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Saturday, January 15, 2011

Close-ended Mutual Fund Schemes

Close-ended Mutual Fund Schemes

Close-ended Mutual Fund Schemes is one of the types of Mutual Funds in India. Opting for the close-ended mutual fund schemes will offer you with definite compensation that other types of mutual fund schemes would not. An emergent number of Indians are now opting to invest their money in close-ended mutual fund schemes.

What is a close-ended mutual fund scheme?
A close-ended mutual fund scheme clearly stipulates the maturity period, which could be wherever in 2 to 15 years of time. One has to make investments into any close-ended mutual fund scheme as soon as they are issued. Afterward on, you are free to buy or sell close-ended mutual fund scheme units when they are listed on the stock exchange.

Important details
Once the units are listed on the stock exchange, the market price of the close-ended mutual fund scheme units may vary based on factors like:-

 The outlook of the unit holders
 Demand for & supply of scheme units

Usually, the units of the close-ended mutual fund schemes are traded on the stock exchange at a price less than its Net Asset Value or NAV. On approaching maturity, the difference between the scheme unit's trading price and NAV may thin drastically.

The Way a close-ended mutual fund scheme paybacks the fund manager:-

Liquidity management- Since a close-ended mutual fund scheme has a rigid term before it matures; the fund manager does not have to be bothered about the corpus at his disposal. In an open-ended scheme, the fund manager will have to deal with inflow and outflow of money on a persistent basis, leaving the person with only a vague idea of how the corpus would look over a certain period of time. In other words, a close-ended mutual fund scheme paybacks a fund manager in terms of proficient liquidity management.

Safekeeping from short-term market fluctuations
Close-ended mutual funds offer a certain security from short-term market fluctuations vis-à-vis the investments managed by the fund managers. The flat term for maturity allows fund managers to work with investments on a long-term viewpoint.

Various Close-ended mutual fund schemes in India
Some of the companies providing various types of close-ended mutual fund schemes in India has been listed below.

 Birla Sun Life Mutual Funds
 HDFC Mutual Fund
 LIC Mutual Fund
 Kotak Mahindra Mutual Fund
 Franklin Templeton Mutual Fund
 ICICI Prudential Mutual Fund
 Sundaram Mutual Fund
 Tata Mutual Fund
 Standard Chartered Mutual Fund
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Friday, January 14, 2011

Open-ended Mutual Funds

Open-ended Mutual Funds
What are Open-ended Mutual Fund Schemes?
Open-ended Mutual Fund Schemes is one of the types of Mutual Funds in India. An Open-ended Mutual Fund does not confine itself to a given set of number for the shares. In other words, the number of shares remains non-confined and thus technically it serves as an open ended instrument. A greater part of the Mutual Funds in India are open-ended. The Open-ended Mutual Fund Schemes in India are more general than the closed-ended Mutual Fund Schemes.

Features of Open-ended Mutual Fund

These are the following distinctiveness of the Indian open-ended Mutual Funds:-

 The open-ended Indian mutual fund schemes have soaring liquidity as the investors can put and take out their many as and when they require.
 The total assets of the open-ended Mutual Fund oscillate with the in and out flow of money.
 This type of fund permits the investors to buy the shares or sell the shares directly, any time.
 Based on the existing NAV (Net Asset Value), this type of fund issues fresh shares to the investors and redeem them once the investor makes a assessment to sell the shares.
 The fund can issue limitless shares and individual share value remains unaltered by the shares outstanding.
 The net asset value (NAV) of the fund determines the value of each share.
Remuneration of Open-ended Mutual Fund
Open ended Mutual Funds provide a number of remuneration which is as follows:
 These funds maintain a lot of elasticity. This is to say that one can draw your money out any point of time.
 The funds can be diversified under the range of kinds of investment opportunities. This way you can garner the fruits of different investment options.
 The majority of the open mutual funds do not charge any fees while transferring a range of funds within the same family.

