What is CKYC?

What is CKYC?

Central KYC Registry (CKYCR) is a centralized repository of KYC records of customers in the financial sector with uniform KYC norms.

Government of India has authorized the Central Registry of Securitization and Asset Reconstruction and Security interest of India (CERSAI), set up under subsection (1) of Section 20 of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, to act as, and to perform the functions of, the Central KYC Records (CKYC) Registry under the PML Rules 2005, including receiving, storing, safeguarding and retrieving the KYC records in digital form of a “client”, as defined in clause (ha) sub-section (1) of Section 2 of the Prevention of Money Laundering Act, 2002.

As per the new KYC norms, once the customer completes the KYC process with an entity authorized to conduct KYC, the customer will be able to invest in all the financial products including Mutual Funds using the 14 digit KYC Identification Number (KIN) issued by CKYC.

As the mutual fund industry is already having KRAs, as a first step, CKYC is being implemented for “New Individuals” for whom KYC is administered by the Intermediaries, effective 1st Feb. 2017. There will be slight change in the KYC form, which encompasses KYC with KRA as well as CKYC.

What is changing?

AMFI circular has mandated that, with effect from 01-Feb-2017,individual investor who is new to KRA (i.e. a prospective investor whose KYC is not registered or verified in the KRA system) has to complete CKYC process by submitting duly filled & signed CKYC form to register KYC.

Kindly note, PAN is still mandatory for investing in Mutual Funds (except Micro KYC and other PAN Exempt scenarios). If an investor had complied with KRA-KYC and CKYC norms, then he/she will have to update the 14 digit KIN and also mention date of birth in the mutual fund application form. There is no change in terms of the documentary proof submission such as ID Proof and Address Proof for both KRA-KYC and CKYC.

In case of an investor who had got the CKYC reference number through non mutual fund route (outside KRA), he has to additionally be compliant of KRA-KYC as well, by submitting the application form, including IPV (In Person Verification) and PAN.

Debt Fund vs Fixed Deposit

Debt Fund vs Bank Fixed Deposits

Debt Funds are more Tax Efficient

Debt Mutual Funds are becoming an increasingly widespread rival to the hallowed Bank FDs. Here are their pros and cons vis-Ã -vis bank deposits

The bank Fixed deposits has been the instrument of choice of generations of low risk investors. However it is becoming harder and harder to ignore the challenge presented by debt funds. The two serve a similar function and are close rivals. The primary areas of difference are returns, safety, taxation, liquidity and returns with mutual funds holding the advantage in tax-adjusted returns and fixed deposits in safety.

Bank Deposits are one of the safest avenues for savers in India with an almost negligible chance of default (although there have been instances of co-operative and local banks defaulting). As with all mutual funds, there are no guarantees in debt funds. Returns are market-linked and the investor is fully exposed to defaults or any other credit problems in the entities whose bonds are being invested in. However, that’s a legalistic interpretation of the safety of your investments in mutual funds.

In practice, the fund industry is closely regulated and monitored by the regulator, Securities and Exchange Board of India (SEBI). Regulations put in place by SEBI keep tight reins on the risk profile of investments, on the concentration of risk that individual funds are facing, on how the investments are valued and on how closely the maturity profile hews to the fund’s declared goals. In the past, these measures have proved to be highly effective and problems have been infrequent such as during the 2008 crisis and more recently with Amtek Auto and JSPL. Another common risk faced by debt funds is interest rate risk with funds losing value in a rising rate scenario and vice versa. Fixed Deposits which have been locked in for long tenures also face this risk in terms of opportunity cost but there is no actual loss of value when the deposit is held to maturity.

The other big difference is that of taxation. Returns from bank fixed deposits are interest income and as such have to be added to your normal income. Since many investors are in the top (30 per cent) tax bracket, this takes away a large chunk of their returns. Banks also deduct TDS on interest income from fixed deposits. The tax rates are similar for debt funds held for less than 36 months (though TDS will not generally be deducted). However for debt funds held longer than 36 months, returns are classified as long term capital gains and are taxed at 20 per cent with indexation.

Turning to liquidity, open ended debt funds proceeds are credited within a period of 2-3 working days depending on factors such as whether an ECS mandate is registered. Fixed Deposits are also typically available at 1-2 day’s notice, but usually carry a penalty if they are redeemed before the maturity date. Debt funds also have exit loads or charges that are usually levied for redemptions, typically upto 3 years. These exit loads are not applied to liquid funds with just a few exceptions for very short periods of time.

