My mother retired recently and she would like to invest her savings of Rs2 lakh in mutual funds. One of the portfolio managers had suggested investing in open-ended equity funds. The choices are SBI Magnum Sector Umbrella Contra Fund Growth, Reliance Growth and Sundaram BNP Paribas Select Midcap-Growth. What would be the bare minimum return that she could gain from investing in these funds and what would be the entry and exit load and lock-in period? Also, what are the tax implications on the returns that she could make.
The choice of funds mentioned above are fairly good. However, the important point would be how much you would invest in individual funds to optimize your returns. Since mid-cap stocks have corrected substantially, slightly higher weightage to them may be a good option. Reliance Growth-Growth option has been a very consistent and steady performer and has done very well against its benchmark. So, this fund should also be given higher weightage for consistent returns. You may add UTI Banking Sector Fund in the portfolio to diversify further and for better returns. As far as your queries are concerned, the bare minimum returns cannot be guaranteed and it could vary based on market conditions. However, going by the past record of the schemes mentioned by you, the average returns have been very good. The entry load in all schemes is 2.25% whereas exit load in case of Reliance Growth, if redeemed after 6-12 months, is 0.5%. In case of Sundaram BNP Paribas—Select Midcap Fund, the exit load is 1% if redeemed within a year. The same rule applies to SBI Magnum Sector Umbrella—Contra as well. There is no lock-in period in the schemes you mentioned. Regarding tax implications, the dividend income will not attract tax implication and if you sell your investment after a year, it will also not attract capital gains. However, I would advise you to verify these facts with your portfolio manager before taking any decision.
Which tax-saving funds give more returns?
Since mutual fund investments are subject to market risks, it is really not possible to predict which fund will give more returns. However, going by recent trends, SBI Magnum Taxgain-93- Growth, Lotus India Tax Plan—Growth, Principal Personal Taxsaver, DSP Merrill Lynch Tax Saver Fund—Growth, Taurus Libra Taxshield and Sundaram BNP Paribas Tax saver 98 are good funds, which have performed steadily and given consistent returns.
I am interested to invest in Reliance Natural Resources Fund. I plan to buy around 4,000 units within this year and expect this fund will grow like reliance diversified power fund. Kindly provide your opinion
Reliance Natural Resources Fund is a good fund offering and is likely to fare well in the log term. Long-term investment in this scheme may prove beneficial.
I am a medium- to long-term investor. Can I buy SAIL, NTPC, IDBI, IDFC and Tata Steel at current levels?
All the stocks mentioned by you are blue-chip stocks and if you have a time frame of more than one year for investment, then all these stocks are likely to do well and give good returns. Targets for Steel Authority of India Ltd, National Thermal Power Corp. and Tata Steel Ltd are quite high from current rates and suit long-term investors most. IDBI Ltd and Infrastructure Development Finance Co. are also likely to do very well in the long term.
I hold futures in Praj Ind Ltd at Rs240. Please guide me what to do with this investment.
Praj Industries Ltd is in a state of consolidation ever since 21 January crash. The stock has a strong resistance at Rs180. If this resistance is crossed, then there could be sharp gains in immediate future, which may take the stock to Rs200. I would suggest you take a fresh call at this level about your decision to hold it further or not.
I want to invest Rs1 lakh to get a return of 25% in next six months. Also, I have 2,000 shares of Tata Teleservices Maharashtra Ltd bought at Rs40.50. I want to convert that into physical format because I want to hold it as a long-time investment. Please advise.
It is not practical to say for sure what returns you may get in the stock markets. However, keeping a target of 25% return in next six months (subject to market risk related to losses), you should diversify from one stock to some more. Investment in private sector bank stocks such as Axis Bank Ltd, HDFC Bank Ltd, Kotak Mahindra Bank, Yes Bank Ltd as well as others such as Moser Baer India Ltd, Alok Industries Ltd, Steel Authority of India Ltd, etc., could be better alternatives to maximize your returns. Regarding conversion to physical format, I would like to inform that stocks are being traded in dematerialized form only and no matter how long you wish to hold them, keeping them in demat has no disadvantage. I do not see any advantage of keeping them in physical format, if at all it is possible.
I had applied for 60 shares of Reliance Gold through IPO at Rs100 on 25 October 2006 but till date the company has not been listed. I am unable to understand the procedure of allotment of shares and why this company has not listed till date and why I cannot sell the shares in the market . Further, I have physical shares of Allahabad Bank, UCO Bank and IOB allotted to me through IPOs. However, I have not received dividends from these banks for last two years. What should I do to get the dividend and to whom I should contact?
I do not have any information on the Reliance Gold IPO. Regarding the question on Allahabad Bank, UCO Bank Ltd and Indian Overseas Bank Ltd , you may contact their registrar office for more details.
I have invested in ICICI Prudential Fusion Fund Series II and now I would like to sell it. Would any deductions be made if it has been a year since it was bought?
As per the offer document of the scheme, there will be no exit load at maturity. However, for the redemptions made before the maturity date of the scheme, i.e. redemptions made during the repurchase facility period, the asset management company (AMC) will redeem the units after recovering the balance proportionate unamortized new fund offer expenses in accordance with a Securities and Exchange Board of India circular dated 4 April 2006. The new fund offer expenses charged to the scheme were limited to 6% of the amount mobilized under the new fund offer. Under the regulations, the fund is entitled to charge new fund offer expenses up to a maximum of 6% of initial resources raised under the scheme if it is a close-ended scheme. The new funds offer expenses charged to the scheme may be amortized over a period of three years and would be included in the net asset value. If an investor is exiting the scheme on any day when the repurchase facility is provided, which is before completion of amortization of the new fund offer expenses, then the AMC will redeem the units after recovering the balance proportionate unamortized issue expenses. So, your redemption would be subject to the above-mentioned deductions.
I had purchased 600 shares of Hotel Krishna International (India) Ltd, having Reg. Office at 5/43 Sheshadri Road, Bangalore; 200 shares of Paam Pharma Ltd, Delhi and 150 shares of Pharmaceutical Products of India, Mumbai. Kindly let me know whether the above companies still exist or they have changed their names.
The companies mentioned by you are not being traded on stock exchanges anymore. Though Paam Pharma Ltd and Hotel Krishna International (India) Ltd still exist as listed companies, no trading is taking place in their shares.
Answers are based on a technical analysis of the markets and individual stocks. The views expressed on this page are not the newspaper’s opinion and are provided for information purposes by Vipul Verma. Readers are requested to do their own research before participating in the stock markets. Neither the paper nor the information provider will be responsible for any outcome based on information provided here.