Showing posts with label investor education. Show all posts
Showing posts with label investor education. Show all posts
Company Fixed Deposits in excess of 12%. But watch out!
In an earlier post, Company Fixed Deposits as a higher risk-higher reward instrument was profiled. Now some companies are giving rates in excess of 12%. Did you know that these companies pay 1-2% commissions to agents who pitch these unsecured FD products to you. In essence, these companies are paying some 15% for your funds. They are doing this because they are not able to tap secured loans from banks due to various reasons.
As mentioned earlier, investors should realize that these FDs are more risky that bank FDs and offer no capital protection. Some of these companies have been raising their unsecured loans by a significant amount. TV18, for example, has over 500 crores in unsecured loans in its sheet. While I don't expect TV18 to disappear overnight, there is a significant risk in these investments. Investors should look at the CRISIL credit rating (or equivalent) of these companies before giving the money to the agent.
| COMPANY | RATING | Min. Deposit Amount | INTEREST RATE | ||||
| 6 | 12 | 24 | 36 | ||||
| Jaiprakash Associates Ltd. | 20000 | 10.50 | 10.50 | 11.00 | 11.50 | ||
| Ansal Properties & Infrastructure Ltd | 50000 | 11.50 | 12.00 | 12.25 | 12.50 | ||
The best performing Mutual Funds in Liquid and Ultra Short-Term Mutual Funds
Liquid funds, money market funds, ultra short-term Mutual Funds are good for parking surplus funds that is likely to be deployed elsewhere in less than 2-3 months. Liquid mutual funds hold securities with maturities of less than 91 days. Liquid mutual funds provide opportunity to earn returns higher than savings bank account. Ultra short-term bond funds can hold securities of maturity longer than 91 days and hence can provide marginally higher returns than liquid funds. Money in a liquid fund can be redeemed within a day. Tax on dividend income is 25 per cent for liquid funds and 12.5 per cent for other debt funds. Capital gains tax is applicable on liquid funds and indexation benefits apply for debt funds.
When considering investing in debt schemes, it's important to consider the average maturity profile of the portfolio (published in AMC website). To reduce the risk of volatility, the investor's holding period for the fund should be close to the fund's average maturity profile.
How have Liquid Funds performed? The following are the best performing Liquid mutual funds ranked based on risk adjusted performance. These funds have produced annual returns in the 7-8% range, which is much better than your bank account. LIC MF Liquid Fund, HDFC Cash Management Fund and HDFC Liquid Fund have performed very well over short as well as longer period of time. So, check your savings account balance and park your money in these funds instead.
