Posts Tagged ‘NAV’

Let’s Talk About Mutual Funds ;)

mutual-funds-basics

Friends we will discuss now as to what are mutual funds before going on to seeing why to invest in mutual funds instead of stock 🙂

What is a Mutual Fund?

A mutual fund is an investment that pools money from many investors, and that money is used to invest in stocks, bonds and other securities.

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One mutual fund share includes a portion of a share of each stock held in the fund’s portfolio.

The stocks these mutual funds have are very fluid and are used for buying or redeeming and/or selling shares at a net asset value.

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Mutual funds posses shares of several companies and receive dividends in lieu of them and the earnings are distributed among the share holders.

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Who Decides What a Mutual Fund Invests In?

Mutual fund managers decide what securities to buy or sell guided by the mutual fund’s objectives.

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If a mutual fund’s objective is to invest in the energy sector, the manager cannot buy shares in technology stocks.

Fund objectives let you know what to expect now and in the future.

Mutual funds can be either or both of open ended and closed ended investment companies depending on their fund management pattern.

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An open-end fund offers to sell its shares (units) continuously to investors either in retail or in bulk without a limit on the number as opposed to a closed-end fund.

Closed end funds have limited number of shares.

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Why Invest in Mutual Funds Instead of Stock?

You can invest in both mutual funds and individual stocks, but mutual funds are particularly useful in some cases.

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*Diversification: If you do not have a lot of money to invest, creating your own diversified portfolio to spread risk will be difficult.

Diversification is automatic in mutual funds.

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*Time : Successful investors take hours every week to analyze their holdings, stock market conditions and to educate themselves further on investing.

Mutual funds are a wise choice for those who lack the time to follow stocks so closely.

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* Experience: Consistently investing well takes a few years of experience and learning from mistakes and successes.
If you are not experienced with trading stocks but want returns over and above what a savings account offers, investing in mutual funds is a good way to grow your personal assets.

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Nifty Hit the Level of 5,000 :)

nifty-climb-5000k

Nifty hit the significant level of 5,000, first time since May 23, 2008, taking 326 trading sessions while, the standard index prepared early gains to close flat after hitting 5,003 at its day’s high.

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However, nifty closed slightly higher at 4,965, up 7 points whereas another standard Sensex also ended flat at 16,711, up 34 points, off its day’s high of 16,820 while both the indices were lower by over 4.4% decline in heavyweight RIL.

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Moreover, RIL stated that it has raised around Rs 3,188 crore through sale of 1.50 crore equity shares of the company and selling pressure in RIL weighed down on the oil & gas index, down 2.8%.

Additionally, the BSE realty index slid 0.9%, Unitech lost 3% and Phoenix Mills declined 2.4% while IT and auto stocks increased.

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Similarly, the BSE IT index gained 1.9%, Patni Computer and HCL Tech rose over 6% while the auto index on the BSE was also up 1.5% and Amtek Auto increased 14.6%.

On the other hand, in the Sensex pack, ACC emerged as the biggest gainer while the stock advanced 3.6% to Rs 827 however, Hindalco, JP Associates, Bharti Airtel and Maruti Suzuki gained over 3% each.

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Further, RIL was declared the top loser in the group followed by Tata Steel and ITC.

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A correction is expected and likely to take place in markets at current levels. But it is unlikely to be a sharp one.

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European and Asian stock markets extended the week’s rally on Thursday, hitting new highs for the year, as investors became increasingly confident that the U.S. economy , the world’s largest , is growing again.

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480 Funds Make it to the Sensex-Beater List :)

Sensex beater Funds

The net asset value (NAV) appreciation of nearly 480 funds or nearly one out of every two funds has bettered the sensex returns of 9% in the past year.

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Around 100 funds have at least doubled the 30-share index’s gains.

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Some like IDFC Small & Midcap Equity (43%), Tata Life Sciences & Tech (40%), UTI Transportation and Logistics (38%), Canara Robeco Equity Tax Saver (36%), Birla Sun Life Dividend Yield Plus (36%), ICICI Prudential Gilt Investment PF (35%) and Reliance NRI Equity (34%) returned eye-popping 3 times sensex’s returns.

