SWP Returns of Mutual Funds: Superb returns by Birla Sun Life Frontline Equity Fund

If you had invested र 10 Lacs in Birla Sun Life Frontline Equity Fund – Regular plan –Growth, during the NFO (launch date August 30, 2002) and started withdrawing र 8,000 per month after one year then the current value of your investment would have been र 1.25 Crores even after withdrawing र12.32 Lacs through 154 SWP instalments of र 8,000 each (Based on June 14, 2016 NAV).

To come to the above conclusion we have presumed that the lumpsum investment of र 10.00 was made on the Scheme inception date i.e. August 30, 2002. We have also presumed that the monthly Systematic withdrawal of र 8,000 was started after one year on the 1st of every month so that each and every SWP withdrawal amount becomes tax free (start date September 01, 2003).

Please look at the chart below to understand how we have selected the different options in the SWP Research Tool to get the results. You can also explore our SWP Return Calculator to explore SWP returns of any fund of your choice.


SWP (Systematic Withdrawal Plan) results

From the above chart you can see that the investor would have withdrawn a total of र 12.32 Lacs through 154 equal monthly SWP instalments of र 8,000 each, thus, he would have got a tax free return of 9.6% every year. Even after withdrawing a tax free amount of र 12.32 Lacs, the current value of his investment is an amazing र 1.25 Crores!

The initial investment of र 10.00 Lacs was totally withdrawn through SWP of र 8,000 per month through 125 instalments. When the principal was totally withdrawn through the last instalment on 1st January 2014, the fund value was र 84.09 Lacs! Thereafter, the investor further withdrew 29 instalments of र 8,000 each. The last being on 1st June 2016 and thereafter the Fund Value is 1.25 Crores (Based on June 14, 2016 NAV).

The interesting point is that when the market hit its life time high during March 2015, Birla Sun Life Frontline Equity Fund – Regular plan – Growth NAV on the SWP date of 02/03/2015 was र 171.05 and the total value was at र 1.31 Crores which is approximately र 5.89 Lacs more than the current value. Please note that the investor withdrew another15 instalments from the highest value point of 02/03/2015 to till today’s value.

Download the cash flow in excel – Click here

We have analysed similar samples with other Large Cap funds and found that SWP returns of Birla Sun Life Frontline Equity Fund – Regular plan – Growth was one of the best amongst its peers.
About Birla Sun Life Frontline Equity Fund

Birla Sun Life Frontline Equity Fund is the second biggest large Cap fund in Indian Mutual Fund industry with an asset size of र 11,847 Crores (as on May 31, 2016). The biggest large cap fund is HDFC Top 200 Fund. The fund is being managed since November 2005, by one of the best known fund managers in the Industry, Mr. Mahesh Patil. Mr. Patil is also the Co-Chief Investment Officer of Birla Sun Life Asset Management Company, India’s 4th largest Asset Management Company.

Birla Sun Life Frontline Equity Fund is one of the most consistently performing equity mutual funds in the Large Cap Category and is rated 5 Star by Valueresearch. CRISIL has given it a Fund Rank 2. This is an excellent fund to own if you are looking at diversification across sectors amongst large cap companies. The fund does not try to time the market and always remains fully invested while maintaining 85 per cent allocation to large cap companies.

The 3, 5 and 10 years annualised returns of the fund is quite impressive at 19.41%, 13.72% and 17.72% respectively (Based on June 14, 2016 NAV).
Lumpsum returns of Birla Sun Life Frontline Equity Fund

Birla Sun Life Frontline Equity Fund has given excellent lumpsum returns. The current value of investment of र 10 Lacs made on the launch date (August 30, 2002), would be र 1.65 Crores, a CAGR growth of 22.53% since inception (Based on June 14, 2016 NAV).

You may check here Lumpsum Returns of Birla Sun Life Frontline Equity Fund

To know lumpsum return of any fund, you may like to check our LUMPSUM RETURNS CALCULATOR
 

SIP Returns of Birla Sun Life Frontline Equity Fund

The SIP returns of Birla Sun Life Frontline Equity Fund have been amazing! If you had started a monthly SIP of र 5,000 on August 30, 2002 (the launch date of the fund), then you would have accumulated a corpus of र 34.85 Lacs as on today (Based on June 14, 2016 NAV) whereas you had invested only र 8.30 Lacs through 166 instalments of र 5,000 each. During this period the fund has given a XIRR return of 19% which is one of the best amongst the peer group of schemes. Check SIP RETURN CALCULATOR

Further, if you see the chart below, you will notice that Birla Sun Life Frontline Equity Fund has also beaten the CNX NIFTY and S&P BSE 200 Index with a huge margin.

You may also like to check the TOP PERFOMING SIP FUNDS of any category from here.

 What is Systematic Withdrawal Plan

In a Systematic Withdrawal Plan (SWP), you regularly withdraw a fixed amount of money on a fixed date or dates from a fund. The amount to be withdrawn and the frequency of withdrawal/s are decided by the investor. You can withdraw a fixed amount weekly, fortnightly, monthly, quarterly or annually from your investment.

SWP withdrawals from an equity fund, after one year from the date of investment, is totally tax free as it is treated as a long term capital gains. It is an ideal investment option for investors with lumpsum investible surplus and looking for regular income from their investments and at the same time want to see their investments grow in value.

Try our SWP RETURN CALCULATOR to know SWP returns of your favourite funds.

