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Close Ended Mutual funds



Most equity mutual fund schemes available in the market in India are open ended —you can invest whenever you want and redeem money at will. And investment and redemptions happen at a price very close to the net asset value (NAV) of the fund.

But there is another variety of equity funds called the close-ended schemes, in which you need to stay invested for the duration of the fund, usually three years or more.

Like in open-ended funds, investing in close-ended plans involves risk. Such schemes call for a more discipline approach by the fund manager, industry players said. And since the investor has no chance to redeem investments at will, the fund manager does not have to think about outflows and is not forced to liquidate stocks that could give more returns in another few months of years.

The market is not an accommodating machine. Here, the returns usually come in spurts.

Often, in an open ended fund, to meet investor redemptions the fund manager is forced to sell a stock before its full value is realised in the portfolio. There could be opposing investment approach in an open-ended fund: While the investor wants to exit after some time, the fund manager may be willing to hold on to the stocks for some more time but is forced to exit prematurely. In a close-ended fund, by the very structure of the scheme, the investment horizon of the investor matches exactly with the investment horizon of the fund manager.

In a close-ended fund once the stock hits the targeted price, the fund manager could sell it and return the money to investors in the form of dividend. Alternatively, the manager could reinvest the gains in some other stock(s) that are likely to give returns till the closing date of the scheme.

A close-ended structure could also allow the fund manager to have a concentrated portfolio of stocks, meaning he could invest in just a handful of stocks which he believes could be the winners till the close of fund. Also, unlike in an open-ended fund, in a close-ended scheme only those investors who pump in money at launch get rewards at the close.

Of late, several fund houses in India have been launching close-ended funds to benefit from the emerging opportunities. Fund managers said there were several reasons for this spurt. The stock market seems to be in a very favourable situation for long term investments. For one, there is an unprecedented electoral mandate after the Lok Sabha polls with a single party getting a simple majority after three decades. On the economic parameters, inflation is showing signs of bottoming out with the government and the RBI's measures to control prices —controlling gold imports, administrative steps to tackle food prices and a limited rise in minimum support prices — showing results. Economists say that if the rate of inflation falls, it could lead to easing of the rate of interest in a few months from now. All these could also lead to credit growth, increase EBITDA (earnings before interest, taxes, depreciation and amortisation) margins and also earnings growth for corporates. These positives are sure to lead to a bull rally in the market, fund managers and analysts said.

Most close-ended funds have a three-year tenor. So the fund manager will have these many years to realise the gains from the portfolio of stocks he invests in.

There is an emotional reason also for investing in a close-ended fund, industry officials said.

Fund industry officials also put forward some caveats for investors in close-ended schemes. For one, these schemes are not a substitute but compliment the open ended ones. Also, these funds lack liquidity. Although closed-ended funds are listed on the bourses, but for most part of its tenure these schemes trade at a value which is discounted to their net asset value (NAV). So if an investor wants to exit much before the close of the scheme, he can expect to get much less than the actual value of his investment.

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

Leave a missed Call on 94 8300 8300

Leave your comment with mail ID and we will answer them

OR

You can write back to us at

PrajnaCapital [at] Gmail [dot] Com

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Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

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Best Performing Mutual Funds

1. Largecap Funds Invest Online
1. DSP BlackRock Top 100 Fund
2. ICICI Prudential Focused Blue Chip Fund
3. Franklin India Bluechip
4. ICICI Prudential Top 100 Fund

B. Large and Midcap Funds Invest Online

1. ICICI Prudential Dynamic Plan
2. HDFC Top 200 Fund
3. UTI Dividend Yield Fund
4. Birla Sun Life Front Line Equity Fund
5. Franklin India Prima

C. Mid and SmallCap Funds Invest Online

1. Reliance Equity Opportunities Fund
2. DSP BlackRock Small & Midcap Fund
3. Sundaram Select Midcap
4. IDFC Premier Equity Fund
5. Birla Sun Life Dividend Yield Plus
6. SBI Emerging Businesses Fund
7. HDFC Mid-Cap Opportunities Fund
8. ICICI Prudential Discovery Fund

D. Small and MicroCap Funds Invest Online

1. DSP BlackRock MicroCap Fund
2. Franklin India Smaller Companies

E. Sector Funds Invest Online

1. Reliance Banking Fund
2. Reliance Banking Fund
3. ICICI Prudential Banking and Financial Services Fund

F. Tax Saver Mutual Funds Invest Online

1. ICICI Prudential Tax Plan

2. HDFC Taxsaver

3. DSP BlackRock Tax Saver Fund
4. Reliance Tax Saver (ELSS) Fund

G. Gold Mutual Funds Invest Online

1. Relaince Gold Savings Fund
2. ICICI Prudential Regular Gold Savings Fund
3. HDFC Gold Fund
4. Birla Sun Life Gold

H. International funds Invest Online

1. Birla Sun Life International Equity Plan A

2. DSP BlackRock US Flexible Equity

3. FT India Feeder Franklin US Opportunities

4. ICICI Prudential US Bluechip Equity

5. Motilal Oswal MOSt Shares NASDAQ-100 ETF

Download Tax Saving Mutual Fund Application Forms

Invest In Tax Saving Mutual Funds Online

Buy Gold Mutual Funds

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94 8300 8300

 

What is growth investing?

