Best Infrastructure Funds for 2017

Invest in Best Infrastructure Funds Online

Infrastructure funds have made a strong comeback this year. Unlike diversified equity funds infrastructure funds are exposed to both systematic (i.e. market) and unsystematic (i.e. sector) risks. As such, only informed investors should invest in sector funds. It is important to get the timing of your entry and exit in such funds correct. Over 2 years or more, infrastructure funds had been lagging behind diversified equity funds for reasons that are well known. The rally in equity market leading up to the Lok Sabha election held in April – May, was riding on the expectation of a reversal of the policy paralysis situation that characterized the previous government. Stocks in the infrastructure sector have been among the biggest beneficiaries of the pre-election rally. The election results did not disappoint the market, with NDA and BJP getting absolute majority in the Parliament. Post elections, the structure of the new NDA government has been viewed by the market as one that will enable faster decision making and will kick start the stalled infrastructure projects. Consequently, post elections infrastructure funds have continued to perform well. Infrastructure funds category has given average return of over 58% in the last 6 months. For our selection of buzzing infrastructure funds, we have selected top 5 funds, based on the criteria discussed above. The buzzing funds in this category have given returns of over 60% in just the last six months. The table below shows the buzzing infrastructure funds (growth option).

Conclusion

As discussed earlier, investors should not rely purely on short term return as a performance measure, when selecting mutual funds for investment. Investors can add these buzzing funds to their investment watch-list. If these funds are able to sustain the strong performance they have shown this year to date in the future, investors should discuss with their financial Prajna Capital, if they are suitable investment options.

Balanced Funds vs LargeCap Funds

Best Balanced Funds Online




LET’S TOSS A COIN Despite a better risk-reward profile, balanced funds are not substitutes for large-caps

The stellar performance of balanced funds over the past few years has attracted the attention of investors. Harnessing the return potential of equity and the safety of debt, balanced funds, for many , is the core of their portfolios. These funds have trumped the returns of large-cap equity funds across the three-, five and 10-year time frames. And this higher return has come at a much lower risk. Does this mean that balanced funds are a better bet than large-cap funds? Would investors be better-off replacing their large-cap funds with balanced funds?

Balanced funds have been sold to conservative investors as an ideal product that captures the potential of equities without the accompanying volatility. Balanced funds as a category has clocked a lower

standard deviation–a measure of volatility in fund returns–of 10.98 compared to the large-cap funds category , which has averaged 14.92. Balanced funds have also recorded a higher

Sharpe Ratio–a measure of risk-adjusted returns–of 1.36 compared to 1 of large-cap funds. This suggests balanced funds boast of a much better risk-reward profile.

However, experts counter that many balanced funds do not fit the conservative profile of this catego ry. Some are, in fact, riskier than large-cap funds.

Balanced funds cannot be a replacement for large-cap funds as it is the former’s aggressive stance that has contributed to their higher returns. Some balanced fund portfolios have a distinct mid-cap tilt, which lends a higher risk profile to the fund.

The debt portion in a balanced fund masks the fact that many balanced funds today have a mid-cap bias. This makes them favourable for those who want to take on higher risk compared to a pure large-cap fund.

For instance, HDFC Prudence has a standard deviation of 16.6, which is much higher than the basket of large-cap funds. Several funds, even with a lower standard deviation, are exposed to higher volatility in their equity portfolio but it is not visible due to the cushion that the debt portion provides.

Nagpal points out balanced funds often do not have a clear positioning for their equity portion, which makes it difficult to gauge the fund’s investing stance. Some balanced funds do not have a set strategy in their equity allocation. An unconstrained approach to portfolio construction provides little comfort when the product is meant for a conservative investor.

Some funds also take on higher risk inadvertently , when taking individual stock exposure. All equity funds, including balanced funds, are mandated to restrict exposure to individual stocks to 10% of the portfolio. But when a balanced fund takes high exposure to a stock within its equity allocation, it is effectively taking a higher risk for its entire portfolio (including debt portion).

Another reason for the popularity of balanced funds is their tax-efficiency . Debt funds on their own are not tax-friendly, as one must hold them for at least three years before the capital gains can be treated as long-term, and be eligible for lower tax. Gains from equity funds on the other hand are tax-free after a year of holding. Equity-oriented balanced funds, recognised as equity funds for tax purposes, effectively let investors enjoy gains in the debt portion without incurring tax.

Despite their tax efficiency , Shah feels investors can do better by handling the equity and debt portion separately . “One can handle asset allocation better by having separate funds for the two asset classes. A balanced fund rebalances within a very nar row band. Besides, a debt fund comes at a much lower expense ratio compared to a balanced fund.

Investors must understand the circumstances in which balanced funds have delivered stellar returns.