Conclusion

Birla Sun Life Frontline Equity Fund has given amazing SWP returns since inception and is a good choice for investors looking for regular income from their lumpsum investible surplus. However, investors should note that past performance of mutual funds are no guarantees for future returns. Mutual fund investments are subject to market risk and therefore investors must consult their financial advisors and check if investment in Birla Sun Life Frontline Equity Fund is suited for their investment needs based on their risk profile. Would you like to check your risk profile? Try this

Readers interested in knowing more about SWP and about this fund, should read the following –

This Fund has a great track record of wealth creation among large cap funds

Can Large Cap Mutual Funds be your best investment option

Mutual Funds are ideal investment option for retirement planning

Mutual Fund systematic withdrawal plans are smart option for income needs

The best performing income fund in the last 5 years: ICICI Prudential Long Term Plan

In the month of February 2016, the Government announced new small savings scheme rules, which has come into effect from April 1, 2016. Under the new rules, investors in small savings schemes like Public Provident Fund, National Savings Certificates, Senior Citizens Savings Scheme, Post Office Monthly Income Scheme, Kisan Vikas Patra etc will earn considerably lower income than before. The interest rates of all the government small savings schemes have been revised downwards by 0.6 to 0.75%. Under the new rules, the interest rates will be revised every quarter, based on the previous 3 month yields of the benchmark Government Bonds. In the current interest rate regime, it is expected that the interest paid by these schemes will go down even further. Major Banks have already reduced their Fixed Deposit interest rates to around 7.5%. Since Government small savings schemes and bank fixed deposits are preferred investment choices for a large number of Indian households, reduction in interest rates will have an adverse impact on the income of these investors.
When interest rates and Government bond yields go down, the interest rates of the small savings schemes also go down on a quarterly basis. On the other hand, when interest rates are lower, long maturity bond investors get higher returns from the capital appreciation of bonds. When interest rates decline bond prices increase and income funds which invest in long maturity bonds are great fixed income investment options for investors in a declining interest rate regime.

Income funds invest in a variety of fixed income securities such as bonds, debentures and government securities, across different maturity profiles. ICICI Prudential Long Term Plan is the best performing income fund in the last 5 years (please see Top Performing Income Funds in our MF Research Section). While in the last 5 years, most Government Small Savings Schemes paid interest @ 8.5 – 8.7%, ICICI Prudential Long Term Plan gave more than 11% compounded annual returns.

Please see the trailing annualized returns of ICICI Prudential Long Term Plan and Dynamic Bond Fund Category over the last 1, 3 and 5 years in the chart below (as on June 13, 2016).

 

You can see that ICICI Prudential Long Term Plan has outperformed dynamic bond funds category by a significant margin across all time-scales.

Please see the annual returns of ICICI Prudential Long Term Plan and Dynamic Bond Fund Category over the last 5 years.

What are Dynamic Bond Funds 

Dynamic bond funds like many other income funds invest in a portfolio of government and corporate bonds. However, unlike other income funds, in dynamic bond funds, the fund manager has the flexibility to actively manage the duration of his or her portfolio, depending on the fund manager’s outlook on interest rates. Bond prices rise when interest rates fall and fall when interest rate rises. Long duration bonds are more sensitive to interest rate movements compared to short duration bonds. If the fund manager believes that interest rates will fall in the future then he or she will invest in long duration bonds to take advantage of price appreciation of the bonds. If the fund manager expects interest rates to rise, then he or she will invest in short duration bonds, which will limit interest rate risk.

Therefore, dynamic bond funds can give good returns in a lower interest environment, while limiting downside during periods of rising interest rates. As such these funds are ideal long term debt investments for retail investors who want to profit from interest rate movements but are unclear about the trajectory and timing of the movements. You can rely on the expertise of the fund manager to make the right call.

Fund Overview

We believe that consistency of performance should be an important consideration when selecting a dynamic bond fund. Consistency of performance shows the dynamic bond fund manager’s ability to manage the portfolio duration, and therefore returns, in different interest rate scenarios. The 3 year rolling returns chart over the last 5 years shows why ICICI Prudential Long Term Plan is rated as a top performer. We have selected 3 years as the rolling returns period, since one should have a long investment horizon for income funds.

In the last 5 years, we had periods of both rising and falling interest rates, but you can see in the chart above that ICICI Prudential Long Term Plan has always given more than 10% 3 

In the last 5 years you could have made a profit of nearly र 68,700 on an investment of र 100,000. The annualized returns would be over 11%. Morningstar has a 5 star rating for this fund.

Portfolio Construction of ICICI Prudential Long Term Plan

We had discussed earlier that fund managers of Dynamic Bond Funds actively manage the portfolio maturity and duration, depending on their outlook on interest rates and bond yields. Therefore the portfolio construction can change a lot from time to time, depending on the strategy of the fund manager. Currently, 91% of the portfolio of ICICI Prudential Long Term Plan is invested in Government Securities, about 8% in money market instruments and 1% in Corporate Bonds. The average maturity of the portfolio is 14.8 years.

It is clear from this portfolio construction that the fund manager is expecting interest rates and bond yields to decline. The yield to maturity of the portfolio is 7.9% and the modified duration of the portfolio is 7.8 years. Yield to maturity is the annual returns the fund will get by holding the bonds in its portfolio to maturity. Modified duration is the change in bond price for a 1% change in interest rate or yield. Therefore, if interest rates go down by 50 bps in the next 1 year, the price of the bonds in the portfolio of ICICI Prudential Long Term Plan will increase by 3.9%. This price appreciation is over and above what the fund will earn in terms of yields from their bonds during the year.

Therefore, in very simple terms, if interest rates go down by 0.5%, the fund can give 11.8% returns (7.9% + 3.9%) before expenses. Even after deducting expenses (expense ratio of 1.22%), the fund can give double digit returns if interest rates decline by 0.5%. This analysis is purely illustrative to show you how the concepts of yield to maturity and modified duration work. The actual returns of the fund will depend on a variety of factors. Reduction in repo rates may or may not result in a reduction of interest rates by the same amount. In fact, bond yields have softened a bit already in anticipation of the rate cut. There are a number of macro-economic risk factors, both local and global. The portfolio construction itself can change during the year and that will have an impact on returns.

