Posts Tagged ‘Mutual Funds’

Moneywise…Be Wise ;)

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If you find yourself asking the question –

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Why should I Save ?

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Why should I Invest ?

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Where do I Invest ?

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Who would Guide me to take informed decision on my Investments ?

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…then look no further !

Why SMC?

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SMC Group, a leading Financial services provider in India, a vertically integrated investment solutions company, with a pan-india presence is there to guide you and provide complete investment solutions to you.

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SMC Group, having rich experience of more then two decades in financial markets, is one of the largest & most reputed investment solutions company that provides a wide range of services to its client base of more than 5, 50,000 clients with presence in more then 1500 cities.

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SMC Online, an unit of SMC Group, is one stop financial investment portal for investor’s all financial needs.

Investors can trade online in Equities, FNO, Currency Futures, Commodities, apply online for IPOs, and invest online in Mutual Funds.

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SMC is :

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a) 4th Largest broking house of India in terms of trading terminals (Source: Dun and Bradsheet, 2008)

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b) 5th largest distributor of Initial Public Offering (IPOs) in retail (Source: Prime Data Ranking)

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c) Awarded ‘Fastest Growing Retail Distribution Network in Financial Services’ (Source: Business Sphere, 2008)

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d) Recipient of ‘Major Volume Driver Award’ from BSE for last three years consecutively.

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e) Nominated among the top three in the CNBC Optimix Financial Services Award 2008 under National Level Retail Category.

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f) One of the largest Proprietary Arbitrage Desk doing risk free arbitrage in equities & commodities.

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g) Commanding turnover of more then 3% in equity market, 4% in commodity market and 10% in DGCX.

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h) Transparent and professional management.

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j) Relentless focus on investor care.

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k) World class in-house research facilities providing research support to investors.

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l) All financial products and services under one roof.

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🙂

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Next Blog we would try to read more about the other SMC’s investment products and services.

Stay Tuned for more on this 🙂

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To know more about the SMC Products and Services, click here.

Mutual Funds : Marginalise Your Investment Risk

Hello Friends here we come up with another write up on “SMC Gyan Series”.

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Mutual Funds : Marginalise Your Investment Risk

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Topic is “Mutual Funds : Marginalise Your Investment Risk
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Mutual funds are the best investment tool for the retail investor as it offers the twin benefits of good returns and safety as compared with other avenues such as bank deposits or stock investing.

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Choose the wrong fund and you would have been better off keeping money in a bank fixed deposit.

Keep in mind the points listed below and you could at least marginalize your investment risk:

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1) Past performance –

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While past performance is not an indicator of the future it does throw some light on the investment philosophies of the fund, how it has performed in the past and the kind of returns it is offering to the investor over a period of time.

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Also check out the two-year and one-year returns for consistency.

How did these funds perform in the bull and bear markets of the immediate past?

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Tracking the performance in the bear market is particularly important because the true test of a portfolio is often revealed in how little it falls in a bad market.

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🙂

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2) Know your fund manager

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The success of a fund to a great extent depends on the fund manager.

The same fund managers manage most successful funds.

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Ask before investing, has the fund manager or strategy changed recently?

For instance, the portfolio manager who generated the fund’s successful performance may no longer be managing the fund.

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3) Does it suit your risk profile?

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Certain sector-specific schemes come with a high-risk  high-return tag.

Such plans are suspect to crashes in case the industry loses the market men fancy.

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If the investor is totally risk averse he can opt for pure debt schemes with little or no risk.

Most prefer the balanced schemes which invest in the equity and debt markets.

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Growth and pure equity plans give greater returns than pure debt plans but their risk is higher.

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4) Read the prospectus

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The prospectus says a lot about the fund.

A reading of the fund’s prospectus is a must to learn about its investment strategy and the risk that it will expose you to.

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Funds with higher rates of return may take risks that are beyond your comfort level and are inconsistent with your financial goals.

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But remember that all funds carry some level of risk.

Just because a fund invests in does not mean it does not have significant risk.

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Thinking about your long-term investment strategies and tolerance for risk can help you decide what type of fund is best suited for you.

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🙂

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5) How will the fund affect the diversification of your portfolio?

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When choosing a mutual fund, you should consider how your interest in that fund affects the overall diversification of your investment portfolio.

Maintaining a diversified and balanced portfolio is key to maintaining an acceptable level of risk.

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6) What it costs you?

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A fund with high costs must perform better than a low-cost fund to generate the same returns for you.

Even small differences in fees can translate into large differences in returns over time.

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Finally, don’t pick a fund simply because it has shown a spurt in value in the current rally.

Ferret out information of a fund for at least three years.

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The one thing to remember while investing in equity funds is that it makes no sense to get in and out of a fund with each turn of the market.

