Detailed information on Mutual Funds, SIP, STP, Financial Planning, Investment Planning, Savings for Long term

1. 9/23/2011
“You work hard for
your money. But does
your money work
equally hard for you?”
PROFILE OF AN AVERAGE RETAIL INVESTOR
Knowledge about investment options is rather vague
Rely on Agents / CA’s / Relatives / Friends
Does not seek advise from professional investment advisors
Generally not clear about Risk & Returns
Have developed comfort in Fixed Deposits / Government Savings
Expectation from Equity are unrealistic
1

2. 9/23/2011
Presentation on
Financial Planning
ÉTICA WEALTH MANAGEMENT PVT LTD
GAJENDRA KOTHARI, CFA, CAIA, ICFA
Vice-
Vice-President & Head – Products (PMS division), UTI AMC Ltd.
7 yrs of work experience in the Financial Services Industry
Currently responsible for Product designing and tying up with bank and distribution
Channel in UTI PMS
Chartered Financial Analyst (CFA) from CFA Institute, USA
Chartered Alternative Investment Analyst (CAIA) from CAIA, Massachusetts
International Certificate in Financial Advice (ICFA), London, UK
Earlier roles -
Institutional Sales (London – 3 yrs),
Institutional Sales (Mumbai – 2yrs),
Retail Sales (Mumbai – 2 years)
Speaker at various investor forums on various personal finance topics
2

3. 9/23/2011
FEW HOUSEKEEPING REQUESTS…
Not a Sales talk
Would request you to participate enthusiastically
No offence to any particular individual
Mobile Silent
“AN INVESTMENT IN KNOWLEDGE PAYS
THE BEST INTEREST"
- Benjamin Franklin
3

4. 9/23/2011
A COMMAN MAN’S CONCERN
How can I grow and protect my financial wealth?
How can I pay and manage my debt / liabilities (Good / Bad / Ugly) (EMIs)?
How much should I save to be able to pay for my children’s education?
How can I maximize the tax benefits which can be availed of?
How can I save enough to be able to retire comfortably and maintain the
current lifestyle?
How can I meet emergency requirements / contingencies?
How can I maximize what my heirs will inherit?
LIFE STAGES
Each individual is unique; so are his needs and wants; also, through out life,
unique; wants;
an individual’s needs and wants keep changing.
changing.
Therefore, financial planning process must first assess an individual at what
stage of life he / she is in.
in.
Life stage is not a mechanical process based on some ‘age’ criteria but
based on a number of milestones
These milestones could be completion of formal education, first job and
subsequent major job changes, major life events like marriage, birth of
child, acquisition of major assets, education of children, marriages,
separation, death etc
4

5. 9/23/2011
LIFE STAGES - MILESTONES
Dependent till early 20s - Education & skill acquisition
20s
Career beginners, enjoyers in 20 to 30 - first job / joining business, first
vehicle, marriage & first child
Career advancers in 30s - Young family, children in school, house purchase
30s
Peak earners, achievers 40s - children in college, more savings and less
40s
debts
Pre retirees, empty nesters 50s - grown children, re-arrange financials in
50s re-
preparation for retirement / starting on own etc
Retired 60s - settled children, debts cleared, estate planning..
60s planning..
5

6. 9/23/2011
WHAT IS FINANCIAL PLANNING ?
Financial planning is the process of successfully meeting financial needs of
finances.
life through the proper management of finances.
“Big picture approach”
It is more than just investment or tax or estate or retirement planning. It is
planning.
more. multi-
all these and more. It is an integrated and multi-disciplinary approach
balancing and fine tuning each of these components.
components.
It is also NOT an one time & one size fit all exercise recognizing each
individual’s goals, desires, needs, experiences and expectations are
different
It is your roadmap to Financial Health, & Sustainable Wealth creation and to
Freedom.
achieve Financial Freedom.
6

7. 9/23/2011
FINANCIAL PLANNING PROCESS
WHY YOU NEED FINANCIAL PLANNING?
Life without Financial planning is like Unplanned
Vacation.
Vacation.
If you wish to achieve your financial goals successfully
& peacefully you must plan your financial life.
life.
7