Tax Advantage of Income Funds held for over three yearsOver an investment horizon of three years or more, Income funds enjoy a big tax advantage over fixed deposits and many Government Small Savings Schemes. While fixed deposit and most government savings schemes interest is fully taxable, the debt fund profits over a three year investment period are taxed at 20%, after allowing for indexation benefits. The table below shows the post tax returns of ICICI Prudential Long Term Plan over various 3 year investment periods compared to FD post tax interest (based on prevailing FD interest rates for respective periods).

To compare the post tax returns of this fund with FD interest over various time periods, please check our FD versus Debt Fund tool

Conclusion
The consistent performance of ICICI Prudential Long Term Plan makes it a good investment option for long term debt investors. To take full advantage of interest rate cycle and the tax advantage of debt mutual funds, investors should have at least a 3 year horizon for investing in the fund. Investors should consult with their financial advisors if ICICI Prudential Long Term Plan is suitable for their financial needs.


Mutual Fund Investments are subject to market risk, read all scheme related documents carefully.

Should You Buy Gold Bonds?

After a long slump, gold has witnessed an almost 15% rise to `28,595 per 10 gram over the past six months.This may have eased the buying pressure for now, but is a price-rise likely in the near future, creating another buying opportunity?

   KOLKATA.03.06.2016: SHINING BRIGHT If you plan to invest for the long term, the Sovereign Gold Bond Scheme may be your best option.

Internationally , gold prices may fall given the likely increase in interest rates by the
US Federal Reserve. In India , however, the prices may rise somewhat if the fundamentals remain intact and the rupee stabilises," says Naveen Mathur, associate director, commodities and currencies, Angel Broking.
Given Indians' long-standing love for the yellow metal, are they planning to buy? If
If yes, will they stick to their favourite form, physical gold, or move to gold bonds , the new option in the market that was launched November last?
"The prices may not be as bearish as they were in November to create a buying dip, but gold bonds could be the best option by sheer virtue of the interest (2.75%) you would earn in addition to capital appreciation," he adds.
An ET Wealth online survey conducted among 934 respondents last week reveals that 48% people are indeed planning to buy gold, but they are not so enthused about picking it up in the form of bonds (only 20%).This despite the fact that nearly 71% of financial planners consider it the best option. With the fourth tranche of the Sovereign Gold Bond scheme to launch after the start of the gold bond trading on the exchange on May 29, we reprise the scheme, list its pros and cons, and tell you whether you should opt for it or not.
HOW DO BONDS COMPARE WITH OTHER OPTIONS? Bonds score over the other two options, physical gold and gold ETFs or mutual funds , on many fronts.
First, they offer interest income over and above capital appreciation, which is not available with the other options. Second, there are no charges incurred as against the locker, insurance premium or making charges you would pay for jewellery , or the expense ratio for ETFs.
Third, there are no concerns over security or purity since the bonds are held in the demat form and the price is based on gold with 0.999 purity . Besides, bonds are not subject to capital gains tax if held till redemption, with only the interest portion taxable as of now. On the other hand, both gold ETFs and physical gold are subject to capital gains tax. On the flip side, liquidity is an issue. "It's a major concern as the exit option is available only after five years, unless you sell the bond on the exchange for which the market is not very active at the mo ment," says financial planner Vinit Iyer.
WHAT SHOULD YOU DO? If you are looking at gold purely as an investment, especially for the long term, bonds are the best option. They offer interest along with capital appreciation, and beat other forms of gold on parameters like charges and security ."One must remain invested in gold at all times, with 10% of corpus allocated to it," says Mathur of Angel Broking.
  "Besides income, bonds offer peace of mind," adds Jayant Pai, head of marketing at PPFAS . Remember, however, that you may remain locked in for five years. And of course, you can't wear bonds.

New mutual fund redemption rule: 5 things investors should know

According to Sebi, redemption requests up to Rs 2 lakh would not be subject to restriction. In case, the amount is more than Rs 2 lakh, then the AMCs would redeem the first Rs 2 lakh without any restriction while the remaining amount would be subject to the restriction that is in place.

Mumbai,03.06.2016: In an investor friendly move, the Securities and Exchange Board of India (Sebi) this week directed set of rules on circumstances under which asset management companies can restrict redemption and such moves should be immediately informed to the market regulator.

The move comes in the wake of JP Morgan case, which recently disallowed redemptions in two schemes due to their exposure to the debt papers of a troubled company. The market regulator further said that asset management companies (AMCs) can impose restrictions on redemptions by investors only when there are issues that could lead to a systemic crisis rather than based on entity specific instances.

According to the regulator, redemption requests up to Rs 2 lakh would not be subject to restriction. In case, the amount is more than Rs 2 lakh, then the AMCs would redeem the first Rs 2 lakh without any restriction while the remaining amount would be subject to the restriction that is in place. This norm is seen as a move to protect small investors.

Femoney spoke to Vidya Bala, Head, Mutual Fund Research FundsIndia.com to get a clarity on Sebi’s new rule in 5 points:

– First thing that an investor should know is that under normal circumstances there can be no restrictions on their redemption for open-ended schemes – equity or debt – whatever be the amount. There is a misunderstanding that the new rule is applicable in normal circumstances

– The new regulation is meant to clearly define the exceptional circumstances under which AMCs can impose restrictions. This is not a norm, this is an exception; to ensure AMCs do not arbitrarily impose restrictions as it happened with certain debt fund some funds ago

– The circumstances when such restrictions will be imposed would be due to overall market crisis or illiqiuidity in the market and not due to issues relating to a specific fund house because of certain instruments or securities that it holds.