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Like stocks, the right equity mutual fund will pay off big — if you have the patience.

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Similarly, it makes little sense to hold on to a fund that lags behind the total market year after year.

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SMC Global Securities : Money Wise Be Wise !

RBI Emphasizes on Managing the Economic Recovery, For Now :)

RBI emphasizes more on Managing economic Recovery

 

The Reserve Bank of India, country”s Central bank, has said that managing economic recovery is now its focus area and the first phase of monetary tightening will arrest inflation without hurting growth.

RBI Executive Director Deepak Mohanty was found quoting  that at present, the focus around the world and also in India has shifted from managing the crisis to managing the recovery.

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He said that withdrawing soft monetary policy, which was initiated to weather the financial crisis is the key challenge.

“The key challenge relates to the exit strategy that needs to be designed, considering that the recovery is as yet fragile but there is an uptick in inflation, though largely from the supply side, which could engender inflationary expectations,” he said.

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Besides this, Mohanty said that the first phase of exit has been initiated by RBI in its monetary policy review in October 2009.

That was done mainly by withdrawal of unconventional measures taken during the crisis.

RBI, in its monetary review in October has raised the requirement for banks to hold portion of the deposits in cash, gold and government securities to 25 per cent.

Moreover, it had also done away with special liquidity provision for banks to provide money to mutual funds and others.

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Points to Remember while Selling Stocks – Part 1

Hello Friends here we come up with our another write up on “SMC Gyan Series”. 🙂


Points to remember while selling stock

Points to remember while selling stock

 

Buying a stock is simple, but Selling is actually harder as it requires regulation, understandable thoughts, and a tight rein on one’s emotions.

The ongoing optimism, slow economic revival, positive signs on the global front and high expectations from the stable government at home have forced bulls to give up their lethargic activities and to march northward.

Many investors who had seen the value of their stocks hit rock bottom and are now facing dilemma whether to sell or should they hold on? :O

Investors often face problems to take right decisions in volatile market as markets could head either way.

Wouldn’t it be disheartening if the markets rallied northwards, the day after you sold your stocks?

What if the markets come crashing down tomorrow, depriving you of the opportunity to enhance profits?

So, the decision to sell is critical.

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Some of the points when to sell your stocks:

Prima facie, if there is any drastic change in fundamental of a company, this should be the only reason to sell stock.

But a depth research has to be done before taking any decision.

Changes includes;

-restructuring of its business model,

-different business focus and directions.

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FIRST THREE POINTS :

1. Margins Crashed

Margins are the profit that a company makes on its sales.

Rising gross margins tell us that a company is reducing production costs or raising prices.

Conversely, deteriorating margins say either that production costs are increasing and the company can’t raise prices proportionally or that the company is cutting prices in an attempt to maintain marketshare.

If there are expenses related to a new product’s introduction then margins might fall for inoffensive reasons.

Falling margins, either gross or operating, often signal a declining competitive position. Thus it’s important to check both.

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2.Is There Any Drastic Change In Company’s Management?

If people in top management of the company say director or president who are liable for a company’s success begin to go away, there might be a few negative implications for the future outlook of that company as an investor.

You must look into and find out the root cause and also to see how much it could impact you.

If negative prospects, investor should sell the stock and should relocate the funds into a similar company that has stronger and more constant management.

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3. What First Fascinated You To The Stock, No Longer Applies

For example, let’s suppose that you bought a stock of a health care company because of its innovative products in the pharmaceutical field and all of a sudden, it loses a crucial patent for a life-saving medicine.

This may result in a decrease of market share in its industry, which might lead to a reduction in future profits (resulting in a decline in the value of its stock).

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Stay Tuned for more on this where we would touch upon other major points needed to keep in mind by investors before making any Buy and sell decision.

Note : For More Finance Gyan, Latest Industry, Stock Market, Economy News and Updates, please click here

Dividend Payout not the Best Criteria to Judge MFs Schemes

Dividend Payout not the Best Criteria to Judge MFs Schemes

Dividend Payout not the Best Criteria to Judge MFs Schemes

 

Mutual fund schemes generally boast about high dividends but mutual fund experts say picking a mutual fund scheme on the basis of its dividend payout may not be the best way to invest in the sector.

As per MF experts, comparing the quantum of dividends paid in short term is not the correct way to measure a fund’s performance.

The proportion of dividend depends on a number of factors, including the frequency of payouts over a certain period of time.

There are funds that have higher net asset value (NAVs) but lower dividends, while others have lower NAVs, higher dividends.

Moreover, many analysts believes that the consistency of dividend payout is important than the quantum of dividend.

Experts always insist investors to not to base their investment decision on the percentage of dividend paid in a short period.

Rather Investors should look for the track record of the fund in this regard over a longer period of time.