8. 9/23/2011
PROBLEMS OF RANDOM INVESTMENT
Wrong selection - flavor of the month.
Wrong timing - mostly near top.
Short term investment.
Inadequate investment.
WHY IS IT IMPORTANT, THE INDIA CONTEXT
Few major socio economic changes which make personal financial planning
more critical in the Indian context
Absence of any kind of social security for vast majority of people
Increased longevity due to improved medical care AND ever increasing
medical costs
Rapidly decreasing career span; retirement (voluntary or otherwise) age is
span;
falling
Gradually (dramatically?) reducing joint / extended family system
More market driven and globalized Indian economy; more choices and more
economy;
risks
8

9. 9/23/2011
WHO NEEDS FINANCIAL PLANNING?
Whatever may be level of your income or assets, you
planning.
need financial planning.
It is myth that only rich people need financial
planning.
planning.
CURRENT STATUS & GOAL SETTING
Find out the net saving available for investment.
investment.
Wealth accumulated till today.
today.
What is your intention of investment (goal setting)?
Simply put, How much money you need? & When you need the
money? (Time horizon)
Specific financial goals are vital to financial planning.
planning.
9

10. 9/23/2011
FINANCIAL GOALS - EXAMPLES
Mandatory Goals:
Children education
Children marriage – Not major in the USA
Retirement Planning.
Purchase of residential premises.
Purchase of vehicle.
Short term Goals 1-
: 1-2 years.
Medium term goals 3-
: 3-5 years.
Optional Goals: Long term goals 5-
: 5-10 years.
Up gradation of Residence. Distant goals 15-
: 15-20 years.
Luxury Car.
Purchase of Luxury items at Home.
Vacation Abroad.
Charity - Religious or Social.
Inheritance - Estate planning.
Early Retirement - Financial freedom.
BEST PRACTICES
goals.
Set measurable goals.
Understand the effect your financial decisions have on other financial issues.
issues.
Revaluate your financial plan periodically.
periodically.
Start now. Do not assume that financial planning is for when you are older.
now. older.
Start with what you have got. Do not assume that financial planning is for the
got.
wealthy.
wealthy.
Take charge. You should be in control of the financial planning process.
charge. process.
Look at the bigger picture. Financial planning is more than retirement planning or tax
picture.
planning.
planning.
Do not confuse financial planning with investing.
investing.
Do not wait for a money crisis to begin financial planning.
planning.
10

11. 9/23/2011
WHAT IS COMPREHENSIVE FINANCIAL PLANNING ?
Comprehensive financial planning uses an integrated
approach to monitor all aspects of someone’s financial
situation:
- Insurance & Risk Planning
- Goal Based & Retirement Planning
- Investment Planning
- Tax Planning
- Estate Planning
Investment Planning
11

12. 9/23/2011
SAVING AND INVESTMENT
Everyone needs to save for a rainy day. Once you have saved
day.
enough to take care of emergencies, you should start thinking
about investing and to make your money grow.
grow.
Investment planning focuses on identifying effective investment
strategies according to an investor’s risk appetite and financial
goals.
goals.
There is a wide variety of investment options, including
Equities, Bonds, Gold, Mutual funds, Bank Deposits, Real
Estate, Commodities and Derivatives.
WHY INVESTMENT PLANNING
Investment Planning is important because it helps you to derive
the maximum benefit from your investments.
investments.
Your success as an investor depends upon your ability to
choose the right investment options. This, in turn, depends on
options.
your requirements, needs and goals.
goals.
Investment Planning also helps you to decide upon the right
investment strategy. Besides your individual requirement, your
strategy.
investment strategy would also depend upon your age,
personal circumstances and your risk appetite.
appetite.
12

13. 9/23/2011
BASICS OF INVESTMENT PLANNING
13

14. 9/23/2011
LET TIME AND COMPOUNDING WORK FOR YOU...
POWER OF COMPOUNDING?
Which option will you chose from below?
1. Receiving Rs 1,00,00,000.00
2. Receiving double the money than previous day i.e Rs
1,2,4,8,16,32……so on for a month
14

