TYPES OF MUTUAL FUND - Based on Asset class

TYPES OF MUTUAL FUND - Based on Asset class

1) Equity Funds - Invest primarily in equity Shares.(sub types we will see later)

2) Debt Funds - Invests in primarily in fixed assets like Government and Corporate Bonds, and Bonds and deposits of Bank and financial institutions. All have lower risks than compared to equity asset. Further witin this type there are Diversified debt funds, Focused Debt funds, High yield Debt Funds, Fixed Term Plan Funds

3) Gilt Funds - Invest primarily in Government Securies with medium to long term maturities (over one year).These funds have little risk and hence offer better protection of principal.

4) Money market/Liquid Funds - Invest primarily in debt securities of short term in nature (less than one year), like Treasury bills, Bank's Certificate of deposits and Commercial papers of companies. Risk level remain lowest.

5) Hybrid funds - These offer mix of asset clsses. i) Balanced Fund - Have equal or near equal mix of equities and Debt instrumensts. ii) Equity oriented Hybrid fund - Have higher proportion of Equities with debt instruments (75 -25 or 80-20) iii)Debt oriented Hybrid fund - Have higher proportion of Debt instruments with equity capital (75 -25 or 80-20)

6) Commodity Funds - Invest in physical assets like Gold, platinum and Silver etc., i)) Precious metal Fund invest in mix of all of these while ii) Gold Funds - Invests in physical Gold and Gold futures and companies.

7)Real Estate Funds - Invest primarily in real estate and related companies.

8)Exchange Traded Funds - Invests in euities of a market index. The units of this fund is traded as a stock in the exchange. For eg., Gold Exchange Traded Fund (GETF) tracks the price of physical Gold and traded in the Stock exchanges.

9)Fund of Funds - This fund onests in othet mutual fund schemes with a select portfolio of mutual fund schemes.

For Selecting, investing in the types of funds that are best suited to you, one time or SIP and after servicing please contact
C.RAMESH

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‘‘You are neither right nor wrong because the crowd disagreeswith you. You are right because your data and reasoning areright.’’-- Benjamin Graham

Chasing Two Rabbits

A martial arts student approached his teacher with a question. "I'd like to improve my knowledge of the martial arts. In addition to learning from you, I'd like to study with another teacher in order to learn another style. What do you think of this idea?" "The hunter who chases two rabbits," answered the master, "catches neither one."

TYPES OF MUTUAL FUNDS - Based on Structure

There are some classifications of Mutual Funds based on various factors. Normally based on their structure..

1) Closed-end Funds

After an initial period of opening for sale the fund gets closed for a pre-determined period. say normally 3 years and an investor cannot buy or sell (redeem) the fund units within the closed period. Some times to provide liquidity, the funds offer buy back of units, once a while or all the time, but with they charge CDSC load. So an investor may not be able to buy during this closed period, but can redeem his units, if he needs.

2) Open-end Funds

An investor can enter and exit all the time. The units are available for buying & selling at all times. An investor can buy units or redeem units from the fund itself at a price beased on the NAV per unit.

For Selecting, investing best mutual fund schemes, SIP, STP, SWP suitable to your needs and goals and after servicing please contact

C.RAMESH

098941 05790

maharajramesh@gmail.com

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'Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market.' - Waren Buffet

LAUGH WITH MULLA

Mulla Nasrudin's son, home from college, was talking to his father about the "Law of Compensation," which he had studied. "If a person loses one eye," he explained, "the sight in the other becomes stronger. If he loses the hearing in one ear, the hearing in the other becomes more acute. If he loses one hand, he becomes more agile with the other." "I GUESS THAT'S RIGHT," said Nasrudin. "I HAVE ALWAYS NOTICED THAT WHEN A MAN HAS ONE SHORT LEG THE OTHER IS LONGER."

What is Load of a Mutual Fund?

This is a fee that is charged when you buy or sell the units of a fund.

When you buy the units of a fund, you pay a percentage of it as a fee. This is known as the entry load. Let's say you are investing Rs 10,000 and the entry load is 2.25%. That means you pay Rs 225 as the entry load and Rs 9,775 is invested in the fund.

Now, let's assume you are selling the units of your fund. And the Rs 10,000 you invested initially is now Rs 15,000. Let's further assume the exit load is 2.25%. So you pay Rs 332 and get back Rs 14,668.