| FUND | AUM (Rs Cr) | NAV | 1wk | 1mo | 3mo | 6mo | 1yr | 2yr | 3yr | 5yr |
| LIC MF Liquid Fund | 8,053.79 | 18.05 | 0.1 | 0.7 | 2 | 3.8 | 6.7 | 11.7 | 21.8 | 41.8 |
| HDFC Cash Management | 2,403.08 | 20.63 | 0.1 | 0.7 | 2.1 | 3.9 | 6.8 | 11.7 | 21.2 | 40.9 |
| HDFC CMF-Treasury Advg | 5,782.69 | 21.40 | 0.1 | 0.7 | 2 | 3.8 | 6.7 | 11.6 | 20.9 | 40.6 |
| Principal Cash Management | 731.77 | 15.36 | 0.1 | 0.7 | 2 | 3.9 | 6.7 | 11.3 | 20.8 | 40.2 |
| HDFC Liquid Fund | 539.17 | 19.51 | 0.1 | 0.7 | 2 | 3.8 | 6.6 | 11.2 | 20.5 | 39.8 |
| Birla Sun Life Cash Manager | 234.81 | 24.01 | 0.1 | 0.7 | 2 | 3.7 | 6.5 | 11.1 | 20.2 | 38.8 |
| UTI Money Market Fund | 125.00 | 2,742.94 | 0.1 | 0.7 | 1.9 | 3.7 | 6.3 | 10.9 | 20.5 | 38.9 |
| SBI Magnum Insta Cash | 3,320.77 | 21.92 | 0.1 | 0.7 | 2 | 3.9 | 6.8 | 11.1 | 20.2 | 38.8 |
| IDFC Liquid Fund | 478.73 | 1,392.95 | 0.1 | 0.8 | 2.3 | 4.2 | 7.2 | 11.9 | 19.5 | 38.4 |
| Reliance Liquid Fund TP | 727.57 | 23.58 | 0.1 | 0.7 | 2 | 3.8 | 6.4 | 11.1 | 20.4 | 38.5 |
| Birla SL Cash Plus - RP | 202.46 | 26.07 | 0.1 | 0.7 | 1.9 | 3.7 | 6.1 | 10.1 | 19 | 37.7 |
| Templeton Treasury MA | 199.33 | 2,419.35 | 0.1 | 0.7 | 1.9 | 3.7 | 6.4 | 10.6 | 19.8 | 38.1 |
| UTI Liquid Cash Plan | 354.99 | 1,588.70 | 0.1 | 0.7 | 1.9 | 3.7 | 6.3 | 10.5 | 19.5 | 37.9 |
| ICICI Pru Liquid Plan | 406.55 | 236.96 | 0.1 | 0.6 | 1.9 | 3.6 | 6.1 | 10 | 18.8 | 37.3 |
| L&T Liquid | 238.58 | 19.60 | 0.1 | 0.7 | 2 | 3.8 | 6.4 | 10.7 | 19.8 | 37.7 |
| DSP-BR Liquidity Fund | 163.65 | 23.42 | 0.1 | 0.7 | 2 | 3.8 | 6.7 | 10.4 | 18.9 | 35.8 |
| HSBC Cash Fund | 102.55 | 15.79 | 0.1 | 0.6 | 1.8 | 3.3 | 5.7 | 8.1 | 15.4 | 33.1 |
| IDFC Cash Fund | 102.26 | 17.52 | 0.1 | 0.7 | 1.9 | 3.7 | 6.4 | 10.6 | 19.3 | 34.6 |
| Reliance Liquid - Cash | 638.21 | 16.00 | 0.1 | 0.7 | 2.1 | 3.9 | 6.4 | 8.9 | 15.5 | 29.5 |
The numbers are absolute return.
See this article for ultra short-term funds.
Happy Investing!
Investor Education: Index Funds
A nice video by Vanguard that introduces Index Mutual Funds. An index fund is a type of passively managed fund that seeks to track the performance of market index like BSE Sensex or NSE Nifty.
There are several index funds in India tracking Nifty, Sensex, Bank index etc. See the table below from Moneycontrol website. Source: Money Control
| Rating | AUM (Rs. cr.) Dec 10 | NAV (Rs./Unit) | 1wk | 1mth | 3mth | 6mth | 1yr | 2yr | 3yr | 5yr | |||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 73.57 | 479.80 | 4.0 | 4.9 | 10.2 | -9.5 | 30.4 | 145.1 | 93.0 | -- |  |  | ||
| 8.15 | 464.31 | 4.0 | 4.8 | 10.1 | -9.5 | 30.2 | 137.5 | 87.0 | -- | | | ||
| 44.86 | 1,191.78 | 2.5 | 3.0 | 11.1 | -3.9 | 21.3 | 132.7 | 61.3 | 176.2 | | | ||
| 60.71 | 1,409.35 | 2.7 | 4.2 | -0.5 | 2.3 | 14.0 | -- | -- | -- | | | ||
| 56.27 | 238.18 | 1.9 | 3.9 | 5.5 | -3.1 | 13.7 | 83.0 | 32.7 | 86.0 | | | ||
| 5.34 | 11.10 | 2.4 | 3.3 | 4.9 | -3.9 | 12.3 | -- | -- | -- | | | ||