After the recent equity market bull-run, many equity funds have declared dividends up to 70 per cent.

So far in October, over a dozen of equity schemes have declared dividends.

Experts are of view that the quantum of dividend paid does not directly indicate the performance of the fund, especially in the short term.

Unlike equities, if a mutual fund scheme pays certain percentage of dividend, NAV of the scheme drops by the same proportion.
If investors go for dividend plans, they most probably miss the compounding opportunities over the long-term for short-term gains.

An Equity head of a mutual fund said “unlike debt funds, where the intention of an investor is to earn dividends on a regular basis, investors in equity funds,  do not always look for dividend”.

At times, the focus is more on capital appreciation.

Even Fund Managers of reputed firms have maintained quite often that they pay dividends every year irrespective of the market conditions and consistency have always been theirs primary concern not the quantum of dividend.

IFAs tying up with Brokerage Houses to turn Sub-Broker :)

IFAs - Sub-Broker

IFAs tying up with Brokerage Houses to turn Sub-Broker

 

Independent financial advisors (IFAs) are tying up with large distributors and brokerage houses to act as sub-brokers, to keep themselves afloat after the entry load ban on mutual funds.

Earlier, IFAs used to make most of their earnings by selling fund schemes.

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A sub-broker is a person who acts on behalf of a stock-broker as an agent, or otherwise for assisting the investors in buying, selling or dealing in financial products through stock-brokers.

Many independent financial advisors have approached the company asking it to create a platform through which they can offer advisory services to their clients.

There is a plan by companies also to launch such a platform in coming weeks.

Broking industry representatives said that IFAs have been left with no option but to tie up with large brokerage houses after they have been denied of their basic source of income (2.25 per cent entry fee on mutual fund investment).

Brokerage Houses are set to provide them with basic infrastructure and resources to provide investors advisory services.

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IFAs are now required to charge a fee for providing their advisory services, instead of a commission on each transaction that they received earlier.

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The Securities and Exchange Board of India (Sebi) had asked mutual fund distributors not to charge any entry load with effect from August 1. It had instead asked them to charge as per the service provided.

It means that a distributor cannot charge any fee for merely selling a product but can charge only if they offer advisory services to investors.

The new norm has queered the pitch for thousands of independent financial advisors, who used to make their earnings by merely selling mutual fund products.

Jagannadham Thunuguntla, equity head of Delhi-based brokerage house SMC Capital, said that the entry load ban has come as blessing in disguise for large brokerage and distribution houses.

“Most of the mutual fund business would now be routed through big distribution houses as IFAs struggle to provide the necessary advisory service on their own.

The sub-broker model is one of the few viable options available with the small financial advisors,” he added.

When asked if IFAs approached SMC showing their interest in becoming sub-brokers, Thunuguntla said that though inquiries were not so aggressive, they expect more IFAs to come seeking their help as the time passes.

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RBI And Its Policies – Part 1

Hello Friends, last month we witnessed loads of action with the RBI’s monetary policy being laid down.

However here we bring more on the RBI policies and projections.

RBI policies and projections

RBI policies and projections

 

The Reserve Bank of India (RBI) laid the groundwork on Tuesday i.e. on 27th Oct in its monetary policy for a rise in interest rates by tightening credit to the commercial property sector, lifting its inflation forecast and warning of the threat of asset price bubbles.

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The RBI had injected in massive liquidity in the banking system in the past one year or so to help revive the domestic economy in the aftermath of the global financial crisis.

For now, the Reserve Bank has decided to keep the policy repo rate unchanged at 4.75 per cent, the reverse repo rate unchanged at 3.25 per cent and the (Cash Reserve Ratio) CRR of banks unchanged at 5 per cent of their (NDTL).


The following measures constitute the first phase of ‘exit’:

– The Statutory Liquidity Ratio (SLR), which has earlier been reduced from 25 per cent of NDTL to 24 per cent, is being restored to 25 per cent.

-The limit for export credit refinance facility, which was raised to 50 per cent of eligible outstanding export credit, is being returned to the pre-crisis level of 15 per cent.

The two unconventional refinance facilities:

(i) special refinance facility for scheduled commercial banks; and

(ii) special term repo facility for scheduled commercial banks [for funding to Mutual Funds (MFs), Non-banking Financial Companies (NBFCs), and Housing Finance Companies (HFCs)] are being discontinued with immediate effect.

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Further, the liabilities of scheduled banks arising from transactions in Collateralized Borrowing and Lending Obligations (CBLO) with Clearing Corporation of India Ltd. (CCIL) would now be subject to the maintenance of the CRR.

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Stay Tuned for more on this in our coming blogs.

We would cover Monetary Projections of RBI and Economy scenario and indicators at the moment.