– Rare circurmstances of overall market closure or operation issues is one more exception when redemption restriction may happen. Even then overall, the restriction annot be for more than 10 working days in a period of 90 days. Hence it is a very temporary sanction, if at all imposed

– The new regulation is aimed at protecting the small investor, even in such exceptional circumstances as the AMC cannot impose restriction on redemptions upto to Rs 2 lakh.

Availing education loan? 5 factors to consider while deciding the amount

Education loan: Lenders extend finance for the entire of cost of education, including tuition fees and living expenses. However, the extent of loan would to be sanctioned would depend on a thorough assessment by the lender as well.
Mumbai,June 3, 2016:

Education loan: Lenders extend finance for the entire of cost of education, including tuition fees and living expenses. However, the extent of loan would to be sanctioned would depend on a thorough assessment by the lender as well.

Are you planning to take an education loan for higher studies? Among the questions that would be bothering you is what is the maximum amount of loan you could avail and how much one should avail?

If you are falling hugely short of cash, don’t worry. Lenders extend finance for the entire of cost of education, including tuition fees and living expenses. However, the extent of loan would to be sanctioned would depend on a thorough assessment by the lender as well.

“Lenders can finance up to 100 per cent of the cost of education, depending on the course, institute and its location,” says Naveen Kukreja – CEO & Co-founder, Paisabazaar.com.

Ajay Bohora, co-founder, MD & CEO of Credila Financial Services, an HDFC company, advises borrower to undertake a complete assessment of the needs. “An overall evaluation of the costs and the benefits provided by the lender can help in planning the finances well,” Bohora said.

Here are a 5 tips from experts to help you decide on the loan amount:
 
-Assess all likely expenditure: Loans generally over tuition expenses, living expenses and overhead expenses such as cost of traveling, purchasing laptop, equipment and books. So take all of it into account while applying for the loan and not just the tuition fee.

-Factor in currency fluctuation: For Indian students going abroad, currency depreciation further leads to increase in fees. “It has become increasingly important now to factor in an additional 10-30 per cent to the total cost to absorb the impact of depreciating rupee against respective currencies, depending on the length of the course,” says Bohora.

-Keep margin money to the minimal: Some lenders do not require margin money (down payment), which helps you get up to 100 per cent of the total cost of education. Do a thorough market study of loans on offer to get the best deal on margin money.

-Minimise future EMI burden: Earning capacity at the beginning of the career is comparatively lower and hence students should opt for longer loan tenure and extends up to 10-12 years, depending on the size of the loan. This helps in easing the repayment burden on the student with relatively smaller EMIs.

-Assess your future earning capacity: Take a loan that you can service with your income after finishing the course. “There is no thumb rule for the quantum of student loan a person should take. A guideline would be to base your income expectation on the lowest offered to students who have cleared the same course from the institute you propose to join. Then consider about 70 per cent of this as the amount you would earn. Remember, besides repaying the loan you also have to sustain yourself,” says Anil Rego, CEO & Founder, Right Horizons.

Retirement planning: Why you should buy insurance as you approach 60s

Insurance is something each of us needs like an umbrella you always carry for that one day when rainfall strikes. But senior citizens need insurance more than others.
Mumbai,June 3, 201:

Over 60 years of age: Insurance is something each of us needs like an umbrella you always carry for that one day when rainfall strikes. But senior citizens need insurance more than others.

 Growing up, we had our parents’ backing, be it financially or otherwise. During our college days when we would exceed our usual monthly expenditure, it was comforting to know that we could always ring up our parents and convince them to transfer more cash to our account. However, as we step out on our own and grow older and wiser, the safety net of our parents disappears while the expenditure graph seems to be ever-increasing. Add to the daily expenses the unforeseen major expenses, such as for health problems or accidents, we soon realise we need to find another safety net as soon as possible. This is especially true for senior citizens, who are over 60 years, and who tend to suffer from a host of health problems and diseases. This is where insurance comes into play.

Insurance is something each of us needs like an umbrella you always carry for that one day when rainfall strikes. But senior citizens need insurance more than others. Here is why insurance happens to be the best bet for senior citizens:

For a safety net
Insurance may be a hassle you grumble about every year, but it pays off when you actually suffer from an illness or in case of an emergency. The purpose of insurance is to have a safety net to provide for your family and loved ones even after your demise. It ensures that you do not neglect or undermine any health issues suffered by you or your loved ones during your senior years simply because you do not have adequate funds for quality healthcare that you deserve. Hence, senior citizens should take up insurance simply because it will be an investment for the future and will safeguard you financially in the case of unforeseen events.

The ticking clock
A senior citizen over 60 may not have as many years to live as his younger counterpart. As such, leaving behind your spouse (who is also most likely a senior citizen) and children or other dependents or loved ones with no financial security to rely on should simply not be an option. So life insurance at this age really is a major requirement, if only for the sake of your loved ones.

Health insurance a must
Prevention is better than cure in case of health problems, but let’s be honest: a senior citizen will likely have health problems sooner or later and he will require adequate cure and healthcare. In today’s era, medical costs for even the most ordinary procedures are surpassing imaginable highs. Add to this the unhealthy lifestyles, the sedentary routines we are committed to and the external factors such as weather conditions and pollution, impacting our health. As a senior citizen, you are more susceptible to health problems and diseases. Health insurance, thus, is an absolute must for a senior citizen. Also, in the golden years of 60 or above one wishes to travel. Thus, travel health insurance also becomes a necessity.

