How Mutual Fund Classification will Impact your Portfolio

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At the time when equity mutual funds are receiving massive monthly inflows in equity and balanced mutual funds, going up to around Rs 25,000 crore, the capital markets regulator Securities and Exchange Board of India (SEBI) has come out with new classification of mutual funds. It’s intended to make the mutual fund selection process easier for investors.

According to the new classification, the mutual funds schemes will be classified into five broad categories– equity schemes, debt schemes, hybrid schemes, solution oriented schemes and other schemes. Solution-oriented schemes will be retirement or children funds.

Equity schemes can be further classified into 10 sub-categories such as large, mid, multicap, small cap et. Debt schemes can be classified into 16 sub-categories while hybrid funds can be further classified into six sub-categories. Only one scheme per category will be permitted.

Sector or thematic funds, closed-end funds, fund of funds are kept out of the purview of this classification.

Fund houses have been given two months time from the date of the circular to review their classification and submit the proposal with SEBI. And after SEBI clears their proposal they will have to carry out the necessary changes within three months time.

Schemes will be comparable:

The biggest advantage of this classification is that it will make mutual fund schemes comparable. Right now it’s a bit difficult as each fund has its own definition of large-cap, mid and small cap stocks. Therefore, even in a large-cap category the weighted average market capitalisation of mutual funds range between 29,000 crore to 1,90,000 crore. In order to bring in uniformity among fund classification, SEBI has also given the definition of large, mid and small cap stocks.

Large cap will be defined as 1st to 100th companies in terms of full market capitalization. 101st to 250th company as per full market capitalization will be termed as mid caps and from 251st company onwards will be classified as small cap.

This new classification will ensure that for example if an investor has invested in a large-cap fund, it will remain a large cap fund throughout

There won’t be duplication of schemes as it is happening right now where a fund house has two or more schemes in a category with similar strategy.

Also, among debt funds the classification has been made much more clearer as per the weighted average maturity of the portfolio. New categories has been introduced by SEBI such as overnight funds which will invest in securities with duration of just one day.

SEBI has not addressed the credit risk in the new classification of debt funds as it is currently based on only average maturity which may not be very helpful for the retail investor. There are broadly eight categories of debt funds right now while as per new classification it will go up to 16. SEBI could have retained the existing classification and defined them more clearly in terms of average maturity and credit risk

Performance may be impacted

There are three reasons why the scheme’s performance will be impacted with the new classification.

a) Right now funds, even a large cap fund, has the liberty to invest a portion of their portfolio in mid and small cap stocks, which helps them generate alpha. This is called style drift and it may not be possible after the new classification is implemented. Therefore there may be lesser alpha generation compared to benchmark. Right now the alpha generation is done through stock picking while going forward fund manager will be able generate alpha by being underweight or overweight on stocks as compared to benchmark or peer as the universe will be limited and same for all,

b) As per the new mandate, if a fund wants to be classified as a large-cap fund then it will have to invest in the stocks defined as large-cap by this regulation. Therefore, it will have to buy some stocks or may have to sell few which will have an impact cost in the short-term and will have to be borne by the investor.

c)Finally, the fund will have to rebalance the portfolio as per the list of large, mid and small cap stocks published by AMFI on a six monthly basis.

So, if a stock has become large-cap as per the definition then a mid cap fund won’t be able to hold it even if the fund manager sees potential in it. So, this will result in forced selling and may impact the performance of the fund.

However, the new classification is considered a step in the right direction as it will bring clarity, uniformity among mutual fund buts investors may see some impact on performance over short-term.

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Should you Invest in Large cap or Mid-cap Funds?

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SIPs allow an investor to deploy the principle of rupee cost averaging to take advantage of market volatility. When the NAV of a fund is high (typically when markets have risen) fewer units of a fund would be purchased from the investment amount and when the NAV is lower more units of a fund would be purchased with the same investment amount, thereby reducing the average cost of units purchased over a period of time.

Hence, if you intend to invest through SIPs over a long tenure (5-10 years), then you could divide the allocation between a large cap and mid-cap fund, perhaps in equal proportion or 60:40 in favour of large caps based on your risk appetite.

