With the US economy beginning to improve, fund houses are looking to tap the potential of its stock markets. Franklin Templeton India's new fund offering (NFO) — FT India Feeder US Opportunities Fund — is an open-ended feeder fund that will invest in Luxembourg's Franklin US Opportunities Fund. This fund is targeting investors looking to diversify portfolios in foreign markets. The parent fund invests in US-based companies across sectors.

The timing of the launch is quite correct, as US markets, in the past one year, have performed better than Indian ones. The Dow Jones index gained 5.5 per cent in the last one year and the Nasdaq was up 2.2 per cent. In comparison, the Bombay Stock Exchanges Sensitive Index or Sensex lost 7.76 per cent year on-year.

However, over the long run, US markets have not outperformed India. In the last three and five years, the Sensex has returned, respectively, 24.16 and 3.83 per cent, annually. In comparison, Nasdaq has returned 23.24 and 2.95 per cent and the Dow Jones index 15.28 per cent and 0.28 per cent, respectively, in the same periods.

This is the second international feeder fund investing in the US. Motilal Oswal AMC launched a Nasdaq exchange traded fund (ETF) last year. It has returned 15.14 per cent in the last six months. The Franklin US Opportunities Fund has returned 15.08 per cent in the past year.

The fund helps achieve diversification through exposure to high quality US companies trading at attractive valuations. Adding an international fund to the portfolio can help reduce the potential risk over the medium- to longterm. The fund will get listed at the stock exchanges on February 14.

Some companies this fund invests in include marquee firms like Apple Inc, MasterCard, Google and Blackrock. About 16 per cent is put in software and services sector, 14 per cent in technology hardware, 12 per cent in energy and 10 per cent in capital goods. Other sectors are pharma, food and beverages and retailing.

This fund should not form more than five per cent of your equity portfolio. The companies comprising the fund portfolio generate more than 50 per cent of their revenues from non-US countries, making them less prone to the economic conditions in the US, he adds.

But remember, in spite of investing in equities, the tax on feeder funds is calculated like that for debt funds. Long term capital gains tax is calculated at 10 per cent with indexation and 20 per cent without it. In the short term, capital gains will be added to your income and taxed according to slab.

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7. SBI Magnum Tax Gain Scheme 1993
8. Sundaram Tax Saver

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   The National Electronic Funds Transfer (NEFT) is a nation-wide payment system facilitating one-to-one funds transfer. Under this scheme, individuals, firms and corporates can transfer funds from any bank to an individual, firm or corporate having an account with any other bank in the country. NEFT is still not being used on a large scale. Increased use of NEFT is expected to bring down the chances of fraud too.

NEFT offers many advantages over the other modes of funds transfer:

The remitter need not send a cheque or demand draft to the beneficiary
The beneficiary need not visit his bank to deposit the paper instrument
The beneficiary need not be apprehensive of loss or theft of the instrument or the likelihood of fraudulent encashment

Ø       It is cost effective

Ø       There is a credit confirmation of remittance sent by SMS or email

Ø       The remitter can initiate the remittance from his home or place of work using Internet banking

Ø       There is hardly any time taken to transfer funds to the beneficiary account in a secure manner

With the gaining popularity of Internet banking, transfer of funds through NEFT is also becoming popular. In case of NEFT, the transferor can transfer the funds to the account of the payee electronically, without visiting the bank or issuing a cheque. The mode is fast, convenient, and cost effective. It saves the time and effort of both the payer and payee.

   However, there have been a few issues in the process. The Reserve Bank of India (RBI) has been trying to ease out the problems. Taking note of some banks not following rules of sending confirmations of payments made through NEFT, the RBI has directed lenders to put in place a system to issue the receipts. It has asked banks to generate confirmations of NEFT payments. All banks need to have systems to ensure a confirmation is sent to the originator (sender). Such confirmation messages should be sent as soon as the beneficiary account is credited. It should be sent before the end of the day under any circumstances.

   According to the RBI, in case of a large number of banks, the percentage of positive confirmations sent vis-a-vis the inward messages received was lower than 10 percent. Positive confirmation is a unique feature of NEFT and has played a major role in popularising the system among users. Not adhering to instructions in this regard will undermine the customer service efficiency of the system.

   In addition, the RBI has directed banks to adhere to norms under which they have to pay a penalty in case of a delay in crediting funds sent through the NEFT system to the beneficiary account or in returning the uncredited amount to the remitter. Banks are required to pay a penal interest at the current RBI LAF repo rate plus two percent for the period of delay or till the date of refund to the affected customers.

   These measures were instituted with the objective of enhancing customer service and efficiency parameters of the system in view of the large scale growth in electronic payment transactions.

   Further, banks are required to establish dedicated customer facilitation centres (CFCs) to handle customer queries and complaints regarding NEFT transactions. The contacts details of CFCs are available on websites of banks as well as the website of the RBI for easy availability to the customers. CFCs are to be the first point of contact for aggrieved customers. Banks need to keep the contact details of their CFCs updated at all times and also advise changes to the RBI. Banks also need to ensure that calls made and emails sent to CFCs are promptly attended to.

   These measures are meant to make NEFT more popular among people.