15. 9/23/2011
POWER OF COMPOUNDING?
How much will you get at the end of month?
1. Rs 30,00,00,000.00
2. Rs 1,07,37,41,823.00
15

16. 9/23/2011
16

17. 9/23/2011
IS THERE ANY SOLUTION TO OVERCOME THIS PROBLEM?
EVEN LOW INFLATION WILL TREBLE COST OF LIVING
Inflation rate assumed is 4.5% per annum in line with RBI’s comfort range.
Source: Sundaram BNP Paribas AMC
17

18. 9/23/2011
LIFESTYLE INFLATION – A TIME BOMB
5 years back Today % increase
Ordinary Shoes – Rs 500 Red Tape shoes – Rs 3000 500%
Titan Watch – Rs 1500 Tommy Hilfilger – Rs 7500 400%
Restaurant – Rs 1000 Fine Dining – Rs 5000 400%
Medicine – Rs 500 No Limit ----
School fees – Rs 5000 DPS fees – Rs 1,00,000 1800%
Didn’t exist I Pod – Rs 15,000 ----
Normal mobile – Rs 3,000 I-phone – Rs 30,000 900%
Scooter / MC – Rs 50,000 Sedan Car – Rs 8,00,000 1500%
2 BHK 3 BHK with SP, Club etc No Comparison
Marriage, Foreign vacation & more…….
Inflation X Multiply by 5 members - !!!!!!!!!!!
Maid - Washing Machine, Driver - Tata Nano
Narayana Murthy Driver
WEALTH CREATION IN DIFFERENT ASSET CLASSES
Today not investing in Equity is Risky
Figures as of April 2010
Rs 1000-a-month invested in Equity is an investment made in Sensex
Source: Sundaram BNP Paribas AMCc
18

19. 9/23/2011
WHO’S THE BEST ???
Asset Class 1 Year 3 Year 5 Year 10 Year 15 Year 20 Year 30 Year
Silver 115.54% 29.77% 48.49% 24.24% 13.63% 12.11% 3.79%
Gold 36.82% 14.46% 38.25% 13.98% 9.06% 6.97% 0.35%
Sensex 10.94% 7.52% 11.51% 18.36% 12.40% 15.10% 17.04%
Bonds 6.00% 8.00% 8.00% 10.00% 12.00% - -
Figures as of March 31, 2011
19

20. 9/23/2011
ASSET ALLOCATION IS THE KEY
20

21. 9/23/2011
21

22. 9/23/2011
STARTING EARLY & INVESTING REGULARLY
Source: Sundaram BNP Paribas AMC
22

