and opportunities and due to the trend of the nuclear family system. They must  manage all their needs and requirements on their own even if they don’t have enough money and income; their life becomes more difficult as they don’t get enough care and support. Therefore, at this stage of life, financial freedom does matter a lot. It has also been seen in today’s lifestyle that the level of sensitization concerning the daily needs and requirements of older people across younger generations has reduced as a majority of them rarely communicate or get time to involve with their aging parents as well as grandparents.

expenses

retire

phase

Frequently, a research done by the Agewell Foundation shows that older people, who are financially stable or having high net worth are taking care of properly in the old age homes but those who have no financial stability often remain lacked sufficient support and care. The research also revealed that approx.75% of old people i.e. of age 60 or more were living alone or with their other half in the old age home. Moreover, only 35%-37% of older people are financially stable in India. That clearly shows the importance of being financially stable in India.

You are going to need money for the next 30 years or even more after the retirement. No one can tell you or predict how much wealth is sufficient after the retirement. There are many uncertain factors like health condition of yours and your spouse, your family responsibilities, social responsibilities, your life-span and many more. That is why your financial needs will remain unpredictable. Hence, you must try to make more money as possible until your health allows you.

And you already know that as long as you manage to work, you are going to remain healthy and fit. With a second job in your hand, along with the money, you will get more respect from your family as well as society. This is the so-called truth that money is very important at every stage of life. Old ones can choose to take on self-employment activities or businesses, like subject-related counseling, shopkeeping or another business as per your interest. Moreover, old people should re-tool themselves with soft skills, modern computer, and digital technicalities and keep themselves upgraded with time. It surely will help them in managing involvement in beneficial jobs after being retired.

Do Not Compare Yourself with Other Investors While Making Investment

Retired ones have an unmatchable experience, knowledge, and intelligence that they have gained over the years. Unluckily, these rich human resources stand untapped. The government must make such opportunities for the retired people so that they can involve themselves in several social and developmental acts with capabilities such as counseling, management, observation, and guardianship. Such provisions will also strengthen the social safety of old people.

Conclusion

Financial freedom plays a crucial role in assuring a stable and healthy life and social relationships as well. It allows the old ones to live the rest of their lives in peace, eminence, relief, and prosperity.

51% of investors withdraw their investment from equity mutual funds within less than a year

Almost every investor is familiar with the SIPs (Systematic Investment Plan), where you aim for making a corpus depending on your goals by investing a fixed amount every month in a mutual fund. As per Data from the (AMFI), shows that just 29% of equity assets stay invested for more than two years. A huge 51% of equity assets get withdrawn before a year gets over and more shocker is 10 % invest only for one month.

equity withdrwal

To generate a corpus, equity funds are one of the good options to invest in as they can deliver a fruitful result. But the significant thing to know about equity funds is that one should hold on their investments for at least 5 years or even more to get a worthwhile result.

EMI VS SIP ( Be controlled or take control )

Equity mutual funds not only provide you a beneficial result but also balance your portfolio. Also, depending on your goals, equity mutual funds give you high returns on your investment and tax benefits. They are one of the most profitable and preferable investment methods present in the market these days. People have switched from low-return instruments like bank FDs (Fixed Deposits), PF (Provident Fund), NSC, REAL ESTAE  ( 1% to 2% p.a. rental yield )to mutual funds across the time period. Equity funds help in tax-savings along with capital enhancement. Moreover, equity funds might deliver you the inflation-beaten returns in the upcoming period. There are even some options present in equity funds which are intended to provide you benefits in tax.

These days, investors are attracted towards SIP in mutual funds. They are investing their money in MFs through SIP but they are missing something beneficial and that is holding on for a longer period of time.

A campaign by the mutual fund industry of India named ‘Mutual Fund Sahi Hai’ and the anticipation of economic change has spread a successful awareness in the last two years among the investors. Even the SIP inflows in mutual funds have increased amazingly in the recent years but the investors must understand that if they don’t hold their investments for a longer period, they are slashing their returns by themselves.