Money matters
By 60, most people have already retired. With no steady source of income, one usually has only their pension and retirement benefits to fall back on for day-to-day expenditure and life. In such a case it is unimaginable to have to immediately spend a massive lump-sum for a major accident or sudden health problem that occurs in one’s life out of the blue. A person with insurance against the same unforeseen events would not have to think twice about the finances and can focus simply on getting better as soon as possible.

Premium less troublesome
At 60 or more, one’s family responsibilities have usually been met. A senior citizen often does not have to worry about things such as building a house, paying for his/her children’s education or settling down dependents. Therefore, an annual premium is not usually as much of a problem as it would be for, say, a young professional who is just starting out in life. That annual premium may be a slight inconvenience, but it can go a long way in making your financial troubles disappear!

Policies on offer for Senior Citizens
India, like most other countries, has a good market of insurance policies for senior citizens today, with a wide variety of choice of policies and highly competitive insurance giants, leading to better quality policies, benefits and services. Given below are the features of some of the prominent and successful insurance policies for health insurance of senior citizens:

 However, one must conduct one’s own research to find the insurance policy that is best suited to their needs, requirements and situation. Don’t procrastinate, get that insurance policy now!

Risk Factor..

Mutual Funds and securities investments are subject to market risks and there can be no assurance or guarantee that the Schemes objectives will be achieved. As with any investment in securities, the Net Asset Value of Units issued under the Schemes may go up or down depending on the various factors and forces affecting the capital market. Past performance of the Sponsors/ AMC/ Mutual Fund/ Schemes and its affiliates do not indicate the future performance of the Schemes of the Mutual Fund. The Sponsors are not responsible or liable for any loss or shortfall resulting from the operations of the Schemes beyond their contribution of Rs.10,000/- each made by them towards setting of the Mutual Fund The Names of the Schemes do not in any manner indicate either the quality of the Schemes or their future prospects and returns. Investors in the Schemes are not being offered any guarantee / assured returns. Please read the Offer Documents carefully before investing.

(i) Investment in mutual funds are subject to market risks and prone to risks to fluctuation in NAVs, uncertainty of dividend distributions, etc.
(ii) Please read the offer document carefully before investing.
(iii) Past performance of other scheme (s) / plan (s) of UTI Mutual Fund and the Sponsors is not necessarily an indication of future results. There can be no assurance or guarantee that the objective of the scheme will be achieved.

Statutory Details
In terms of The Unit Trust of India (Transfer of Undertaking and Repeal) Act 2002 (“Act”), the assets and liabilities of the erstwhile Unit Trust of India have been bifurcated into two parts the specified undertaking and the specified company. The Administrator of the Specified Undertaking of The Unit Trust of India comprises of US 64 and the assured return schemes (most of which have since been converted into tax free bonds, the present investment is guaranteed by the Govt. of India) . The Specified Company has been set up as a mutual fund viz. UTI MF, comprising of all net asset value based schemes. UTI MF has been structured in accordance with SEBI (Mutual Funds) Regulations, 1996 The mutual fund was registered with SEBI on January 14, 2003 under Registration Code MF/048/03/01.

Details of Sponsors, Trustees, Investment Managers bringing out clearly their legal status and liability of these entities.

National Pension System

What is NPS?
National Pension System (NPS) is a 'Government of India' initiative with an objective of Development of a sustainable and efficient voluntary defined contribution Pension System in India. It is regulated by Pension Fund Regulatory and Development Authority (PFRDA).
NPS provides a platform for savings to create a Retirement Corpus (Pension Wealth) through 3 baskets of investments i.e. Equity (E), Corporate Bonds (C) and Govt. Securities (G) commonly known as E, C & G.

Who can join NPS
Any citizen of India, whether resident or Non-Resident between 18-60 years of age can join the NPS.

Why should I invest in NPS?
NPS gives you the undernoted unique advantages which will help you built the best possible retirement corpus
Additional Tax Deduction: Opportunity of Extra Tax Savings under Sec 80 CCD (1B) up to Rs.50000/- (This is applicable for investments in NPS only) and is over and above the Sec 80C limit.
Lower Expense Ratio: NPS is perhaps the world's lowest cost pension scheme. The total recurring expenses inclusive of the Fund Management fee and all other handling and administrative charges would work out to be around to 0.21% p.a. The Lower Expense ratio would lead to HIGHER RETIREMENT CORPUS.
Ensures Complete Portability: NPS account can be operated from anywhere in the country irrespective of employment and geography.
Tax Efficient : The Retirement Corpus used for buying Annuity will be totally Tax-free.
No liquidity before Retirement: Under Normal circumstances, No withdrawal is allowed before Retirement i.e. 60 Years of age. In a true sense this investment will prove to be the "REAL BUDHAPE KI LATHI".
Flexibility: Subscribers have - i) Choice of Pension Fund managers (PFMs) ii) Choice of Investment mix iii) Choice of Life Cycle Fund is also available

What is the process of enrolling in NPS?
If you are an individual between 18 years to 60 years, you can contact any of branch offices / UTI Financial Centres (UFCs) and ask for NPS Applications Forms and additional information about NPS.
You will be required to undergo the following steps:
A. Fill up the NPS Application form with Black INK (NPS Application Form).
B. Documents to be attached along with the NPS Application Form
(i) Affix one colour photograph on the NPS Application Form
(ii) Proof of Address (ADHAR Card/ Bank Statement/ Voters ID/ Passport etc.) (iii) Identity Proof (PAN Card/ Driving Licence/ Passport)
(iv) Cheque drawn in FAVOUR of "UTI AMC Collection Account - NPS Trust"

All About SIP

Why SIP?
The UTI Systematic Investment Plan is a unique plan that allows you to fulfil all your dreams efficiently. With salient benefits and features, the UTI SIP becomes a wise choice for investments. An investor can make regular investments and follow a disciplined approach towards investing in UTI MF schemes. He can also peruse the Systematic Investment Plan according to pre-opted schedules.
Take a look at all that you can do with UTI SIP:
Build your future.
To meet the more exhaustive expenses of your life like marriages, education or a house, you need to start investing early. Save a small amount every month/quarter with SIP and look forward to a bright future.
Relax and accumulate wealth.
With SIP, you don't need to invest a huge sum of money i.e. you can start with an amount as little as Rs. 500. Gradually, you can accumulate wealth over the long-term.

