HDFC Tax Saver Fund

HDFC Tax Saver Fund

  • Investment Style: Large Growth
  • Investment Process: A bottom-up approach to scout for quality stocks, with a long-term orientation
  • Fund Manager: Vinay Kulkarni
  • Vinay Kulkarni is an experienced and competent manager who is well-ingrained into the HDFC investment philosophy and has a reasonably strong track record.

The investment process is key to our favourable view here: Kulkarni plies a multi-cap approach, investing roughly 70% in large caps and the remaining in small/mid-caps. Like all managers at HDFC Asset Management Company, he places a lot of emphasis on understanding the business and has an inherent quality bias while investing. His portfolio holdings typically span a two- to three-year investment horizon. However, it isn’t uncommon for stocks to feature in the portfolio for significantly longer time frames.

We think Kulkarni’s focus on the long-term strength of a business is a positive and it complements the broader style of investing followed by the investment team at the AMC. While Kulkarni considers the opportunity cost of holding a stock over the long term, he does not tend to exit stocks solely based on valuations. Kulkarni also takes large stock and sector bets, often against the grain. We believe this is linked to the research-intensive approach and the caliber of the investment team, which helps pull off such a strategy. Overall, we are fairly impressed with his investment style and solid execution of the investment process. We also note that the process is well-defined and repeatable.

That said, certain risks associated with the investment process need to be highlighted. Kulkarni’s sizeable high conviction bets can result in some underperformance over the short term. Nevertheless, we believe that over longer time frames when markets experience a full cycle, the manager’s investment style and expertise will hold the fund in good stead.

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

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Invest SIP for Wealth Creation

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SIPs or systematic investment plans of mutual funds have been the hands down winners in Indian financial markets, for both solid performance as well as swelling investor interest in them.

SIPs enforce disciplined and regular asset allocation to an asset class, whose volatile behaviour gets evened out by the steady flow, helping investors to create wealth through the ups and downs of the market.

Domestic mutual funds allow monthly SIPs for as less as Rs 500, the price of a pizza. At last count in August end, SIP accounts of the domestic mutual fund industry stood at 1.59 crore. Around Rs 5,200 crore flowed into the market through these SIPs in August, compared with Rs 3,500 crore inflow in the same month last year.

Despite its growing popularity, there are certain myths around SIPs that can make investors get the wrong end of the stick.

Myth: SIPs won’t yield much returns
Fact: While this may be true in the short run or in a volatile market, the truth is SIPs are the best wealth creation options to accumulate and compound wealth, as long as one has a long-term perspective. If one were to constantly keep checking how an investment is faring, an SIP can disappoint in the short run

Data available showed an investment of Rs 1,000 made through an SIP in HDFC Top 200 fund starting September 2013, would have become around Rs 68,609, indicating an annualised return of 16.90 per cent.

The same SIP in ICICI Prudential Balanced Advantage started in January 2013 would have made you Rs 82,276 today; a return of 15.71 per cent.

In bad market conditions, the discipline of staggering investment through the SIP route can increase the base corpus and facilitate solid appreciation in the subsequent bull markets. Returns will, therefore, look good over the long term

Myth: SIP in any equity mutual fund will do
Fact: Given the sharp rise in inflows through SIPs in recent months, investors need to understand that investing in any mutual fund may not lead to automatic wealth creation. If you map 10-year SIP returns of various equity funds, you may find up to 8 per cent difference in annualised returns among some of them. Choosing the right set of diversified funds with an eye on the long-term performance track record is critical

The power of compounding cuts both ways; a bad choice can result in large difference in end returns, he warns

Myth: Markets are too high to start or continue an SIP

Fact: Time is investor’s best friend in the stock market, goes the saying. Studies have shown that time spent in the market is far more profitable than timing the market. SIPs shield investors from periods of wild market swings and save investors from the futility of timing the market.

Secondly, in a weak market, one ends up accumulating more units of a security through the SIP mode of investment, which then results in lower average purchase cost.

Markets have their ups and downs. Market experts say there was a period in 2013 when a number of investors did not renew their SIPs, as returns for the immediate prior years were negative or low. Those who kept the faith on them were rewarded in the subsequent years

Investors will be better off if they don’t allow market fluctuations to affect their decision to invest in or continue with an SIP. Anytime is good time to do it!