Growth investing is where you buy the stock of a company expecting that the company will grow at a rate which will be higher than the rate of growth of the market as a whole or the sector to which the company belongs to. Since the company grows at a higher rate than the market's rate, the stock will appreciate at a faster clip than the market benchmark.

Often, growth investing is perceived to. Since the company grows at a higher rate than the market's rate, the stock will appreciate at a faster clip than the market benchmark. than the market benchmark.

Often, growth investing is perceived to be opposite or very different from value investing, but two very famous investors — Warren Buffett and Peter Lynch — believe the two styles could be mixed for great results.

Lynch, who over a 20-year period as a fund manager of Fidelity's Magellan Fund gave an annual average return of 29%, the best by any fund over such a long period of time, had followed an investment philosophy of growth at reasonable price (GARP). This investment philosophy mixed both value and growth styles of investing and made Magellan one of the best schemes in the history of mutual funds.

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

Leave a missed Call on 94 8300 8300

Leave your comment with mail ID and we will answer them

OR

You can write back to us at

PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

---------------------------------------------

Best Performing Mutual Funds

1. Largecap Funds Invest Online
1. DSP BlackRock Top 100 Fund
2. ICICI Prudential Focused Blue Chip Fund
3. Franklin India Bluechip
4. ICICI Prudential Top 100 Fund

B. Large and Midcap Funds Invest Online

1. ICICI Prudential Dynamic Plan
2. HDFC Top 200 Fund
3. UTI Dividend Yield Fund
4. Birla Sun Life Front Line Equity Fund
5. Franklin India Prima

C. Mid and SmallCap Funds Invest Online

1. Reliance Equity Opportunities Fund
2. DSP BlackRock Small & Midcap Fund
3. Sundaram Select Midcap
4. IDFC Premier Equity Fund
5. Birla Sun Life Dividend Yield Plus
6. SBI Emerging Businesses Fund
7. HDFC Mid-Cap Opportunities Fund
8. ICICI Prudential Discovery Fund

D. Small and MicroCap Funds Invest Online

1. DSP BlackRock MicroCap Fund
2. Franklin India Smaller Companies

E. Sector Funds Invest Online

1. Reliance Banking Fund
2. Reliance Banking Fund
3. ICICI Prudential Banking and Financial Services Fund

F. Tax Saver Mutual Funds Invest Online

1. ICICI Prudential Tax Plan

2. HDFC Taxsaver

3. DSP BlackRock Tax Saver Fund
4. Reliance Tax Saver (ELSS) Fund

G. Gold Mutual Funds Invest Online

1. Relaince Gold Savings Fund
2. ICICI Prudential Regular Gold Savings Fund
3. HDFC Gold Fund
4. Birla Sun Life Gold

H. International funds Invest Online

1. Birla Sun Life International Equity Plan A

2. DSP BlackRock US Flexible Equity

3. FT India Feeder Franklin US Opportunities

4. ICICI Prudential US Bluechip Equity

5. Motilal Oswal MOSt Shares NASDAQ-100 ETF

Download Tax Saving Mutual Fund Application Forms

Invest In Tax Saving Mutual Funds Online

Buy Gold Mutual Funds

Leave a missed Call on

94 8300 8300

 

Increase your savings

 

We have all heard stories of our parents or grandparents putting away money in tins, envelopes and savings accounts. Indians are known to be big savers. That is one of the reasons why the 2008 global recession did not affect us as much as it did people in Western countries. Savings have more or less worked as a great way of safeguarding one's future, until now. With the increasing cost of living, the old methods of saving seem to be falling short of our expectations. Are we letting our standard of living eat away our retirement money? This is one question every person faces sooner or later in life.

As a thumb rule most of us keep a certain amount of our income aside as savings. This is usually between 10 to 50 per cent of the earnings depending on the lifestyle. We assume that if we start saving in our twenties we will have a sufficient amount saved by retirement. However, by the time we near retirement our standards of living are so high that the saved amount seems inadequate.

It is a fact that people who save and invest regularly are better off than those who do not. But merely saving is not enough. One should increase one's savings with proportionate increases in salary.

After living a certain way during one's working life, no one wants to cut down on the lifestyle, especially after retirement, when one should be enjoying it the most.

Put the extra money to good use: Every time we get a hike in our salary we start expecting more out of life. We suddenly shift our focus to our ' wants'. We tend to become lax with our expenses. Knowing that we are saving a portion of our money gives us a sense of satisfaction.

