Mutual fund returns

[Vicky78]

Originally Posted by mf_investor_me

Ok, I understand the catch now. Higher NAV with higher performance will be ideal.

NO.. good growth during the bull run and less fall during the bear run as compared to its peers only matters. NAV is absolutely immaterial. Try reading yoogi's calculation (post #7)once more.

I am thinking on investing in SBI Magnum Tax gain, Reliance Tax saver and Principal Personal Tax saver.

Principal Personal Tax saver has perfromed well recently. But be aware of the risks that fund takes. It invests heavily in small caps. If you investing in other equity funds apart from tax savings stick to one tax saving fund else chose 2 tax savings fund. Magnum taxgain is a good fund. Principal tax savings (different from Principal Personal tax saver) is another fund u could consider for aggression.

To add what most people said read every page in valueresearchonline.com before investing.

[yoogi]

To understand it better, repeat the calculations assuming fund A returns 25% and Fund B returns 30%. Not same.

Now, fund B's gain will be 3000 rs despite the entry NAV being high. A will return only 2500rs.

Try to repeat the calculation by assuming Fund A returns 30% and B returns 25%.

Now Fund A's gain will be 3000 rs and B's return will be 2500. See NAV doesnt actually matter, but growth % matters most.

[mf_investor_me]

Thanks for the replies friends.
I did not get your opinion about the Reliance ELSS fund (G). How is it performing and should I go for SIP or lumpsum for it? By the way what is meant by small/mid/large caps?

[yoogi]

I hope you are investing in ELSS to save tax and not for any other reason. Also understand that ELSS (equity linked savings scheme) does not allow you to withdraw money for the first three years no matter how badly you need it.

I persoanlly dont like reliance brand but Reliance ELSS fund (G) is one of the best funds available in the market. Your choice of fudns are very good.

SBI Magnum Tax gain,
Reliance Tax saver
Principal Personal Tax saver.

Invest in all of them equally.


Eqauity based Mutual funds invests in shares of a companies. The average size of the companies in which a fund invest can be diffrent.

Large cap are companies of very large size. In some domains they have the advantage of cost effectiveness because of their scale of operations, being leader in the market with better market share etc. But the shares of these companies are also highly priced. Usually market trust these companies to earn more for them. Companies that are valued above 3000 crores can be termed as large caps (may be around 200 best companies in India..)

Mid cap are companies that are not very big, yet no small fish. Some of them are market leader in their own domains, but they attend to some niche markets. There are too many companies to choose from (at least 2000 companies in this range) and mutual fund managers work hard to analyze each company and asses its potential and then invest some of the best companies. But most of the stocks are not very popular and when the stock market fails there are very few buyers for this kind of stocks and they just drop value.

Small caps: now you know what they are.

There are some penny stocks as well. They are probably the most intresting in stock market. but mutual funds usually cannot invest much in small cap and penny stocks.

[yoogi]

mf_investor_me, you are very right in saying SIP is best way to take "controled risk".
Also that is the best way to "save" regularly.

[ger06]

Dear Sir;

I like to know which is the best "Liquid Fund" compared to keeping the money in bank savings account and will be redeemed at short notice. I heard that few LQ funds won't charge entry & exit fee.

thanks in advance.

[mf_investor_me]

Thanks for all the clarifications yoogi. Now I am quite informed and would like to invest in MF and probably go directly into stock trading in the future.
One last query is can you suggest a good online broker for MF investment. Also, what are the charges I will have to pay for online service?

[mf_investor_me]

I am a bit confused on SIP investment in ELSS. Its true that I will gain more units when NAV goes down and less when NAV is high. For the last three months all the three funds I mentioned have increased their NAVs. So is SIP good at this period? Also, since there is a lock-in of 3 years, what if the funds do not perform well: Will I not be losing more thru SIP for the following:
Lumpsum: Rs. 10,000 each
SIP: Rs. 1000 per month

[mf_investor_me]

BTW,
1. what is entry & exit load for the 3 funds for the SIP route. I did not see it anywhere in the offer document. I beleive the 2.25% entry/0% exit is only for lumpsum investment. Wht abt SIP investment?

2. I read somewhere that u cannot redeem all the units at one go after 3 years. You can only redeem those units that you had bought for the first SIP installment, then next month for second installment and so on. Is this true?

[yoogi]

Liquid funds, usually dont charge any entry or exit loads and they will need atleast a week to make some money for your. (dividents are weakly.) In most cases a sum less than 25,000 is not worth keeping in. Also there will be a delay of 2-3 days while encashing the payout. Almost all liquid funds perform more or less around 4-6% pa region. So choice doesnt matter much. Go for better brands like SBI, HDFC..