Alternatively, you could invest in an equity diversified fund that invests in a mix of large, mid and small caps in a proportion based on the fund manager’s views.

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How to choose NFOs

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How to choose a new fund offer

Recently, the mutual fund street saw two big-ticket new fund offers (NFO) from two of India’s largest fund houses. It’s a good occasion to go through a check list on how to select a new fund.

Anything unique?

There are close to 2,000 mutual fund schemes in the market. Why, then, should you invest in a new one? The first thing you should check is if the scheme offers you something interesting and unique. After all, existing schemes are good enough to take care of most of your needs. Typically, it’s safer to go with existing schemes that come with an established track record than going with something that is totally new.

Costs

Though NFOs are barred from charging NFO fees, they will still charge fees every year. Equity funds are mandated to charge a maximum of 2.5% of your weekly average net assets, every year; debt funds up to 2.25%; and index and ETFs up to 1.5%. The Securities and Exchange Board of India has also allowed fund houses to charge 30 basis points for going to ‘beyond top-15’ towns, subject to a certain amount coming from such places, and another 20 basis points in lieu of exit loads. One basis point is one-hundredth of a percentage point.

But the annual costs are supposed to come down as the fund’s size grows. Some fund houses voluntarily cut costs further, mainly due to competition. Check your NFO’s scheme information document to see if the fund house has a track record of bringing down expense ratios of other schemes. You might have to do a bit of hard work here and check with your adviser or distributor; or browse through past fact sheets if you want to invest directly with the fund house. See past few years’ fact sheets to check the scheme’s expense ratio track record.

Taxation

All mutual funds are not taxed the same way. Debt funds impose a short-term capital gains tax at your income tax rates (10.3%, 20.6% or 30.9%) if you redeem the units before 3 years. After 3 years, long-term capital gains tax is applicable at 20.6%, with indexation benefits. Equity funds impose a short-term capital gains tax of 15% if you redeem units before a year. If you withdraw your equity mutual fund units after a year, there is no long-term capital gains tax to be paid.

Although taxation should not be the primary reason for investing or avoiding a mutual fund, it pays to know your fund’s tax status, especially if your NFO aims to swing between equity and debt.

Lock-in or closed-end

Check if the scheme is open-ended or closed-end. A closed-end scheme comes with a fixed tenure and you would only be able to exit the fund after its tenure—typically 3-5 years, occasionally it could be 10 years—gets over. Such schemes are, however, mandatorily listed on the stock exchange. But you can only sell them if there is liquidity, else you have to take a hit on the market price, which could be at a significant discount to its prevailing net asset value.

A lock-in is different. Open-ended funds like tax-saving schemes too have a lock-in. In the lock-in period, you cannot exit the scheme, even on the stock exchange.

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Do not chase Last year Best Fund

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Don’t chase the fund that won last year

Returns are just one aspect. Many objective and subjective factors go into picking funds, including consistency of performance and the fund management team

You invest to earn returns. However, returns are a function of many things. Different banks don’t offer the same rate for fixed deposits of similar tenure. Come to market-linked investments like mutual funds, and the differences get magnified. The past 1-year returns for funds in the large-cap equity category ranged from 12% to 36%. If you were invested in a fund that delivered the worst, your portfolio return would look relatively poor. Thus, should you always try to pick the top performer? Even in case of fixed deposits, it’s rare that investors pick the one that offers the highest return or even compare the returns. Rather, it is more about convenience of having investment products with the bank one has a savings account in. In case of market-linked investments, rankings based only on returns can change at short intervals, and moving in and out of funds based only on performance can be costly and counterproductive.

If not returns, then how does one choose?

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Performance change

We looked at equity funds in multi-cap and large-cap diversified categories and compared 1-, 3-, 5- and 10-year returns on five random days between now and 1 January 2014. Why random dates? Investment decisions are taken on random dates; you can decide to start investing at any point in time and when you want to pick an equity fund, intuitively, the first action is to compare returns.

We found that if you look at the past 1-year performance of funds in the equity multi-cap category in February 2017 and match the top ten schemes in terms of returns in, say, October 2015, it’s unlikely there will be any overlap. Similarly, the top ten basket in August 2016 and January 2014 looked completely different from today’s basket. Repeat this exercise for 3-year returns, and the chances of finding the same names as the top ten performers are only about 10%.