Hazard of Open-ended Mutual Fund

There are also some risks implicated with the open-ended Mutual Fund, which are as follows:-

 The returns are unnatural when abrupt redemptions result in a decline in the value of portfolio.
 The fund returns may also get pretentious by the various types of market forces.
 Open ended Mutual Funds cannot be traded in the stock market.
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Indian Mutual Fund Schemes

Varieties of Mutual Funds in India

These days, various types of Indian Mutual Fund Schemes have come up which provide to a range of financial needs like tax benefits, financial position, risk tolerance, return expectations and others. Here is a catalog of the diverse types of Mutual Fund in India.
Indian Mutual Fund Schemes

Close-ended Mutual Fund Schemes - Close -ended schemes are those which have a particular maturity period (which generally ranges from 3 - 15 years). At the time of initial public issue one can make straight investment in the scheme and can also get the benefit of buying and selling of the units. Due to demand and supply in the market & the policy holders' outlook and assorted other market factors, the market price may vary from Net Asset Value (NAV). Some of the close-ended fund schemes in India are ING Vysya Dynamic Asset Allocation Fund. Birla sunlife capital protection fund and Kotak Dynamic Asset Allocation Scheme.

Open-ended Mutual Fund Schemes - There is no rigid maturity for the open-ended mutual fund schemes. One has to contract directly with the Mutual Fund for his investments & redemptions. Liquidity is the key feature here. Buying and selling of the units becomes suitable at the related prices of the net asset value (NAV). Some of the open-ended fund schemes in India are Birla Sun Life infrastructure fund, Franklin Templeton Blue-chip Fund, HDFc top 200, HDFC equity fund (G) etc.

Tax-saving Mutual fund Schemes - Individuals, companies, partnership firms, and body corporate are some of the investing parties in the different Mutual Funds available in the market principally to enjoy the remuneration of tax saving. The Indian Mutual Funds are guided by principles of SEBI. It provides certain tax benefits to the fund holders. It is compulsory that tax benefits should be declared in a column which reads "objects of the offering". Birla Sun life Tax Relief-96, SBI Mutual Funds, HDFC Tax Saver, Prudential ICICI and Bajaj Capital are a number of the tax saving Mutual fund companies in India.
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Thursday, January 13, 2011

Future of Mutual Funds in India

Future of Mutual Funds in India - An Overview

Financial experts believe that the potential of Mutual Funds in India will be very brilliant. It has been predictable that by March-end of 2012, the mutual fund industry of India will reach Rs 99,90,000 crore, taking into account the total assets of the Indian commercial banks. The assessment was based on the December-04 asset value of Rs 1,50,537 crore. In the coming 10 years the annual multiple growth rate is expected to go up by 14.5%. Since the last 5 years, the growth rate was recorded as 9.3% annually. Based on the current rate of growth, it can be forecasted that the mutual fund assets will be double by 2012.

Indian Mutual Funds Future - Growth Facts

*       In the past 6 years, Mutual Funds in India have recorded a growth of 100 %. In India, the rate of saving is 24 %. In the future, there lies a big possibility for the Indian Mutual Funds industry to expand.
*       Quite a lot of asset management companies which are foreign based is now entering the Indian markets. A number of commodity Mutual Funds are introduced now. The SEBI (Securities Exchange Board of India) has approved the permission for it. More emphasis is put on the effective Mutual Funds governance.
*       There is also sufficient scope for the Indian Mutual funds to enter into the semi-urban and rural areas. Financial planners will play a major role in the Mutual Funds market by providing people with proper financial planning.

Future of Indian Mutual Funds- Conclusion

Looking at the past developments and combining it with the current trends it can be finished that the future of Mutual Funds in India has lot of positive things to offer to its investors.
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Wednesday, January 12, 2011

Drawbacks of Mutual Funds

Drawbacks of Mutual Funds
Mutual Funds, like every venture, have their own share of compensation and disadvantages. Before you venture out to make your investment in Mutual Funds, it is advisable that you do a thorough study of the pros and cons of Mutual Funds. Just like you can list a number of Mutual Funds advantages, you will find drawbacks of Mutual Funds as well if you do a market research. Several of the common drawbacks of Mutual Funds in India are listed below:

Disadvantages of Mutual Funds in India

There are several shortcomings of Mutual Funds in India. Some of these Mutual disadvantages are as follows:

*       No Guarantees: Every outlay comes with some sort of risk. If the value of an entire stock market falls, it will directly affect the mutual fund shares as its values will also turn down, irrespective of the portfolio balance. However, the risks concerned in mutual funds are much lesser than buying and selling of stocks on your own. This is because when you are dealing through a mutual fund you do not have this risk of money loss.
*       Taxes: In a usual year, the mutual funds which are most efficiently managed have the capacity to sell anywhere from 10 - 70 % of their portfolio securities. If the money you invest in Mutual Fund earns a yield, you will be required to pay the taxes on the dividend received by you. You have to pay the taxes even if you make your money reinvest in Mutual Fund.
*       Fees and Commissions: An administrative fee is required by all kinds of funds to meet the operating expense. There are many funds which even charge commission on sales or "loads" to pay financial consultants, brokers, financial institutions or financial planners. If you buy stocks or shares from Load Fund, you have to pay a commission on sales irrespective of the verity that you are consulting a financial advisor or a broker.
*       Risk Management: It depends on the right assessment of the fund manager that you will get a reasonable return or not. This is unlike Index Funds where there is no management risk implicated because of the absence of managers. 
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Advantages of Mutual Funds

Advantages of Mutual Funds

A Mutual Fund can be defined as a confidence wherein the savings of the investors with the same financial purpose are shared in. The unruffled money then goes for investment in capital market instruments. These can include shares, debentures and other such securities. These investments in turn succumb an income. The income and capital enjoyment are distributed amongst its unit holders. The return of mutual funds is many. Some of the rewards of mutual funds in India are listed as below:

Mutual Funds Advantages

There is numerous compensation of investing in a Mutual Fund and that is why more and more people are taking to it. Some of the major profits of mutual funds in India are as follows:-

Low cost: The operating expense of the Mutual fund seldom cross the 1.5 % mark of the asset you make. The Index Funds expenses are generally lesser. Instead, the company stocks are bought by them which are found on the explicit index.

Diversification: The top Indian mutual funds create their collection designs in such a manner that the attracted individuals who invest in mutual funds react in a different way even under similar economic circumstances.

Regulatory oversight: There are certain rules and convention framed by the government which each Mutual fund are required to follow. This is to guard the investors from any fraudulent actions.

Liquidity: Getting your money out from the mutual fund is not difficult task. All you have to do is just apply online, write a check, make a telephone call and you are done.
Convenience: Mutual fund shares can be bought via phone, mail, or even over Internet online also.

Ease to proceed: Investing in a mutual fund is easy if you are a bank account holder and you have a PAN card. All you will need to do is fill up the application form, attach the PAN card number proof (for transactions over Rs 50,000), sign the cheque and your Mutual Fund investment is complete.

Professional Management: A mass of the mutual funds in India employ the leading professionals in their investments management. These managers make decisions on what securities, the buying and selling of the funds will take place.

Well regulated: The SEBI (Securities Exchange Board of India) regulates the India mutual funds for the security and expediency of the investors. SEBI ensures that clearness is maintained by keeping a stern vigilance on the mutual funds. This keeps the investor informed and helps him/her to make his/her choice. To keep a track whether the investment in Mutual Fund is in line with the goal or not, SEBI demands the disclosure of portfolios once in every six months.
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Tuesday, January 11, 2011

Performance of Mutual Funds

Performance of Mutual Funds

Mutual Funds are efficiently run by those companies which gather money from various investors and invest or organize those funds in diversified portfolios like shares, stocks, bonds and a variety of other securities for returns. The portfolio manager has the duty to invest primary security of the fund, pulling in capital gains or losses and transposing earnings to the investors. Unit Trust of India was the first organization to introduce the idea of Mutual Fund in India. The recital of mutual funds began rising with the liberalization of India.

Performance of Mutual Funds: Unit Trust of India (UTI)

Unit Trust of India Mutual Funds governed the Indian mutual fund market for about 54 years. It had no competitors till the year 1988. It is solitary in 1988 that few mutual fund companies were set up to compete the Unit Trust of India. Despite the surfacing of various Mutual Fund companies in 1988, UTI Mutual Fund remained in his peak position. UTI Mutual Funds over and over again exhibited excellence in this field, and this contributed to the recital of Mutual Funds in India. Back in 1992, 24 million UTI Mutual Fund shareholders were promised high returns. UTI Mutual Funds schemes sold the thought of ahead profits by investing in mutual funds to Indian people. This happened to be a tremendously helpful measure in drawing more and more investors. Moreover, there was no risk in investing in mutual funds.

Performance of Mutual Funds: Present Scenario

Now day’s Different Indian mutual fund companies have plans of introducing pension schemes. They are also introduced open-ended mutual funds. According to some experts, if certain boundaries are removed, the system will become more favorable and bendy.
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Monday, January 10, 2011

Mutual Funds in India

Mutual Funds in India

A mutual fund is one which is an efficiently managed group speculation scheme. It pools in money from a number of investors and invests in bonds, stocks, short term money market instruments and other forms of securities. The mutual fund will also have a fund manager who will do business the mutual money from time to time. The worldwide value of the entire mutual funds sum up to more than $30 trillion.