Generally, if funds charge an entry load, they will not charge an exit load or vice versa. But some of the funds also charge 0.5 to 1% exit load, only if the redemption is done within 6 months or an year. Normally Only one of the loads is charged.

There is also another type, ie., CDSC ( Contingent Deferred Sales Charge) an Exit charge payable by the Investor for a No load closed end scheme, but charged only if the redemption is done within the closed period.

Always, the load is refered as percentage of the NAV.

For Selecting, investing best mutual fund schemes, SIP, STP and after servicing please contact

C.RAMESH

098941 05790

maharajramesh@gmail.com

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"Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well." - Warren Buffet

LAUGH WITH MULLA

Mulla Nasrudin was watching the youngsters put on their horse show. He said to a bystander, "It's terrible the way they dress today. Just look at that young boy with the cigarette, sloppy haircut, and tight breeches." "That is not a boy," said the other. "It's a girl and she's my daughter." "Oh, excuse me, Sir," said the Mulla. "I meant no offence. I didn't know you were her father." "I AM NOT," said the other. "I AM HER MOTHER."

IS LOWER NAV (NET ASSET VALUE) BETTER?

IS LOWER NAV BETTER?

Because it brings us more number of units?
Definitely not. There is this myth among ivestors about this Lower NAV, and the NFOs (New Fund Offers) launched at an issue price of Rs 10 are perceived to be a good investment opportunity by a large section of mutual fund investors. Similarly, existing mutual funds with a lower NAV often appeal more to investors. And often investors try to avoid funds with higher NAV, most of which are actually very excellent fuunds. Is it not that since they are performing well and so they have a higher NAV? (ie., that not just they are older funds)

The amount of one's investment remaining constant, between two mutual funds with same portfolios, investment in a low NAV would give a higher number of units and that in a high NAV would give lower number of units. But in both the cases, the product of the number of units and the applicable NAV, which is the value of your investment, would be the same. Thus, it is the stocks in a portfolio that determine returns from a fund, the value of the NAV being immaterial.

Often people mistake that the NAV Rs.10 may not fall downside in adverse market conditions. At recent fall of sensex to 8000, NAV of a worst performing fund was Rs.1.97/-. A loss of Rs.8/- in a fund with an NAV of Rs.80 means 10% loss and the same Rs.8/- in a fund with a NAV of Rs.10/- means 80% fall. And the fund is performing far worse! Without knowing this people try to buy these fund at Rs.1.97/- because it brings them more number of units!

Mutual fund schemes are to be judged based on their performance relative to their risk profile, bench mark index and peers compared for similar periods.

For Selecting, investing best mutual fund schemes, SIP, STP and after servicing please contact
C.RAMESH
098941 05790
maharajramesh@gmail.com
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‘‘The reasonable man adapts himself to the world. Theunreasonable one persists in trying to adapt the world to himself.Therefore all progress depends on the unreasonable man.’’-- George Bernard Shaw

GENEROSITY
Zen master Ryokan (1758-1831) lived austerely and simply in a little hut below a mountain. One evening a thief visited the hut only to find nothing there to steal. So he went off into the night. Ryokan caught up with him: “You may have come a long way to visit me, and you should not return empty handed. Please take my clothes as a gift.” The bewildered thief took the clothes and slunk away. Ryokan sat naked, watching the moon. “Poor fellow,” he mused, “I wish I could give him this beautiful moon!”

HOW MUTUAL FUND NAV IS CALCULATED?

CALCULATION OF NAV

What is NAV? Simply put, NAV is the sum total of all the assets (like stocks, Deposits, Corporate bonds, Treasury bills etc.,of the mutual fund (at market price) less the expenses (fund manager fees, audit fees, registration fees among others); divide this by the number of units and you arrive at the NAV per unit of the mutual fund. An illustration may help to understand better.

NAV calculation :

Net Assets = Rs 128,000

Expenses = Rs 3,000

No. of Units = 1,250

NAV = (128000-3000)/6000 = Rs.100

And depending on the market values of the assets on all market days, the NAV may rise or fall. A mutual fund's relative performance depends on the asset allocation, stock selection, buying & profit booking at appropriate timings.

