Skip to main content

US focused MFs

 With seven US-focused MFs, Indian investors have several options
Even as the Chinese stock market crash, compounded by the eurozone's Greek debt crisis, has seen investor confidence shatter, the US continues to offer hope to those interested in foreign markets. With seven US-focused mutual funds, offering diverse investment routes--direct investment with active fund management, fund-of funds and ETFs--Indian investors have several options to choose from.

WHY INVEST IN THE US?

The US has the world's largest equity market. At $23 trillion, its market cap accounts for 36% of global market capitalisation. A quarter of the Fortune 500 companies have their headquarters in the US. Indian investors can also get exposure to unique investment themes, such as aerospace, semiconductor, consumer technologies, e-commerce, etc, not available in the domestic market. Also, the correlation between the CNX Nifty and the S&P 500 Index has been very low--0.29 over the past 10 years.

The low correlation between the Indian and the US equity markets results in more effective diversification of the Indian investor's portfolio.

Having exposure to both the markets lowers your portfolio volatility . For instance, if you had invested in the Sensex, your standard deviation--a measure of volatility--over the past 10 years would have been 25.65%. But if you had constructed a portfolio with 80% weight in the Sensex and 20% in the S&P 500 Index, the standard deviation would have been just 17.74%.

The likelihood of rupee depreciating against the dollar is another reason to invest in the US market. Many Indians will have dollar-based liabilities in the future with children's education or travel plans. Being invested in dollarbased assets will protect your portfolio.

If you are building your international portfolio country-wise, and not via a diversified international fund, then the US market should be your top priority .

DRAWBACKS AND RISKS

After several years of outperformance, valuation in the market is no longer cheap. Even if corporate profit margins do not revert to their historical mean, the current valuation levels appear stretched.

Currency movements also pose risks.The strengthening of the dollar against many of the world's currencies could affect corporate earnings in the US as almost 40% of the sales of S&P 500 companies are from abroad. Also, since all the US-focused funds have more than 65% of their portfolio invested in foreign funds or shares, they will be treated at par with debt funds for ax purposes in India. Which means you'll need to stay invested for at least hree years to avail of long-term capital gains benefit.

WHAT SHOULD YOU DO?

Despite the markets' elevated valuations, Indian investors should have some exposure to US funds in their long-term portfolios.

Investors should invest via SIPs and have at least a five-year horizon to overcome the risk arising from high valuation. Allocate 5-10% of your equity portfolio to these funds.


 


Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015

1.ICICI Prudential Tax Plan

2.Reliance Tax Saver (ELSS) Fund

3.HDFC TaxSaver

4.DSP BlackRock Tax Saver Fund

5.Religare Tax Plan

6.Franklin India TaxShield

7.Canara Robeco Equity Tax Saver

8.IDFC Tax Advantage (ELSS) Fund

9.Axis Tax Saver Fund

10.BNP Paribas Long Term Equity Fund

You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds

Invest in Tax Saver Mutual Funds Online -

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

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

Leave your comment with mail ID and we will answer them

OR

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

OR

Leave a missed Call on 94 8300 8300

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

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Popular posts from this blog

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...

National Savings Certificate

National Savings Certificate Here's everything you need to know about the 5-year savings scheme offered by the Government This is a 5-year small savings scheme of the government. From 1 July 2016, a National Savings Certificate (NSC) can be held in the electronic mode too. Physical pre-printed NSC certificates have been discontinued and replaced with Public Provident Fund-like passbooks. What's on offer The minimum amount you can invest in them is Rs100 and there is no upper limit. Under this scheme, all deposits up to Rs1.5 lakh qualify for deduction under section 80C of the Income-tax Act, 1961. The interest earned is taxable. You can invest in multiples of Rs 100. These certificates can be owned individually, jointly and also on behalf of minors. The interest rates for all small savings schemes are released on a quarterly basis. The effective rate for NSC from 1 October to 31 December is 8%. The interest is calculated on an annual compounding basis and is given along w...

Mutual Fund Review: HDFC Index Sensex Plus

  In terms of size, HDFC Index Sensex Plus may be one of the smallest offerings from the HDFC stable. But that has not dampened its show, which has beaten the Sensex by a mile in overall returns   HDFC Index Sensex Plus is a passively managed diversified equity scheme with Sensex as its benchmark index. The fund also invests a small proportion of its equity portfolio in non-Sensex scrips. The scheme cannot boast of an impressive size and is one of the smallest in the HDFC basket with assets under management (AUM) of less than 60 crore. PERFORMANCE: Being passively managed and portfolio aligned to that of the benchmark, the performance of the index fund is expected to follow that of the benchmark and in this respect, it has not disappointed investors. Since its launch in July 2002, the fund has outperformed Sensex in overall returns by good margins.    While every 1,000 invested in HDFC Index Sensex Plus in July 2002 is worth 6,130 now, a similar amount invested in Sensex then wo...

IDFC - Long term infrastructure bonds - Tranche 2

IDFC - Long term infrastructure bonds What are infrastructure bonds? In 2010, the government introduced a new section 80CCF under the Income Tax Act, 1961 (" Income Tax Act ") to provide for income tax deductions for subscription to long-term infrastructure bonds and pursuant to that the Central Board of Direct Taxes passed Notification No. 48/2010/F.No.149/84/2010-SO(TPL) dated July 9, 2010. These long term infrastructure bonds offer an additional window of tax deduction of investments up to Rs. 20,000 for the financial year 2010-11. This deduction is over and above the Rs 1 lakh deduction available under sections 80C, 80CCC and 80CCD read with section 80CCE of the Income Tax Act. Infrastructure bonds help in intermediating the retail investor's savings into infrastructure sector directly. Long term infrastructure Bonds by IDFC IDFC issued an earlier tranche of these long term infrastructure bonds on November 12, 2010. This is the second public issue of long-te...

Different types of Mutual Funds

You may not be comfortable investing in the stock market. It might not seem like your cup of tea. But you can start by investing in Mutual Funds. Many first-time investors invest in Mutual Funds. This is because they do not know how to invest in individual securities. Basic information on Mutual Funds People invest their money in stocks, bonds, and other securities through Mutual Funds. Each Fund has different schemes with specific objectives. Professional Fund Managers look after these schemes. Your Fund Manager could help you invest in a scheme that suits your financial goal. Functioning of Mutual Funds You could make money through Mutual Funds in different ways. A single Mutual Fund could hold many different stocks, bonds, and debentures. This minimizes the risk by spreading out your investment. You could earn dividends from stocks and interest from bonds. You could also earn capital by selling securities when their price increases. Usually, you could choose to sell your share any t...
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