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Invest In ELSS For Valuation Advantage

Monday, April 30, 2012
By Anand Birai

The mutual fund investors are standing a good opportunity to invest in equity related funds as the valuations are substantially down. Especially, the investors who rush for Equity Linked Saving Schemes (ELSS) at the end of the financial year in a hurry have better opportunity to enter with investable funds locking for three years now.

Timing plays a crucial role in investments and if you were waiting for it, the time is now. The equity markets are trading at lower level than a year before. When the BSE Sensex was at around 19,000 points around the same time of the year in 2011, it is now at around 17,000 points. This has brought the market valuations of equity-based funds in negative territory but they will soon overcome with the valuations adjusting with the time factor.

Out of more than 230 equity funds, only 16 funds posted positive returns as on April 26 on account of one year. Except SBI Magnum Sector Funds Umbrella –Emerg Buss Fund – Growth which posted return of 11.77%, no other fund is with returns of more than 4% among those who are in positive return giving fund category.

Unsurprisingly, all Index funds are in red zone as 35 Funds are in between 8 to 13% negative owing to the reduction in valuations.

ELSS has the similar story with out of 47 ELSS only two are in positive territory with the table topper ICICI Prudential RIGHT Fund – Growth with 4.71% and Axis Long Term Equity Fund – Growth with 0.16% returns over a year.

However, the funds are faring well on the accounts of three years. The ELSS investors are likely to gain better mileage from this opportunity because of two reasons. The valuations over three years can improve and secondly, the much anticipated move of removing ELSS for tax saving purpose might go away after 2014 general elections when the slew of reforms are likely to be announced.

MF UPDATE
SBI introduces new facilities  

SBI MF has announced to introduce new facilities – Fixed end period SIP, Top up SIP facilities, Flex Systematic Transfer Plan and Daily & weekly Systematic Transfer Plan, with effect from 25th April 2012. First three facilities will be available in all the open ended schemes. Daily & Weekly Systematic Transfer Plan facility will be available in the SBI Gold Fund, SBI PSU, SBI Infrastructure Fund-Series I from Magnum Insta Cash Fund and Magnum Insta Cash Fund-Liquid Floater Plan. All other existing terms & conditions of Daily & Weekly STP shall be applicable for above schemes. SBI Mutual Fund has decided to change the name of all schemes which are starting from Magnum, with effect from 25th April 2012. Now, the name of the schemes will start from the word SBI Magnum instead of Magnum only. SBI Mutual Fund introduces trigger facilities for all its open ended schemes from 25th April 2012. Under these facilities, a stipulated amount would be transferred from one scheme to another in case trigger is activated.
   
Taurus launches Banking & Financial Services Fund  
Taurus MF has launched a new fund, Taurus Banking & Financial Services Fund, an open ended sectoral equity scheme. The face value of the scheme is Rs. 10 per unit. The new issue will be open for subscription from 2nd May 2012 and closes on 16th May 2012. The investment objective of the scheme is to generate capital appreciation through a portfolio that invests predominantly in equity and equity related instruments of Banking, Financial and Non-Banking Financial Companies that form part of the BFSI Sector. The performance of the scheme will be benchmarked against BSE Bankex Index and will be managed by Sadanand Shetty.

IDBI launches India Top 100 Equity Fund  
IDBI MF has launched a new fund named as IDBI India Top 100 Equity Fund, an open ended growth scheme. The face value of the scheme is Rs. 10 per unit. The new issue will be open for subscription from 25th April 2012 and closes on 9th May 2012. The investment objective of the scheme is to provide investors with opportunities for long-term growth in capital through active management of a diversified basket of equity stocks, debt and money market instruments. The performance of the scheme will be benchmarked against CNX 100 and will be managed by V. Balasubramanian. IDFC has announced dividend under IDFC Sterling Equity Fund. The quantum of dividend will be Rs. 1.4 per unit on the face value of Rs. 10 per unit. The record date for dividend distribution is 30th April 2012.

Edelweiss announces change in face value for its schemes  
Edelweiss MF has decided to change the face value of Edelweiss Liquid Fund and Edelweiss Ultra Short Term Bond Fund. Accordingly, the face value has been raised from Rs. 10 per unit to Rs. 1000 per unit for all the plans/options under aforesaid schemes, with effect from 29th April 2012 and 30th April 2012 respectively.
 
Escorts announces dividend under various schemes  
Escorts MF has announced dividend under Escorts Short Term Debt Fund, Escorts Income Bond Fund, Escorts Income Plan and Escorts High Yield Equity Plan on the face value of Rs. 10 per unit. The quantum of dividend will be Re. 0.11 per unit for Escorts Short Term Debt Fund, Re. 0.10 per unit for Escorts Income Bond Fund, Re. 0.092 per unit for Escorts Income Plan and Rs. 0.40 per unit for Escorts High Yield Equity Plan. The record date for dividend distribution will be 02nd May 2012.

Kotak revises exit load under its scheme  
Kotak MF has announced to revise exit load structure under Kotak Equity Arbitrage Fund. Accordingly, an exit load of 0.50% will be charged if units are redeemed within 6 months from the data of allotment and nil if redeemed or switched out after 180 days from the date of allotment irrespective of the amount of investment. The revised exit load structure will be effective from 1st May 2012. Bonus units and units issued on reinvestment of dividends shall not be subject to exit load.

TOP PERFORMING FUNDS

Scheme Name Nature    1 M % 6 M % 1 Y % 3 Y %   
SBI Magnum Sector Funds Equity    7.35 8.17 11.77 39.71
Canara Robeco InDiGo Fun Debt    1.26    4.92      14.75    -
ICICI Prudential Balance Balanced    1.42     6.16   2.7       19.15
DSP BlackRock MIP Fund MIP    1.79    8.92     9.97       10.45
Escorts Liquid Plan - Gr Liquid    0.89    5.22    10.51       8.04
ICICI Prudential RIGHT F ELSS    2.67     7.83    4.71   
MOSt Shares NASDAQ 100 ETF    1.83       19.63    33.47   -
Baroda Pioneer Gilt Fund Gilt    0.93     8.51    12.72      12.19
HDFC Index Fund - Sensex Index    0.38    0.73   -8.97    18.78

*Note:- Returns calculated for less than 1 year are Absolute returns and returns calculated for more than 1 year are compounded annualized. NAV as on April 26, 2012

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