Now, let's briefly discuss the step-by-step approach an investor can use with SIP to reach out for his goals. It is important to remember that an early investor builds more than the one who comes in later. The simple reasoning being; the accumulated investment increases with fresh capital which is invested at periodic intervals.
Steps:
Set your financial goals.
Identify the scheme.
Decide the SIP amount.
Look for a long-term commitment by opting for bigger gains. SIP returns increase with an extended time horizon. Aim for the big picture which is to get the most out of the market fluctuations.
Start investing! The sooner you start, the earlier you reach your financial goals.

Financial Planning Guide

Is your income at risk?
Sitara was a hugely successful film star and earned an eye-popping income. She had an impressive fleet of cars, expensive clothes and jewellery and lived in a palatial mansion. That was during her peak of popularity. Last month, the newspapers reported her tragic death- alone, penniless and abandoned at her old age.

Sitara did not see that her stardom would not last forever. Her income was high, but also carried a high risk of her going out of jobs. Her expenses were driven by her habits. She took too long to curb her expenses. She survived by selling her assets, reducing herself to the penniless situation at death.

Therefore: The first principle in financial planning is to cushion a household's future by creating an investment portfolio that can generate additional income. Mutual funds offer a range of investment products to meet this need.
SAVING AND INVESTING ARE OUR TOOLS TO PROTECTING OUR INCOMES FROM RISK. 
 
Are your assets flexible enough?
Tarun has always been ambitious and hard working. He has to pay EMIs for his house and car, care for his elderly parents and provide for his wife and kids. He is a regular saver. Everything seemed fine, until he suffered an unexpected heart attack at an early age of 42.
The income of Tarun's household which looked stable and adequate is now under risk, until he gets well and resumes work. The family needs support to get back on its feet. . They may also have to manage with a lower income, should Tarun have to take it easy because of health reasons. Tarun fell back on his investment portfolio, built through his careful savings. He partly liquidated his stocks and mutual funds and repaid the loans, so the family is not burdened with the EMI. The lower income would not affect the household, since there are no EMIs to pay. Tarun is confident of building back his portfolio through savings.
Therefore: Every household should ensure that a good portion of the investments are in assets that can be easily utilized to reduce loans and liabilities. Most mutual fund products are highly liquid readily convertible into cash.
UNEXPECTED EVENTS DEMAND HIGHER FLEXIBILITY FROM OUR INVESTMENTS
 

Types of Funds

Sector-Specific Fund Schemes
These are the funds/schemes that invest in the securities of only those sectors or industries as specified in the offer documents. For e.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may give higher returns, they are more risky compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time. They may also seek advice of an expert. Tax Saving Schemes
These schemes offer tax rebates to the investors under specific provisions of the Income Tax Act, 1961 as the Government offers tax incentives for investment in specified avenues. E.g. Equity Linked Savings Schemes (ELSS). Pension schemes launched by the mutual funds also offer tax benefits. These schemes are growth oriented and invest predominantly in equities. Their growth opportunities and risks associated are like any equity-oriented scheme.

A scheme can also be classified as growth scheme, income scheme, or balanced scheme considering its investment objective. Such schemes may be open-ended or close-ended schemes as described earlier. Such schemes may be classified mainly as follows: Growth-/Equity-Oriented Scheme

The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time. Income-/Debt-Oriented Scheme

The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice-versa. However, long term investors may not bother about these fluctuations.

About Mutual Funds

A mutual fund is a trust. It pools money from like-minded shareholders and invests in a diversified portfolio of securities through various schemes that address different needs of investors. The pool of money thus collected is then invested by the Asset Management Company (AMC) in different types of securities. These could include shares, debentures, convertible bonds, bonds, money market instruments or other securities, based on the investment objective of a particular scheme. The investment objective is clearly laid down in the offer document for that scheme. The fund adds value to the investment in two ways: income earned and any capital appreciation realised through sale. This is shared by unit holders in proportion to the number of units they own. Setting up a Mutual Fund

A mutual fund is set up in the form of a trust, which comprises a sponsor, trustees, Asset Management Company (AMC) and custodian. The trust is established by a sponsor or more than one sponsor who is like the promoter of a company. The trustees of the mutual fund hold its property for the benefit of the unit holders. The Asset Management Company (AMC), approved by SEBI, manages the funds by making investments in various types of securities. The custodian, who is registered with SEBI, holds the securities of various schemes of the fund in its custody. The trustees are vested with the general power of superintendence and direction over AMC. They monitor the performance and compliance of SEBI Regulations by the mutual fund.

SEBI Regulations require that at least two thirds of the directors of trustee company or board of trustees must be independent i.e. they should not be associated with the sponsors. Also, 50% of the directors of the AMC must be independent. All mutual funds are required to be registered with SEBI before they launch any scheme. However, Unit Trust of India (UTI) is not registered with SEBI (as on January 15, 2002). Net Asset Value (NAV) of a Scheme

The performance of a particular scheme of a mutual fund is denoted by Net Asset Value (NAV).