This trend holds true even if you consider the large-cap diversified category and for longer 5- to 10-year performances. One has to make concessions for new fund launches and fund mergers. But what it means is, if you invest only based on performance, you will end up chasing too many funds.

What you will have for sure is a fund that delivered good returns in the past but with very little focus on its potential. Moreover, every time you invest based on past returns, if there is any slack in performance, you are likely to sell too soon. Performance data by itself only gives you a point to point reference. There are several objective and subjective criteria to pick funds, including consistency of performance and fund management team. The stocks bought are not as important as the knowledge, freedom, security and confidence that a fund manager has. Equity funds from four funds houses and believes that selection can’t be automated. Each fund manager is different and investors must assess that.

How to choose

In addition to past performance, looking at the consistency of performance and risk measures like fund beta and Sharpe ratio can give an indication of what to expect. A fund that hasn’t displayed consistent performance in the past is considered high risk. A fund portfolio with a beta greater than 1 indicates sharper movement relative to the market. Fund performance up to the first year shouldn’t be looked at. If there is a drag, consider calendar year performance for, say, the past 5 years. If only 1 year is bad, you know you have to give it time.

Secondly, while performance and risk numbers will change depending on when you are looking, the fund manager’s ability and focus around the fund ideally shouldn’t waver.

All funds rarely perform equally well at all times, so diversifying into a few funds, which are complimentary in style and portfolio, helps to balance near-term performance gaps. It is important to remain invested through market cycles rather than just looking at recent returns

A fund manager’s stock selection style, the investment process and ability to move from one company to another will eventually result in the returns that a scheme earns.

Each fund manager is different. It’s important to assess the freedom and security a manager has to make stock selection choices. Their conviction and integrity is also criticality. But these are subjective factors and an average investor may not be able to evaluate them easily.

For investors, the focus in equity mutual funds should be to build a diversified portfolio, which can be held for at least 7-10 years.

Market dynamics change but fund managers often select stocks based on their earnings conviction for a particular company, which takes time to play out.

An adviser can help you pick funds for the long term and hand hold you through short-term lapses in performance. During portfolio reviews, I spend around 20% of the time on individual scheme performance as the discussion needs to be around financial objectives. Performance tracking is something that should be left to the adviser. We consider many aspects and have interactions with fund managers before suggesting a buy or sell.

Fund selection can’t be based solely on performance. A fund at the bottom today can well be a top performer 6-12 months later.

While some objective criteria should be looked at for fund selection, as it establishes a performance track record, a lot of the selection is subjective.

Advisers we spoke to said that interactions with fund managers are important in deciding whether to invest in the funds they manage. For the average investor, who doesn’t have the time or the ability to evaluate the softer aspects of individual funds, it’s best to take the help of an experienced adviser. The other alternative is to invest in passive funds where risk of fund manager selection does not exist. Here you will earn market returns, as passive funds track the performance of underlying indices.

