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Saturday, 23 September 2017

Mutual fund's Expense Ratio

Expense ratio tells that how much a fund is expending to run the business. Rest would be invested. We cant judge a fund on the basis of expense ratio. It is used for all type of expenses like salaries, agent commission, office expenses etc.

A good fund manager can charge more salary than the other fund manager. A newer fund house may offer higher commission to its agent. All these are included in expense ratio.

As per SEBI regulations, the maximum expense ratio of an equity fund can be 2.5% and for a debt fund, it should not cross 2.25%.it will additional allowance 0.3 per cent given for selling in Tier II and Tier III cities for equity schemes. The return from an fund returns is always exposed after such expense ratio.

The expense is charged on daily basis. Suppose some fine day NAV of a fund is 100rs and it is moved 5%then the final NAV would not be 105. If the expense ratio is 2% then the expense ratio for that particular day would be 2%/365 (that’s 365th part of 2% as charges, as it’s for 1 day, remember 365 days in a year) and the final NAV would be 105-0.5479=104.45rs.

So dont decide the fund to invest on expense ratio. Go for the fund which has good consistent CAGR return for 3 to 5 years. if there are two equally good performers and one has a lower expense ratio than the other, then you should perhaps go for the first one.

Friday, 22 September 2017

Mr. Market behaves same as our perspective

Today I was talking with one of my close relative.  I was trying to convince him to get invested in indian stock market for better return. He believes that investment in stock market is same as gambling. It is not even ethical. I must agree that I failed to convince him. After this I just think and found he is right that some people treat the share market as casino. They come only for quick money. Sometimes they succeed sometimes don't. And one final they they declare that it is gambling. Yes it is the perspective which determine our action and sometimes the result also.

I remember a story which we had in our school text book. Once upon a time, there lived six blind men in a village. One day the villagers told them, "Hey, there is an elephant in the village today."
They had no idea what an elephant is. They decided, "Even though we would not be able to see it, let us go and feel it anyway." All of them went where the elephant was. Everyone of them touched the elephant.

















"Hey, the elephant is a pillar," said the first man who touched his leg.
"Oh, no! it is like a rope," said the second man who touched the tail.
"Oh, no! it is like a thick branch of a tree," said the third man who touched the trunk of the elephant.
"It is like a big hand fan" said the fourth man who touched the ear of the elephant.
"It is like a huge wall," said the fifth man who touched the belly of the elephant.
"It is like a solid pipe," Said the sixth man who touched the tusk of the elephant.
They began to argue about the elephant and everyone of them insisted that he was right. It looked like they were getting agitated. A wise man was passing by and he saw this. He stopped and asked them, "What is the matter?" They said, "We cannot agree to what the elephant is like." Each one of them told what he thought the elephant was like. The wise man calmly explained to them, "All of you are right. The reason every one of you is telling it differently because each one of you touched the different part of the elephant. So, actually the elephant has all those features what you all said."
"Oh!" everyone said. There was no more fight. They felt happy that they were all right.

Markets are like elephants and we are like blind men. We believe that much only what we feel. Some people believe it gambling.  some people believe it need big money. Some think when they buy it falls and if they sell it will rise. Some think that they can hold the businesses of multiple types with small money. We should experience it before making any perspective. If you like gambling then it will be a Casino and if you want to own businesses then it will provide that also.  Mr. Market behaves same as your perspective about him, so it is up to us how we want to use this. But it the truth that if you come for a longer period and hold good businesses it will reward you. 

Disclosure : Image source is Google Image 

Tuesday, 12 September 2017

ICICI Lombard IPO



ICICI Lombard is General insurance company. It is incorporated in 2000.  It is a largest no-life insurance company in India based on gross direct premium income in fiscal 2017. ICICI Lombard is a joint venture between ICICI Bank and Canada-based Fairfax Financial Holdings Ltd. The company generated revenue of Rs 416.2 Crores for the year ended Mar-13 and Rs 983.6 Crores for the year ended Mar-17 that means i.e. it has revenue growth at about 24% for last 5 years. Its FY17 EPS is Rs 14.2 and 3 years average EPS is Rs 13.12.They mainly offers range of products, including motor, health, crop/weather, fire, personal accident, marine, engineering and liability insurance.

ICICI Lombard General Insurance Company’s initial public offering will open for subscription on September 15. ICICI Bank in a notification to the stock exchanges, said the IPO will close on September 19.