23. 9/23/2011
TIME MATTERS, NOT TIMING
Source: Sundaram BNP Paribas AMC
23

24. 9/23/2011
ARE YOU CONFUSED???
24

25. 9/23/2011
INVESTMENT OPTIONS
Real Returns(-) = Returns (9%) - Tax (20%) - Inflation (8-9%)
ROLLING RETURN OF SENSEX
Date Sensex 1 Year 2 Years 3 Years 5 Years 10 Years 15 Years
Dec-79 118.76
Dec-80 148.25 24.83
Dec-81 227.72 53.61 38.47
Dec-82 235.83 3.56 26.13 40.92
Dec-83 252.92 7.25 5.39 30.62
Dec-84 271.87 7.49 7.37 9.26 18.02
Dec-85 527.36 93.98 44.40 49.54 28.89
Dec-86 524.45 -0.55 38.89 44.00 18.16
Dec-87 442.17 -15.69 -8.43 27.53 13.40
Dec-88 666.26 50.68 12.71 12.40 21.38
Dec-89 778.64 16.87 32.70 21.85 23.42 20.69
Dec-90 1048.29 34.63 25.44 53.97 14.73 21.60
Dec-91 1908.85 82.09 56.57 69.26 29.48 23.69
Dec-92 2615.37 37.01 57.95 83.27 42.69 27.20
Dec-93 3346.06 27.94 32.40 78.66 38.10 29.47
Dec-94 3926.9 17.36 22.53 43.43 38.21 30.61 26.27
Dec-95 3110.49 -20.79 -3.58 9.06 24.30 19.42 22.50
Dec-96 3085.2 -0.81 -11.36 -3.98 10.08 19.39 18.98
Dec-97 3658.98 18.60 8.46 -3.47 6.95 23.53 20.06
Dec-98 3055.41 -16.50 -0.48 -0.89 -1.80 16.45 18.07
Dec-99 5005.82 63.83 16.97 27.38 4.97 20.45 21.43
Dec-00 3972.12 -20.65 14.02 4.19 5.01 14.25 14.41
Dec-01 3262.33 -17.87 -19.27 3.33 1.12 5.51 12.96
Dec-02 3377.28 3.52 -7.79 -17.86 -1.59 2.59 14.52
Dec-03 5838.96 72.89 33.78 21.24 13.83 5.73 15.57
Dec-04 6602.69 13.08 39.82 42.26 5.69 5.33 15.32
Dec-05 9397.93 42.33 26.87 66.81 18.80 11.69 15.75
Dec-06 13786.91 46.70 44.50 53.66 33.41 16.15 14.09
Dec-07 20286.99 47.15 46.92 75.29 43.13 18.68 14.63
Dec-08 9647.31 -52.45 -16.35 1.32 10.56 12.18 7.31
Dec-09 17464.81 81.03 -7.22 12.55 21.48 13.31 10.46
Dec-10 20509.09 17.43 45.80 0.36 16.89 17.84 13.40
Yearly Rolling Returns 31 30 29 27 22 17
Positive Returns 23 22 25 25 22 17
Negative Returns 8 8 4 2 0 0
25

26. 9/23/2011
SENSEX RETURNS - 17.06% P.A
SMALL VS MID VS LARGE
26

27. 9/23/2011
AXIS BANK - 47.45% P.A
SBI BANK - 27.06% P.A
" A SBI Fixed Deposit doubles your money in 10 years. Had you invested
the same money in SBI stock, it would have given you 1800% returns"
27

28. 9/23/2011
BHARTI AIRTEL - 37.07% P.A
BHEL - 21.61% P.A
28

29. 9/23/2011
ONGC - 13.83% P.A
INFOSYS - 57.36% P.A
29

30. 9/23/2011
MUTUAL FUND AS AN INVESTMENT VEHICLE
INDEX
1. Mutual Fund Concept
2. Organization of a Mutual Fund
3. Advantages / Disadvantages of Mutual Funds
4. Types of Mutual Fund Schemes
5. Mutual Fund Investment Strategies
6. Mutual Funds Vs. Direct Equity Investments
7. Worldwide MF Industry
8. Mutual Funds - Performance
9. Mutual Fund Investment Blunders
10. Mutual Funds Taxation
30

31. 9/23/2011
MUTUAL FUND OPERATION FLOW CHART
CONCEPT
A Mutual Fund is a trust that pools the savings of a number of investors who
share a common financial goal.
goal.
The money thus collected is then invested in capital market instruments
such as shares, debentures and other securities.
securities.
The income earned through these investments and the capital appreciation
realized are shared by its unit holders in proportion to the number of units
them.
owned by them.
Thus a Mutual Fund is the most suitable investment for the common man as
it offers an opportunity to invest in a diversified, professionally managed
cost.
basket of securities at a relatively low cost.
31

32. 9/23/2011
MUTUAL FUNDS = PACKAGED ATTA
or
FUND STRUCTURE
Fund Sponsor
Trustees
Asset Management Company
R&T
Agent
Custodian
32

33. 9/23/2011
SBI MUTUAL FUND
Mutual Fund Trust SBI Mutual Fund
Sponsor State Bank of India
Trustee SBI Mutual Fund Trustee Company
Private Limited
AMC SBI Funds Management Private Limited
Custodian HDFC Bank Limited, Mumbai
Citibank N.A., Mumbai
Stock Holding Corporation of India Ltd., Mumbai
Bank of Nova Scotia (custodian for Gold)
RTA Computer Age Management Services Pvt. Ltd
33

