Tag - Mutual Funds

May 2013

February 2013

Time to take double indexation benefit ~ From Now until March 2013

 

Double Indexation Benefit, Save Taxes, Invest in FMP's, Fixed Maturity Plans NFO'sIt is that time of the year when you have a window of opportunity to intelligently invest for just over 1 year and get tax free returns.

The opportunity arises every year from mid-feb until financial year ending i.e March 31

You need to invest in Fixed Maturity Plans (FMP’s) of more than 14 months and which matures in April 2014. By doing this, your investment in a debt product spans over three financial years. And thus enables you to take advantage of double indexation on long term capital gains (which is taxed @20.6% post indexation) .

With inflation running at almost 8 %, the returns virtually becomes tax free. And is ideal for investors in highest tax brackets (30%). (Cost Inflation Index Table)

Fixed Maturity Plans are closed ended funds and are available as NFO’s. They are open for very short periods of time (generally 4 – 5 days). These funds are available from leading Asset Management Companies (AMC’s)  like HDFC , ICICI , Birla Sun Life, Kotak, Reliance etc. You can find the open NFO’s at the AMFI Website : NFO’s

The estimated current yields on these FMP’s should be in the range of 9.5 %.

FMP’s are ideal tax saving vehicles and suited for investors in the highest tax brackets, who are conservative, looking to park lump sum funds for about 1-2 years, in return for a Fixed Income similar to FD’s.  Please note that the drawback of investing in FMP’s is illiquidity.

The advantage of investing over FD’s in terms of returns is a no brainer. Current 1 year FD returns are at around 8.5% and so the post tax returns (for the highest tax bracket) is pathetically around 5.8%

The tax advantages of investing in FMP’s is mentioned in detail here (What-are-fixed-maturity-plans-fmps-advantages-disadvantages) and I will not elaborate on that further.

Happy Investing and tax savings this season.

January 2013

Top ELSS mutual funds for investing in 2013

Top ELSS funds for investing 2013, Mutual Funds, Tax Saver Mutual Funds, HDFC Tax Saver, ICICI Pru Tax saver

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The following ELSS mutual funds can be considered by investors this tax season. Well, actually the best mechanism for investing is to do a SIP throughout the year.

However, incase you are planning on investing in the last few months until 31st March 2013, you can consider the following top performing ELSS funds. And also, if possible continue to SIP for the rest of the year as well for the next financial year.

I have provided the performance measures alongside which will help you make a informed decision.

The article on “How do you compare and evaluate Mutual Fund Performance” might be helpful in case you would like to know more about evaluating mutual funds.

Reliance Tax Saver
Scheme 1 yr 3yr 5yr
Reliance Tax Saver 25.45% 9.34% 8.44%
Inception 22-Sep-05
AUM (31-Dec 2012) 2105 crs
Fund Mgr Ashwani Kumar
Beta 0.98
Std Deviation 19.72%
R squared 89.95
Sharpe Ratio 0.31
Portfolio Turnover 60.80%
Expense 1.90%
Benchmark BSE 100
ICICI Pru Tax Plan
Scheme 1 yr 3yr 5yr
ICICI Pru Tax Plan 24.27% 9.19% 8.51%
Inception 19-Aug-99
AUM (31-Dec 2012) 1468 crs
Fund Mgr Chintan Haria
Beta 0.92
Std Deviation 17.58%
R squared 95.84
Sharpe Ratio 0.26
Portfolio Turnover 148%
Expenses 1.99%
Benchmark S&P CNX 500
Franklin India Tax Shield
Scheme 1 yr 3yr 5yr
Franklin India Tax Shield 22.83% 11.40% 8.37%
Inception 10-Apr-99
AUM (31-Dec 2012) 942 crs
Fund Mgr A Radhakrishnan
Beta 0.79
Std Deviation 15.26%
R squared 95.36
Sharpe Ratio 0.36
Portfolio Turnover 53.60%
Expense Ratio 2.10%
Benchmark S&P CNX 500
Canara Robeco Tax Saver
Scheme 1 yr 3yr 5yr
Canara Robeco Tax Saver 21.82% 6.92% 8.89%
Inception 31-Mar-93
AUM (31-Dec 2012) 456 crs
Fund Mgr Krishna Sanghvi
Beta 0.82
Std Deviation 17.07%
R squared 83.09
Sharpe Ratio 0.15
Portfolio Turnover 45.20%
Expense Ratio 2.33%
Benchmark BSE 100
HDFC Taxsaver
Scheme 1 yr 3yr 5yr
HDFC Taxsaver 17.40% 7.72% 7.17%
Inception 31-Mar-96
AUM (31-Dec 2012) 3448 crs
Fund Mgr Vinay Kulkarni
Beta 0.83
Std Deviation 16.11%
R squared 93.39
Sharpe Ratio 0.17
Portfolio Turnover 25.20%
Expense Ratio 1.85%
Benchmark S&P CNX 500

 ** The Volatility / risk performance measures are of 3 years. Happy Investing.