As the returns of debt funds demonstrate, you can beat the bank by investing in debt funds. Debt fund investors assume both credit risk (lending to riskier borrowers) and interest rate risk (the risk of bond prices falling when interest rates rise) and are hence compensated by higher returns.

In summary, you can beat the bank by investing in debt funds instead. However you should be cognizant of the risks involved and choose the right fund in order get the best possible deal.

Best Debt Funds to invest Online

Understanding Equity Mutual Funds

Equity Mutual Funds Online

You give money to a fund, which it invests in stocks. The gains or losses, whatever they may be, accrue to you. Equity funds are that simple

Expenses: Clearly, a mutual fund is a business and not a charity. It must be taking some money from you in order to meet its expenses as well as to make some profits and indeed it does. Equity funds are allowed, by law, to charge up to 2.25 per cent per annum of the money it manages as it’s expenses. Since the amount of money it manages goes up and down every day, the fund deducts a small amount from your money every day such that, on an average, the annual deduction comes to the above percentage. There are some complexities to this percentage–smaller funds are allowed sightly more. Also, in order to encourage financial inclusion, funds are allowed to charge a slightly higher amount if they get more investments from smaller towns and rural areas.

Mutuality: The word ‘mutual’ in the name means exactly what it implies. A mutual fund is composed of the money that a large number of people have invested in it. The way law, rules and regulations are formulated, all investors are exactly equal financially. and are treated the same way.

NAV and Units: In terms of relevance to an investor, the NAV (Net Asset Value) of a fund and the number of units that he owns are two of the least useful, most misunderstood and most over-valued numbers. A mutual fund is made up of all the money that its various investors have invested, combined. Here’s an example: A fund is launched and a 1000 investors each invest R10,000 in it. In all, the fund has R1 crore of assets under its management. Just for convenience, a fund is divided into ‘units’ of a certain value, which is set to a round number initially. Typically, this is R10. In the above fund, each investor is said to own a 1000 units and in all, the fund has issued 100,000 units.

Now we come to NAV. NAV stands for Net Asset Value. It basically means the current value (on any given day) of each unit of the funds. In the current example, the fund manager invests the R1 crore of assets in various stocks. In the beginning, the NAV is R10 and each unit is worth R10.

Let’s say that after an year, the investments have done well and theR1 crore grows to R1.1 crore. Now, the NAV of each unit is R11 (1.1 crore divided by 100,000). Each investor owns 1000 units so the value of his investments has grown to R11,000. It is important to understand that the only relevant thing here is that the total assets have grown by 10 per cent and therefore the investors have had a gain of 10 per cent. If the fund had initially had a face value of R100, then the NAV would have grown to R110 or if the face value had been R1 then the NAV would have grown to R1.10. From the investors’ point of view, only the percentage change in the NAV is important, not the actual number.

Whenever an investor has to invest or redeem his money, he either buys fresh units or sells them at the NAV at the point. Under some circumstances, there might be a small extra charge at the time of redeeming. Also, some funds allow entry and exit at any time while others allow entry only when the fund is launched and exit only after a pre-determined period when the fund is terminated.

Public Sector ETF – CPSE ETF

While the fund promises a lucrative play on India growth story, there are a few pitfalls
The government is set to launch a new exchange-traded fund (ETF) based on the central public sector enterprises (CPSE) index. Managed by Reliance Mutual Fund, this will be the second CPSE ETF, the first being launched in March, 2014.

The fund aims to provide investors the opportunity to invest in a diversified basket of public sector companies and benefit from the growth potential over the long term.

It will mirror the performance of the CPSE Index while the portfolio will comprise shares of the 10 biggest PSUs: ONGC, GAIL, Coal India, Indian Oil, Oil India, Power Finance Corporation, Rural Electrification Corporation, Container Corporation, E n gi n eer s In di a a n d B harat Electronics.

To find out if it’s a good idea to invest in the fund, one shouild consider how the first CPSE ETF has been performing. When it was launched, the government had offered an upfront discount of 5% on the issue price to sweeten the deal for investors.

A year later, the government issued `loyalty’ units in the ratio of 15:1 to eligible retail investors who remained invested since the new fund offer, which amounted to an additional discount of 6.66%. It is expected that the new CPSE ETF will also offer similar discounts and bonus, providing an attractive entry point for retail investors. The low valuations of the underlying shares also make it a compelling offer–the stocks that form the CPSE ETF are trading at a much lower Price to Earnings (PE) ratio and have higher dividend yields than the broader market.