34. 9/23/2011
ADVANTAGES OF MUTUAL FUNDS
Professional Management
Diversification
Potential Higher Return Vs other Avenues
Low Costs
Liquidity
Transparency
Flexibility
Choice of schemes
Tax benefits
Well regulated
DISADVANTAGES OF MUTUAL FUNDS
Management fees
Exit Costs
Potential poor performance
Complicated tax reporting issues
Potential market risk with all investments
Aggressive or unethical sales personnel / practices -
90% of the reason why investors stay away from Mutual
Funds
34

35. 9/23/2011
REALITY CHECK….
In a country with a population of close to 120 crores, we at best
have about 1 crore investors – less than 1% ! (even that is
suspect)
4-5 crore mutual funds investors a myth; these are folios that
belong to about 60-70 lakh active unique investors
Households’ investments in capital market have fallen from a
high 23.3% of gross financial savings in 1991-92 to a meagre
2.6% in 2008-09!
HOUSEHOLD SAVINGS - WHERE’S THE MONEY PARKED?
35

36. 9/23/2011
DECLINING INVESTMENTS IN CAPITAL MARKET
INVESTMENTS / SAVINGS OF THE HOUSEHOLD SECTOR (GROSS) IN CAPITAL MARKET
(Per cent)
# Preliminary P Provisional
Source: SEBI HANDBOOK OF STATISTICS ON THE INDIAN SECURITIES MARKET 2009
THANKS TO MR C B BHAVE
Mr U K Sinha, SEBI Chairman
36

37. 9/23/2011
TYPES OF SCHEMES
By Structure
Open Ended Schemes
Close Ended Schemes
By Investment Objectives
Growth Schemes
Income Schemes
Balanced Schemes
Money Market Schemes
Other Schemes
Tax Saving Schemes
Special Schemes
Index Schemes
Sector Specific Schemes
ETFs (including gold ETFs)
Fund of Funds
RISK-RETURN TRADEOFF
Siamese Twins
37

38. 9/23/2011
EQUITY
Scoreboard – Hybrid & Debt schemes
38

39. 9/23/2011
HOW DO MUTUAL FUNDS HELP YOU ?
SHORT TERMACCOUNT
SAVINGS DEBT FUNDS FIXED DEPOSITS
FMPS
Mutual
Banks SIPS
CURRENT ACCOUNT
LIQUID FUNDS RECURRING DEPOSITS
Funds
LIEN
LOAN AGAINST SHARES
EQUITY //COMMODITY TRADING
EQUITY COMMODITY FUNDS
39

40. 9/23/2011
COMPUTING NET ASSET VALUE
For investors, the performance of their investment
depends on what happens to the fund’s per unit value, or
net asset value (NAV)
NAV = Market Value of Assets – Liabilities
Number of Shares Outstanding
MUTUAL FUND INVESTMENT STRATEGIES
Choose in funds consistent with your objectives,
constraints, and tax situation
Invest. Don’t speculate. (Stock market is not a casino)
Be regular
Own funds in different asset classes
Do your homework or hire wise experts to help you.
Monitor your investments at a regular interval. Remember, no
investment is forever.
Don’t panic.
40

41. 9/23/2011
DIRECT EQUITY VS MUTUAL FUNDS
Diversification
Professional Management
Transaction costs
Convenience / No demat account required
Blue Chip portfolio for as low as Rs. 500
High Service Standards
Transparency
WORLDWIDE MUTUAL FUND ASSETS
Worldwide MF Assets in Rs 1,097,00,000 crs (31st Dec’10)
India MF Assets in Rs. 7,00,538 crs (31st Mar’11)
0.63% of the worldwide MF assets
1 USD = Rs 44.40 as at Mar 31, 2011 (trillions of U.S. dollars, end of Dec 2010) Source: Investment Company Institute
41

42. 9/23/2011
US LEADS THE WORLD MUTUAL FUND MARKET
WORLDWIDE MF ASSETS BY TYPE OF FUND
Data as of Dec 2010 Source: Investment Company Institute
42