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Equity Mutual Funds

Mutual funds have grown to register a five –fold increase in less than a decade with assets under management totalling Rs 18.48 trillion on February 28, 2017, from 3.26 trillion as on 31st March 2007 as per AMFI data. The sheer number of schemes offered by the 40 plus mutual fund houses can leave a financial mogul bewildered let alone the common man. Yet, they have become a favoured source of investment for a range of investors, from beginners to HNI.In fact, mutual funds offer a range of schemes to invest from debt funds, equity funds hybrid funds exchange traded schemes etc., Equity funds are schemes of mutual funds which are equity-oriented and invest in equity and equity-related securities of publicly traded companies. According to an industry trend report by AMFI, equity funds constituted 31.9%% of the mutual fund industry’s assets in December 2016. These funds are a popular choice among individual investors with a moderate risk appetite as mostly 85% of assets in an equity fund are derived from this segment.Equity funds are classified on the basis of market capitalization and investment style. One of the main highlights of equity funds is that they allow ordinary investors to buy shares in companies through mutual funds rather than directly buying stock. Since a mutual fund is money pooled together from multiple investors, the cost of buying shares reduces.Depending on the size and investment objective, equity funds can be of the following types:Large Cap Funds: Mutual funds with a significant portion of their asset allocation in companies with large market capitalization (share value multiplied by the number of shares) are called Large Cap funds. While there is no set cut-off limit, as different agencies use different methods for classification, companies that are generally listed on the Sensex or S&P BSE-100 are usually large cap companies. These are well-established companies which offer stability and returns over a period of time.Mid-Cap and Small-Cap Funds: Mutual funds which diversify investments in between mid and small cap companies are termed as mid and small cap funds. These funds invest in a mix of midcap and small cap stocks. Due to their exposure to high beta stocks, they are positioned on a high-risk return trade-off plane compared to a large cap fund. Funds investing in mid-size companies which are still developing are mid-cap funds and these funds. They are considered moderately riskier as well. Similarly, funds which invest in stocks of small-size companies are called small cap equity funds.Multi-Cap Equity Funds: These funds invest across the “cap” sectors in a bid to diversify and seek to minimise risk. In other words, they are market capitalization agnostic. These funds resort to portfolio gyrations commensurate with the market condition. The understanding here is that an event might affect a particular industry and diversification across many sectors may aim to lower the impact of the event.Sector or Thematic Funds: These funds invest in securities of specific sectors such as IT, Infrastructure and Pharmaceuticals. The performance of these funds depends on of the performance of these sectors.Equity Linked Savings Scheme: ELSS are unique as they have a lock-in period usually of 3 years, and the returns are tax deductible (up to 1.5 lakhs) under Section 80C. They present a dual opportunity to invest in equity funds and save tax.The price of any equity fund is based on its Net Asset Value (NAV). It can be defined as the total asset value divided by the number of units. When investing in a particular scheme, the investor is basically purchasing mutual fund units. The NAV of a mutual fund changes daily and hence does the value of the investment.Also, there are various charges associated with mutual funds. This could in the form of an entry load, exit load, expense ratios, transaction charges, etc. While these charges seem inconsequential, it is important to remember that while your interest on your investment is compounded, so are many of the charges and can add up to a significant amount.Equity investors are suggested to hold their investments for the long term (say 5 years and above) to achieve potential returns. Investing over a longer period could possibly help tide over short term losses as well. Another reason to invest for long-term is taxation. Investments in equity funds sold after 12 months qualify for long-term capital gains tax which is nil. On the other hand, investments sold within 12 months qualify for short term capital gains tax which are 15% on the returns.While equity funds are considered riskier than debt or money market funds, they have the potential to generate potential returns and are suited especially for young investors relatively new to the market. They provide an opportunity to invest in companies at a lower rate. An individual investor by investing in a mutual fund diversifies his portfolio by investing in stocks of multiple companies. Not to mention, mutual funds are managed by a seasoned fund manager. The fund manager is mentioned in the scheme documents, and one can check their track record online. According to A Balasubramanian, “If you compare any industry in India with regards to transparency like banking, the mutual fund industry has one of the best transparency mechanisms of dealing with investor’s money from portfolio disclosure to how much the fund manager is earning.”In the end, keeping in mind the volatility of the stock markets, where the prices zoom up or fall down, mutual funds seek to provide a stable platform for systematic investment.

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Top 10 Tax Saver Mutual Funds for 2018

Best 10 ELSS Mutual Funds to invest in India for 2018

1. DSP BlackRock Tax Saver Fund

2. Invesco India Tax Plan

3. Tata India Tax Savings Fund

4. ICICI Prudential Long Term Equity Fund

5. Birla Sun Life Tax Relief 96

6. Franklin India TaxShield

7. Reliance Tax Saver (ELSS) Fund

8. BNP Paribas Long Term Equity Fund

9. Axis Tax Saver Fund

10. Birla Sun Life Tax Plan

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Advantages of Investing in SIP

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Thinking about making funds for future expenditures?

Searching for a plan which will give you benefiting return?

Let me tell you one of the popular plans in recent market.

Systematic Investment Plan (SIP) has gathered a lot of attraction and there are some justified reasons behind it. It is a financial plan that helps you to create wealth, by investing small amounts of money every month, over a period of time. A Systematic Investment Plan (SIP) is a vehicle offered by mutual funds to help investors invest regularly in a disciplined manner, through small and periodic installments.