While the CPSE Index trades at a PE multiple of 11.44 and dividend yield of 4.07%, the Nifty 50 index is available at 22 times and 1.35% respectively .A low expense ratio of 0.065% also ensures that costs do not eat into the gains made by the scheme over time.

The ETF claims to offer investors a play on the India growth story through a diversified basket of PSU stocks. But a closer inspection of the composition of the underlying index suggests that the portfolio is far from diversified. Three stocks — ONGC, Coal India and IndianOil–together constitute around 63% of the entire portfolio.

The portfolio is also skewed towards a few sectors, with energy, metals and financial services making up 90% of the portfolio. This lends a higher risk element despite the fact that the stocks are some of the biggest names in their respective sectors.

The performance of the first CPSE ETF has been impressive. Since its inception, the fund has clocked 14.5% annualised return while the Nifty 50 index gained 7.5% during the same period. After adjusting for loyalty units, retail investors have made a gain of 17.2%. Over the past year, the fund delivered 17.43% return even as the Nifty 50 index clocked 2.8%.

This effectively makes it the best performing large-cap fund. But this performance needs to be put in context. The fund reached its peak NAV within two months of launch supported by factors such as government oil price deregulation and a fall in crude prices.

Investors also believed that the efficiency of public sector companies would improve under the Modi government. The fund’s returns have been driven by commodity price trends as the index is skewed towards commodity businesses.

Experts argue that this is a speciality fund an not a diversified equity fund. Investors should treat this as a sector or thematic fund. You can opt for partial allocation within the 10% tactical allocation in the portfolio.

Any changes in the policies of the promoter could have a bearing on the entire basket. Retail investors should not over-expose their portfolio to such a concentrated bet. Most private sector businesses in the respective sectors are run far more efficiently, and are therefore awarded expensive valuations.

MF Alpha

Alpha, as you may know, is the first letter of the Greek alphabet. But when analysts use it in the context of modern portfolio theory, Greek is far from their mind.

Alpha tells you whether the fund has produced returns justifying the risks it is taking. It does this by comparing its actual return to the one ‘predicted’ by the beta. Say, a fund can be expected to earn a return of 15 per cent in a year (based on its beta). However, it actually fetches you 18 per cent. Then the alpha of the fund is 3 (18 – 15 = 3). In other words, alpha is a measure of selection risk (also known as residual risk) of a mutual fund in relation to the market. A positive alpha is the extra return awarded to the investor for taking a risk, instead of accepting the market return.

Alpha can be seen as a measure of a fund manager’s performance. This is what the fund has earned over and above (or under) what it was expected to earn. Thus, this is the value added (or subtracted) by the fund manager’s investment decisions. A passive fund has an alpha of 0. That’s why index funds always have-or should have, if they track their benchmark index perfectly-an alpha of 0. An active fund’s alpha is a measure of what the fund manager’s activity has contributed to the fund’s returns.

Alpha is the portfolio’s risk-adjusted performance or the ‘value added’ provided by a manager. Mathematically, alpha is the incremental difference between a manager’s actual results and his expected results, given the level of risk. A positive alpha indicates that a portfolio has produced returns above the expected level–at the same level of risk–and a negative alpha suggests the portfolio under performed given the level of risk assumed. So two fund managers may beat the same benchmark, but only one may outperform on a risk-adjusted basis. That one has got the alpha.

Alpha is one of the five technical risk ratios used in Modern Portfolio Theory. The other four are beta, R-squared, standard deviation and the Sharpe Ratio. All these statistical measurements help investors determine the risk-reward profile of a mutual fund.

Mutual Funds Online Investing Link

Canara Robeco Infrastructure Fund

Canara Robeco Infrastructure Fund Invest Online

With just weeks to go for the Union Budget, there is an increasing expectation from the government to boost capital expenditure across various sectors under the broad `infrastructure’ theme. Given this, it makes sense for investors to consider funds which have consistently stuck to various sectors in infrastructure. One of the few five-star rated infrastructure schemes investors can consider investing in is Canara Robeco Infrastructure Fund.

The fund, managed by Yogesh Patil, has been one of the few schemes which follow infrastructure theme closely.This is one of the key reasons why, over a long term, the scheme has beaten its peers by a fair margin. In a five-year period, the scheme gave returns of close to 11%, while its peers returned in the range of 8-9%. More importantly, in the past ten years, the scheme has beaten its benchmark by a considerable difference. Its benchmark, S&P BSE 200 has given 9% returns, while the scheme has given 12%.