Mutual funds invest the money collected from the investors in securities markets. In simple words, Net Asset Value is the market value of the securities held by the scheme. Since market value of securities changes every day, NAV of a scheme also varies on a day-to-day basis. The NAV per unit is the market value of securities of a scheme divided by the total number of units of the scheme on any particular date. For example, if the market value of securities of a mutual fund scheme is Rs. 200 Lakhs and the mutual fund has issued 10 Lakh units of Rs. 10 each to the investors, then the NAV per unit of the fund is Rs. 20. NAV is required to be disclosed by the mutual funds on a regular basis - daily or weekly - depending on the type of scheme.

Sector-Specific Fund Schemes These are the funds/schemes that invest in the securities of only those sectors or industries as specified in the offer documents. For e.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may give higher returns, they are more risky compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time. They may also seek advice of an expert.
Tax Saving Schemes These schemes offer tax rebates to the investors under specific provisions of the Income Tax Act, 1961 as the Government offers tax incentives for investment in specified avenues. E.g. Equity Linked Savings Schemes (ELSS). Pension schemes launched by the mutual funds also offer tax benefits. These schemes are growth oriented and invest predominantly in equities. Their growth opportunities and risks associated are like any equity-oriented scheme.

Income other than Capital Gains
As per the provisions of Section 10(35) of the Act, income received in respect of units of a mutual fund specified under Section 10(23D) of the Act is exempt from income tax in the hands of the recipient Investors.
Tax Deduction at Source In view of the exemption of income in the hands of the Investors, no income tax is deductible at source, on income distribution by the mutual fund, under the provisions of Sections 194K of the Act.
Capital Gains As per Section 2(42A) of the act, units of the scheme held as a capital asset, for a period of more than 12 months immediately preceding the date of transfer, will be treated as a long-term capital asset for the computation of capital gains; in all other cases, it would be treated as a short-term capital asset.
Also, sub-section (7) of Section 94 of the act provides that loss, if any, arising from the sale/transfer of units (including redemption) purchased up to 3 months prior to the record date and sold within 3 months after such date, will not be available for set off to the extent of income distribution (excluding redemptions) on such units claimed as tax exempt by the Investors.
Q. Who should invest in mutual funds?
Mutual funds can meet the investment objectives of almost all types of investors. Young investors, who can take some risk while aiming for substantial growth of capital in the long-term, will find growth schemes (i.e. funds which invest in stocks) an ideal option.

Older investors who are risk-averse and prefer a steady income in the medium term can invest in income schemes (i.e. funds which invest in debt instruments). Investors in middle age can allocate their savings between income funds and growth funds and achieve both income and capital growth. Investors who want to benefit from regular savings, save a small sum every month, can use the Systematic Investment Plan (SIP).

Q. As mutual fund schemes invest only in stock markets, are they suitable for small investors?
Mutual funds are meant for small investors. The prime reason is that successful investments in stock markets require careful analysis, which is not possible for a small investor. Mutual funds are usually equipped to carry out thorough analysis and can provide superior returns.

Buying health insurance is not an easy job

 

Mutual funds folio count rises 4 lakh to 4.8-cr

NEW DELHI, 2,June,2016: Driven by addition in equity fund folios , mutual fund (MF) houses have registered a surge of more than 4 lakh investor accounts in April, taking the total tally to 4.8 crore. This is on top of an addition of 59 lakh folios in 2015-16 and 22 lakh in 2014-15. In the last two years, investor accounts increased mainly due to robust contribution from smaller towns.
Folios are numbers designated to individual investor accounts, though one investor can have multiple folios.
According to the data from the Association of Mutual Funds in India ( Amfi ) on total investor accounts with 43 fund houses, the number of folios rose to 48,071,814 at the end of last month from 47,663,024 in March-end, a gain of of 4.09 lakh.
Growing participation from retail investors , especially from smaller towns and huge inflows in equity schemes have helped in increasing the overall folio counts, experts said.
The equity category witnessed an addition of nearly 1.6 lakh investor folios to 3.62 crore in the first month of the current fiscal.
Mutual funds have reported a net inflow of Rs 4,438 crore in equity schemes in April, making it the highest in five months. Overall, funds have seen an infusion of Rs 1.7 lakh crore. The inflow is in line with BSE Sensex rising 265 points or 1.04 per cent during April.
Mutual funds are investment vehicles  made up of a pool of funds collected from a large number of investors. The funds are invested in stocks, bonds and money market instruments, among others.

Mutual Fund houses receive 16,425 investors' complaints in FY16

NEW DELHI,2,June,2016: Mutual fund houses received about 16,425 complaints from investors last fiscal, a drop of 7 per cent, on account of efficient grievance redressal mechanism.
These complaints pertain to data corrections in investor details and non-updation of changes about address, PAN (Permanent Account Number) details and nomination, among others.
According to industry experts, the complaint redressal mechanism has become efficient at most asset management firms with the grievances getting resolved within the prescribed turnaround time.
As per data on the Association of Mutual Funds of India (AMFI) website, the top 10 mutual fund houses received 16,425 investor grievances in 2015-16 compared with 17,712 complaints in the preceding fiscal.
The folio base or investor accounts grew to 3.67 crore from 3.35 crore during the same period.
Folios are numbers designated to individual investor accounts, though one investor can have multiple folios.
Among the top 10 fund houses, HDFC MF saw the biggest drop in investor grievances last fiscal, with complaints plunging by 39 per cent to 3,763 followed by UTI MF, which saw complaints tumbling to 2,364, a slump of 38 per cent.
Reliance MF witnessed 37 per cent decline in the number of complaints at 1,454, while Kotak MF fell by 32 per cent to 173.
"Efficient and effective use of technology -- an important part of our focus on customer centricity -- has helped us eliminate routine complaints by investors who are now able to resolve these by using our mobile app or through internet," Reliance MF Chief Executive Sundeep Sikka said.
"We will further strengthen these interfaces to provide ease for our investors," he added.
Sebi first took note of rising investor complaints in mutual funds in 2011 and hauled up fund houses for not taking serious note of these grievances.
In absolute terms, the highest number of investor complaints were recorded against Franklin Templeton MF (5,529) in 2015-16 followed by ICICI Prudential MF (4,564), HDFC MF (3,763), UTI MF (2,364) and SBI MF (1,582).
Industry experts believe that large number of complaints are received due to the illegible data provided by investors as well as errors made by investors while filling up application forms.