These two are simple Mantras for SIP

Early start : The earlier you start investing in SIP, the more you will get at the end of your plan!

Regular Investments : Invest regularly in order to reap the benefits of SIP!!

So now the question arrives,

What are the advantages of the SIP?

SIP truly has so many advantages which leads people of any income group to invest in this Plan. Let us take a brief look them:

  1. 1. Can start with very small amount : One of the important advantages of SIP is that you can start with very small amount like RS. 1000/- (Around 16$). Because of this nominal amount, anyone can invest in SIP.

2. Disciplined investment : It makes you a disciplined investor. The SIP monthly amount always gets cut on the pre-set date (mostly early dates of month).In this way, you always keep that amount from your determined budget and thus the way you become a successful disciplined investor.

3. Power of Compounding : You can enjoy the power of compounding while invest in SIP, i.e. ‘Interests on Interest’. For example, for your investment of Rs. 12,000 for a year with 15% interest will earn you Rs. 13,800. Now for your next investment cycle you gain interest on Rs. 13,800 and your further investments. So, you are gaining interests on interest for rest of the investment period.

4. Rupee Cost averaging : SIP safe guard you from any market conditions. If the market is down, you are getting more units and when the market goes up, you are getting little less. But in SIP your risk is minimum but the benefit is optimal. whatever happens, you will not lose!

5. The Longer, The Better : There is a saying – “The longer you wait, the bigger/better you get “. SIP is that kind of plan. If you invest in a long period, better returns are waiting for you.

6. SIP- Automated process : Investment in a SIP is an automated process, so you don’t have to worry of the investment as it is taken care of automatically every month. On the early dates of the month, your money will be automatically deducted from your selected account and will be added to your SIP account.

7. SIP- Way to achieve goals : If you have any financial goals, you can now easily complete the goals by investing in SIP. Some people invest in SIP to get increased return in order to expense that money on his/her children’s marriage or higher education, where some people invest in SIP in order buy anything precious like, cars or a home. SIP helps them to achieve their own goals.

8. Change your monthly investment amount : You can start your SIP with a nominal amount of Rs. 1000 and can increase the monthly investment amount later according to your goals.

9. Backup plan after retirement – SIP : You don’t have to worry after retirement if you invest in SIP till the end of your career. You will be rewarded with a huge amount of return

10. No dependencies on Market timing : You don’t have to wait for any time window like stock market, while investing in SIP. So, you can enjoy your time with your loved ones when your ‘money earns more money’.

As you can see, SIP plays a pivotal role in today’s investment market. It is the ‘PEOPLE’S PLAN’ for better return in future.

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Start SIP for Long Term

The oldest man on earth, Yisrael Kristal, died recently at the age of 113 in Israel. The first thing that came to my mind when I read this news was how would I manage my finances if I lived till 100 years or more. It would be a challenge. World Bank data indicates that life expectancy has increased from 52 years in 1960 to 72 years in 2015. However, despite these statistics on improving life expectancy, there is not enough effort around creating adequate wealth and cash flows to allow us to enjoy this longer life span.

To solve the wealth challenge, it is important for us to change the way we save. Firstly, financial savings in India are mostly invested in traditional, assured returns products. The drawback here is that, these investments may not help create wealth in the required proportion on account of falling interest rates. Secondly, savings in India are not bucketed according to goals but follow a single funnel approach where goals are met by drawing down from a single pool of investments as and when needed. Hence, retirement, being the last goal, is often left with the residual investment corpus as we draw down from the central pool for earlier goals.

It is therefore imperative for savers to move from a central pool to a goal-based investment portfolio as well as have a judicious mix of market-linked products like mutual funds in their portfolio. One can start a mutual fund investment with as little as Rs 500 per month through a ‘recurring deposit’ like approach called a systematic investment plan or SIP

Let me illustrate this with the example of equity mutual fund investments as most Indians are missing out on this potentially remunerative asset class. While one can start an SIP with as little as Rs 500 per month, but for a moment, let’s start with an SIP of Rs 10,000 per month in equity mutual funds. Assuming a compounding return of 12% per annum, this monthly investment would result in a corpus of Rs 1 crore after 20 years and Rs3.5 crore after 30 years, that too tax-free as per current tax laws in India.