Myth: There is penalty if SIP is stopped in between

Fact : One can continue or stop a mutual fund SIP at one’s own convenience. One just needs to provide a duly signed written request. There is no penalty whatsoever, or charge for stopping an SIP

Myth: If you agree to a SIP amount every month, you can never change it

Fact: If you decide to invest Rs 2,500 a month through an SIP and want to change it to Rs 5,000 next month or Rs 1,000 next month, there is total flexibility for you to do so. There are no charge associated with changing the SIP amount

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

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SIP Top up

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Investment is a long term and a long drawn process and the results are yielded after good amount of patience and sound decisions. As an investor you should keep on reviewing your needs, depending on your age and fund vis-à-vis inflation. Your systematic investment plan (SIP) is one such investment that needs stepping up every year, especially in your younger days. It should be increased every year in line with inflation rate, income status, and investment goals.

Need for SIP top-up

The need to step up any investment has its basis on the fact that the value of currency is eroding with time. According to consumer price index, today’s Rs 206.50 is equivalent to Rs 100’s value 10 years back. The average inflation rate in the last 10 years has been 7.57%. In the last 20 years, the average inflation rate has been 6.54%.

Let us assume that you have calculated your future wealth requirement to be Rs. 1 crore in 20 years. However, accounting for inflation trends in the past 20 years, a better target may be Rs. 3.5 crore. This is assuming that the average inflation rate will remain approximately the same as the recent past.

A higher target may seem difficult to get today, but it is a worthier goal and would protect you against the adverse effects of inflation. Therefore, to commit to a more challenging investment objective, you can periodically increase your investments in tandem with the rise in your monthly income via annual appraisals or bonus income. Not only will this help you create greater wealth but also beat inflation.

You SIP top-up amount and type would depend on factors like your age, investment years available, and financial goals. Your age especially is key—nearly as important as the rate of return on the SIP. A greater investment tenure (for example, from the age of 30 to 60) offers greater chances of compounded returns, allowing you to accelerate towards your goal as you approach retirement.

The impact of compounding, coupled with a gradual stepping up of your investments, would allow you to achieve investment targets that may sound impossible to achieve today. With disciplined investing and smart planning, you can secure yourself financially.

Stepping up your investment

Investing With Rs. 10,000 A Month
Particulars Fixed SIP Step-up SIP
Monthly Contribution Rs. 5,000 Rs. 5,000
Final Year Monthly Contribution Rs. 5,000 Rs. 30,500 (approx.)
Annual Step-Up Nil 10%
CAGR 12%
Tenure 20 Years
Corpus Rs. 49.95 lakh Rs. 87.50 lakh

The table in the article is indicating a goal of investing around Rs 5,000 monthly. Either you would commit a fixed amount every month with a long-term plan or you decide to go ahead with a step-up SIP where your monthly contribution increases by some per cent annually. Considering the mutual fund you are investing in, CAGR has been assumed at 12% in the table.

In the step-up plan, you start with a monthly investment of Rs. 5000 and increase this by 10 percent each year – Rs. 5500 in the second year, Rs. 6050 in the third, and so on. In the final year of your 20-year plan, your monthly contribution would have risen to Rs. 30,500. This may seem a lot today. In 20 years your income too would have risen substantially, and the inflation would have eroded the value of the rupee as well.

It is obvious from the table stepping up contribution has yielded better results. So, stepping up has great deal of advantage. However, at any moment you find it tough to step up investment, the choice of withdrawing is always there.

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

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Gold ETFs & Gold

imggallery

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Aditya Birla SunLife Corporate Bond Fund

After a significant duration rally we believe that there is further room for gains from interest rate easing owing to the low inflation and weak growth parameters but this maybe coupled with some volatility. The benchmark bond yields are also expected to be range bound in nature. While we continue to run reasonable duration in our duration oriented offerings which stand to benefit from the impending rate cuts but for incremental allocations especially for investors expecting lesser volatility than duration funds, accrual funds are the way forward.

Following are some reasons as to why Credit Accrual Funds (like BSL Corporate Bond Fund) make a strong case for investors:

§ The business of Credit Funds emanates from the idea that there is a large untapped market of companies seeking to borrow funds since they have limited access to bank finance or NBFC finance due to their profile or line of business or other regulatory parameters.