One of the several reasons behind people attracted to invest in mutual funds is the diminishing rates of bank fixed deposits. It makes investors invest in their choices of mutual funds, usually in balanced funds and debt funds. The demonetization act happened in 2016 also encouraged investors to switch to mutual funds from gold and real estate investments and this led to a greater proportion of savings. The monthly inflows through SIP have also increased incredibly in the last two years as more than ₹7500 Crores flowed into equity funds in July’ 18. These figures were ₹3122 Crores in April’16.

“Some investors prefer the classical method of investment i.e. staying invested only for one year like people used to do before while investing in 1-year bank FDs. This could be a reason why several investors stay invested only for 1 year. On the other side, some smart investors hold their investments for a very long period of time.”

Do Not Compare Yourself with Other Investors While Making Investment

Most preferred & profitable period to stay invested

According to a research on the efficacy of the returns delivered by the SIPs, the investors who have their running SIPs for more than seven or eight years have hardly any probability of facing any loss while the investors who run their SIPs for a shorter period of time say, between one to two years have a higher probability of suffering losses. Investors must stay invested in equity for at least 5 years to get expected results.

One can see in the chart, how many investors (in %) hold their investments for a short period and how many of them hold it for a longer period.

equity

“One more reason behind investors exiting in short-period is their wrong approach towards investing as numerous investors pool in their money unsystematically and without any proper planning and asset allocation for their long-term goals. They invest their money expecting that they will get higher returns in just 2 or 3 years or a short period of time. And that results in unexpected returns and a bad experience, so they withdraw their investment.” Moreover, one must try to check once in every five or six months that how far they are from the goals now. Making investments by carrying long-term financial goals in mind is the correct way to grow patience.

 

Note: Past performance of fund does not guarantee the future returns.

Mutual Fund Investment are Subjected to Market Risks, Read all Scheme Related Document Carefully.

Disclaimer: 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.

DSP Mutual Fund to reopen DSP Small Cap Fund for SIPs/STPs only

From 3rd September 2018, the DSP mutual fund is going to accept investments through Systematic investment plan (SIP) and Systematic Transfer Plan (STP) in the DSP Small Cap Fund. However, as before the fund will continue to not accept lump-sum investments. Also, large valuations have come across in the small-cap fund. Therefore, there could be volatility over the next one year for the investors to grab the changes made. And this volatility can be conquered by the investors to add to small caps using SIPs.

Since the last 5 years and 10 years period, DSP Small Cap Fund has been consistently performing the best in the small-cap category and has consistent returns of annualized 34% and 20%, respectively.

However, from the last 1 year, the fund performance has been dragged that of peers with the slow return of only 2.3% as compared to 7.4% which is its benchmark of average return.

The BSE Small Cap Index is decreased to 19%. Well, other stocks lose 25-35%. As the economy improves, the earnings prospect for many stocks is going to rise.

dsp

Investment Objective:

The aim of the fund is to seek long-term capital appreciation by investing in a portfolio that is substantially constitutes of stocks of small cap companies.

Biography of Fund manger:

Mr. Vinit Sambre (Co-manager):Mr. Sambre is a B.Com and FCA. Prior to joining DSP BlackRock he was associated with DSP Merrill Lynch Ltd.(Nov 2005 to Jun 2007), IL & FS Investsmart Ltd. (Dec 2002 to Oct 2005), Unit Trust of India Investment Advisory Services Ltd.(Jun 2000 to Dec 2002), Kisan Ratilal Choksey Shares and Securities Pvt. Ltd. (March 1999 to May 2000) and Credit Rating Information Service of India Ltd.(Apr 1998 to Feb 1999).

Mr. Jay Kothari (Co-manager):Mr. Kothari is a BMS and MBA from Mumbai University . Prior to becoming the fund manager in DSPBR he has worked as the Vice President in the equity investments division as well a product strategist in DSPBRIM.

Mr. Resham Jain (Co-manager): Resham joined DSP Investment Managers in March 2016 as Assistant Vice President in Equity Income Team. He has over 9 years of experience. Prior to joining DSP Investment Managers, he worked for B&K Securities (I) Private Limited, Jaihind Projects Ltd & Arvind Ltd.

Do Not Compare Yourself with Other Investors While Making Investment

Correction in the small-cap segment:

smallWhy did DSP small-cap fund was closed before?