While these are standard SIPs, an even more interesting feature available in market is called the step-up or top-up SIP. Using this feature, instead of investing the same amount monthly across these periods, you can increase your SIP amount by a certain percentage or amount every year in line with the increase in your earnings. Let us assume you increase your above SIP amount of Rs10,000 per month by 10% every year. The revised corpus using step-up SIP at the same assumed compounding return of 12% per annum would be Rs1.58 crore after 20 years and Rs6 crore after 30 years. The step-up SIP corpus after 30 years (Rs6 crore) is almost double that of the SIP without step-up (Rs3.5 crore). Thus, by investing a little more every year, your corpus can grow significantly. Again remember, all of this is tax-free.

You may wonder how a small increase of 10% per year, can double your outcome. This is mainly due to the power of compounding, rightly called the ‘eighth wonder of the world’ by Albert Einstein. There are two things that help compounding work better—a higher rate of return and a longer period of investment. That’s why power of compounding works exponentially when you invest for periods like 20, 30 or more years.

In order to help investors explore the potential of this exponential growth, the mutual fund industry has introduced the concept of a ‘perpetual’ SIP, which helps one to be disciplined savers for very long periods. Most wealth creation opportunities are missed because we do not allow our investments to compound for adequately long periods for reasons as trivial as failing to renew SIPs on their due date. In this sense, perpetual SIPs help inculcate discipline and long-term saving.

But what if you start a perpetual SIP but then need to change the amount, or temporarily stop your SIP instalment, or you simply decide to change your investment allocation? Many mutual funds today offer flexible options to help keep you investing for the long term. If you are not able to meet your SIP commitments for a month or two owing to personal exigencies, some funds will allow you to pause your SIP. You can restart your SIP instalments once your cash flows normalise. There is flexibility to also increase or decrease your SIP amounts for a brief period, say, when you receive additional cash flows like a bonus or ex-gratia or when you are able to contribute lesser in a month. If you change jobs and the date you receive your salary changes from, say, 1st to 25th of the month, there is no need to open a new SIP account but simply opt for change in your SIP date and continue it. Make sure you ask your adviser or fund about these features before starting a perpetual SIP. The sole aim of these options is to enable you to save for decades instead of years without needing to discontinue your SIP due to changes in personal circumstances, thus allowing you to enjoy compounding benefits. Perpetual SIPs with these features offer you the freedom to pay the way you want to, while sticking to your wealth path.

Starting early and investing for the long term are the essence of wealth creation. For example, Rs10,000 per month gave Rs3.53 crore in 30 years at 12% per annum in the above example. If the same amount were to be targeted in 10 years, the monthly contribution would rise 15 times to Rs1.5 lakh per month (assuming the same return on investment).

Padma Shri Jadav Payeng from Assam started planting trees in the barren sand bars of Assam in 1979, and did this relentlessly for nearly 30 years. The result—a beautiful forest that houses over 100 elephants, besides tigers, rhinos and deer. Thanks to him, over 1,300 acres of sandbars have been transformed into the Molai Forest located in Jorhat, Assam. Consistency can create results like the Molai Forest. A perpetual SIP can do similar wonders for your wealth.

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DSP Blackrock Equity Savings Fund Details

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DSP Blackrock Equity Savings Fund Scheme details, Dividend History.

Performance of DSPBR Equity Savings Fund.

ESF – Exposure Equity Arbitrage Debt
Product Construct 20%-40% 25%-55% 25%-35%
Exposure as on 30th September 35.2% 36.4% 28.4%
Scheme Details
YTM 6.81%
MOD 0.92 years
Average Maturity 1.15 years
AUM in Crs 1217
Fund Manager – Equity Mayur Patel,
Fund Manager – Fixed Income Vikram Chopra, Kedar Karnik
Exit load 365 days, 1.00%
DSPBR ESF – Regular – Monthly Dividend
Date NAV Dividend per unit Div Yield
27-Jul-16 10.665 0.09 0.84%
28-Sep-16 10.927 0.131 1.20%
28-Dec-16 10.46 0.126 1.20%
28-Mar-17 10.974 0.165 1.50%
26-May-17 11.068 0.111 1.00%
28-Jun-17 10.833 0.055 0.51%
28-Jul-17 11.249 0.056 0.50%
28-Aug-17 11.219 0.056 0.50%
3-Oct-17 11.189 0.056 0.50%
Performance as on 30th September 1 Month 3 Months 6 Months 1 Year YTD Since Inception*
DSP BlackRock Equity Savings Fund – Reg – Growth (0.51%) 3.42% 5.12% 9.30% 11.65% 12.83%