§ Aditya Birla SunLife Corporate Bond Fund helps investors use this opportunity to benefit from the higher interest rates offered by these corporate and alongside mitigate the risk arising from individual bond investing also.

§ Notably, in the credit fund space, the role of a larger fund house with a fairly large investment team comprising of credit managers & fund managers has the most prominent role to play. This is because, successful investing in credit funds is only possible on the back of a strong credit research & superior bargaining power executed while building covenants and collaterals covers. This is also the area where a retail entity or individuals lack resource & experience.

§ Hence, the in-depth credit research, excessive caution exercised while lending, strong & multi-layered tangible & enforceable financial covenants and collateral cover, superior bargaining power with borrowers owing to size & number of years of experience in the industry differentiates our credit fund from other not so prominent players.

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 2017 – 2018

Best 10 ELSS Mutual Funds to Invest in India for 2017

1. DSP BlackRock Tax Saver Fund

2. Tata India Tax Savings Fund

3. Birla Sun Life Tax Relief 96

4. ICICI Prudential Long Term Equity Fund

5. Invesco India Tax Plan

6. Franklin India TaxShield

7. Reliance Tax Saver (ELSS) Fund

8. BNP Paribas Long Term Equity Fund

9. Axis Tax Saver Fund

10. Sundaram Diversified Equity Fund

Invest in Best Performing 2017 Tax Saver Mutual Funds Online

Invest Best Tax Saver Mutual Funds Online

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Liquid Funds

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liquid-funds.jpg

Liquid Funds are for those who have Surplus Money in hand but don’t want to invest them in Fixed Deposits as they give better interest rates than FD. Money can be parked in them for a short period of 5 days even. The biggest advantage is you can do redemption and get your money back in you account in 24 hours flat , unlike an FD.

  • Invests in very short-term market instruments such as treasury bills, government securities and call money.
  • Suitable for investors having capacity to bear Minimum Risk.
  • On Redemption and get your money back in you account in 24 hours .
  • Least Volatile as NAV of Liquid Funds in not volatile.
  • Liquid funds do not suffer exit load.

Liquid funds are ideal parking grounds when you have a sudden influx of cash either because you have received money from any legal settlement or from maturity of investments. It is noteworthy that liquid funds cannot be a full-fledged substitute for a savings bank account.

That said, given the low interest rates (about 4 per cent mostly and 6-7 per cent in the case of one or two banks) in savings account, you would do well to temporarily put your money in liquid funds to earn slightly higher interest. You can exit the scheme anytime without any exit load and receive your funds the next day.

Another way to make use of liquid funds is invest your lump sum receipts in them and then opt for a systematic transfer plan to invest in equity funds of your choice. Often, you would use SIPs to invest in equity funds. That is fine when you invest out of your monthly savings. But if you receive a large sum at one go, you can use liquid funds in such instances, to enhance your returns.

So to park your money lying idle in your savings account contact us now.

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

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Bharat 22 ETF

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Bharat 22 ETF, the New Fund Offer (NFO) from ICICI Prudential AMC

What is Bharat 22 ETF?
The government of India, in the Budget speech of 2017, announced its plan to achieve a divestment target of Rs 72,500 crore in the FY 2017-18. Bharat 22 ETF has been set up as one of its vehicle to achieve the target. It is an open-ended Exchange Traded Fund which will invest in similar composition and weightages as they appear in Bharat 22 Index.

How is the underlying index (S&P BSE Bharat 22 index) constituted?
The index is collectively comprised of 22 stocks of Central Public Sector Enterprises (CPSE), Public Sector Banks and private companies which are Strategic Holding of Specified Undertaking of Unit Trust of India (SUUTI). The said 22 stocks are spread across six sectors (Basic Materials, Energy, Finance, FMCG, Industrials and Utilities).

The index invests a maximum of 15% in a single stock and 20 per cent in a particular sector.

Who will manage the scheme?
The government of India has appointed ICICI Prudential AMC to create, launch and manage Bharat 22 ETF. Mr. Kayzad Eghlim will manage the fund.

Who should invest in Bharat 22 ETF?
The scheme is intended for investors who are seeking long-term wealth creation through a diversified portfolio which is largely comprised of high-quality public sector undertakings.

Is there any lock-in period?
There is a lock-in period of 30 days from the date of allotment for Anchor investors. There is no lock-in period for others, including retail investors, retirement funds, qualified institutional buyers (QIBs) and non-institutional investors (NIIs).

