Skip to main content

IDFC CAPITAL PROTECTION ORIENTED FUND SERIES 1

Product Isn't As Liquid As Fixed Deposits, Exit Is Only Through Stock Exchange Where Liquidity Is Uncertain




THERE is a class of investors who are unhappy with fixed deposit rates but do not want to take chances with their capital. It is keeping such investors in mind that IDFC Mutual Fund has launched the first in its series of capital protection-oriented funds. These funds allow a conservative investor to participate in equity markets, while at the same time the asset allocation is such that investor capital is protected at all times.

THE FUND

IDFC Capital Protection Oriented Fund (Series 1) is a closed-ended mutual fund that seeks to protect capital by investing in high-quality fixed income instruments which mature at the same time as the scheme. It will also seek capital appreciation by investing in equity and equity-related instruments. The tenure of the fund is 36 months.

INVESTMENT STRATEGY


The fund manager will invest between 84% and 100% of the invested funds in highquality debt instruments. This investment will grow over 36 months of the total initial investment you made in the fund at the time of its inception. The remaining 0-16% of amount will be invested in equities. The strategy ensures that you get your capital back whatever happens with equity investments. This way the fund aims to offer you an opportunity to invest in equities without risking your entire investment.


TARGET AUDIENCE

Clearly, the target is traditional fixed income investors. The only difference between a fixed deposit and such a fund is that returns on fixed deposit are known to investors at the time of investing. However, in case of this fund, the returns are not known in advance, though investors can expect a return of capital.

TAXATION

On the taxation aspect, the fund is a sure shot winner. The fund scores over a fixed deposit as the returns earned in this product are taxed at lower of 10.3% without indexation, or 20.6% with indexation like a debt mutual fund, whereas the fixed deposit returns are taxed at 30.9%.

SAFETY


The fund is rated AAA (SO) by CRISIL. The rating only indicates highest degree of certainty regarding payment of face value of investment to unit holders on the maturity. The rating does not indicate any stability of NAV before maturity. A point to note is that the rating is not a guarantee that investors will get their money back.

FUND DETAILS


The minimum investment has been fixed at Rs 5,000. The scheme has growth and dividend options. Benchmark for the scheme is CRISIL MIP blended index. Ashwin Patni is the fund manager to the scheme. There is no entry or exit load. The scheme being a closed-ended scheme, the only exit is through the stock exchange where liquidity is low. As such, there is no guaranteed exit at NAV before the maturity date. The new fund offer closes on March 24, 2010.

WHY INVEST:

To invest in equities to earn higher returns over traditional fixed deposits without risking your capital.

WHY NOT INVEST:

The product is illiquid. Being close-ended structure, it reduces the probability of exit at NAV since the only exit is through stock exchange, where liquidity is uncertain.

 


Popular posts from this blog

Bear markets may kill, but bulls always return with vengeance

Average Gain Between Any Two Downturns Has Been 186% IF you have lost a fortune in shares by now, the best way to make it up perhaps could be by buying some more. Since the Great Depression of 1929, the world has undergone 12 major bear market phases. The average bear market has lasted about 22 months, and the market has fallen by an average of 51%. However, the average gain during the bull market between any two downturns has been an eye-popping 186%. The index here in question is the S&P 500. Bull markets — after every recessionary phase — have always been good for investors. All major bull rallies since end-1930 have resulted in markets gaining between 50-500%. Historic numbers show that the magnitude (size or breadth) of a bull market is much heavier than that of a bear market. The million dollar question is: Are we at the threshold of another bull market rally? Markets could go up intermittently, but convincing rallies will take time to happen. The current bear phase is...

Stick to Good Fund Manager who Can Multiply Your Investment

A manager may be the difference between the best and worst funds. Here's how you can find the right one    Does a mutual fund manager make a difference to your investment? The answer may not be as easy as you think, since most best-performing mutual funds have moved away from individualistic fund management to process-driven methods, limiting the scope of an individual's role in investment decisions. In fact, many fund managers would speak at length about how the "system" their fund house has in place makes their task of picking stocks easy even though it restricts their freedom. Still, the question is important, especially after recent reports that the Securities and Exchange Board of India ( Sebi ) may ask fund managers to disclose to investors their track record of managing money. Let us take a look at the universe of large-cap funds over the past five years. According to Value Research, an independent mutual fund tracking firm, the topper in the category is DSP...

NRIs and direct taxes code (DTC)

DTC Proposes To Do Away With Special Provision That Allows NRIs Liberalised Duration Of Stay In Country      THE new direct taxes code could bring a large number of global Indians under the tax net, as it does away with a provision that allowed individuals to escape tax in any country citing double tax avoidance.    The new legislation, introduced in Parliament on Monday, says an individual shall be a resident of India in any financial year if he is in the country for more than 59 days in that year, and has been has been India for more 365 days in four preceding financial years. A number of Indian industrialists including Vedanta's Anil Agarwal and Essar's Ravi Ruia have acquired non-resident status over the years.    The DTC has only attempted to clean up the provision in line with the laws globally. A phrase "being outside India" in the existing income tax law exempted individuals who stay outside the country for six months from paying taxes. This was prone ...

Tata Fixed Income Portfolio Fund dividend

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)       Tata Mutual Fund has announced dividend under the dividend option of Tata Fixed Income Portfolio Scheme B2 Plan A-DQ, Tata Fixed Income Portfolio Scheme B2 Reg-DQ and Tata Fixed Income Portfolio Scheme B2 Direct-DQ. The record date has been fixed as August 29, 2013. Happy Investing!! We can help. Call 0 94 8300 8300 (India) Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com --------------------------------------------- Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C. Invest Tax Saving Mutual Funds Onlin...

EPFO will Invest through ETFs

  EPFO set to invest more through ETFs   Labour minister says decision on increasing investments from 5% to 15% of deposits to be taken this week.   Retirement fund body EPFO will this week decide on in creasing investments in stock markets through ETFs , as they have started giving returns, Labour Minister Bandaru Dattatreya has said.   "A report will be presented before the Central Board of Trustees on (ETF) investments of the EPFO on July 7. Now the report is positive. We will decide quantum of percentage increase. According to the percentage (increase), the amount of investment will also increase," Dattatreya said.   An ETF trades like an individual stock in the market and is generally a basket of various securities such as shares, bonds, commodities and indices. The EPFO started investing in ETFs last August. It had started by investing 5% of its investible deposits in ETFs last fiscal. Now, there is a move to increase the pro portion of such investments in this fisc...
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