Are equity oriented balanced fund safer bets??

Based on valueresearchonline screener, I filtered the top  "Equity oriented balanced funds" and top "Equity funds excluding sectoral funds" based on last 10 year returns as on 15oct2015. Here are the results.

Considering the risk reward proposition, I think Balanced funds are safer bets ( as they are should supposedly be a able to give a better downside protection, apart from automatic asset allocation benefits between debt and equity plus same tax treatment as equity funds).

The returns from equity funds don't seem extremely superior to balanced funds. My take- unless we see a 2003-7 kind of a bull run, the performance differential between these two categories may be minimal. In a downward/ side ward market, balanced funds might even do better!

# Note:- This is not a recommendation to buy balanced funds. Investors are supposed to consult a financial advisor or do their own research before investing. Past performance of funds cannot be extrapolated to the future ! :-)

Benefit of #direct mutual fund #investing

From 1st of January, 2013 SEBI introduced the option of investing in the "Direct Plan" of  the existing schemes of mutual funds.( When you send your application to the fund house directly without a "broker code" or transact online without a broker code - it is called a direct investment)

Wanted to check how the "direct" schemes have fared over the "regular" schemes. Roughly for the two year period, the following difference is seen in NAV between direct and regular schemes of randomly chosen equity MF schemes.

Please note that although the percentage difference might look small,the benefit will be seen more" clearly" depending on the absolute sum of corpus invested in the schemes.Example, investor having more than 1 crore in a scheme would have saved more than 1.5 lakhs in two years.( savings till date- not looking into future savings) 

If you know to choose the right schemes ( it is not as complicated as knowing the right "stocks"), you should try and opt for direct investing in mutual fund schemes.

Fund- Growth Scheme	Regular	Direct	Diff* %
HDFC Top 200	352.025	356.157	1.17%
ICICI Pru Dynamic	188.7277	191.4078	1.42%
UTI Opportunities	49.2846	50.0483	1.55%
Franklin India Bluechip	347.7465	353.3355	1.61%
Reliance Growth	786.723	797.0294	1.31%
Sundaram Select Midcap Fund	323.8099	327.5543	1.16%
Birla Sun Life Frontline Equity	161.57	164.3	1.69%
* Difference in returns for the period 1 Jan 2013 to 16 Jan 2015
Direct schemes were introduced on 1  Jan 2013

Wishing you a successful "direct" investing.

Mutual funds - difference in dividend declaration- Regular and Direct plans

Of late, may mutual fund have declared dividends. If you have been wondering that your scheme ( direct) was treated differently from the other for dividend declaration, here's the reason.

No dividends in yourdirect plan?
Don't worry on this count, as thereare valid reasons regarding realisedgains; look at other factors, too

Investors of the HDFC Prudence Fund direct plan received a

dividend of ~1.25 a unit in March. But investors in the regular

plan of the same fund received a dividend of ~3 a unit. Similarly,

in the ICICI Prudential Tax Plan, the direct plan declared a dividend

of 1.5 per cent a unit, while the regular plan declared a dividend

of two per cent a unit.

HDFC Mid-cap Opportunities Fund declared a dividend of

~1.75 for the regular plan in February but did not declare any

dividend for the direct plan. Similarly, in January, ICICI

Prudential Discovery declared a dividend of ~2.14 for the regular

plan but none in the direct plan.

Data from Value Research says this is not a trend across

mutual funds and schemes. It is specific to some schemes. The

reason why some direct MF plans did not declare dividends or

declared less was because of a Securities and Exchange Board

of India rule that dividends can only be paid from realised

gains, says Dhirendra Kumar of Value Research.

For instance, if the net asset value increases from ~10 to ~13,

the gain is ~3. Earlier, funds used to pay a dividend out of these

gains. Sebi has now said the dividend can be paid only out of

the profits the fund makes, by selling shares and booking profits.

So, if the fund makes a profit of ~1, it can pay dividends only

out of that ~1.

Credits :- Full article on link - 

Mutual Fund - Direct investing - Make use of it!

"Effective 1 January, all asset management companies (AMCs) launched direct plans of all their open-ended MF schemes, a move which was made mandatory by the capital markets regulator, Securities and Exchange Board of India (Sebi), through a circular issued in September."

So, are you still investing through your broker initiated portfolios?

Is there a need to switch to "direct" schemes?

Read the detailed article here. For those who don't have the time, here's the relevant portion which states the benefit in % for direct schemes. This amount may sound trivial but may add up to a huge saving over a period of time.  Please mind the impact of capital gains tax before you do the switch. ( Also note :-you will loose out on STT for switch out from regular plan as in case of normal sale)

According to figures provided to us by Outlook Asia Capital, equity funds have shown a difference of about 0.58% on an annualized basis between the net asset values (NAVs) of direct and normal plans, as on 11 January. We have taken the annualized figures here as the total expense ratio (TER) figures of MF schemes are also annualized. Liquid funds have shown a far lower difference of about 0.05%, so far.