What are the tax implications?
The taxation treatment for Bharat 22 ETF is in line with other equity mutual fund schemes. Short-term capital gains (STCG), that is, gains if the investment is held up to one year is taxed at 15% plus surcharge and cess as applicable. Long-term capital gains (LTCG), that is, gains if the investment is held for more than one year are tax-free.

How can I invest in Bharat 22 ETF?
The NFO is open for subscription from November 15 to November 17, 2017 for retail investors. Applications to invest in Bharat 22 ETF through NFO can be submitted online as well as offline. Offline applications can be submitted to any of the service centre of ICICI Prudential AMC or CAMS. For online application, ICICI Prudential AMC website, IPRUTOUCH mobile app and other platforms like BSE Star MF, MF Utility, CAMSONLINE, etc may be used.

It is mandatory for the applicants to hold a Demat account in which the allotted units will be delivered. Minimum and maximum application amount for retail investors is Rs 5,000 and Rs 2 lakh, respectively.

Is there any extra benefit in investing through the New Fund Offer (NFO)?
Units of Bharat 22 ETF are being offered at a discount of 3 per cent on the basis of the Reference Market Price. Reference Market Price is determined as an average of FVWP (Full Day Volume Weighted Price) on BSE from November 15 to November 17, 2017.

When are the units allotted? How?
Units of Bharat 22 ETF will be allotted to the successful applicants in whole numbers within 5 business days from the closure of the NFO period. They will be delivered directly to the Demat account of the applicant.

What happens in the case of oversubscription or under subscription?
In case the NFO is oversubscribed, the units will be allotted in proportion to the amount of the applications received. And, in case of under subscription, all the units applied shall be allotted. Refund amount, in case of oversubscription or unsuccessful application, will be directly credited to the bank account of the applicant registered with his/her Demat account.

The maximum amount to be raised by BHARAT 22 ETF shall be allocated in the following manner.

Anchor investors: Not exceeding 25% of ‘Maximum Amount to be Raised’

• Non-Anchor investors:
RIIs
– Not exceeding 25% of ‘Maximum Amount to be Raised’
RFs – Not exceeding 25% of ‘Maximum Amount to be Raised’
QIBs and NIIs– Not exceeding 25% of ‘Maximum Amount to be Raised’

How can I liquidate my investments in Bharat 22 ETF?
The units of Bharat 22 ETF will be listed on BSE and NSE within 5 business days from the date of allotment. Units can be freely traded on the stock exchange like direct equity shares, once they are listed.

SIPs are when Stock Market is high volatile. Invest in Best Mutual Fund SIPs and get good returns over a period of time. Know Top SIP Funds to Invest Save Tax Get Rich

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Income Funds

Income funds are those mutual funds which invest in bonds and government securities.

Income funds have exposure to corporate bonds and government securities of varying maturities, and are classified as short, mid and long term.

Corporate Bonds: These are bonds issued by corporate to raise funds. These generally have a higher interest rate compared to government securities, owing to higher risks involved compared to the latter.

Further the corporate bonds can be in the form of:

Coupon Bearing Bonds: These bonds are issued at face value and have a coupon which is paid annually/semi-annually or quarterly varying from company to company. At maturity, investors would get the face value plus the interest accrued between the last coupon paid and the maturity.

Zero Coupon Bonds / Deep Discount Bonds: These bonds do not have a coupon and are issued at a discount to the face value. At maturity, an investor would get the face value.

These are traded in the secondary market and the yield-to-maturity is calculated based on the remaining maturity period, price of bond, and also the coupon in case of coupon bearing bonds.

A fund manager with the help of a research team reviews the situation and takes exposure in the bonds of different maturities.

Apart from holding the bonds with higher yields, they can also sell the bonds in the secondary market for capital appreciation.

Dated Government Securities: More popularly known as GILTs, they are issued by the central government and are long term borrowing instruments that vary in maturities up to 30 years. The interest is paid mostly half-yearly unless specified and coupon is either fixed or floating. They are sold through a process of auction by the RBI. Being government securities, they carry a lowerinterest rate compared to corporate bonds but still enjoy a lot of demand in the secondary market.

