MF scheme, Dividend , Growth or Bonus

[kalwarik]

GROWTH is better

[mrindia]

As rightly said, in India, DDT is applicable to DEBT FUNDS/DEBT oriented Funds only. In your particular case, both Gr & Div-Reinv options will prove to be same; if same tax structure persists.
Among the 2 funds, I will rate DSP ML Top100 above HSBC Eq. Views from other members are welcome!
mr india

[justsayraj]

DSP ML Top 100 comes ahead of HSBC Equity..

Growth option (my choice) , even though Growth and Div - Reinvestment works out same approximately..

[VOICE OF REASON]

Thakur,

One should always go for growth option if looking for optimal growth of funds invested.
However, depending on your liquidity reqirements, you may elect to go with the dividend option. PLEASE BEAR IN MIND, never go with dividend reinvestment because it will lock your money for 3 years again form the day the devidend is reinvested.
Feel free to email me if you have any further questions. Hope this helps you!

[VOICE OF REASON]

Originally Posted by thakur

Hi friends,

i am going to invest 20k in SBI Magnum Tax gain Mutual fund shortly.
but i m confused which option (Growth ,dividend ) is better to go with.
Can anyone tel me the pros and cons of these options.


thanks
thakur

Thakur,

One should always choose growth option if looking for optimal growth of funds invested.
However, keeping in mind liquidity requriments, you can elect to go with dividend option.
PLEASE BEAR IN MIND, never elect dividend reinvestment incase of a tax saving scheme because it will lock your funds (amount reinvested as dividend) again for a peiod of 3 years from the time of reinvestment. Hope it helps. Any further questions, send me an email.

[new.invester]

hello everyone,

i am a new nri invester.
i had been quietly following this thread,it is really good ind informative.

thanks for all the questions and answers

regards


natasha

[unclecharles16]

Originally Posted by ritz1

Hi,
Can anyone explain the difference between Growth and Dividend options in MF? Which one is better or preferable in terms of Tax savings MF or any other MF??

This is my first post So sorry if there is a mistake.
I am new to investing

I feel that in growth money wont be removed from the(investment) account till u sell ur Unit.(positive is ur invested money is always working,
negetive is if the market is bad all ur investment gose down )
but in Dividend option money will be removed from the account, when dividend is announced to pay for taxes and distribution.but u will be having more units with the dividend u receive. (positive is u have more shares so ur actual invested amount will get some support from the devidend units u earn even if the market is going down,Negitiveis the Unit Nav growth will be a little slow as Money is removed from the fund during dividend announcments.

[pearsbent]

Hello guys

dividend is payed out by the fund as decided by the fund manager. the nav goes down once the dividend is declared. The advantage is that it is a way of partially booking profits. The disadvantage is that dividend distribution tax has to be paid . (I think it is 10%). In Growth option the money is collected in the end. Here if you remain invested >1 year there is not tax.

Have a any other ideas,

[Apurv7164]

Understanding Hedge Funds

For some investors, hedge funds might seem like unregulated, high risk ventures where you can lose all your money. Others might see them as actively managed funds, which provide high returns regardless of market conditions. But most would probably agree that hedge funds are not well understood by the investing public.

Hedge funds are private investment pools, so the lack of public awareness is largely because hedge funds are restricted by law from advertising. Most investors hear about hedge funds through word of mouth, investment advisors, or stock brokers. If an investor is interested in learning about a particular hedge fund opportunity, they must actively request information from the fund. With a lack of public presence, many hedge fund myths and misconceptions have persisted, especially in the media.

Hedge funds are an alternative investment vehicle for high net worth individuals and institutions. Hedge funds are much different than the traditional mutual fund. To "hedge" means to avoid or lessen investment risk by offsetting one investment by another investment. The most basic type of hedging is to hold both long (betting price will rise) and short (betting price will fall) positions at the same time in order to reduce risk. This type of strategy was first developed by sociologist Alfred W. Jones in 1949.

A good way to understand this concept is to remember what happened after the market bubble burst in 2000. If an investor had maintained 100% long positions during the market decline from 2000-2003, they would have suffered big losses. Suppose instead that an investor had held a mixture of long and short positions during the decline and let's assume further that all asset prices in this portfolio fell, during this period. The losses from the long positions would be offset against the profits from the short positions, thereby reducing market risk and limiting losses. While this is a simplistic, theoretical model, it does illustrate the basis on which many hedge funds control losses with long/short hedging strategies.