  • Hyper Valuations
  • Limited investment opportunities
  • Massive Inflows

DSP small-cap fund portfolio stats:

PE

The reason behind the re-opening of fund:

  • Post the recent market correction; valuations have become more reasonable for both.
  • Selective stocks within the portfolio
  • Other stocks in the radar.

Current changes to the portfolio:

PORTFOLIO1

  • Overall, it has increased weights in consumer-oriented names to add more stability to the portfolio.
  • Increased sector weights by Auto (3.9%), Chemicals (3%), and Textile (2.5%).
  • Increased concentration in stocks where they have conviction and were available at reasonable valuations.

Performance Chart:

CHART

SIP Performance:

Principal invested: Rs.  10,000 x 121 installments = Rs.  1,210,000

DSP SMALL S&P BSE Sma # NIFTY 50 TR # Gold PPF
Current value Rs.  4,145,243 Rs.  2,728,968 Rs.  2,471,110 Rs.  1,551,982 Rs.  1,931,010
Absolute growth 242.58% 125.53% 104.22% 28.26% 59.59%
Annualized growth 23.40% 15.67% 13.82% 5.02% 9.19%

Rolling Return:

rolling

Top 10 holdings as on 31st July:

TOP 10

Download (PDF, 101KB)

10 things I have learned about investing

Risk analysis:

Alpha -0.07
Beta 1.05
Downside Risk 22.66
Info Ratio Rel. 0.10
Jensens Alpha 0.28
Max. Drawdown -19.78
Max Gain 51.30
Max Loss -18.69
Negative Periods 11
Positive Periods 25
r2 0.95
Relative Return 0.38
Return 13.77
Sharp 0.34
Sortino 0.28
Tracking Error 4.01
Trenyor 5.98
Volatility 18.70

Note: Past performance of fund does not guarantee the future returns.

Mutual Fund Investment are Subjected to Market Risks, Read all Scheme Related Document Carefully.

Disclaimer: 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.

Stay cautious to the damaged Midcaps – MFs no longer hold it up

According to UBS, a global financial service provider, the most crucial wheels of the past two year’s rally in small-caps and mid-caps might be turned out to be cold now. If it seems like the damaged midcap and small-cap funds appear tempting in the market that is raising the benchmark indices to a record high in every next day, one must take a careful look.

mid cap

As per the survey by the global brokerage in July, both midcaps and small caps funds have lost support from the domestic mutual funds. The survey revealed that for more than last two years, flow from local mutual funds had a closer connection for small caps and mid-caps than foreign flows. Concerning the investors, the MF has reduced its rate of buying and the performance of small & mid-caps in the Nifty 2018 has not met the investors’ expectations.

The overall ranking of concerns (Investors’ outlook)

  1. Oil prices
  2. Local fund flows
  3. 2019 Elections
  4. Bank NPLs resolution
  5. INR exchange rate

How to choose the best mutual fund for your portfolio

The rankings are according to a small survey conducted by UBS where the investors were asked to rate the issues which are most critical for the Nifty on behalf of other investors. It has been predicted that the falling value of rupee is the most crucial issue but surprisingly, oil prices emerge out to be the most crucial issue by the investors. At present, even the 2019 elections is not a big worry for the investors. And the rupee depreciation is the last concern for the domestic equity investors.

The prime reason behind Nifty50’s underperformance across emerging market peers is the occurrence of rapid depreciation in the rate of INR along with a hike in the price of crude oil in the international market.

According to foreign brokerage, an increase of $10 per barrel in the price of crude oil might result into increase in India’s current account deficit by 0.3% of GDP and fiscal deficit by 0.1%. Moreover, CPI inflation may increase by almost 25 bps and cause a 30 bps impact on GDP growth if there is a 10% hike in the average prices of crude oil and if the raised fuel prices are passed on to buyers. Also, a hike of 10% in crude oil prices might not impact Nifty earnings so it may not change, but a drop in the rate of currency can push earnings up.

Refrain these mistakes while rebalancing the portfolio

“Nifty50 has usually did not met the expectations by its performance in relation to other rising markets in periods whenever there was a hike of more than 10% in oil prices and also when the currency rate dropped by more than 5%”, UBS revealed. Although crude oil prices and currency depreciation has affected the macro stability of India yet India is still far from the delicacy situation like in 2013.