At present, the scheme has companies which have relatively better balance sheet, reasonably good order book, high market share, hard-to-replicate business model and proven financial performance. Some of these firms are UltraTech, Sadbhav Engineering, Orient Cement, VA Tech Wabag & Bharat Forge.


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Franklin India Corporate Bond Opportunities Fund

Invest Franklin India Corporate Bond Opportunities Fund Online

· Open ended income fund that endeavors to provide regular income and capital appreciation by investing predominantly in corporate bonds

· Average maturity of the fund is capped at 36 months with no exposure to dated government securities permitted

· Fund may also invest in Securitized Debt as it offers advantage in terms of credit strength, potential for yield pick up and risk diversification

· The fund is positioned as an income fund that focuses on securities with higher accrual and potential for capital gains given its maturity profile

· The fund has a retail focus with restrictions on large inflows/ outflows (currently an investment cap of Rs 20 crore by an investor in each plan per application per day)

· This fund is suitable for investors with a medium to long term time horizon (at least 30 months and above) who would like to invest in the steadily developing corporate bond market which is likely to offer attractive risk reward opportunity

· This fund is also suitable for investors who would like to potentially benefit from high accrual and the prospect of capital appreciation of the fixed income securities over the long term

Fund Details
Average Maturity 1.92
YTM 10.52%
Duration 1.56

Load Structure:

Entry Load: Nil

Exit Load: 3% if redeemed within 12 months from the date of allotment, 2% if redeemed after 12 months but within 24 months from the date of allotment, 1% if redeemed after 24 months but within 36 months from the date of allotment

Invest Franklin India Corporate Bond Opportunities Fund Online

Birla Sun Life Balanced Advantage Fund

(BSL Balanced Advantage Fund erstwhile BSL Dynamic Asset Allocation Fund)

Historically, Equity is known to be a volatile asset class but the only asset class that beats inflation handsomely and helps you create wealth. This is a fact proven the world over.

It is also however equally proven thatevents can have a deep impact on your returns from equities as experienced in the recent past such as Brexit, US Fed rate hike, Chinese slowdown etc. In today’s world no country survives in isolation and is bound to be impacted in some way or the other when a global event occurs and in general, markets are expected to remain volatile.

So, should one exit or remain invested?

Invested off course, since volatility also creates opportunities, that can potentially add to your returns. Investors, however, need stability, reassurance and predictability of growth. They basically seek solutions that aim to provide reasonable returns even in volatile markets and decent participation in bullish markets, also known as Stable Compounding over a longer term period.

What is the way out?

§ A solution that helps investor with emotion free investment in Equities that enables Buying Low & Selling High.

§ A solution that protects the investors money from market shocks but selects companies that continue to generate strong returns across market cycles.

Presenting, Birla Sun Life Balanced Advantage Fund that seeks to address the above problems for the conservative investor and offers a solution that actively manages your equity exposure in response to market movements. The fund was acquired from ING Mutual Fund in October 2014 and has been tested well to achieve its objective of stable compounding.

How does this work?

Birla Sun Life Balanced Advantage Fund runs a well tested P/E based model that drives the ‘Net Equity Exposure’. This determines the level of aggression that the fund carries in any market situation. While being invested in long equity at all times, it uses derivatives to reduce the ‘net’ exposure to equities, allowing fundamental research driven approach to selection of stocks that continue adding alpha over a longer period of time. Some of the key features of the fund are –

ü A fund that seeks to generate steady returns with lower volatility

ü Advantage of active portfolio management by asset allocation and stock selection

ü Emotion free investing: disciplined investing approachbased on extent of valuations – P/E ratio, a proven measure of market valuation

ü Equity Taxation: Invests in both equity & debt asset classes, but seeks to maintain gross equity exposure of 65%

ü Endeavor to provide month-on-month tax free dividends

ü Smart Withdrawal Feature

Invest Birla Sun Life Mutual Fund Online

Mutual Fund NAV

Mutual Fund NAV Online

The net asset value of a fund makes no difference to its returns. Consider a fund for its performance, not its NAV

Low NAV doesn

If there is one myth that fund distributors love to propagate, it is that a fund with a low net asset value (NAV) is cheaper. ‘The NAV is just R10,’ is their sales pitch. As a result, investors flock to new fund offerings (NFOs) to exploit this so-called cost advantage.