*inception date 28/03/16

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Aditya Birla Sun Life Balanced 95 Fund

Aditya Birla Sun Life Balanced 95 Fund seeks to achieve long-term capital appreciation and current income from a balanced portfolio with a target allocation of 60% equity, 40% debt and money market securities.

One of the oldest balanced funds in the market, it has an enviable record of beating the benchmark in every one of the last 14 years, except 2008. It has retained a three- to four-star rating throughout its 12-year life.

Aditya Birla Sun Life Balanced 95 Fund maintains a 70-30 allocation in favour of equities, with a 5 per cent leeway to move either way, based on market conditions. Rebalancing is done on a monthly basis. Within the equity portfolio, the positioning is conservative, with a two-thirds allocation to large-cap stocks. The debt portion uses both duration and accrual strategies to deliver alpha.

Aditya Birla Sun Life Balanced 95 Fund follows ‘growth at a reasonable price’ strategy and looks for secular growth stories for its equity portfolio. In the last one year, the fund has consciously shifted its equity weights in favour of large caps, with a 70 per cent allocation to this segment as of May 2017. The debt portfolio mainly features sovereign and AAA instruments, with a sub-5 per cent weight in instruments rated below AA.

Save for 2008, the fund has been quite good at handling both bull and bear phases in the market. The fund’s exceptional returns in 2009 and 2014 show that it has been particularly adept at playing the big bull years. Consistent performance has lifted the assets under management from under Rs 1,000 crore in 2013-14 to Rs 8,754 crore in May 2017.

But given the widely diversified portfolio, size isn’t a constraint. Overall, a reliable fund that has proved itself across two market cycles.

Invest Rs 1,50,000 and Save Tax up to Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds. Save Tax Get Rich

Top 10 Tax Saver Mutual Funds for 2018

Best 10 ELSS Mutual Funds to Invest in India for 2018

1. DSP BlackRock Tax Saver Fund

2. Tata India Tax Savings Fund

3. Birla Sun Life Tax Relief 96

4. Sundaram Diversified Equity Fund

5. ICICI Prudential Long Term Equity Fund

6. Invesco India Tax Plan

7. Franklin India TaxShield

8. Reliance Tax Saver (ELSS) Fund

9. BNP Paribas Long Term Equity Fund

10. Axis Tax Saver Fund

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L&T India Prudence Fund

Due to a sustained flow of liquidity, markets are touching new peaks. In such a situation, valuation could be a concern. To deal with this, retail investors may consider balanced schemes, which take exposure to equity and debt. Among balanced funds, L&T Prudence Scheme (Regular) stands out in comparison to its peers. The fund, managed by Soumendra Nath Lahiri, Shriram Ramanathan and Karan Desai, invests 65-75% of its portfolio in equities and the rest in debt.

A large part (more than 50%) of its equity portfolio is tilted towards large-sized companies, while the remaining part of its portfolio is invested in mid-and-small-sized companies. On the debt side as well, the scheme is invested in AAA debt securities in addition to government securities, which caps the portfolio’s downside in terms of fall in returns.

L&T India Prudence Fund, highly focused on value-oriented stocks, has generated 14.7% and 19.5% returns in the past three and five-year periods, while the fund category has generated 12% and 16% returns during the same period. In the past six months, the scheme’s fund managers bought in companies which are well-established, have lean balance sheets and a sizeable market share. Interestingly, these companies represent diverse themes, which provide strength to the portfolio.

Invest Rs 1,50,000 and Save Tax up to Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds. Save Tax Get Rich

For further information contact SaveTaxGetRich on 94 8300 8300

OR

You can write to us at

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Call us on 94 8300 8300