Mainly for these reasons gold is at an all-time high and has expectedly caught the fancy of investors. As equity markets turn more volatile, investors are venturing into assets like gold for that extra return. The moot point is; are they investing in gold for the right reasons? For investors oblivious to how asset cycles work, rising gold prices look like an opportunity to make easy money.
It's that time of the year, when fund houses roll out their FMP (fixed maturity plans) products in response to the attractive yields on corporate bonds. Expectedly, investors view FMPs as a means to clock a higher return at relatively low risk (actually many investors believe there is zero risk in an FMP). While this is mostly true, some points about FMPs are noteworthy.
There's something about a top-performing fund. The glowing reviews, self-congratulatory advertisements by the fund house and a host of stars (read ratings) and awards. It's a pretty heady mix. Sadly, the NAV performance in isolation presents a one-dimensional picture i.e. it may conceal more than it reveals. In this article, we make a case for looking beyond just the NAV performance by listing instances, when top-performing funds could potentially be bad investments.
The recent stock market crash has been particularly harsh on one investment category -- mid cap stocks/funds. Compared to their large cap peers, mid cap stocks/funds have fallen more sharply. The view that many frustrated investors might take is that investing in mid caps was a bad idea in the first place. And they can't really be blamed, in many ways mid caps were presented as an opportunity to make quick money without informing the investor of the higher risk involved.
Mid cap companies tend to be under-researched ones, thereby providing an investment opportunity that is yet to be identified by the market. Investments in such companies offer high growth potential and the opportunity to clock above-average returns over the long-term (at least 3-5 years). On the flipside, since mid-sized companies are often under-researched, there is a fair chance that some reasons for "not investing" could be overlooked.
Technically speaking, a credit card is an unsecured loan. This means that unlike a secured loan, which is advanced by a bank/financial institution against a security like property for instance, a credit card is offered without any security. In a secured loan, if the borrower fails to make good on his principal/interest commitment, the bank/institution can seize the security as compensation.
Hybrid funds (powered by their flexibility to invest across asset classes) can add immense value to the investor's portfolio (especially during the down turn). While the role of balanced funds in the investor's portfolio has been well-documented, it's time for investors to recognise the value MIPs can add to his portfolio. MIPs invest predominantly in debt instruments with a small portion of assets allocated to equities.
The month's big event was the Union Budget 2008-09; however, it proved to be a bit of an anti-climax for mutual fund investors. The only noteworthy change was that the short-term capital gains tax was raised from 10% to 15%. In effect, short-term transactions will become less attractive for investors. Clearly, the benefits of long-term investing aren't lost on the Finance Minister either. However, the month was certainly not a staid one.
Mis-selling and poor advice continue to plague the domain of investment and insurance products.
In recent times, there has been a lot of buzz around Kotak Opportunities Fund, a diversified equity fund from Kotak Mutual Fund. We have also received a large number of queries about the fund, and given its performance on the net asset value appreciation front, we aren't surprised.
If the FM can levy education cess to meet the cost of education, then why not defense cess for defense cost, health cess, food cess, and so on. What are the tax collections meant for, asks Kanu H Doshi, partner of Kanu Doshi Associates, chartered accountants, Mumbai.
In this article, we are not going to preach that you should not invest in infrastructure and related funds (haven't we done that many times already?!). So, no preaching here. Only facts. And then, you decide what you want to do with your money.
Agents are known to mis-sell tax plans to unaware investors. Mis-selling comes easy as basic facts are misrepresented and investors are made to buy plans that don't benefit them.
If MSGF had shared the complete portfolio with its investors more frequently, the red flag on its misconceived investments might have been raised earlier.
Investors looking to make an investment are often so busy choosing the right option, that they can be oblivious to the basic details. This can be counterproductive over the long-term, especially if an important detail was overlooked and the same comes back to haunt the investor later.
There are so many infrastructure funds in the market today that most fund houses can now boast of managing one. So much so that even fund houses that were launched less than 12 months ago with just one equity fund in their portfolios, have been quick on the draw with their infrastructure NFOs.
Innovation is nothing new to the mutual fund industry. In the past, we have seen mutual funds provide add-on benefits like accident insurance, critical illness insurance and even life insurance. A recent innovation involves providing insurance benefit to the child in the event of the parents meeting with an eventuality.
The Securities and Exchange Board of India ruled that investors could avoid paying the entry load charged while investing in mutual funds
Investors who are enamored by thematic funds (especially infrastructure funds) must not lose sight of the fact that diversified equity funds (which include opportunities funds) can make aggressive sectoral/thematic calls. More importantly, they can exit the sector/theme when valuations peak; this is something thematic funds cannot do because they are bound by their mandates to remain invested in the theme regardless of the valuations.
While comparing portfolios of various mutual fund schemes, investors must keep the following points in mind. Read on:
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