My wife and I jointly have about Rs 10 lakh to invest. I want to invest this amount in 2 pension plans (Rs 5 lakhs each, single premium) in my wife's name. My wife wants to retire after 10 yrs and wants a regular pension and some corpus after this period. The risk appetite is medium to high. We do not want to invest in a regular annual premium plan. Please advice us on which pension plan to invest in as most of them are new and don't have much of a track record. I gather that some of these plans also guarantee minimum returns.
- Vineet
It is a wise decision to plan your retirement. As you said, most of the pension plans offered in India by various Life Insurance Companies are not very high yielding products and are relatively new. Nowadays, companies are offering the hot selling ULIP (unit linked investment plans) which have high cost associated with them. Plus it's always tough to decode a ULIP because of its complex structure and various associated charges. After the vesting age, the companies propose to buy an annuity for you for the fund value amount.
But, as you still have ten years to retirement, it is advisable to invest in good diversified mutual funds. You can make a well balanced portfolio with a mix of equity and debt by choosing from various five or four star rated funds, from the equity diversified, balanced, debt or MIP category. The debt funds and the MIPs would help balance your portfolio as they invest primarily in debt. This would help you reduce the down side risk. Instead of putting all your amounts in one go, it is better if you spread the investment over 12 months. Once you invest the amount, you can continue to remain invested for 7-8 years. After that, as your retirement age nears, you can start moving your equity investments completely to debt for securing your corpus. This way you can build a huge retirement corpus.
Once you build your corpus in ten years time and wish to start having a monthly income, you can put the whole amount in a Debt Fund. From this fund you can choose a fixed amount that you need every month and enroll for a SWP (Systematic Withdrawal Plan). Alternatively you can put the whole amount in a Fixed Deposit or some post office scheme to get a guaranteed return.
The above given investment approach will help you build a healthy and secure retirement corpus.
(Source: Value Research)
Mutual Fund News update from Nishit Doshi (9824021680) a leading MF Advisor based in Ahmedabad. Gujarat.
Tuesday, December 4, 2007
Sundaram BNP Paribas Smile Fund declares Dividend
Sundaram BNP Paribas Mutual Fund has announced a dividend of Rs. 6 per unit on the face value of Rs. 10 under Sundaram BNP Paribas Smile Fund.
The record date for the same is
No Crash In Near Future
Ashwani Kumar has over 10 years of experience in the financial services industry and has worked with Zurich Asset Management Company, which was later bought over by HDFC Mutual Fund. In Reliance AMC he has been managing Reliance Vision, one of the best equity funds, since January 2004. He has also been in charge of Reliance Taxsaver since its launch in August 2005. Kumar holds a B.Sc degree and is an MBA in finance.
Do you see a market crash in the near future?
Barring unforseen circumstances in the global markets, one does not see any reason for a crash in the market in the near future.
Large cap with growth bias.
Which are your top sector preferences?
Domestic capital spending related themes
Global Outsourcing
These are the preferred themes for this fund. However, the sectoral view is a guiding principal and the fund has a strong focus on absolute stock returns.
(Source: Value Research)
New Funds - LIC Top 100 Fund
LIC Mutual Fund has come out with a three-year close ended equity fund- LIC Top 100 Fund. The scheme aims to provide long term capital appreciation from a portfolio of equity and equity related instruments primarily drawn from the companies which are a part of CNX 100 Index. However, the weightage contributed towards each of the company in the portfolio may not be same as the company's weightage to the CNX 100 Index.
This fund would automatically be converted into an open ended fund after the expiry of three years. Although there is no entry or exit load during the new fund offer period, the fund may charge initial issue expenses upto a maximum of 6 per cent of the amount mobilised to the scheme, which will be amortised over the three-year tenure of the fund.
Scheme Details
Issue Opens: November 15, 2007
Issue Closes: December 14, 2007
Type: Close-end, equity fund
Benchmark Index: CNX 100 Index
Minimum Investment: Rs 5,000
Load: Nil
Cost: Initial issue expenses, not exceeding 6 per cent of the corpus collected, would be amortized on a daily basis over the three-year close-ended tenure of the scheme
Ms. B. Mahapatra is the designated fund manager for the scheme. She has been with LIC of India for 11 years but in different roles. Ms. Mahapatra has been managing four schemes in LIC Mutual since January 2004- LICMF MIP (Hybrid: Monthly Income), LICMF Children's Fund (Hybrid: Debt Oriented), LICMF Balance Fund (Hybrid: Equity Oriented) and LICMF India Vision (Equity: Diversified).
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Performance History: LIC AMC
LIC Mutual Fund was incorporated in the year 1989. Currently it has assets worth Rs 13,937 crore under management. The fund house's 9 equity fund offerings contribute over Rs 932 crore to its total assets under management. However, their performance record is not too encouraging. Out of its six rated equity funds, three are rated 1-star, one is rated 2-star, while LICMF Sensex Advantage and LICMF Index Sensex have a 3-star rating.
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Opinion
The fund house lacks a good performance record for its actively managed equity funds. Hence, investors should avoid investing in this latest equity fund of LIC Mutual Fund.
(Source: Value Research)
HDFC Funds out of steam?
The HDFC Equity Fund and the HDFC Long Term Advantage Fund seem to have run out of steam. Is it advisable to continue investing in them or is it time to exit from these two funds?
- Anonymous
The HDFC Equity Fund and HDFC Long Term Advantage Fund have been two of the best performing funds in their respective categories, but are going through a rough patch of late. However, such short term fluctuations should not alter your investment strategy and force you to sell your quality investments.
- Anonymous
The HDFC Equity Fund and HDFC Long Term Advantage Fund have been two of the best performing funds in their respective categories, but are going through a rough patch of late. However, such short term fluctuations should not alter your investment strategy and force you to sell your quality investments.
As on November 8th 2007, HDFC Equity has generated a return of 38.76 per cent on a year to date basis, almost matching its category average. One cannot classify this as a poor performance, but it is evident that when compared to peers, the fund has not done well. The fund however continues to have a 5-star rating, and is one of the best core picks.
HDFC Long Term Advantage has been a laggard in the ELSS category in the recent past. In the past one year (as on November 8, 2007) the fund has returned a disappointing 30 per cent whereas the category average has been 45.42 per cent. If you have plans of selling your investments exactly after three years, then you could perhaps think of routing your future tax saving investments in better performing ELSS funds which have outperformed the category in the recent past.
(Source: Value Research)
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