The dollar to rupee value is somewhere near 70 and the crude oil prices have touched $70 per barrel in the global market for some time now. UBS said the fall in the currency affected the market in an assorted way. Although a 5% drop in the currency would drive up inflation by 10 to 15 bps, its influence on growth would be somehow beneficial, provided a pump to net exports.

Considering 2019 elections

One of the prime factors for the Indian markets in the upcoming months will be the outlook of the investors for the elections going to be conducted in 2019. According to some sources, there is a solid chance that Narendra Modi is going to win again in the 2019 elections. UBS said, ‘the majority of investors are assuming that Modi is supposed to be the Prime Minister again in 2019 elections.

Why is equity the most preferable long-term asset class?

It has been an eminent journey for the Indian mutual fund industry since now. The MF industry has made outstanding steps over the past few years. The investors have raised a substantial ₹1.3 lakh crores in equity mutual funds in 2017. But, the percentage of mutual fund assets in household savings is very less in India.

equity

According to the data from RBI, the percentage of mutual funds in financial assets is as low as 13%. The percentage of mutual funds will be even lesser if we add household savings in the physical assets, i.e., gold, petroleum, real estate etc. Even after the immense success of the Indian MF industry, the most selected choice for people is still bank deposits which are approx. 50% of the household financial assets.mutualSource: RBI

One can see that mutual funds savings are even less than 22% of the total bank deposits. The similar percentage in the US (United States) is around 101%. Moreover, almost the top 60 district of India hold the immense percentage of the mutual fund industry AUM. Except for those districts, the penetration of mutual funds in household savings in remaining part of India is appallingly less. One of the numerous reasons behind the low penetration of mutual funds in the country is the deficiency of financial awareness.

Risk factor

Doubtlessly equity is an uneasy and unpredictable asset class. There are sudden fluctuations in the stock market and this is called volatility. If you have invested in equity and your investment generally makes more hike in up-markets than it drops in down-markets, then it is a sign that your probability of getting impressive results are very high than of suffering loss over long investment tenure which is very low.

Mutual funds reached to 21% of total bank deposits

Performance in 5 years

The time period of five years, i.e. from 2014 to 2018 covers uncommon market conditions. 2014 was a year with a rising price. It was the year with a bull market with Lok Sabha elections and BJP coming to authority. 2015 was a good year stock market-wise having a correction worldwide as well as in India. 2016 started with a significant drop within the first 2 months, followed by an improvement. 2017 was a contrary year to a bull market. 2018 started with a volatility period of 3 months in the market, and since then the market is mostly seen as range-bound.

Different asset class

In this exploration, BSE-100 is taken as the proxy for the equities. BSE-100 symbolizes the large-cap province of stocks. Large-cap stocks hold the immense majority of overall market capitalization in the stock markets. CRISIL Composite Bond index represents the long-term i.e. more than 5 years, medium i.e. 3 to 5 years and short-term i.e. 1 to 3 years fixed income investment. CRISIL liquid fund index represents very short-term fixed investments i.e. less than a year and this index is similar to the savings bank.

Performance in 2014

2014Source: CRISIL, BSE, Goldprice.org

As mentioned 2014 was a year with a rising or a bull market year. All the asset classes performed well in 2014 except gold. And BSE-100 was outperformed.

Performance in 2015

20141Source: CRISIL, BSE, Goldprice.org

2015 started amazingly for equities but there was a great rectification in the month of March and there was high volatility in the stock market for the rest of the 9 months period with a downward bias. Predictably, equity not performed so well in such market-conditions but still is the best performer if we combine the 2014 and 2015 performance of all asset classes.

Warren Buffett that may help you to create wealth in long-term

Performance in 2016

2016Source: CRISIL, BSE, Goldprice.org

2016 started with under-performance by equity, driven mostly because of the slowdown in economy on the back of dropping prices of crude oil. But the stock market made a recovery in the month of March and maintained it or the remaining year.

Performance in 2017

2017Source: CRISIL, BSE, Goldprice.org

2017 was the great year for the stock market. Equity performed exceptionally well in 2017 and after the under-performing period of 2 years, BSE-100 provides more than 30% returns.