MFs can restrict redemptions in overall market crisis situation

NEW DELHI,31 May, 2016: To curb discretionary disclosures and ensure more transparency for investors, Sebi today came out with a detailed set of norms on circumstances under which asset management companies can restrict redemptions and such moves should be immediately informed to the market regulator. Asset management companies can impose restrictions on redemptions by investors only when there are issues that could lead to a systemic crisis rather than based on entity instances, Sebi said.
The watchdog's detailed circular -- listing out broad circumstances under which redemptions can be limited by the mutual fund houses -- comes against the backdrop of JP Morgan recently disallowing redemptions in two schemes due to their exposure to the debt papers of a troubled company.
Seeking to put in place a robust framework to protect investor interest, Sebi has also said the possibility of limiting redemptions as well as the time limit should be clearly spelt out in the scheme-related documents.
Now, restriction on redemption would be imposed only for a specified time-period not exceeding 10 working days in any 90 days period.
Any imposition of restriction would require specific approval of Board of AMCs and Trustees and the same should be informed to Sebi immediately, the circular said.
According to the regulator, redemption requests up to Rs 2 lakh would not be subject to restriction. In case, the amount is more than Rs 2 lakh, then the AMCs would redeem the first Rs 2 lakh without any restriction while the remaining amount would be subject to the restriction that is in place.
The new norms would be with immediate effect for all new schemes launched today onwards while it would be applicable for existing ones from July 1.
In the circular, Securities and Exchange Board of India (Sebi) said the restriction can be imposed in circumstances leading to a systemic crisis or event that severely constricts market liquidity or the efficient functioning of markets.
The new norms would be with immediate effect for all new schemes launched today onwards while it would be applicable for existing ones from July 1.
In the circular, Securities and Exchange Board of India (Sebi) said the restriction can be imposed in circumstances leading to a systemic crisis or event that severely constricts market liquidity or the efficient functioning of markets.
Currently, there are no specific provisions requiring fund houses to spell out the circumstance in which restriction on redemption may be applied.
"Recent instances resulting in application of restriction on redemption have necessitated a re-look into the circumstances that require such restriction on redemption," the regulator noted.
JP Morgan Mutual Fund, last year, restricted redemptions from two of its debt schemes after a decline in NAVs (net assets value) of the schemes due to fund house's exposure to troubled auto component firm Amtek Auto BSE -1.58 %.s debt papers. These schemes had a collective exposure of around Rs 200 crore in Amtek Auto.

Issuing the circular, Sebi also said the existing provisions are general in nature and do not specifically spell out the circumstances in which restriction on redemption may be applied; "leading to discretionary disclosures and practices in the industry".
Sebi said restriction on redemption should apply during excess redemption requests that could arise in overall market crisis situations rather than exceptional circumstances of entity specific situations.
The circumstances calling for restriction on redemption should be such that illiquidity is caused in almost all securities affecting the market at large, rather than in any issuer specific securities.
Besides, "when exceptional circumstances are caused by force majeure, unpredictable operational problems and technical failures. Such cases can only be considered if they are reasonably unpredictable

operational problems and technical failures. Such cases can only be considered if they are reasonably unpredictable and occur in spite of appropriate diligence of third parties, adequate and effective disaster recovery procedures and systems."

Further, Sebi said information to investors should be disclosed prominently and extensively in the scheme related documents regarding the possibility that their right to redeem may be restricted in such exceptional circumstances and the time limit for which it can be restricted.

SBI Mutual Fund launches first-ever fixed income exchange traded fund SBI-ETF 10 Year Gilt

By Saikat Das, ET Bureau | 1 Jun, 2016,

Read more at:
http://economictimes.indiatimes.com/articleshow/52539525.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

 MUMBAI, 1 Jun, 2016: SBI Mutual Fund has launched its first-ever fixed income exchange traded fund christened as " SBI-ETF 10 Year Gilt ", an open-ended exchange traded scheme .The scheme would invest up to a minimum of 95 per cent in securities covered by the Nifty 10 year benchmark GSec Index, which have a medium to high risk profile, the fund house said in a report. For the residual 5%, money market instruments like collateralised borrowing and lending obligation or CBLO, will be considered.
The fund will open subscription on Thursday and the new fund offer will close on June 22.
"The 10 year gilt segment is one of the most liquid fixed income segments in the Indian debt market. The ETFs too, owing to low costs, occupy unique position in the investment landscape and are listed on the stock exchanges," said Navneet Munot , CIO, SBI Mutual Fund.
The fund may also invest in derivatives at the time of portfolio rebalancing, albeit for a short period of time.
"The exposure of the schemes in Derivative instruments shall however, be restricted to 5 per cent of the net assets of the scheme," the fund house said.
The investment objective of the SBI-ETF 10 Year Gilt is to provide returns that closely correspond to the total returns of the securities as represented by the underlying index.
The changes in interest rates affect the prices of bonds as well as equities. If interest rates rise the prices of bonds fall and vice versa.
The fund manager for SBI-ETF 10 Year Gilt is Mahak Khabia, who is an MBA - Finance, FRM, CFA, joined SBI Funds Management Private Limited as a dealer - fixed income in 2014. He has over six years of experience in the capital market.