Skip to main content

Mutual Funds Scheme Consolidation

Best SIP Funds to Invest Online 

To select schemes, investors will have to look at fund manager credentials, stock selection capabilities, duration and credit management across rate cycles with regard to debt schemes.                    

The move by market regulator SEBI to categorise and rationalise mutual fund schemes is a practical step. It simplifies and standardises mutual fund offerings, rationalises the number of schemes offered and helps investors make better decisions.

Here are the key takeaways of the move:

  1. It simplifies and standardises mutual fund offerings not just by classifying mutual funds across specific categories like equity, debt, hybrid, solutions oriented and others, but it also defines the investment mandate of each scheme.
    • Equity schemes have been classified into 10 different buckets (besides index funds) from large cap funds to sector funds
    • Debt schemes have been classified in to 16 different buckets, from liquid fund to long duration fund to credit risk fund
    • Hybrid category is demarcated in to six buckets from conservative hybrid fund to aggressive hybrid to dynamic asset allocation to multi asset fund. Interestingly the multi asset fund is redefined as the one that invests in minimum three asset class with minimum allocation to each being 10% (foreign securities will not be treated as an asset class).
    • Solution oriented funds offer investment solutions for children and retirees and
    • Others category define guidelines for index funds and fund of funds (both overseas and domestic)   
  1. It rationalises the number of schemes offered by fund houses since no asset management company can have more than one fund per category. This leads to merging of certain schemes with more or less same investment mandate within the fund family. Furthermore, certain schemes are transitioning into new investment mandates – a fund house offering two large cap funds will not have to merge these schemes or may change the mandate of one fund. One of the large cap funds can now be a multicap fund, etc.
  1. It enables investors to not just to make right peer group comparison with different fund categories, but also have clearer asset allocation strategies in place. For example, the circular defines a company that falls within the first 100 companies in terms of full market capitalisations as large caps, midcap if it falls between the 101st and 250th company and small cap if beyond the 250th company.

This new norm has sound and lasting benefits for both fund managers and investors in the long run as it leads to better defined investment strategy of funds and easier evaluation of such funds on investor's part. However in the near term, it poses a few challenges to both sides of the investment community. Fund managers have to re-orient their portfolios as per the new mandate and investors will have to review their fund holdings that have undergone change in investment strategy or merged into a fund that has a new investment objective.

For fund houses that have re-classified their product portfolio as per the new norms, it has led to certain schemes undergoing change in the fundamental attributes. For example on the equity side, a fund that used to predominantly invest in top 100 companies by market capitalisation is categorised as focused equity fund that can invest in no more than 30 stocks across market capitalisation now. Similarly, on the debt side, a fund investing mainly in AA and below rated bonds is re-categorised as ultra-short term fund.

Fundamental changes in the attributes of the scheme will lead existing investors to review allocations to such schemes so as to avoid any mismatch in investment objective and the scheme. To elaborate, funds undergoing change in investment objective/strategy will pose a challenge to investors that used to rely only on past history for investment decisions. An erstwhile multicap fund may now be a midcap fund offering different risk-return dynamics to investors.

Investors will have to add a qualitative layer of assessment in their fund selection criteria, i.e. fund manager credentials, stock selection capabilities with regard to different buckets of market capitalisation definition, duration and credit management across rate cycles with regard to debt schemes, etc. Investors will also have to make smart assessment of their existing portfolio and make adjustments accordingly over time to avoid any adverse tax impact.




SIPs are Best Investments when Stock Market is high volatile. Invest in Best Mutual Fund SIPs and get good returns over a period of time. Know Top SIP Funds to Invest Save Tax Get Rich - Best ELSS Funds

For more information on Top SIP Mutual Funds contact Save Tax Get Rich on 94 8300 8300

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

Popular posts from this blog

SBI Magnum Tax Gain Scheme 1993 Applcation Form

    https://sites.google.com/site/mutualfundapplications/tax-saving-mutual-funds-elss     Investment Details Basics Min Investment (Rs) 500 Subsequent Investment (Rs) 500 Min Withdrawal (Rs) -- Min Balance -- Pricing Method Forward Purchase Cut-off Time (hrs) 15 Redemption Cut-off Time (hrs) 15 Redemption Time (days) -- Lock-in 1095 days Cheque Writing -- Systematic Investment Plan SIP Yes Initial Investment (Rs) -- Additional Investment (Rs) 500 No of Cheques 12 Note Monthly investment of Rs 1000 for 6 months and quarterly investment of Rs 1500 for 4 quarters.
Read more

Birla Sun Life Tax Plan Online

Invest Birla Sun Life Tax Plan Online   An Open-ended Equity Linked Savings Scheme (ELSS) with the objective to achieve long-term growth of capital along with income tax relief for investment.   After a bad patch from 2008 to 2010, Birla Sun Life Tax Plan has made a big comeback in the last five years, with a particularly good run since 2014. The fund's rankings, which had slipped to two stars in 2011-12, recovered sharply to three-four stars in the last three years. The fund has delivered a particularly large outperformance over its benchmark and peers in the last couple of years. The fund's investment strategy focuses on a diversified and high-quality portfolio, with parameters such as capital ratios and balance-sheet strength used to judge quality. It uses a combination of top-down and bottom-up approaches to take sector/stock positions. The fund avoids highly leveraged plays. Staying more or less fully invested at all times, the fund parks roughly half of its portfoli
Read more

Should you Roll Over 1 year Fixed Maturity Plans?

The period between January and March typically sees an uptick in the launch of fixed maturity plans, or FMPs. Not this year. Instead, fund houses are busy rolling over or extending the tenure of their one- year FMPs launched last year to three years. Investors in one- year FMPs have a choice. Either redeem units or roll over to three years. If you exit now, your gains will be added to your income and taxed in line with your individual slab rate of 10, 20 or 30 per cent. If you stay invested for two more years, you pay 20 per cent tax with indexation benefit. Yields have softened in the past few months on expectations of a rate cut. If the central bank continues its soft monetary stance, yields are likely to fall further. In such a scenario, it makes sense for investors, particularly those in the 30 per cent tax bracket, to roll over their investments and lock in at a higher yield now. In a surprise move, the Reserve Bank of India cut repo rate by 25 basis
Read more

Mutual Fund Review: IDFC Premier Equity Fund

  IDFC Premier Equity Fund, which falls under the presumed high risk group of mid- and small-cap schemes, can rely on astute and timely equity picks. These make it less vulnerable to fluctuations compared with others in the category   IDFC Premier Equity Fund is designed to invest in upcoming, but promising businesses available at cheap valuations, and hold on to these businesses until they reap desired returns. The experiment has been successful so far, and IDFC Premier Equity has emerged as one of the top performing mutual fund schemes in the mid- and smallcap category of equity schemes.    While the scheme is an open-ended equity fund, i.e. open for subscriptions throughout the year, it has a unique philosophy to limit fresh inflows. Thus, while an investor can always take the systematic investment plan ( SIP ) route to invest in the scheme throughout the year, inflows through a lumpsum investment have been restricted. Since inception, IDFC Premier Equity has been opened for l
Read more

IDFC Premier Equity Fund dividend

  IDFC Mutual Fund   has announced dividend under the dividend option of   IDFC Premier Equity Fund Direct-D . The quantum of dividend shall be   R 4.3464 per unit.   The record date has been fixed as May 06, 2015. 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]
Read more
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