To get help in Selecting, investing best mutual fund schemes, SIP, STP and after servicing please contact

C.RAMESH

098941 05790

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MULLA : RIDING THE DONKEY BACKWARDS

One day Nasruddin Hodja was riding his donkey backward, facing towards the back. “Hodja,” the people said, “You are siting on your donkey backwards!”

“Oh no,” he replied, “It's not that I am sitting on the donkey backwards, the donkey is facing the wrong way.”

WHAT IS NAV (NET ASSET VALUE) OF A MUTUAL FUND?

Net Asset value is the networth of an unit of the Mutual Fund at the close of any working Day. It is calculated after closing of the capital market everyday on the basis of the closing prices of the underlying securities. NAV denotes the underlying value of the securirities at any given time in terms of per unit holding. Investors purchase units on the ongoing price of NAV in a Mutual fund scheme.

For the purpose of purchase, redemption & switches, the applicable NAV is the Net Asset Value per Unit at the close of the Working day on which a request, complete in all respects is accepted and received before the cut-off time (normally 3pm for euity funds) for the particular scheme. Otherwise, the applicable NAV would be the one for the next business day.

To get help in Selecting, investing best mutual fund schemes, SIP, STP and after servicing please contact

C.RAMESH

098941 05790

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RELAX WITH ZEN
Empty Your Cup

A university professor went to visit a famous Zen master. While the master quietly served tea, the professor talked about Zen. The master poured the visitor's cup to the brim, and then kept pouring. The professor watched the overflowing cup until he could no longer restrain himself. "It's overfull! No more will go in!" the professor blurted. "You are like this cup," the master replied, "How can I show you Zen unless you first empty your cup."

ANOTHER USE OF STP (SYSTEMATIC TRANSFER PLAN)

Once the mutual fund is well grown up in value after few years, and if the market is expected to fall in the coming term, but not sure, then the investor may switch out some amount or some units (say Rs.2000/- per month or 5o units per month periodically) systematically from the invested Euity fund to a Liquid scheme of the same Fund house. This can be done by the STP instruction. By STP, one may try to book profits earned and save in a liquid sheme to be used either for further investing in Euity scheme in a downfall or for redemption (one time or SWP) later.

To get help in Selecting, investing best mutual fund schemes, SIP, STP and after servicing please contact

C.RAMESH

098941 05790

maharajramesh@gmail.com

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A MULLA STORY AGAIN
Mulla Nasrudin was getting ready to apply to a local department store for a job. A friend told him that it was the policy of the store to hire nobody but Catholic Christians, and that if he wanted a job there, he would have to lie about being a Catholic Christian. Nasrudin applied for the job and the personnel man asked him the usual questions. Then he said to the Mulla, "And what church do you belong to?" "I am a Catholic," said Nasrudin. "And all my family are Catholics. IN FACT, MY FATHER IS A PRIEST AND MY MOTHER IS A NUN, SIR."

WHAT IS STP (SYSTEMATIC TRANSFER PLAN)?

Suppose one has a lumpsum of money in his bank account, but prefers to invest in a Mutual Fund scheme through SIP mode, he may go ahead with SIP as such, and the money from his bank account would be invested periodically in the selected scheme as per the the instruction given. At any time, the balance in his account would earn the interest rate as per the bankers norms ie., normally 3-4% per annum.

Instead of SIP he can invest the lumpsum amount in a Mutual fund Liquid scheme (that invests in money market instrumenst) and go for this STP, Systematic Tranfer Plan, wherein the desired installment amount is transfered from the Liquid fund to the Selected Equity fund, periodically. Here at any time, the Balance amount in the Liquid fund would normally earn about 8% per annum, which is pretty higher than compared to the above mode of Investing.

So, in STP, the desired amount or no. of units is transfered periodically from one mutual fund scheme to another fund scheme both in the name of the same investor.

