indianmutual funds

If you are wondering whether the market will touch 10K ( Senses) as predicted by some, but nor sure of the direction in which the market will go, it is time you look at this fund. This is a pure equity oriented fund and thus offers all the gains and risks associated with stock market. The attraction in the new fund offer is that you do not have pay any entry load for NFO subscribers,if stay invested beyond 1 year. ( I am referring to small investors and not those institutional investors in crores.)
If you are not risk averse to equity funds, this is a fund that can be looked at.
( all usual disclaimers will apply.) The allocation of the fund,is maximum of 40% in mid cap and 10% in small caps. This ceiling really is a compromise looking at perception that mid cap and small cap stocks are high risk investments. Thus the return you can expect from this fund, will be similar to large cap funds. At the same time is that this is not a sectorial fund, thus allows more options to the fund manager to maximise returns. In short this is pure equity funds offering you the advantages of associated tax benefits.

If you are not averse to equity investing, and
If you are not averse to sectorial fund investing,
here is a new fund offer from Sundaram Mutual fund.
" Capex opportunities fund".
The fund proposes to invest in companies associated with capital goods sector. This means that the fund will invest in companies which supply capital goods and other similar items. What attracted me towards this fund?

There is ripple in the loud thinking industry that India is poised for outsourcing in manufacturing sector. With the lower wages, available in india, this ripple may turn into a tide. The outsourcing BPO segment is being transformed into knowledge based industry, If this trend persists, will the manufacturing sector will be far behind?
more about this fund in my next post.

From this financial year onwards, your savings in approved instruments are deducted directly from your income upto a limit of Rs. 1 lac. ( Of course there are some restrictions, however investment in tax saving mutual fund can be made upto Rs. 1 lac). This does not mean that your investment should be to the maximu limit. Calculate your present commitments of existing investment such us PF. PPF, Insurance premium, etc. See how much more investment you can make. How much of your investments are in equity based tax savings savings scheme? I suggest that 10 to 20% of the available gap, subject to a maximum of Rs.6K can be utilised for investment in this scheme. Do not forget to utilise the Recurring investment plan , so that your investments are spread over the period of 12 months. ( of course you will be able to deduct only that amount invested during this financial year and rest of the investment can be carried to next financial year.)

What type of investors should go in for the fund? Remember the scheme is pure equity scheme. Hence those are risk averse and can not bear the risk associated with Equity, the scheme is no-no.
Another view point is that every investor in the accumulation stage should have equity in his portfolio of investment. The renowned personal finance advisor Bogle ( His bio is available here), says that in asset allocation, as a thumbrule, the asset class of the investor in debt should be equal to his age. Going by the above thumb rule, even if you are aged 40, your standard asset portfolio may consist of 40% debt instruments and 60% in equity. Hence this investment is suitable for all those who are in accumulation and consolidation stage.

The scheme is meant as a tax saving measure. Hence has a lock in period of 3 years indicating that you stay invested in 3 year horizon in the equity. This period is considered as reasonable and optimum for investing in equity markets. Hence the possibilities of obtaining optimum returns exists.

How much to invest?

The ELSS scheme proposed by reliance is a pure equity scheme. The Fund has similar equity oriented schemes.

Reliance Equity opportunities Fund: The fund was launched only in March 2005. The investment portfolio consists of 84.61% in Equities as at the end of June 2005. The net asset value stands at Rs.11.51.( 22/07/05)

Reliance Vision Fund ( Growth) : The fund was launched in Oct 1995. The investment portfolio consists of 95.92 % in equity as at the end of June 2005. The net asset value stands at Rs.100.40 as at 22nd July 2005.

Even though there are other equity oriented schemes of reliance, I have chosen only the above two, as the investment in equity is more than 80%. The proposed ELSS scheme of reliance proposes investment in equity of 80%.

You have to remember that the latest Net asset value is in the booming market conditions and statutory disclaimer that the past performance is not a guarantee for future performance.
However, these net asset values indicate the level of performance and efficacy of the funds managed.

I have also chosen only the growth option as, the proposed investment in ELSS is locked for a period of three years. The Reliance vision fund has provided an annualised return of 26.55% since inception and it is too early to annualise the return in respect of Equity Opportunities fund.

Reliance Asset management company, belonged to the Reliance group. Now, it should be under the leadership of the financial wizard Mr. Anil Ambani. The company proposes New Fund Offer on 25th JULY 2005. The Asset manangement company manages 31 schemes. As every schemes has various options such as growth, monthly income, quarterly dividend, etc, if we take these options also into account the number of schemes managed by the company is 92, as at the end of June 2005.
Of the 92 schemes, equity oriented schemes account for 33, Debt schemes 51, Equity and debt 1, and Gilt fund numbering 7.
The total assets under management is Rs.9900.00 Crores app as at the end of 30th June 2005.
The company is coming out with another pure Equity scheme. The attraction is that it is a tax savings scheme.

The budget 2005 have brought cheers to the investment community in equity markets. To the average salary earner, one of the major changes are the restrictions ( excepting in certain cases) have been removed in respect of dealings and choice of investments to plan taxation, has been left to the individual. Instead of earlier system of providing relief in the tax amount, the recent budget has provided for reduction of the investment from the total salary thereby reducing the taxable salary. The ceiling on such deduction has been kept at Rupees one lac for the present.
It is not unusual for mutual funds to come out with tax saving funds every year. During this year, the early birds are HSBC Investments, (who has reported to have filed the prospectus with SEBI) and Reliance Mutual Fund, who is coming with its new Fund offer on 25th July 2005.