State Development Loans: Similar to GILTs issued by central government, these are dated securities issued by State Government. These also are issued through an auction process similar to GILTs and interest is paid on a half-yearly basis

How does an Income Fund work?

When interest rates come down, higher coupon bearing bonds will have higher demand and have double the benefit of earning higher coupons or when sold in the market also attract higher bargain price thus, there will also be a capital gain apart from the high coupon which is received on an annual/semi-annual basis. Let us assume there is a 12 year bond with 10.5% coupon which is bought at Rs 100.

In case in two years time, interest rates come down and new bonds are available with 10 years maturity offer you 8.5% and one is looking at an internal rate of return (IRR) of 9.5%. The 10.5% bond can be bought at Rs 106.28. So, in case the initial buyer of the bond sells it in the market at 106.28, he would have earned a return of 12.84%, or hold the bond till maturity and get 10.5% p.a. Let us assume there is a 4 year bond with 10.5% coupon which is bought at Rs 100.

2 years maturity offers you 8.5% and one is looking at an IRR of 9.5%. The 10.5% bond can be bought at Rs 103.2. In case the initial buyer of the bond sells it in the market at Rs 103.2, he would have earned a return of 11.46% or hold the bond till maturity and get 10.5% p.a.

Thus, a longer maturity bond not only gives you higher rate for longer tenure till maturity, but also provides an opportunity to generate capital gains. Income funds are a good, stable hedge against economic uncertainty.

The Current Scenario

Based on the interest rate scenario one can capitalize by investing in income funds of various maturities. Let us take the case of the current scenario where if RBI goes for rate cuts in the further monetary policy review meetings. The intensity in the rate cut by RBI again depends on various factors. For the time being, we would assume RBI goes in for a 25 bps rate cut in the upcoming review. What happens then is that, the fresh papers which would come into the market will have lower interest rates. Thus, for an investor to have higher interest rates they have to go into the sec- ondary market and buy. In this situation, when the expectation is that RBI may resort to rate cuts to the extent of 20-50 bps in the next year and a half period, the demand for higher interest yielding in- struments traded in the secondary market will have huge demand. This gives an op- portunity to the investor who is currently holding the higher interest bearing bonds to either hold it till maturity or sell them in the secondary market at a premium thereby getting capital appreciation. For a buy side investor, the idea would be to calculate the price at which a bond can be bought so that, even on paying a premium, he still can get effective yield higher than the available papers on offer.

Repo Rate

Repo rate is the rate at which RBI lends money to banks. Thus when banks bor- row money, they have to pay them interest of 6.25% (as per the current rate), thus this is important for normal public as well as the companies as this would form the basis of the lending rates by Banks. The repo rate is currently at 6.25% after RBI has decided to maintain the status quo in the last monetary policy review. Many including the corporate sector would expect rate cuts going forward. Now that Inflation seems to have been coming down drastically, rate cut seems to be on the cards in the next review.

Overall, income funds form a good base for an investor to consider investments in them as they have the capability of delivering competitive returns in the current scenario. Investors who are looking for stable returns mainly for the purpose of retirement may consider having certain allocation to these funds.

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 2017 – 2018

Best 10 ELSS Mutual Funds to Invest in India for 2017

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

Invest in Best Performing 2017 Tax Saver Mutual Funds Online

Invest Best Tax Saver Mutual Funds Online

Download Top Tax Saver Mutual Funds Application Forms

For further information contact SaveTaxGetRich on 94 8300 8300

OR

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Call us on 94 8300 8300

RELIANCE TOP 200 Fund

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RELIANCE TOP 200 Fund takes a large-cap tilt, but retains a higher mid-cap exposure compared to many of its peers. The mid-cap picks are mostly among the leaders in their segment, and display strong capa bilities to scale up.

RELIANCE TOP 200 Fund takes a conservative approach, does not deviate too much against its benchmark index in terms of sector exposure. While it is more aligned with the benchmark and does not dabble in stocks outside the benchmark index, it is not an index hugger.

The portfolio is very compact, which is an outcome of its risk positioning. It also allows the fund to retain healthy expo sure in its top picks, but ensures exposure to mid-caps does not exceed 3% of the portfolio. With fund managers of proven capabilities at the helm, this fund is a good pick.

02_10_2017_124_005_003.jpg

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

Invest [at] SaveTaxGetRich [dot] Com

OR

Call us on 94 8300 8300