Performance in 2018

2018Source: CRISIL, BSE, Goldprice.org

2018, as many investors know, saw a lot of volatility and the market has been range-bound over the last few months. Let us how different asset classes have performed so far this year.

Large-cap equity vs. mid and small-cap

According to the data, mid-cap and small-cap stocks have dropped 20% to 30% in 2018. Even though mid-cap and small-cap funds are capable enough to provide high returns in the long-term period but large-cap funds and stocks are less volatile than them. Large-cap funds deliver balance to the investment portfolio and these funds should contain the core of the portfolio.

Conclusion

CONCLUSIONSource: CRISIL, BSE, Goldprice.org

Equity seems to be the worst performing asset class in 2018 but the outstanding performance between the period of 2014 and 2017 ensures that equity shows itself as the best performer over the entire period.

 

Note : Past performance of fund does not guarantee the future returns.

Mutual Fund Investment are Subjected to Market Risks, Read all Scheme Related Document Carefully.

Disclaimer: 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.

A significant 25 years journey of Mutual Funds

“Active fund managers in India have convincingly outperformed benchmarks over 5, 10 and 20-year time frame.” The industry of mutual fund was open to private sector encounter for the first time in 1993.

The former Kothari Pioneer Mutual Fund which is named as Franklin Templeton MF introduced Prima & Blue chip fund on 1st Dec.’93. Initiating from these two funds, there were 9 equity fund schemes obtainable in India. A total of six schemes were introduced in 1993 and two were introduced before ’93. to develop the assets under their enclosure to nearly ₹7 lakh crores from ₹48,000 crores, it takes almost 20 years of efficiently period.

mf

Indian MFs have multiplied their assets to more the ₹23 lakh crores in the past 5 years without any exertion. Almost ₹70,000 crores of the yearly MF Flows now floats in through the SIP (Systematic Investment Plan). These days the SIPs capture prime recall for the new and upcoming investors but competing with the old preferences like insurance plans and bank deposits have never been such easy-going.

For the current position of the industry, the excellent ones are the asset managers, advisors, and the regulators. The credit must go to these three positives of the MF industry. There was a time when the fund managers have struggled in the developed markets to keep it and match up with the markets, active fund managers in India have definitely outperformed benchmarks over 5, 10 and 20-year time frames. The 10-year category returns on sincerely organized small-cap, mid and large-cap funds are ahead on the Nifty50, Nifty Midcap100 and Nifty Small cap 100 by compelling margins of 100, 300 and 700 basis points even in spite of recent fluctuations. The supremacy of the open-end funds has also made it clear that the worst performing ones lose assets to the good performing ones.

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

By continuously prioritizing investor’s concerns, SEBI has shown that it’s a strong regulator. SEBI has played a crucial role in establishing MFs by the’ advanced tightening of its rules on revelation, efficient exposures, and governance.

Despite the outstanding performance of the MF industry, there are some misses that should be developed. Indian MF industry is mainly marketed on their current 1-year, 3-year, and 5-year records. According to the sources, approx. 55% of retail investors had only 2-year holding period on equity funds and that time is too less and barely provide the benefits of investing in equity. A large number of domestic equity funds exhibit portfolio turnover ratios of more than 50% that means minimum half stocks are replaced within a year. The industry must shift the goal-line to more long-term performance course to entice better fund managers and more stable assets. The salary of fund managers must benefit into constancy and tenure, and not just to master the 1 to 3-year rankings.

Mutual funds reached to 21% of total bank deposits

In India, Equity MFs are still categorized on the basis of a sole-dimensional market-cap viewpoint which is an idea introduced in 1993 by the Kothari Pioneer MF. Debt funds are even adapted more to corporate treasuries than the new and retail investors. Also, ETFs and good passive funds are lost in action while there is a group of many active funds. In the past years, new launches have focused around common closed-end funds, thematic funds or equity saving funds, intended to utilize tiny loopholes in constantly changing tax laws. Rather than, investors will like to invest in 10 to 15-year debt funds and pension funds that provide tax-efficient income or ETFs with micro-cap or wide-market portfolios.

After putting barriers on liquidity and declaration with their open-end funds MFs have been reverting recently, by turning out series after series of closed-end funds with indefinite instruction. Close-end schemes at 1002 are numerous than open-end schemes i.e. 811.