IPO Details as follows:

  • IPO open date: 15-September-2017
  • IPO close date: 19-September-2017
  • Face Value: Rs. 10 per share
  • Issue price band: Rs. 651 to Rs. 661 per share
  • Issue size: Rs. 5,700 Crores on higher price band
  • Lot size: 22
  • Minimum investment: 14542
  • Listing: BSE / NSE

Sunday, 10 September 2017

Tax Rule on Mutual Fund Gains


Indian retail investor continuously investing in equity market. The AMC (Asset Under Management) of all mutual funds are at record level. There are many new investors are looking to come in market with mutual fund route. In India there are following kinds of fund

  • Equity Funds: Equity Funds are those that invest in equity shares of listed companies
  • Arbitrage funds: Funds that trade through futures and options on the cash and futures sections of the stock market.
  • Debt fund: Funds that invest in debt (fixed income securities such as Govt. Bonds, corporate bonds, Certificate of Deposits, Money market and call money) are called debt funds.
  • Balanced Fund: Funds that invest in Debt instrument and Equity share are called Balanced Fund.
  • Liquid Fund: these funds invest in very short term debt instruments having a maturity period of less than 91 Days.
Before choosing any fund we need to know the objective, lock-in, entry/exit loads and tax implications of that particular fund. Here we will discuss about the tax implications of these kind of fund.

Any fund who invests 65% of its value in equity shares or equity related instruments like futures and options are comes under one bracket. Any gain on the investment that are held for minimum 12 months treated as long term capital gain. It is applicable to both SIP as well as Lumsump. As per the policy, there is no tax is applicable on the long-term capital gains from equity funds. Balanced Fund with minimum 65% exposure to equity and Arbitrage fund also share the same benefit. If the investment are less than 12 months old then the gains are consider as Short term capital gain. The tax on short-term capital gains is applicable at 15% on the gains. 

Tax implications are different in case of Debt funds. Investments in debt funds are considered long term only if they are held for more than three years. In case of Debt fund, the long-term capital gain is taxed at the rate of 20 per cent. However, investors get the benefit of indexation on their original debt fund investment. This indicates that the adjustment of original investment is done in accordance for the price if inflation and taxes. Since the original cost of investment goes up after factoring in inflation, long term capital gains tax comes to negligible levels. If we redeemed our debt fund investment before 3 years then then short term gains will be taxed according to our tax slab.

If investors opt for dividend option while investing in equity mutual funds. Dividend income from all kinds’ funds is tax-free, irrespective of when you receive it. But one thing need to mention here that fund houses have to pay dividend distribution tax @ rate of 28.84 per cent (including surcharge and CESS), which reduces the yields.

Friday, 8 September 2017

Mutual fund investments must now be linked to Aadhaar



As per the Prevention of Money Laundering Act (PMLA) Rules, 2017, now Adhaar is mandatory for Mutual fund investment. It has been made mandatory for mutual fund houses to obtain their customers' Aadhaar numbers and link the same to their respective accounts.

CAMS (Computer Age Management Services), has launched an online facility to link mutual fund investments to Aadhaar. Other R&T agents such as Karvy and Sundaram BNP Paribas Fund Services are yet to begin this service. Franklin Templeton Mutual Funds use Franklin Templeton Asset Management as an in-house R&T.

Here's how to link your mutual fund investments to your Aadhaar on CAMS:

Step 1: On the CAMS website, on top of the you will get the link


 Step 2: Fill EMAIL and PAN. After that, name all AMC will appear in which you have investment.

Step 3:Select All , fill AadhaarNo. And mobile no registered with Aadhaar, Click on Submit


Step 4: Now you need to enter OTP received on mobile on next screen. Click on submit


now you will get the confirmation page as below


Thursday, 7 September 2017

BharatMatrimony.com IPO

BharatMatrimony.com, incorporated in 2001, is an online match-making services provider. It is accessible through Websites, Mobile Apps and Mobile Websites. It is the leading online match-making services provider with 3.08 Mn free subscribers and 702,000 paid subscribers as of FY17.  As of June 30, 2017, they had 140 retail centers distributed across India where customers can walk in and register on their websites. BharatMatrimony has 15 language based domains under its umbrella.  

This company offers 
  1. Directory Services
  2. Photography & Videography
  3. Apparel
  4. Decorations
  5. Catering
  6. Venue Booking Services

The offer for sale shares include 14.6 lakh shares by Bessemer India Capital Holdings, 1.55 lakh equity shares by Mayfield and 16.83 lakh equity shares by CMDB II, apart from 3.84 lakh shares of Murugavel Janakiraman, the promoter of the company and 82,834 shares by Indrani Jankiraman, a member of the promoter group.

Issue Detail:
  • Issue Open: Sep 11, 2017 - Sep 13, 2017
  • Issue Type: Book Built Issue IPO
  • Issue Price: Rs 983 - Rs 985 Per Equity Share
  • Market Lot: 15 Shares
  • Minimum Order Quantity: 15 Shares
  • Listing At: BSE, NSE


Discount to Retail Investors


A discount of Rs 98 is offered to investors in retail category

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