43. 9/23/2011
FACTORS TO CONSIDER FOR CHOOSING A FUND
Track record / experience of the fund house
Stability of the investment team / adherence to an investment process
Consistent performance of the fund across market cycles
Disclosure and service levels offered by the fund house
Relative performance among its peer group (across time periods)
Investment style (whether it suits your risk profile)
Look for Expense Ratio, Exit load etc
PERFORMANCE OF DIVERSIFIED EQUITY FUNDS
Sensex 9.77 32 7.51 22 11.47 16
Performance as at March 31, 2011
43

44. 9/23/2011
PERFORMANCE OF TAX-SAVING EQUITY FUNDS
Sensex 9.77 16 7.51 14 11.47 8
Performance as at March 31, 2011
PERFORMANCE OF BALANCED FUNDS
Performance as at March 31, 2011
44

45. 9/23/2011
INVESTMENT MODES
Systematic Investment Plan (SIP)
Invest a fixed sum every month. (6 months to 10 years-
through post-dated cheques or Direct Debit facilities)
Fewer units when the share prices are high, and more units
when the share prices are low. Average cost price tends to fall
below the average NAV.
Systematic Transfer Plan (STP)
Invest in debt oriented fund and give instructions to transfer a
fixed sum, at a fixed interval, to an equity scheme of the same
mutual fund.
Systematic Withdrawal Plan (SWP)
PATH TO BUILDING YOUR PORTFOLIO
45

46. 9/23/2011
SYSTEMATIC INVESTMENT PLANNING (SIP)
A long journey begins with a small step
DIFFERENCE IN APPROACH
Earn (Rs 1 lakh) Earn (Rs 1 lakh)
Spend (???) Save (Rs 20,000)
Save (???) Spend (Rs 80,000)
46

47. 9/23/2011
47

48. 9/23/2011
Rs 18 lakhs
investment in
SENSEX
growing to
Rs 3.46 crores
in 30 years
48

49. 9/23/2011
SIP CALCULATIONS
My
retirement
portfolio at
the end of my
50th Birthday
Atleast
15 crores
Monthly
pension
Rs 12 lakhs
SIP CALCULATIONS
Monthly Amount Rs 50,000 Rs 1,00,000 My
Period 10 years 10 years retirement
Total Investment Rs 60,00,000 Rs 1,20,00,000 portfolio at
Return @15% Rs 1,37,60,852 Rs 2,75,21,705 the end of my
Return @20% Rs 1,88,04,764 Rs 3,76,09,529 55th Birthday
Period 25 years 25 years
Total Investment Rs 1,50,00,000 Rs 3,00,00,000 Atleast
Return @15% Rs 16,21,76,480 Rs 32,43,52,961 85 crores
Return @20% Rs 42,42,64,335 Rs 84,85,28,670
You earn regularly,
You spend regularly,
Why not invest regularly?
49

50. 9/23/2011
50

51. 9/23/2011
51

52. 9/23/2011
52

53. 9/23/2011
GOAL - ADITI’S EDUCATION
Current investment – Rs 10,000 p.m
Tenure – 25 years
Expected Rate of return – 18%
Aditi’s estimated wealth on her 25th Bday – Rs 5,82,33,121
GOAL - ADITI’S MARRIAGE
Current investment – Rs 10,000 p.m
Tenure – 30 years
Expected Rate of return – 18%
Aditi’s estimated wealth on her 30th Bday – Rs 14,32,52,892
53

54. 9/23/2011
SIP VS STP
54

55. 9/23/2011
TWO GREATEST INVESTMENT BLUNDERS
1. Investing in the NFOs
2. Investing in the schemes which
gives high dividends
INVESTING IN NFOS
Its new (Old wine in a new bottle, participate in India’s
growth potential)
Its at Rs 10 i.e its cheaper than a existing fund whose
NAV is Rs.110
My friend / relative is buying it
My distributor / agent has strongly recommended it.
I can make good profit in the short term
55