The cycle of falling interest rates over the past few years has improved the returns from the debt p o r t i o n o f b a l a n c e d f u n d s.Combined with the healthy stock market returns, the overall performance has got a twin boost. This will not sustain going forward as interest rates are nearing the end of the softening cycle.

This will hurt the debt portion of balanced funds, most of which is invested in long-duration government securities that are most sensitive to interest rate changes. The constrained equity exposure may limit balanced funds’ performance vis-a-vis large-cap funds going ahead. With the economy set to kick into higher gear, the stock market is likely to outperform in the coming years. It would make more sense to be invested in a 100% equity product than one which only provides around 70% exposure.

Since balanced funds do not let the gains in stock investments run beyond a point to keep equity exposure within a band, it limits the potential of gains from a rising market.

Best Largecap Funds Online

Birla Sun Life Manufacturing Fund

Birla Sun Life Manufacturing Fund Online
(An Open ended Manufacturing Sector Scheme)

Accredited to be India’s first Manufacturing Oriented Fund, it is a thematic strategy geared to benefit from India’s rising economy – Resurgence of the Indian manufacturing sector. This fund aims to generate long term capital growth and specializes in investments into equity and equity related securities of companies engaged in manufacturing sector.

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Birla SunLife Cash Manager Fund

BSL Cash Manager Fund Online

In this fund we have been running a modified duration in the range of ~1 year for the last couple of months. In the 1-2 year bonds space the spreads and carry currently look attractive to us owing to the liquidity position of the economy now & as expected to be in future with RBI’s efforts towards moving to a neutral liquidity position from a the current deficit one. We believe that the RBI’s efforts on infusing liquidity into the system to move it from deficit liquidity to neutral liquidity is going to ease short term rates going forward. Hence, it is only justified to benefit by investing in 1-2 year segment now and benefit going forward when the yields come down.

Owing to this strategy, the fund is at the higher end of its duration band (0.5 – 1.25 yrs) and hence, the credit risk taken in the fund at this time is limited.

Bank Accounts for Mutual Fund Investments

Invest Mutual Fund Investments Online

You need only one bank account to transact in any mutual fund

There is no such requirement for you to open a different bank account or hold multiple accounts to be able to invest in different mutual funds.

With just one bank account you can invest in and redeem your money from all mutual funds.

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

OR

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Invest UTI Short Term Income Fund Online

UTI Short Term Income Fund Online

The fund seeks to generate steady and reasonable income, with low risk and high level of liquidity from, a portfolio of money market securities and high quality debt with maturity upto 4 yrs.

A fund which has managed a near 9.5 per cent CAGR over five years, this three-star fund uses a combination of sovereign and corporate bonds to earn short-term returns. The direct plan has managed returns that are 50-60 basis points ahead of the institutional plan in the last three years.

The fund is among the most conservative funds in the category in terms of taking on credit risk, given that nearly 90 per cent of the portfolio is parked in G-secs or A1+ or AAA corporate bonds. The fund does not shop below AA-rated corporate bonds for better returns. Instead, it takes a limited exposure to long duration G-secs to make the most of rate falls. The average maturity of the portfolio has hovered at three-four years on occasion but stood at a moderate 2.2 years by April 2016 end. This indicates that the fund takes rate risks to a limited degree.

SBI Magnum Equity Fund

Invest SBI Magnum Equity Fund Online

Earlier known as Magnum Multiplier Plus ’90, the scheme seeks capital appreciation through investments in diversified portfolio of equities of high growth companies. The scheme was made open-ended in January 1998.

This fund has managed strong outperformance of the index for the last one year and three years. It has managed a steady climb in the rankings in the last ten years. A consistent show has helped it retain a four-star ranking in almost all of the years since 2007, no mean achievement in choppy-market conditions during this period. This fund is focused on the top 100 companies in terms of market cap and on outperforming the benchmark over a one- to three-year period. The idea is to outperform the benchmark so that the fund also beats the category average automatically. The objective is good risk-adjusted returns with an eye on the tracking error. The fund is now invested in a mix of growth and cyclical stocks.

The good show for one year has lifted the three- and five-year returns too to result in a strong outperformance of the category by 2-3 percentage points on a CAGR basis. On an annual basis, this long-standing fund has outperformed both its benchmark and category for 11 of the last 13 years, which is a remarkable achievement. Year 2008 proved to be difficult for the fund, with the NAV taking higher losses than the benchmark in the bear market. But since then it has proved good at managing downside in the down market of 2011. The same manager, R Srinivasan, has been at the helm since 2009, imparting stability to the fund’s style and strategy. The fund invests 85-90 per cent of its assets in large caps, with a slightly higher mid-cap bias than the category.