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Overall, there are at least 23 funds which more than tripled the benchmark’s gains in the period starting August 31’08 and ending this August 30.

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Mutual funds have always showed the ability to beat popular benchmarks.

While investors remain cautious, especially after Sebi regulations on loads, the fact remains that most funds have good track records.

The industry have delivered always alpha (a measurement of risk-adjusted performance) as per the industry experts.

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Interestingly, many funds which sported NAVs of less than Rs 10 have proved to be real gems and may have helped SIP users.

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Take, for instance, Religare Contra fund.

The market rally has helped the same fund’s NAV to almost touch Rs 13 per unit, gaining 32.52% in 12 months.

Other funds which have outperformed sensex include Taurus Infrastructure (29%), Mirae Asset India Opportunities (25%), AIG World Gold (20%), HSBC Tax Saver Equity (20%) and Morgan Stanley ACE fund (19%).

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Numerous exchange traded funds (ETFs), which track a specific index or commodity, find their place in the market beater list with those tracking gold like Gold Benchmark ETF (27%) or banks such as Kotak PSU Bank ETF (32%) doing exceedingly well.

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Monthly income plans, best suited for getting specified monthly payment to investors like senior citizens and retired persons, also make it to the sensex-beater list.

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Funds like Reliance MIP (28%), HDFC MIP Long-term (22%), Principal MIP Plus (14%), Templeton MIP-G (12%) and LIC Floater MIP (10%) are some examples.

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The net asset value (NAV) appreciation of nearly 480 funds or nearly one out of every two funds has bettered the sensex returns of 9% in the past year. Around 100 funds have at least doubled the 30-share index’s gains. Some like IDFC Small & Midcap Equity (43%), Tata Life Sciences & Tech (40%), UTI Transportation and Logistics (38%), Canara Robeco Equity Tax Saver (36%), Birla Sun Life Dividend Yield Plus (36%), ICICI Prudential Gilt Investment PF (35%) and Reliance NRI Equity (34%) returned eye-popping 3 times sensex’s returns. Overall, there are at least 23 funds which more than tripled the benchmark’s gains in the period starting August 31’08 and ending this August 30.

“Mutual funds have always showed the ability to beat popular benchmarks. While investors remain cautious, especially after Sebi regulations on loads, the fact remains that most funds have good track records. We (the industry) have delivered always alpha (a measurement of risk-adjusted performance),’’ said the CEO of a top mutual fund. Interestingly, many funds which sported NAVs of less than Rs 10 have proved to be real gems and may have helped SIP users. Take, for instance, Religare Contra fund which had an NAV of Rs 9.78 on August 30, 2008. The market rally has helped the same fund’s NAV to almost touch Rs 13 per unit, gaining 32.52% in 12 months. Other ‘beaten-down’ funds which have outperformed sensex include Taurus Infrastructure (29%), Mirae Asset India Opportunities (25%), AIG World Gold (20%), HSBC Tax Saver Equity (20%) and Morgan Stanley ACE fund (19%).

“Many themes may not have done well in the past few months. Take for example international funds. While performance is one of the metrics, it’s important for the investor to allocate some portion of their MF assets to them. They might do well when global economies rise,’’ S Naren, CIO of ICICI Prudential AMC, said in a recent interview.

Numerous exchange traded funds (ETFs), which track a specific index or commodity, find their place in the marketbeater list with those tracking gold like Gold Benchmark ETF (27%) or banks such as Kotak PSU Bank ETF (32%) doing exceedingly well. Monthly income plans, best suited for getting specified monthly payment to investors like senior citizens and retired persons, also make it to the sensex-beater list. Funds like Reliance MIP (28%), HDFC MIP Long-term (22%), Principal MIP Plus (14%), Templeton MIP-G (12%) and LIC Floater MIP (10%) are some examples.