But just as the increment in salary, savings too need to increase. This will help to take care of the change in lifestyle that the increment may have brought about.

Decide how to spend the increment carefully. It can be either a lump sum amount or it can be additional monthly savings. You need to ensure that the additional money in your hand is being used for securing a better financial future and not only to upgrade your lifestyle.

Many of us don't realise that in spite of getting a raise in our salaries, we are still putting aside the same amount in savings we used to when we initially started. We spend most or all of the increment on material things. Instead of focusing on what we are saving, we should focus on what we are spending most of our money on. If we take every hike in our income as something we can freely spend, we will end up saving a very small amount of the total money we earn on an annual basis.

To see the exact difference, calculate how much you earn every year and how much of it you are able to save.

Here is an example.

Imagine you were saving ₹ 5,000 every month from your total income of ₹ 50,000. After a year your salary increases by 15 per cent and goes up to ₹ 57,500. You are still saving the same amount, that is, ₹ 5,000 and the rest is going towards lifestyle expenses. If 10 per cent of the income was what you initially saved, it has now gone down to about 8 per cent because ₹ 5,000 now is about 8 per cent of your revised salary. Although, you have more money in hand you are unable to retain it for a better financial future. And if this goes on every year you gradually get into a pattern where it becomes difficult for you to spare any extra cash. And with this pattern going on throughout your life you reach the retirement age feeling unsure how to make ends meet.

Follow these simple rules when you receive an increment and/ or bonus: Figure out your savings percentage (not an amount) of your monthly take- home and stick to it. If you emphasise on saving first then spending for expenses, you will build a healthy habit of securing your future Track your expenses every year.

The rate at which they are going up is the rate at which your savings should grow Keep a tab on financial goals and how your savings are helping you achieve them Keep a tab on fixed expense and variable expense items. For example: The equated monthly instalment doesn't change unless you want to change it. Household expenses, school fees, domestic staff are all fixed on an annual basis. Eating out, holidays, shopping, festivals expenses can vary based on your focus on ' wants'. You can set a limit to increase in variable expenses. Any increase in salary can be divided proportionately to increase in savings and expenses and subsequently to proportionate increase in fixed and variable expenses Understand the power of compounding.

Compounding returns can create a huge corpus even if the amount being saved is small but held on for a very long term Understand the cost- benefit analysis of using the lump sum to pre- pay any loan or investing the money for future financial goals.

Although it is hard to save money during the initial stages of your career, allowing yourself to spend just 50 per cent of the raise you get every year can work wonders.

Before you start dreaming big, you should have something to back it up with. Personalise your lifestyle in such a way that it creates a balance between what you have and what you intend to have in the future. Anyone who masters this quality will be able to maintain a consistent standard of living, not only while working but even during his/ her retirement.

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

Leave a missed Call on 94 8300 8300

Leave your comment with mail ID and we will answer them

OR

You can write back to us at

PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

---------------------------------------------

Best Performing Mutual Funds

1. Largecap Funds Invest Online
1. DSP BlackRock Top 100 Fund
2. ICICI Prudential Focused Blue Chip Fund
3. Franklin India Bluechip
4. ICICI Prudential Top 100 Fund

B. Large and Midcap Funds Invest Online

1. ICICI Prudential Dynamic Plan
2. HDFC Top 200 Fund
3. UTI Dividend Yield Fund
4. Birla Sun Life Front Line Equity Fund
5. Franklin India Prima

C. Mid and SmallCap Funds Invest Online

1. Reliance Equity Opportunities Fund
2. DSP BlackRock Small & Midcap Fund
3. Sundaram Select Midcap
4. IDFC Premier Equity Fund
5. Birla Sun Life Dividend Yield Plus
6. SBI Emerging Businesses Fund
7. HDFC Mid-Cap Opportunities Fund
8. ICICI Prudential Discovery Fund

D. Small and MicroCap Funds Invest Online

1. DSP BlackRock MicroCap Fund
2. Franklin India Smaller Companies

E. Sector Funds Invest Online

1. Reliance Banking Fund
2. Reliance Banking Fund
3. ICICI Prudential Banking and Financial Services Fund

F. Tax Saver Mutual Funds Invest Online

1. ICICI Prudential Tax Plan

2. HDFC Taxsaver

3. DSP BlackRock Tax Saver Fund
4. Reliance Tax Saver (ELSS) Fund

G. Gold Mutual Funds Invest Online

1. Relaince Gold Savings Fund
2. ICICI Prudential Regular Gold Savings Fund
3. HDFC Gold Fund
4. Birla Sun Life Gold

H. International funds Invest Online

1. Birla Sun Life International Equity Plan A

2. DSP BlackRock US Flexible Equity

3. FT India Feeder Franklin US Opportunities

4. ICICI Prudential US Bluechip Equity

5. Motilal Oswal MOSt Shares NASDAQ-100 ETF