56. 9/23/2011
RS.10 OR RS.100 - NAV MAKES NO DIFFERENCE
DOES NAV MATTER?
56

57. 9/23/2011
DON'T FALL FOR THE DIVIDEND BAIT
The NAV falls to the extent of dividend payout
Expense incurred on advertisement campaigns for
spreading the word goes from your fund
If the basis of investing in a scheme is flawed, so is
the investment
MF EXPENSES
Initial Issue Expenses :
One time expense
Born by the AMC
Earlier 6% charged to the scheme
Recurring Expenses :
These can be charged to the scheme.
57

58. 9/23/2011
FEES
SEBI has stipulated the following annual limits on recurring
expenses (including management fees) for schemes other than
index schemes:
Avg weekly New asset Max Expenses for Max Expenses for
Crore)
(Rs Crore) Equity Scheme Debt Scheme
First 100 2.5% 2.25%
Next 300 2.25% 2%
Next 300 2% 1.75%
Above 700 1.75% 1.5%
The management fees cannot exceed :
1.25% on the first Rs 100 crore of net assets of a scheme
1.00% on the balance net assets
FEES BREAK-UP
Fees of various service providers, such as Trustees, AMC, Registrar &
Transfer Agents, Custodian, & Auditor fees
Selling expenses including scheme advertising and commission to the
distributors
Expenses on investor communication, account statements, dividend /
redemption cheques / warrants
Listing fees and Depository fees
Service tax
Expenses cannot be charged to the scheme
Penalties and fines for infraction of laws.
Interest on delayed payment to the unit holders.
Legal, marketing, publication and other general expenses not attributable to
any scheme(s).
Expenses on general administration, corporate advertising and
infrastructure costs.
58

59. 9/23/2011
MF TAXATION
Short Term Capital
Long Term Capital
Gain Tax
Gain Tax
Mutual Funds (holding period
(holding period >
< 12 months)
12months)
Equity 15%* Nil
As per your tax slab 10% / 20%*
Debt
*Additional education cess of 3% on the amount of tax
$ Additional surcharge of 5% and an education cess of 3% on the amount of tax
%
WARNING SIGNALS
Fund's management changes
Performance slips compared to similar funds.
Fund's expense ratios climb
Independent rating services reduce their ratings of the
fund.
Change in management style or a change in the
objective of the fund / Scheme Mergers.
59

60. 9/23/2011
BUYING MUTUAL FUNDS
Contacting the Asset Management Company directly
Web Site
Branch Offices
Mutual Fund Agents / IFAs
Locate one on AMFI site
Financial Planners
ASK Wealth
Sykes & Ray FP, IMM, Parag Parikh FAS
National Distributors
Birla Sunlife, Bajaj Capital, India Infoline
Banks
Net-Banking
Branch Banking / Relationship Managers
ATMs
Online Platform
Fund Supermart, ICICI Direct, Motilal Oswal, Indiabulls
KEEPING TRACK…
Filling up an application form and writing out a
cheque = end of the story… NO!
Periodically evaluate performance of your funds
Fact sheets and Newsletters
Websites
Newspapers
Professional advisor
60

61. 9/23/2011
Mutual Fund investments are subject to market risks.
Please read the SID and SAI carefully
and consult your
financial advisor before investing.
SOURCE
Sundaram BNP Paribas Mutual Fund
Religare Mutual Fund
UTI Mutual Fund
ICICI Prudential Mutual fund
www.valueresearchonline.com
www.outlookmoney.com
Fidelity Mutual Fund
The Finance Literates blog
Bloomberg
61

62. 9/23/2011
62

63. 9/23/2011
THANK YOU
For any further information, please contact:
Mr. Gajendra Kothari, CFA, CAIA, ICFA
M:+91 90043 89883
E: gajendra.kothari @eticawealth.com
Ética Wealth Management Private Limited
501, T-39 Sunshine Building,
Shastri Nagar, Lokhandwala Complex Road,
Andheri West, Mumbai - 400 053
Landmark: Suburban Diagnostics, Near Lokhandwala Circle
T: +91 22 2632 9644
+91 22 4264 8740
E: info@eticawealth.com
63