Now Mutual Funds cannot restrict redemptions at will…

The recent circular from SEBI on May 31st has put several conditions for restriction of redemptions by mutual funds. Currently, mutual funds can decide to freeze redemptions on any scheme if the Board of the AMC and the Board of the Trustees agree to it. We recently saw the case J P Morgan Mutual Fund. It two debt funds had and exposure of nearly Rs.193 crore to the bonds of Amtek Auto. When Amtek got into financial trouble, the bonds were downgraded by CRISIL. This led to a crash in the price of these bonds. With these bonds becoming illiquid, there was no way the fund could have handled redemptions. As a result they had to freeze redemptions, till the issue had got sorted out. Continue reading

Equity Mutual Funds

Will they continue to dominate equity markets in 2016?

The big story of the Indian equity markets in 2015 was the emergence of mutual funds as a serious player. Post 2009, equity mutual funds had seen fund outflows for each quarter, for five years till the first half of 2014. Post mid-2014, retail money has come back in droves into mutual funds. In the calendar year 2015, nearly $15 billion was invested by retail investors into equity mutual funds. So how did it impact Indian markets? Continue reading

Common myths to overcome about mutual funds…

Mutual fund investors generally become the victims of common myths pertaining to mutual funds as an investment product. These myths either emerge from an inadequate understanding of the mutual fund product or the way the product is marketed by the mutual funds themselves. It is however, necessary to overcome these 7 myths as they are critical in helping you take an informed and intelligent decision about your mutual funds. Here are the 7 myths you need to overcome before investing in mutual funds… Continue reading

Why it is essential to understand the tax treatment of mutual funds…

It is already a well-understood fact that mutual funds offer the best way for retail investors to participate in the markets. With the benefit of professional management and the benefit of diversification, mutual funds are in a position to outperform markets over a longer period. Thus they offer the best means of creating wealth over the long term. Mutual funds have another important role to play. They are extremely critical to help meet our long term goals. Typically, goals include our requirements like capital appreciation, liquidity, tax efficiencies, synchronizing withdrawals, timing redemptions etc. The beauty of mutual funds is that they have a wide variety of schemes like equity funds, debt funds, variable rate funds and money-market funds etc which are suited to each of these unique needs. Continue reading

Mutual Fund Performance & Trends 2015

How mutual funds have fared in 2015…

The year 2015 has not been too charitable to the equity markets. The Nifty did rally in the early part of the year and crossed the 9000 mark. Post-March, the markets have lost close to 15% and have suffered repeated bouts of volatility. In this entire melee, Indian mutual funds have come out trumps.

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