In actuality, the NAV is totally irrelevant and should not even be considered when making an investment. Not convinced? Let’s say that two funds have identical portfolios. One has been around for a while and the other is a newly-launched fund. As the value of their (identical) holdings increase, the NAV will rise by the same percentage. So investors in both will benefit equally.

To put it numerically, let’s say the NAV of the two funds are R10 andR50 and they rise to R11 and R55, respectively. So it might appear that one has just risen by a rupee while the other by R5, but in reality, they have both shown a 10 per cent rise.

Of course, the number of units held would differ. A low NAV would imply a higher number of units and a high NAV would indicate a lower number of units. So let’s say you invest R5,000. It would get you 500 units with an NAV of R10 but only 100 units if the NAV isR50 (assuming no entry load). Yet, in both cases, the value of the investment is identical. So R5,000 invested in each would show the same gain. The 500 units (for which you paid R10/unit) would rise to R5,500 at R11 per unit. The 100 units (for which you paidR50/unit) would rise to R5,500 at R55 per unit.

The ‘cost’ of a scheme in terms of its NAV has nothing to do with returns. What you want to buy in a scheme is its performance, not its NAV.

The only instance where a higher NAV may adversely affect you is where a dividend has to be received. This happens because a scheme with a higher NAV will result in a fewer number of units and as dividends are paid out on face value, higher NAV will result in lower absolute dividends due to the smaller number of units. But even here, total returns will remain the same. So from whichever angle you see it, the NAV makes no difference to returns. Mutual fund schemes have to be judged on their performance. And the simplest way to do this is to compare returns over similar periods.

The confusion over NAV arises simply because investors view a fund’s NAV like a stock price. Nothing could be farther from the truth. The current price of a stock could be much lower or higher than its actual value. But the NAV just reflects the current value of the portfolio as it is.

Next time you are evaluating a fund, take a good look at the portfolio and returns over various time periods. Remember, it is the stocks that the fund manager has invested in that determine the returns.
The value of the NAV is immaterial.

Online Investing of Mutual Funds in India Link

Principal Tax Saving Fund

Why Principal Tax Savings Fund?
• Eligible for tax deduction of up to 1.5 lakh to investors under section 80C of the Income Tax Act, 1961
• Lock-in period of three years is low compared to other Tax saving options
• Opportunity to generate wealth as money is invested in equity markets
Performance of Principal Tax Savings Fund ? Lumpsum Investment (as on December 30, 2016)
Past performance may or may not be sustained in future. Since Inception Returns (in %) are calculated on Compounded Annualised Basis.
$ PTP (Point to Point) Returns is based on standard investment of ₹ 10,000/- made at the beginning of relevant period.
Performance of the dividend option for the investors would be net of dividend distribution tax, as applicable. ^ Growth Option
Performance of Principal Tax Savings Fund ? SIP Investment
Inception Date – March 31, 1996
Returns shown above are for Regular Plan – Growth option. Past performance may or may not be sustained in the future.
The returns shown above are calculated using XIRR approach assuming investment of ₹ 10,000/- on the 1st business day of every month. XIRR helps in calculating return on investments given an initial and final value and a series of cash inflows and outflows with the correct allowance for the time impact of the transactions. Load is not taken into consideration for computation of performance.
Disclaimer: The above investment simulation is for illustrative purposes only and should not be construed as a promise on minimum returns and safeguard of capital. The AMC / Mutual Fund is not guaranteeing or promising or forecasting any returns. SIP does not assure a profit or guarantee protection against a loss in a declining market.
Annexure of other schemes managed by Fund Manager
Principal Growth Fund (as on December 30, 2016)
Principal Equity Savings Fund (as on December 30, 2016)
Principal Balanced Fund (as on December 30, 2016)
Past performance may or may not be sustained in future. Since Inception Returns (in %) are calculated on Compounded Annualised Basis.
$ PTP (Point to Point) Returns is based on standard investment of ₹ 10,000/- made at the beginning of relevant period.
Performance of the dividend option for the investors would be net of dividend distribution tax, as applicable. ^ Growth Option
Product Label for Principal Tax Savings Fund
This Product Is Suitable For Investors Who Are Seeking~-
Long term Capital Growth with a three year lock-in.
Investment in equity & equity related securities including equity derivatives of companies across market capitalization.
~ Investors should consult their financial advisors if in doubt about whether the product is suitable for them.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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

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. 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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Invest Best Tax Saver Mutual Funds Online

Download Top Tax Saver Mutual Funds Application Forms

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