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Funds are hiking your exit barrier One of the worst aspects of mutual fund returns is the cost you pay for the privilege of having your money ‘managed’. After all, the revenues and profitability of fund companies are directly linked to how much they can extract from you. They don’t make or...

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Funds are hiking your exit barrier One of the worst aspects of mutual fund returns is the cost you pay for the privilege of having your money ‘managed’. After all, the revenues and profitability of fund companies are directly linked to how much they can extract from you. They don’t make or lose...

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Even with generous tax benefits, bond funds don’t beat bank fixed deposits by a wide margin Indian stocks may have delivered great returns over the past five years but a lot of people are still wary of investing in stocks. They don’t want to take the risk. They want to buy bonds or put money in...

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A recent summit of mutual funds (MFs) generated a plethora of ideas on the future of fund industry and how it can grow. Many of the ideas are self-serving; others smack of ignorance. Here is selection of views aired at the summit and our comments RETAIL INVESTORS If the MF industry relies on...

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Fidelity Forward India Fund is a run-of-the-mill idea from a fund house with a very average performance Fidelity has filed a draft prospectus for Fidelity Forward India Fund, which is a plain vanilla equity diversified fund. It will invest in the same set of instruments as any other equity fund...

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Many funds were sitting on loads of cash before the big rally One of the key tenets of mutual fund management is to stay fully invested – or almost fully invested – at all times. This idea is in turn derived from another belief of the fund management business. Fund managers argue that you...

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UTI is merging schemes, but for whose benefit? Unit Trust of India has been in the business of mutual funds for decades now. Through these years it has come out with over 90 schemes, of which 29 are equity-related schemes. It launched UTI Infrastructure Advantage Fund in January 2008 just...

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Small- and mid-cap stocks are shooting up; not the schemes that aim to take advantage from their rise A strong global rally, declining inflation rate, interest rate cuts and positive signs in global economic data after several stimulus packages have ensured that the Indian stock indices have...

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We had asked you to avoid SIPs in late 2006. We are suggesting that you buy them now but in a different way In the MoneyLIFE issue of 14 September 2006, we had pointed out that using the systematic investment plan (SIP) is bad for your wealth. SIP is a planned investment programme under which a...

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Some funds were significantly in cash at the market peak last year. Yet, they were not the year’s best performers The cornerstone of the mutual funds’ investing process is to stay invested most of the time and not try to time the market. The basis for this is the assumption that nobody knows...

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Many funds are sitting on illiquid stocks Careful stock selection, rather than right entry into a stock and exit is the most important aspect of investing. But fund managers have to keep in mind another aspect: liquidity. That is why they try to avoid small companies. In fact, large foreign...

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Is mutual fund performance driven by skilful stock picking or solely by the market direction? Fund houses and their managers claim special expertise in stock-picking skills and various strategies of portfolio construction that they apply to earn market-beating returns. Unfortunately, this is...

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Sector funds are supposed to focus on a single sector. But to create performance, they diffuse their focus The primary objective of most fund companies is amassing more and more assets through an ever-lengthening list of fund ideas. One such idea is sector fund. Sector funds invest entirely or...

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Why do the portfolios of contra funds look exactly like large-cap diversified equity funds? Debashis Basu provides the answer When you think of a contra fund, what would usually come to your mind? Funds that stay away from what the rest of the crowd herds into? Funds that would tend to rely...

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Equity funds that have done well in the December quarter had a low exposure to equities and held more cash As the market showed signs of stabilising towards the end of the year, mutual funds have turned in a relative outperformance. Of the 193 equity diversified growth funds, excluding...

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The first fund by a foreign fund company has completed 15 years. It has not been a memorable run In 1994, investors stood in long queues to put money in the first fund launched in India by a foreign fund management company – Morgan Stanley. The foreign name was a big draw, as was the 40%-60%...

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Without some sense of when to buy, you will get poor returns and evenlose capital invested in a fund One of the key tenets of the fund industry is that it is impossible to time the market and, therefore, you should remain invested through ups and downs, through thick and thin. Wrong advice....

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The worst time is when they are offered as lollipops The business of mutual fund industry rests on a strange paradox. Investors should buy funds when the market is down. But they don’t – for a variety of irrational factors. So, fund companies don’t have much of a choice in when to launch funds....

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Gold was languishing at US$741 on 11th September. Over the next two days, it jumped to US$780, paused there for a day and then, suddenly, in just two days flat (17th and 18th September), it jumped to hit almost US$910. This astounding two-day move was caused by the financial crisis that has hit...

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Madhusudan Kela, head equity, Reliance Mutual Fund, is among those rare fund managers with a known prowess of handling the largest and the best funds in India, having seen all kinds of market cycles. In a career spanning two decades, Kela has been associated with Peregrine Securities, UBS...

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