Can I generate higher returns compared to traditional investment products without any risk? This was the query posed to me by one of the clients. The answer is definitely YES. At this stage, it is advisable to switch to Short Term Debt Mutual Funds. Now you must be wondering why? I will answer it in this post with proper justification. Before I proceed, It is important to know the impact of interest rate movement on the performance of Long term debt funds and Short Term Debt Mutual Funds. I explained it in detail in my post, why you should buy long term debt funds? The conclusion was that ... Read More
Arbitrage Mutual Fund – The Right Choice
Arbitrage Mutual Fund is a unique type of mutual fund. If i tell you that i invested in an equity mutual fund that is almost 100% risk-free. You will think, have i gone mad?. The answer is NO. Arbitrage Mutual Fund is an equity mutual fund but provides USP of a debt mutual fund i.e. capital safety. Investors invest in Arbitrage Mutual Fund as an alternative to Debt Mutual Fund or during volatile times. Utterly Confused!!!. I also got confused when i first came to know about this product. As i discussed in my post, Debt Mutual Funds - 7 Hidden Risks that contrary to popular perception, debt ... Read More
Mutual Fund Riskometer – Old Wine New Bottle
The new Riskometer for Mutual Funds is an old wine in new bottle. SEBI (Securities and Exchange Board of India) will replace the existing colour coding system for mutual funds with new riskometer. The new product labelling system will be implemented from 1st July, 2015. If any fund house would like to implement the new riskometer before 1st July, 2015 then they are free to do so. Riskometer will be applicable for both old and new mutual fund schemes. Existing Colour Coding System Mutual fund investors must be familiar with the following colour coding picture It basically shows the ... Read More
Dividend in Non Equity Funds – A Wealth Killer
Dividend Payout is one of the most popular option and USP for Mutual Funds. It may be good for equity mutual funds but for non-equity mutual funds, its a wealth killer. Infact Dividend option is "Silent" Wealth Killer as it kills your wealth without your knowledge. As i explained in my post Capital Gain Tax - Short Term Capital Gain that a mutual fund is classified as Equity Mutual Fund only if 65% of its AUM is invested in equity market. Any fund which does not fulfill this condition is non-equity mutual fund. Non-Equity Mutual Funds broadly include Debt Funds, Monthly Income Plan, Balanced ... Read More
Avoid Direct Plan of Mutual Fund
Direct Plan of Mutual Fund is creating lot of buzz in Personal Finance space. In last one month or so, i have gone through atleast dozen posts on Direct Plan of Mutual Funds. The advantage of Media coverage is that it create buzz. Investors are seriously considering Direct Plan of Mutual funds which currently contribute less than 10% of total investments (Industry Estimate). Currently this channel is utilized by Institutional investors or HNI's and that too in debt category. Contrary to the fact that expense ratio of debt category is very low compared to equity. In my post on 7 Steps to Select ... Read More