Today, "hedge fund" applies less to the hedging process and more to how hedge funds are structured and managed for the various types of strategies they use. Hedge funds are a private investment pool formed under a limited partnership agreement. The investors are "limited" partners; they do not participate in the fund's operations, and their liability is limited to the amount of capital invested. The fund manager is the "general" partner, who is responsible for operating the fund and is liable for any potential misconduct under Federal Securities Laws.

Unlike mutual funds, not everyone is eligible to invest in a hedge fund. For an individual to be an "accredited investor," they must have a minimum of one million dollars of liquid net worth. Institutions (pensions funds, endowments, investment banks.) can also invest in hedge funds as "qualified purchasers" if they have at least five million dollars in assets. Hedge funds have a minimum investment amount which is usually $250,000.

Hedge funds are loosely regulated by the Securities and Exchange Commission. In contrast, mutual funds are highly regulated; but regulation comes at a price. Mutual funds are largely prohibited from using leverage and shorting. During the 2000-2003 market decline, they either held long positions or partially went to cash. In contrast, hedge funds were able to short during the market decline. Hedge funds are allowed a wide range of investment options, such as shorting, leverage, arbitrage, and derivatives, which allow them to take advantage of all market conditions and produce higher returns.

Hedge funds also have an incentive to outperform traditional investments. As part of their compensation, hedge funds charge a performance fee, commonly 20% of profits. In addition, fund managers usually invest their own money in their hedge fund. Hedge funds seek absolute returns and pursue profits under all market conditions, including bear markets. In contrast, mutual fund performance is compared to the general stock market and is highly dependent on a bull market to create positive returns. The mutual fund manager's compensation is based on assets under management rather than their performance.

One of the biggest misconceptions about hedge funds is that they must take excessive risks in order to gain higher returns. The best hedge funds are specialists at minimizing risk and make it an integral part of their investment plan. Conscientious risk management serves to limit losses and promotes more consistent, generally higher risk-adjusted returns. Hedge funds are also more actively managed than mutual funds and use more advanced strategies such as shorting and leverage which require greater skill. Active management also places greater emphasis on making the right investment at the right time. It's no wonder hedge funds attract some of the brightest minds on Wall Street.

Most hedge funds are highly specialized in the type of investment strategy they use. There are over a dozen different types of hedge fund strategies, and each fund is based on a particular strategy and the financial instrument(s) traded (stocks, options, or futures, etc). For instance, one type of stock fund seeks to provide high returns by investing in growth stocks (Aggressive Growth Fund) while another looks to generate consistent income with dividend-paying stocks (Income Fund). There are also "funds of hedge funds" which are funds that invest a portion of their capital in each of several different hedge funds. It is important for an investor to understand the type of hedge fund which best fits their portfolio because funds vary in risk and return.

Investors should also research the fund manager's background and experience as well as the hedge fund's track record, although past performance does not imply equivalent performance in the future. Many hedge funds now list their returns at websites. Hedge funds will provide accredited investors with documents that cover key information about the fund including the structure, rules, and investment objectives. One can also use a research consultant, who specializes in hedge fund analysis. For general information about hedge funds, a good place to start is the not-for-profit Hedge Fund Association (www.thehfa.com).

Hedge funds are not for everyone, and they are not intended to replace traditional investments. Hedge funds can serve an important and valuable role in a well-diversified portfolio, especially since hedge funds reduce market risk by achieving positive returns during market declines. The more an investor understands hedge funds and their operation, the more they can set aside myths and misconceptions and capitalize on the advantages that hedge funds can offer.

[palka]

Originally Posted by Apurv7164

Understanding Hedge Funds

For some investors, hedge funds might seem like unregulated, high risk ventures where you can lose all your money. Others might see them as actively managed funds, which provide high returns regardless of market conditions. But most would probably agree that hedge funds are not well understood by the investing public.

Hedge funds are private investment pools, so the lack of public awareness is largely because hedge funds are restricted by law from advertising. Most investors hear about hedge funds through word of mouth, investment advisors, or stock brokers. If an investor is interested in learning about a particular hedge fund opportunity, they must actively request information from the fund. With a lack of public presence, many hedge fund myths and misconceptions have persisted, especially in the media.

