Skip to main content

Goal Driven Investing in mutual funds

 

 

It's not easy for fund companies. Having run out of new equity themes or sectors, and with SEBI frowning on duplication of schemes, there is a dearth of ideas for new fund offers (NFOs). So, in this super competitive industry, one should not be too surprised at seeing a slew of goal-oriented schemes from fund houses. That's the new buzz in the NFO circles.

 

By introducing goal oriented schemes, fund houses appear to be replicating the strategy followed by insurance companies. The main advantage of such products is that it strikes an emotional chord with investors and helps them relate to the product in a much easier fashion rather than a fund which gets categorized according to market cap, such as a mid- or multi-cap fund.

To be fair, goal driven investing helps investors think through their priorities, identify goals and keeps them focused on what is important, rather than attempting to time the market. But end of the day, you can achieve the same by allocating your money in various investments and fund schemes of your choice. Annual rebalancing of your assets can also be done to ensure that the closer you get to your goal, the more you lower the equity exposure.

 

An investment worth mentioning here is the New Pension Scheme (NPS). Over here, as the investor ages, exposure to equity tapers by a certain percentage every year and gets diverted to debt. Unfortunately, there is a tax liability to consider - the investment in NPS is only eligible for a tax deduction at the time of contribution. However, fund management charges in NPS are just 0.009 per cent, much lower than the charges of a mutual fund. On the flip side, mutual funds provide liquidity that the NPS does not.

 

So do remember, whichever way you plan to invest, the principles of investing stay constant. If you want to invest in equity, it must be for the long haul. As you approach your goal, hike up the debt exposure. Finally, look at the tax aspect as well as the returns when deciding where to invest.

 

Actively Management Funds


Peerless Mutual Fund Child Plan
Launched in March 2011
The allocation varies between equity (5-35%), debt (60-80%) and Gold ETFs (5-35%).


Fidelity India Children's Plan
Launched in January 2011
The investment style of the plans range from aggressive to conservative. It is only the marriage plan that has the gold option for an asset class. The reason is obvious - it will provide a hedge against rising gold prices.


Tata Retirement Fund
Offer document filed with SEBI
The assets under these plans will be allocated based on the age of the investor. This fund offers an auto switch facility based on a pre-defined trigger, which is the age of the investor. It is available for the Progressive and Moderate plan. Under this facility, when a person reaches the age of 40, his investment will automatically move from a Progressive to Moderate plan. On reaching 60, it will move to the Conservative one.


The auto switch facility ensures that the corpus accumulated is invested in a more conservative manner so that capital erosion does not take place. But do note, a switch from one plan to another will be treated as a redemption and fresh purchase and will be liable for capital gains tax as well as Security Transaction Tax (STT).


For investors who do not wish to opt for the auto switch facility, they can stay or exit whenever they want to.

 

Fund of Funds (FoF)
There are two FoFs which follow the same goal-oriented style of investing. The fundamental difference being ICICI Prudential Lakshya restricts the investment universe only to the schemes of ICICI Prudential Mutual Fund. In the case of ING Optimix Financial Planning Fund, the universe includes schemes from 14 asset management companies (AMCs) and will not invest in any of the schemes from ING Mutual Fund.


ICICI Prudential Lakshya
Offer document filed with SEBI
This FoF has 10 plans of varying objectives such as child's education and retirement. Each plan has a specific target date according to which the asset allocation is based. As the target date approaches, exposure to equity reduces while that to debt increases. At the time of maturity, the investor has the option to either switch units to ICICI Prudential Liquid Plan, switch to a subsequent plan or redeem the units.


ING Optimix Financial Planning Fund
Launched in May 2011
The fund offers four plans- Cautious, Conservative, Prudent and Aggressive with investments made in four asset classes. Being a FoF, the investment will take place in a fund which invests in those assets. Investors can opt for any plan depending on their financial goals and can also invest in more than one plan simultaneously.

 

The online solution
Franklin Templeton Mutual Fund recently launched the Family Solutions Planner. It is a software tool which helps investors formulate an investment plan.


The individual needs to fill up a questionnaire online which will ask for certain basic details and specific goals. Three funds, from the fund house, are then recommended in each portfolio based on the portfolio style. There are five such portfolios - ultra conservative, conservative, moderate, aggressive, highly aggressive.


Similarly, Kotak Mutual Fund has also introduced a financial tool called Personal Goal Planner. On taking various inputs and preferences from the investor, it will provide information on the amount of money that an investor needs to invest per month in order to achieve his goal.