Saving is a vital part of the financial system of any nation. With the inestimable savings and venture options available, the money is a vaccination. The Indian economic market presents a superfluity of avenues to the investors. Speculation goals vary from one person to another. While some may prioritize security, others give weight to profits. While some plan for their child's education, some others might want to save for urgent situation and retirement.

Although not the best as yet, there has been a fuelled escalation rate in the mutual fund trade that would provide levelheaded options for the commoner to endow his/her savings.

Mutual Funds may be invested in a number of securities. The most regular of these securities are cash instruments (eg. Fixed Deposits), stock and bonds with a number of sub categories. Stock funds can be invested in shares in specific industries like banking, automobiles, real estate, technology or utilities. One can also call them segment funds. Bond funds can vary according to their future risk. For illustration, the high-return junk bonds or speculation grade commercial bonds, type of issuers (e.g., govt. agencies, corporations, or municipalities), or ripeness of bonds both long term as well as short term are vital. Stock and bond funds can be invested in the foreign securities which are domestic funds, foreign securities which are universal funds or foreign securities with global funds.

Various Mutual Funds in India

There are quite a lot of Mutual Fund Schemes in India to meet the necessities like risk forbearance, return prospect and fiscal position. The different Mutual Funds schemes in India are enlisted below:

• Income Schemes

• Sector Specific Schemes

• By Structure

• Open - Ended Schemes

• Interval Schemes

• Close - Ended Schemes

• Balanced Schemes

• Growth Schemes

• Money Market Schemes

• Special Schemes

• Tax Saving Schemes

• Index Schemes

Popular Mutual Funds in India

The following Mutual Funds are very popular in India:

• Tata Mutual Fund

• Reliance Mutual Fund

• LIC mutual Fund

• HDFC Mutual Fund

• JP Morgan

• Merrill Lynch

• ABN Amro Mutual Funds

• State Bank of India Mutual Fund

• Birla Sun Life Mutual Fund

• HSBC Mutual Funds

• UTI Mutual Fund

• Kotak Mahindra Mutual Fund

• Standard Chartered Mutual Fund

• Sahara Mutual Fund

Benefits of Mutual Funds

Mutual funds are tremendously popular form of speculation in India. Many investors go in for Mutual Fund investment because it offers outstanding remuneration to the investors with limited money and time. In addition, risks of loss are relatively less in Mutual Funds as compare to Share Market.
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Sunday, January 9, 2011

TAN (Tax Deduction and Collection Account Number)

TAN (Tax Deduction and Collection Account Number)

1 What is TAN
TAN or Tax Deduction and Collection Account Number is a 10 digit alpha numeric number required to be obtained by all persons who are responsible for deducting or collecting tax. It is compulsory to quote TAN in TDS / TCS return (including any e-TDS / TCS return), any TDS / TCS payment challan and TDS/TCS certificates.

2 Who needs to apply for TAN? What law requires it to be obtained?
All those persons who are required to deduct tax at source or collect tax at source on behalf of Income Tax Department are required to apply for and obtain TAN.
The provisions of section 203A of the Income-tax Act require all persons who deduct or collect tax at source to apply for the allotment of a TAN. The section also makes it mandatory for TAN to be quoted in all TDS/TCS returns, all TDS/TCS payment challans and all TDS/TCS certificates to be issued. Failure to apply for TAN or comply with any of the other provisions of the section attracts a penalty of Rs. 10,000/-

3 How to apply for TAN
An application for allotment of TAN is to be filed in Form 49B and submitted at any of the TIN Facilitation Centres meant for receipt of e-TDS returns. The application form can be downloaded from the website of the Income Tax Department

4 What kind of documents are required to be sent with the application
No documents are required to be filed with the application for allotment of TAN. However, where the application is being made online, the acknowledgment which is generated after filling up the form will be required to be forwarded to NSDL.
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1 What is PAN
Permanent Account Number (PAN) is a ten-digit alphanumeric number allotted by Income Tax Department. Normally it is, issued in the form of a laminated card, by the IT Department.

