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Monday, November 26, 2012
IDrive - Protect your Digital Life, Sync and Share
Wednesday, June 25, 2008
Tax-saving funds yield negative returns
The common dictum about mutual fund (MF) investments is that you must not check the net asset values (NAVs) too often. But if you have started your investments in tax-saving funds in the past six months you may be justified in taking a closer look.
All the top equity-linked savings schemes (ELSSs) are deep in the red with the best ranked fund for the period posting a 25.7% negative return and the worst a 43.46% slump, according to Value Research data.
In comparison, top performing diversified equity funds for the period have declined 15-20%. "ELSS products have fallen across the board. Given that they follow a passive fund management approach the impact is slightly higher," says Sridhar Parthasarathy, associate VP and head-PMS and research, Cholamandalam DBS Wealth Management. The broad market correction has contributed to the fall in NAVs, he says.
"This is a good opportunity for new investors. The economy is still strong. In six months things will come under control," says a fund manager of a leading fund house. In tune with the market correction, NAVs of many schemes have hit the nadir. For instance, the NAV of HDFC Tax Saver Growth, a popular ELSS that touched a 52-week high of Rs 208.58 on January 7 reached its 52-week low of Rs 133.54 on June 23. Other popular schemes like Magnum Taxgain and Birla Sun Life Tax Relief show a similar pattern.
Also, equity as an investment class has consistently outperformed many other options in the long run. And it pays to stay invested for a longer duration, say fund managers. "Equity markets go through a 5-6 year cycle. So, it's normal for a 3-4 year bull period (followed by) a subsequent 1-2 year bear phase. The returns will average out. They (tax-saving funds) still will give a better return compared to other investment options," says Parthasarthy.
"Investing in equity is a better option. Informed set of investors can use this corrective phase to enter tax-saving funds," says Satish Ramanathan, head, equity, Sundaram BNP Paribas. The top 50 performing funds of last year are believed to have attracted an inflow of Rs 8,000-10,000 crore, say industry sources. The asset base of Sundaram BNP Paribas has gone up 20% since December 30, 2007. As far as Sundaram Paribas was concerned, March has been a good month for tax-saver funds. Since MFs don't hold cash beyond a certain level they are constrained and accordingly get affected with the fall, he explains. This applies even more for tax-savings schemes.
All the top equity-linked savings schemes (ELSSs) are deep in the red with the best ranked fund for the period posting a 25.7% negative return and the worst a 43.46% slump, according to Value Research data.
In comparison, top performing diversified equity funds for the period have declined 15-20%. "ELSS products have fallen across the board. Given that they follow a passive fund management approach the impact is slightly higher," says Sridhar Parthasarathy, associate VP and head-PMS and research, Cholamandalam DBS Wealth Management. The broad market correction has contributed to the fall in NAVs, he says.
"This is a good opportunity for new investors. The economy is still strong. In six months things will come under control," says a fund manager of a leading fund house. In tune with the market correction, NAVs of many schemes have hit the nadir. For instance, the NAV of HDFC Tax Saver Growth, a popular ELSS that touched a 52-week high of Rs 208.58 on January 7 reached its 52-week low of Rs 133.54 on June 23. Other popular schemes like Magnum Taxgain and Birla Sun Life Tax Relief show a similar pattern.
Also, equity as an investment class has consistently outperformed many other options in the long run. And it pays to stay invested for a longer duration, say fund managers. "Equity markets go through a 5-6 year cycle. So, it's normal for a 3-4 year bull period (followed by) a subsequent 1-2 year bear phase. The returns will average out. They (tax-saving funds) still will give a better return compared to other investment options," says Parthasarthy.
"Investing in equity is a better option. Informed set of investors can use this corrective phase to enter tax-saving funds," says Satish Ramanathan, head, equity, Sundaram BNP Paribas. The top 50 performing funds of last year are believed to have attracted an inflow of Rs 8,000-10,000 crore, say industry sources. The asset base of Sundaram BNP Paribas has gone up 20% since December 30, 2007. As far as Sundaram Paribas was concerned, March has been a good month for tax-saver funds. Since MFs don't hold cash beyond a certain level they are constrained and accordingly get affected with the fall, he explains. This applies even more for tax-savings schemes.
Tuesday, June 24, 2008
Anil slaps legal notice on Mukesh
It's been a season of growing acrimony between estranged brothers Mukesh and Anil Ambani. Soon after the senior Ambani introduced a legal roadblock in Anil Ambani's talks to buy African telecom firm MTN, the younger sibling has found cause to slap a legal notice on Mukesh Ambani.
The move follows an article on Mukesh Ambani in ‘The New York Times' in which he is reported to have made a remark which Anil Ambani's lawyers have called ‘‘libellous'' and ‘‘deserving of a clear, unambiguous and unqualified retraction and apology'' from Mukesh Ambani and also the newspaper.
What has offended Anil Ambani is a paragraph that speaks about Reliance's alleged intelligence gathering network with which it is said to have obtained data about the ‘‘vulnerabilities of the powerful, about the minutiae of bureaucrats schedules, about the activities of their competitors.''
Mukesh Ambani was asked about the alleged intelligence network to which he reportedly said that all such activities were overseen by his brother (Anil Ambani) before they split, and had since been expunged from his tranche of the company. ‘‘We demerged all of that,'' he is reported to have said.
The letter by Anil Ambani's lawyers says the statement implies that ‘‘our client continues the operation of the said alleged intelligence agency, its network of lobbyist and spies and its various unethical and subversive activities.''
The move follows an article on Mukesh Ambani in ‘The New York Times' in which he is reported to have made a remark which Anil Ambani's lawyers have called ‘‘libellous'' and ‘‘deserving of a clear, unambiguous and unqualified retraction and apology'' from Mukesh Ambani and also the newspaper.
What has offended Anil Ambani is a paragraph that speaks about Reliance's alleged intelligence gathering network with which it is said to have obtained data about the ‘‘vulnerabilities of the powerful, about the minutiae of bureaucrats schedules, about the activities of their competitors.''
Mukesh Ambani was asked about the alleged intelligence network to which he reportedly said that all such activities were overseen by his brother (Anil Ambani) before they split, and had since been expunged from his tranche of the company. ‘‘We demerged all of that,'' he is reported to have said.
The letter by Anil Ambani's lawyers says the statement implies that ‘‘our client continues the operation of the said alleged intelligence agency, its network of lobbyist and spies and its various unethical and subversive activities.''
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