 

-----------------------------------------------------------------

 

Also, know how to buy mutual funds online:

 

Invest in DSP BlackRock Mutual Funds Online

 

Invest in Reliance Mutual Funds Online

 

Invest in HDFC Mutual Funds Online

 

Invest in Sundaram Mutual Funds Online

 

Invest in Birla Sunlife Mutual Funds Online

 

Invest in UTI Mutual Funds Online

  

Invest in SBI Mutual Funds Online

 

Invest in Edelweiss Mutual Funds Online

 

Invest in IDFC Mutual Funds Online

 

 

 

 

 

Popular posts from this blog

NPS Investment Choice for Safe Investors

Invest NPS Online       Whether they invested through SIPs or put in a lump sum amount, risk-averse individ uals have earned the highest returns. These are investors who stayed away from stocks and divided their NPS corpus between G class gilt funds and C class corporate debt funds. On average, gilt funds have given 9.75% annualised returns while corporate debt funds have churned out more than 11% in the past five years. As a result, the average return for ultra-safe investors in the past five years is in double digits. Even in the short term, ultrasafe investors have been the biggest gainers among NPS investors. Will the good times continue? The gilt funds of NPS are holding long-term bonds with an average maturity of over 19 years and a modified duration of about 9 years.These funds have done well because interest rate cuts have pushed down bond yields. But experts say this trend will not stay forever. NPS is a long-term investment and the bonds are predominantly held to matu...

Buy Health Insurance Plan even if you are covered with my Employer

Buy Health Insurance Plan Online Yes, getting a private insurance cover now, which extends beyond your retirement age, is recommended There are a few reasons why buying a health insurance plan may make sense even though you get medical insurance from your employer. Here are the points you need to think about. Firstly, your employer's insurance coverage will only protect you as long as you are employed with the company. The policy will terminate when you quit the job or when you retire. Post retirement is perhaps the phase when one needs it the most but you won't have it then. Moreover, buying a new insurance policy after the age of 50 means that there will be no coverage for pre-existing diseases.   Lastly, health insurance policy you get from your employer may or may not cover your dependants. ------------------------------ ----------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saver M...

Surrender ULPPs

  ICICI Pru LifeTime and ICICI Pru Lifestage are Unit Linked Pension Plans. Such insurance linked retirement plans are neither good investments nor do they offer sufficient insurance cover. As you can see, these have turned out to be bad deals. In the Lifetime plan, the fund value is not even equal to the total premiums that you have paid and in the Lifestage plan your return is just about 6% which is quite low. The mortality charges are as per your age which is why they have increased. Moreover, once these plans matures, you will have to compulsorily opt for annuity (regular income) and the annuity rates are generally modest. Assuming these plans mature in the next one year, it will be wise to surrender the plan now and curb your future commitments.   Before you choose to buy a term plan, you have to consider a few points. You need to insure yourself, only during the time you are working and your family is financially dependent on you. At the age of 59, not all insurance companies w...

Mutual Fund Review: Taurus Tax Shield

    Taurus Tax Shield has seen a turnaround in performance since 2007, but still remains a volatile offering… The fund has seen a turnaround in its performance since 2007 and has delivered impressively during market rallies since then. The portfolio is also more diversified. It contained its downfall to an average level in 2008 but is still one of the most volatile offerings in this category. Bold investors can look at this fund.   Strategy The fund manager invests across the market capitalisation and sectors. The selection of stocks is made on the basis of long-term business prospects and value creation. Fund Insight Launched in March 1996, the fund was a laggard with just two annual outperformances. Concentrated stock bets and high exposure to mid and small caps led to it being hit harder during market downturns. The number of stocks in the portfolio never exceeded 20 and it was not rare to see the top 5 holdings account for around 60 per cent of the portfolio. After b...

AXIS Long Term Equity Fund - The Best Tax Saver Fund for 2016

  AXIS Long Term Equity Fund - Invest Online   History:   The open ended mutual fund was launched on December 21 in the year 2009. It is benchmarked against BSE 200 and managed by the fund manager JINESH GOPANI. Initially the scheme was called as Axis tax saver fund but later it was renamed as Axis long term equity fund with effect from September 2, 2011. Nature of investment: As far as asset allocation is concerned, 97.52% of the stocks are equity and 0.02% is debt based. The primary focus of the fund is to invest in diversified equity stocks that have higher growth potential. Total asset size of the fund is in the tune of 4,996 CRORE as of June 30, 2015. Performance: The performance of the fund for one year, 3 years and 5 years are 23.6%, 29.9% and 19.1 respectively which are far greater than 6.4%, 14% and 5.6% benchmark figures. It has also preformed fairly well against SBI magnum Tax Gain (G) and HDFC tax saver (G). The growth comparison is enumerated below;                        ...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now