| 1.12 | 204.91 | 2.4 | 3.4 | 4.8 | -2.7 | 11.3 | 73.7 | 20.4 | 68.5 | | | ||
| 510.88 | 593.45 | 2.4 | 3.3 | 4.8 | -3.4 | 11.2 | 69.3 | 15.4 | 65.0 | | | ||
| 177.54 | 54.39 | 2.3 | 3.1 | 4.6 | -3.7 | 11.2 | 69.2 | 18.0 | 74.2 | | | ||
| 17.48 | 591.41 | 2.4 | 3.3 | 4.8 | -3.5 | 11.1 | -- | -- | -- | | | ||
| 32.01 | 199.00 | 2.5 | 3.4 | 4.8 | -3.2 | 11.1 | 74.6 | -- | -- | | | ||
| 1.43 | 591.99 | 2.4 | 3.3 | 4.8 | -3.4 | 10.9 | 69.5 | -- | -- | | | ||
| 9.53 | 29.30 | 2.3 | 3.4 | 4.7 | -3.6 | 10.8 | 68.8 | 15.8 | 62.1 | | | ||
| 30.33 | 36.51 | 2.4 | 3.3 | 4.7 | -3.5 | 10.8 | 67.2 | 4.5 | 45.0 | | | ||
| 4.88 | 34.31 | 2.4 | 3.5 | 4.6 | -3.8 | 10.7 | 70.5 | 16.2 | 28.3 | | | ||
| 68.61 | 32.43 | 2.3 | 3.4 | 4.9 | -3.5 | 10.7 | 63.7 | 9.0 | 41.6 | | | ||
| 6.27 | 18.64 | 2.3 | 3.1 | 4.6 | -4.3 | 10.7 | 58.4 | -- | -- | | | ||
| 5.55 | 30.90 | 2.3 | 3.1 | 4.5 | -3.6 | 10.2 | 67.5 | 13.9 | 58.8 | | | ||
| 17.18 | 40.01 | 2.4 | 3.3 | 4.7 | -3.7 | 10.2 | 67.1 | 11.7 | 53.3 | | | ||
| 50.14 | 162.21 | 2.5 | 3.5 | 4.0 | -4.0 | 10.1 | 68.2 | 9.8 | 46.3 | | | ||
| 53.00 | 50.84 | 2.3 | 3.3 | 4.7 | -3.8 | 9.9 | 63.7 | 11.8 | 45.9 | | | ||
| 37.10 | 58.03 | 2.4 | 3.0 | 4.3 | -4.4 | 9.9 | 66.9 | 13.0 | 59.8 | | | ||
| 103.20 | 19.89 | 2.0 | 4.1 | 4.0 | -6.9 | 6.8 | 68.6 | -- | -- | | | ||
| 0.97 | 128.98 | 2.0 | 2.3 | 2.2 | -4.8 | 5.2 | 55.4 | -- | -- | | | ||
| 187.12 | 115.44 | 0.7 | 4.8 | 3.9 | -12.3 | 5.1 | 111.9 | 26.6 | 72.0 | | | ||
| 64.40 | 55.04 | 2.4 | 3.3 | 4.6 | -3.4 | 10.7 | 71.8 | 15.4 | 63.4 | | | ||
| 214.26 | 36.46 | 2.4 | 3.2 | 4.6 | -4.0 | 10.0 | 67.0 | 13.7 | 61.5 | | | ||
| 71.27 | 60.59 | 2.5 | 3.4 | 4.7 | -3.3 | 10.9 | 72.7 | 14.6 | 62.2 | | | ||
| 138.82 | 46.03 | 2.4 | 3.3 | 4.6 | -3.7 | 10.4 | 68.7 | 14.8 | 63.6 | | | ||
| 2.86 | 44.82 | 2.3 | 3.2 | 4.6 | -3.6 | 10.3 | 66.6 | 14.6 | 62.0 | | | ||
| 0.17 | 15.47 | 2.4 | 3.4 | 4.7 | -3.3 | 10.9 | 45.3 | -- | -- | | | ||
| 5.84 | 47.41 | 2.4 | 3.3 | 4.5 | -3.7 | 10.0 | 70.2 | 13.4 | 58.3 | | | ||
| 8.77 | 34.85 | 2.3 | 3.2 | 4.5 | -4.0 | 10.0 | 67.1 | 13.0 | 59.0 | | | ||
| 20.88 | 49.85 | 2.3 | 3.2 | 4.5 | -4.0 | 10.3 | 68.1 | 11.8 | 55.1 | | | ||
| 1.14 | 9.49 | 2.3 | 3.2 | 4.0 | -4.1 | -- | -- | -- | -- | | | ||
| 76.90 | 9.54 | 2.3 | 3.3 | 4.7 | -3.5 | -- | -- | -- | -- | | | ||
| 14.55 | 1,213.59 | 2.5 | 3.0 | 11.0 | -3.9 | 21.2 | 131.9 | -- | -- | | | ||
| 49.02 | 9.05 | 0.7 | 4.6 | 3.6 | -12.6 | -- | -- | -- | -- | | | ||
| 0.13 | 9.89 | -- | -- | -- | -- | -- | -- | -- | -- | | | ||
| 134.95 | 11.07 | 2.3 | 3.2 | 4.5 | -4.1 | -- | -- | -- | -- | | | ||
| 5.19 | 313.30 | 0.4 | 4.0 | 1.7 | -14.7 | -- | -- | -- | -- | | | ||
| 0.00 | 8.34 | 1.5 | 5.8 | 6.2 | -- | -- | -- | -- | -- | | | ||
| 301.29 | 83.39 | 2.5 | 4.7 | 3.8 | -5.3 | -- | -- | -- | -- | | | ||
| 0.75 | 626.49 | 2.3 | 3.3 | 5.0 | -2.6 | 12.2 | 72.0 | 20.0 | 74.1 | | |
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