It can be strange to worry about diminishing competition in an industry with about 2000 schemes and 40-odd players. But the reality is that the industry is rapidly becoming a horse race. Talking about today, the topmost 5 AMC in the industry manage almost 57% of the assets. Moreover, this listing has rarely any changes in the past 10 years with large AMCs easily growing larger.

In addition, it seems to be a far better option that MF industry self-regulates itself on these particular outlooks. Without remaining awaited for the SEBI to add some more pages to its already long rule-book.

 

Note : Past performance of fund does not guarantee the future returns.

DISCLAIMER

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 prior to making any actual investment decisions, based on information published here.

Analysing the Axis Long – Term Equity Fund

Axis Long Term Equity Fund is an ELSS (equity-linked savings scheme) fund managed by the AMC Axis Mutual Funds. It is designed to provide subscribers with tax savings benefits under section 80C of the IT Act 1961. This fund invests exclusively in equity and equity-linked instruments such that it features a high degree of growth with the potential of providing high returns to those investing the Axis Long-Term Equity Fund scheme. Like any other equity mutual fund, the Axis Long-Term ELSS is traded in stock markets, and its unit price is subject to daily change.

axis

Fund features:

This ELSS mutual fund is an open-end scheme, i.e. investors are free to invest in it or liquidate it as per their investment requirements. Additionally, it is an equity-linked savings scheme (ELSS) hence it provides tax deduction benefits under section 80C with the mandatory 3-year lock-in requirement. It is, however, important to note that investors can choose to remain invested in the scheme beyond the mandatory 3 year lock-in period to make his/her wealth grow even further.

Risk Level:

The expected level of risk undertaken by an investor of this key mutual fund is classified as moderately high due to its high equity exposure. However, this does increase the chances of potentially high returns for those remaining invested in the scheme for a longer tenure.

Facts about the fund:

Launching date- 29th December’09

Categorisation- Equity

Type- ELSS (Equity Linked Saving Schemes)

Average AUM – ₹ 17,299.43 Crores

Benchmark – S&P BSE 200 Index

NAVs {as on 06 Aug ’18}

Growth option – ₹ 45.12

Dividend option – ₹23.53

Minimum investment amount – ₹ 500

Minimum SIP – ₹ 500

Exit load- nil

Manager of the fund- Mr. Jinesh Gopani

Tenancy period- 7 years 4 months

Education (degree)- B.Com (H), MMS

10 things I have learned about investing

Fund manager:

Mr. Gopani is a B. Com (H) and MMS from Bharati Vidyapeeth Institute of Management Studies and Research. Before joining Axis AMC he has worked with Birla Sun Life AMC, Voyager India Capital Pvt. Ltd., Emkay Shares & Stock Brokers Limited and Net worth Stock Broking Limited.

Investment Philosophy:

As mentioned earlier, this scheme is designed to provide income and long-term capital appreciation to investors by investing in a wide range of equity and equity-linked investments. As a rule, this ELSS mutual fund from Axis has focused on organizations that have robust growth prospects or have proven performance track record in their area of expertise. The fund invests in company equities across key segments such as large cap, mid cap and small cap irrespective of the sector the companies belong to.

Performance of the fund so far:

The fund has surpassed the benchmark index (12.07%) and the bracket average i.e., 13.66% providing a return of 19.22% within 7 years. The fund has made an outstanding track record of outshining since the initiation.

BENCHMARKAnnual performance (in percentage):

The fund has provided exceptionally good performance beyond time periods.

axis graph

‘Ujjwal Bharat’: ABSL Resurgent India Fund – Series 6 Review

Year-wise performance (in percentage):

The fund saw a drop in return profile in the past 2 years

axis graph 2Where does the fund make its’ investments?

The fund draws huge positions in its uppermost picks, keeping a compact portfolio.