Hedge funds are an alternative investment vehicle for high net worth individuals and institutions. Hedge funds are much different than the traditional mutual fund. To "hedge" means to avoid or lessen investment risk by offsetting one investment by another investment. The most basic type of hedging is to hold both long (betting price will rise) and short (betting price will fall) positions at the same time in order to reduce risk. This type of strategy was first developed by sociologist Alfred W. Jones in 1949.

A good way to understand this concept is to remember what happened after the market bubble burst in 2000. If an investor had maintained 100% long positions during the market decline from 2000-2003, they would have suffered big losses. Suppose instead that an investor had held a mixture of long and short positions during the decline and let's assume further that all asset prices in this portfolio fell, during this period. The losses from the long positions would be offset against the profits from the short positions, thereby reducing market risk and limiting losses. While this is a simplistic, theoretical model, it does illustrate the basis on which many hedge funds control losses with long/short hedging strategies.

Today, "hedge fund" applies less to the hedging process and more to how hedge funds are structured and managed for the various types of strategies they use. Hedge funds are a private investment pool formed under a limited partnership agreement. The investors are "limited" partners; they do not participate in the fund's operations, and their liability is limited to the amount of capital invested. The fund manager is the "general" partner, who is responsible for operating the fund and is liable for any potential misconduct under Federal Securities Laws.

Unlike mutual funds, not everyone is eligible to invest in a hedge fund. For an individual to be an "accredited investor," they must have a minimum of one million dollars of liquid net worth. Institutions (pensions funds, endowments, investment banks.) can also invest in hedge funds as "qualified purchasers" if they have at least five million dollars in assets. Hedge funds have a minimum investment amount which is usually $250,000.

Hedge funds are loosely regulated by the Securities and Exchange Commission. In contrast, mutual funds are highly regulated; but regulation comes at a price. Mutual funds are largely prohibited from using leverage and shorting. During the 2000-2003 market decline, they either held long positions or partially went to cash. In contrast, hedge funds were able to short during the market decline. Hedge funds are allowed a wide range of investment options, such as shorting, leverage, arbitrage, and derivatives, which allow them to take advantage of all market conditions and produce higher returns.

Hedge funds also have an incentive to outperform traditional investments. As part of their compensation, hedge funds charge a performance fee, commonly 20% of profits. In addition, fund managers usually invest their own money in their hedge fund. Hedge funds seek absolute returns and pursue profits under all market conditions, including bear markets. In contrast, mutual fund performance is compared to the general stock market and is highly dependent on a bull market to create positive returns. The mutual fund manager's compensation is based on assets under management rather than their performance.

One of the biggest misconceptions about hedge funds is that they must take excessive risks in order to gain higher returns. The best hedge funds are specialists at minimizing risk and make it an integral part of their investment plan. Conscientious risk management serves to limit losses and promotes more consistent, generally higher risk-adjusted returns. Hedge funds are also more actively managed than mutual funds and use more advanced strategies such as shorting and leverage which require greater skill. Active management also places greater emphasis on making the right investment at the right time. It's no wonder hedge funds attract some of the brightest minds on Wall Street.

Most hedge funds are highly specialized in the type of investment strategy they use. There are over a dozen different types of hedge fund strategies, and each fund is based on a particular strategy and the financial instrument(s) traded (stocks, options, or futures, etc). For instance, one type of stock fund seeks to provide high returns by investing in growth stocks (Aggressive Growth Fund) while another looks to generate consistent income with dividend-paying stocks (Income Fund). There are also "funds of hedge funds" which are funds that invest a portion of their capital in each of several different hedge funds. It is important for an investor to understand the type of hedge fund which best fits their portfolio because funds vary in risk and return.

Investors should also research the fund manager's background and experience as well as the hedge fund's track record, although past performance does not imply equivalent performance in the future. Many hedge funds now list their returns at websites. Hedge funds will provide accredited investors with documents that cover key information about the fund including the structure, rules, and investment objectives. One can also use a research consultant, who specializes in hedge fund analysis. For general information about hedge funds, a good place to start is the not-for-profit Hedge Fund Association (www.thehfa.com).

Hedge funds are not for everyone, and they are not intended to replace traditional investments. Hedge funds can serve an important and valuable role in a well-diversified portfolio, especially since hedge funds reduce market risk by achieving positive returns during market declines. The more an investor understands hedge funds and their operation, the more they can set aside myths and misconceptions and capitalize on the advantages that hedge funds can offer.

The above post is a copy paste job from the following link: http://www.fend.com/efng.html