The fund has a good long-term record and improving returns.

E-CAS for Mutual Funds

The consolidated account statement (CAS) consists of record of transactions and holdings of an investor in demat accounts held with NSDL and or CDSL, and in units of mutual funds. Of late, the CAS has also been including insurance policies held in e-insurance accounts. CAS is sent to the investor in the month following the month in which an investor carried out a financial transaction with respect to investments.

Paperless CAS

Instead of receiving CAS in hard copy, investors can sign up with NSDL to receive their consolidated account statement by email on their registered email id by using the E-CAS facility.

Link

Investors can access https:nsdlcas.nsdl.com and click on NSDL E-CAS to sign up for this facility.

CAS ID

In order to subscriber for e-CAS, one needs to know the CAS ID. CAS ID can be found out by clicking on the “Know your CAS ID“ tab. The investor is prompted to provide his PAN, DP Name and ID and Client ID. Once the fields match, the CAS id is displayed on the screen. This id may be noted for future reference.

Subscribing to E-CAS

Once the CAS ID is known, the investor can subscribe to E-CAS by entering the CAS id and the PAN. On clicking the “Submit“ button, the investor is prompted to choose the mobile number on which the one-time password can be sent for authentication.OTP received on the mobile must be entered to authenticate and proceed. Further the investor’s Email id is registered. The investor is required to accept the terms and conditions for e-CAS. On completion of all these steps, this service gets activated.

If the investor wants to go back to receiving the CAS in physical mode, he can approach the depository to get this done.

The E-CAS is a password-protected file and one needs to enter PAN in capital letters as password to open the file.

Invest IDFC Corporate Bond fund Online

Invest IDFC Corporate Bond fund Online

Performance :

Income Short Returns As on 12-September-2016
Short Term Funds Regular NAV / Index Value Average Maturity

(in Years)

Expense

Ratio

Monthly
AUM
(Jul-16)
1 Week 2 Weeks 1 Month 3 Months 6 Months 1 Year 2 Years 3 Years 4 Years 5 Years YTD FYTD Since Inception
IDFC Corporate Bond Fund – Reg – Growth 3037.7 10.74 3.83 0.48 12.93 13.15 9.07 14.33 13.37 N.A N.A N.A N.A N.A N.A 12.21 11.07

Save Tax and also get better Return

2017 Season of Tax Saving investment has started

If you are salaried then your EPF and your life insurance premiums are already qualified as an eligible investment option to get the benefit under Section 80C. Rest of the money you may invest either into the 5 years bank FD, PPF, NSC or ELSS. Except ELSS all other tax saving instruments will generate the fix return which might not even be sufficient to give you the cover against inflation.

Apart from the Life insurance policies premium and EPF, PPF is the most preferred choice of investor for investing for 80©. While PPF has many merits including the assurance and safety along with the stable return, it lacks when it comes to inflation adjusted better return. To get the comfort of assured and stable return you need to sacrifice the chance of earning the higher return.

While on the other hand, ELSS (Equity Linked Savings Schemes) has a very good track record in terms of giving the better inflation adjusted return than PPF in longer run; it is still not very popular due to the fact that it doesn’t give you any assurance and predictability of returns.

Investing into the ELSS may give you the dual benefit of tax saving and higher return. You can get the investment option where you get the higher probability of getting far better return than the PPF in longer run. Though in short run ELSS can be much more volatile and unpredictable due to the fact that it invests into the equity and equity related instrument which are connected to market movement.

ELSS can be a very good alternative compared to PPF, because minimum investment cycle of PPF is 15 years i.e. very long term.

ELSS vs PPF

Let’s look at the historical performance of the ELSS vs PPF.

In case of ELSS return is market driven. As on 31st March, 2015 the average return for last 12 years of all ELSS schemes is 24.66%. Following is the comparison of the return of ` 100000/- invested every year into ELSS vs. PPF. Analysis gives you an idea about minimum, maximum and average returns generated by any ELSS schemes out of all available ELSS schemes as on 31st March, 2015. Returns generated by even the worse performing ELSS schemes have given the better returns than PPF as on the given date.

Years 5 10 12
Investment 500000 1000000 1200000
Maximum (ELSS) 11,66,023 30,93,292 70,50,286
Minimum (ELSS) 8,12,305 21,58,779 35,70,806
Average (ELSS) 9,29,566 26,26,812 51,43,643
PPF 6,44,940 15,97,279 20,93,487

Also apart for the return ELSS is better in terms of least lock in period i.e. 3 years from the date of investment.

So why just to save only tax ,you can save tax & also earn better returns. Invest into the Save Tax Get Rich recommended list of ELSS schemes and grab this combo.

Top ELSS Funds

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