Latest Portfolio:

portfolio axis

Download the portfolio:

Download (PDF, 115KB)

Risk factor:

ratio final

The fund has appeared to be more vigorous in this year, overcoming all its peers easily after a small drop in the return profile in past two years. The fund manager’s uncompromising attention on the standard of underlying portfolio and leaning towards large caps has improved it to deliver outperformance between the deficiencies in the broader market. The fund takes a top-heavy approach with a huge position in its uppermost picks even it constantly runs a compact portfolio with a gush in its asset base. It also acquires a high benchmark skeptic perspective, comfortable in taking remarkably higher exposure about an index. With its big skew to towards financials, this adds a portion of aggression to the fund even its firm stance on retaining the quality. A supportable pick-up in return profile will show its long-term achievements.

 

Note: Past performance of fund does not guarantee the future returns.

Mutual Fund Investment are Subjected to Market Risks, Read all Scheme Related Document Carefully.

Disclaimer: 

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.

 

What are Indian Bond Fund Managers Purchasing Despite Inconstancy?

A rapidly increasing trade war and an escalation-focusing RBI (Reserve Bank of India) is thrusting the local fund and money managers into low-risk and shorter debt securities. Take a look at their plans and what they said about it –

Choose the 3-year segment

Mahendra Jajoo, Head of India Fixed-Income (Mirae Asset Management)

  • “The most appealing segment is the three-year segment because after that there are a lot of riskiness and challenges to face.”
  • The most beneficial thing about the three-year segment is that if you are to manage in a situation where you predict that the macros are somewhat risky and uncertain, but probably have ended being worse, what you think you do in that situation? I things started being worse from here, then you are not freaking out much because, at the very end of 3 years, you will get the capital back.

DEBT

Being defensive is a good option

Lakshmi Iyer, Chief Investment Officer for Debt (Kotak Asset Management)

  • “As there are a plenty of riskiness and uncertainties regarding policy decisions and macros, make your portfolio defensive. By being defensive, I mean purchasing two or three-year sovereign bond i.e. short-duration.”
  • “Short-end of curve provides the most comfort at this point. The delta risk to take for maturities which are long-term is not equivalent to the available return.”
  • She said that she suggests state bonds of the same duration rather than AAA and sovereign bonds.

Want to invest your FD proceeds in mutual funds? Here is how to do it

Liquidity is the key

Suyash Choudhary, Head of Fixed Income (IDFC Asset Management)

  • “Target on sovereign bonds and AAA bond is extremely sharp this year as does not desire illiquidity risk.”
  • “Shifted to standard paper as much as possible. Want to be as much AAA as possible.
  • Stop disclosure to some of the less-rated bonds in some of the portfolios between frights of refinancing shocks.
  • “Government bond return curve is very precipitous until five years and then very flat after that.”
  • The noted correlative value in front-end of the return curve- mostly 4 to 6 govt. bonds, which is the core excessive holding.

Accrual & liquid funds

 Killol Pandya, Head of Fixed Income (Essel Finance)

  • Stick to the briefest possible end of the duration curve like accrual, ultra short-term funds, and liquid.
  • September-October is the month of fund cut duration. Have not included it yet.
  • Wish that investors constantly move towards liquid funds else it will turn out to be a mistake.

What are Dynamic Funds? ( Video )

Upmost corporate paper

 R Sivakumar, Head of Fixed Income (Axis Asset Management)

  • Suggests short-end bonds which are less than 5 years tenor in sovereign and also the corporate space because they provide more value. Prefers AAA-rated paper above sovereign bonds.
  • Sees a more combative RBI and an upright number of rate hikes proceeding.
  • Does not see any onward remarkable selloff in sovereign bonds with markets being much more stable.

Shorter-maturing liabilities

 Rajeev Radhakrishnan, Head of Fixed Income (SBI Mutual Funds)

  • “Rates are only predicted to go up in the upcoming seven to eight months, would be properly conservative in position over a period, liquidity.”
  • “Credit spreads- corporate returns vs. govt. bonds- are fixed and probably remain so in the very near term because of demand and supply issues.”
  • The fund’s portfolio is suddenly changed toward shorter-maturity AA & AAA note, he said.
  • Probably there will be two or three more rate hikes as per recent pricing followed by relatively long pause after that. Additional policy action is on the cards with clarity.

 

DISCLAIMER

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 prior to making any actual investment decisions, based on information published here.

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.

portfolio

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.

LONG TERM AVERAGING OF EQUITY SIP’S IS RAPIDLY BUILDING WEALTH

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.

 

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.