To get help in Selecting, investing best mutual fund schemes, SIP, STP and after servicing, please contact

C.RAMESH

098941 05790

maharajramesh@gmail.com

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RELAX

YET ANOTHER MULLA STORY
Nasrudin, as everyone knows, comes from a country where fruit is fruit, and meat is meat, and curry is never eaten. One day he was plodding along a dusty Indian road, having newly escended from the high mountains of Kafiristan, when a great thirst overtook him. "Soon," he said to himself, "I must come across somewhere that good fruit is to be had."
No sooner were the words formed in his brain than he rounded a corner and saw sitting in the shade of a tree a benevolent-looking man, with a basket in front of him.
Piled high in the basket were huge, shiny red fruits. "This is what I need," said Nasrudin. Taking two tiny coppers from the knot at the end of his turban, he handed them to the fruit-seller.
Without a word the man handed him the whole basket, for this kind of fruit is cheap in India, and people usually buy it in smaller amounts.
Nasrudin sat down in the place vacated by the fruiterer, and started to munch the fruits. Within a few seconds, his mouth was burning. Tears streamed down his cheeks, fire was in his throat. The Mulla went on eating.
An hour or two passed, and then an Afghan hillman came past. Nasrudin hailed him.
"Brother, these infidel fruits must come from the very mouth of Sheitan!"
"Fool!" said the hillman. "Hast thou never heard of the chillis of Hindustan? Stop eating them at once, or death will surely claim a victim before the sun is down."
"I cannot move from here," gasped the Mulla, "until I have finished the whole basketful."
"Madman! Those fruits belong in curry! Throw them away at once."
"I am not eating fruit any more," croaked Nasrudin, "I am eating my money."

WHAT IS SWP (SYSTEMATIC WITHDRAWAL PLAN)?

WHAT IS SWP (SYSTEMATIC WITHDRAWAL PLAN)?

Just like SIP, a mode of entry, SWP is a mode of exit from a mutual fund. One can opt for this facility with most of the schemes.

Redemption is done periodically for the prefered amount or units/period and the money is transfered to the Investor. Say, One can redeem for Rs.2000/- every month or some 50 units every month and the amount is given to the investor through cheque or directly credited into investor's account depending on the facility available.

With this SWP facility, One can plan pension type of investing in a mix mutual funds in select Equity and debt schemes, with the help of a good financial advisor .

RELAX

ANOTHER MULLA STORY

Mulla Nasruddhin took his donkey across a frontier every day, always with a big load of straw. Every day the guards searched him as he crossed each way. They knew he was smuggling but could not find anything. They searched his person, sifted the straw, again and again. They even burned the straw from time to time. Mulla was obviously becoming more prosperous.

When he finally retired and went to live in another country, he met one of the customs officers. "You can tell me now, Mulla," he said. "What was it that you were smuggling in the straw. We could never catch you?

"Donkeys," said Mulla. "Donkeys and just only donkeys."

ADVANTAGES OF INVESTING THROUGH SIP MODE

ADVANTAGES OF INVESTING THROUGH SIP MODE

1. Cost averaging per unit

2. Smooth ride over market fluctuations

3. Easy, convinient way to invest

4. Ensures regular saving habit

Now some of the Mutual Fund houses offer addditional benefit for investing through SIP mode. One of such benefits is Waiving of entry load. The normal charge of 2.25% (ie., Rs.225 per Rs.10,000/-) is not charged if one enters through SIP mode.

The other important Benefit is "Life insurance cover" proportinate to the amount invested per installment and the number of years selected. For those people liking ULIPS, this is an 'Ideal instrument' to get 'two in one' benefit, since normally there is about 1/10 th reduction in the cost of investing mutual funds compared to ULIPS.

Out of the modes of frequency for SIP, the monthly mode is far better than other modes. Auto Debit, ECS facilities make possible the easy & regulat investing of money in a Fund. But one should also ensure the amount on the indicated date otherwise nowadays a penalty is charged by the bankers for ECS or Autodebit dishonour.

RELAX

A MULLA STORY

One day Mulla Nasrudin visited a large department store to buy his wife some nylon hose. Inadvertently, he got caught in a mad rush at a counter where a bargain sale was going on. He soon found himself being pushed and stepped on by frantic women. He stood it as long as he could. Then with head lowered and elbows out, he plowed through the crowd. "You there!" said a woman. "Can't you act like a gentleman?" "NOT ANY MORE," said Nasrudin. "I HAVE BEEN ACTING LIKE A GENTLEMAN FOR AN HOUR. FROM NOW ON, I AM ACTING LIKE A LADY."

A SAYING

WE ARE NOT ABLE TO MEET THOSE WHOM WE WANT TO MEET, BUT HAPPEN TO MEET THOSE WHOM WE NEVER LIKE TO SEE.