2 Is it necessary to obtain PAN
It is mandatory w.e.f.1 January 2005 to quote PAN on challans for any payments due to Income Tax Department. Moreover, now it is mandatory to quote PAN on return of income, all correspondence with any income tax authority.

3 For which type of transactions it it necessary to quote PAN
In all documents pertaining to financial transactions notified from time-to-time by the Central Board of Direct is necessary to quote PAN. Some of the transactions where it is compulsory to quote PAN are as follows-
Sale and purchase of immovable property or motor vehicle;
Payments in cash, of amounts exceeding Rs. 25,000/-to hotels and restaurants;
In connection with travel to any foreign country.
For obtaining a telephone or cellular telephone connection.
For making a time deposit exceeding Rs. 50,000/- with a Bank Post Office;
depositing cash of Rs. 50,000/- or more in a Bank.

4 Who must have PAN
(a) All existing assesses or taxpayers or persons who are required to furnish a return of income, even on behalf of others, must obtain PAN.
(b) Any person, who intends to enter into financial transaction where quoting PAN is mandatory, must also obtain PAN.
(c) The Assessing Officer may allot PAN to any person either on his own or on a specific request from such person.

5. How to apply for PAN?
PAN application has to be made on Form 49A. It can be downloaded from website. Income Tax department has authorized UTI Investor Services Ltd (UTIISL) to set up and manage IT PAN Service Centers in all cities or towns where there is an Income Tax office and National Securities Depository Limited (NSDL) to dispense PAN services from TIN Facilitation Centers. For convenience of PAN applicants in big cities, UTIISL has set up more than one IT PAN Service Center and likewise there are more than one TIN Facilitation Centers.
To obtain PAN fast, one can also make application for fresh allotment of PAN through Internet pay througha 'nominated' credit card. In such cases the PAN is allotted on priority and communicated through email.

6 What are the documents to be submitted alongwith the Form 49A (application for PAN)
a. Individual applicants will have to affix one recent, coloured photograph (Stamp Size: 3.5 cms x 2.5 cms) on Form 49A; (A photograph is compulsory only in case of 'Individual' applicants')
b. Any one document listed in Rule 114 must be supplied as proof of 'Identity' and 'Address'; and
c. Designation and code of the concerned Assessing Officer of Income Tax department will have to be mentioned in Form 49A.

7 What type of documents are accepted as proof of address?
For Individuals: Following are some of the documents that are accepted as proof of address: (a) copy of electricity bill; or (b) telephone bill or (c) depository account or (d) credit card or (e) bank account or (f) ration card or (g) employer certificate or (h) passport or (i) voter identity card or (j) property tax assessment order or (k) driving license or (l) rent receipt or (m) certificate of address signed by a MP/ MLA/Municipal Councilor / a Gazetted Officer;
In case the PAN applicant is a minor, any of above documents of any of the parents or guardian of such minor shall serve as proof of Address;
For HUF: In case PAN application is made on behalf of a HUF, any of above documents in respect of Karta of the HUF will serve as proof of Address.
For Others e.g. Partnerships / Companies etc.: Copy of Certificate of Registration issued by the Registrar of Companies or Copy of Certificate of Registration issued by the Registrar of Firms or Copy of Partnership Deed or Copy of Trust deed or Copy of Certificate of Registration Number issued by Charity Commissioner or Copy of Agreement or Copy of Certificate of Registration Number issued by Charity Commissioner or Registrar of Co-operative Society or any other Competent Authority or any other document originating from any Central or State Government Department establishing Identity and Address of such person.
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1)Bharat Overseas Bank
2)City Union Bank
3)Development Credit Bank
4)Dhanalakshmi Bank
5)Lord Krishna Bank
6)SBI Commercial & International Bank
7)Tamilnadu Mercantile Bank (Link Not Available at present)
8)The Bank Of Rajasthan
9)The Baneras State Bank (Link not Available at present)
10)The Catholic Syrian Bank
11)The Federal Bank
12)The Ganesh Bank of Kurundwad (Link not available at present)
13)The Jammu & Kashmir Bank
14)The Karnataka Bank
15)The Karur Vysya Bank
16)The Lakshmi Vilas Bank
17)The Nanital Bank (Link not yet avaialble)
18)The Nedungadi Bank (merged with PNB)
19)The Ratnakar Bank
20)The Sangli Bank
21)The South India Bank
22)The United Western Bank
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Links for Banks in India :- INDIAN PUBLIC SECTOR BANKS

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