SEBI has initiated the system of colour coding/ product labeling for mutual fund schemes, wherein the mutual fund application forms, brochures and all advertisements in newspapers and magazines will have a product label of a specific colour to indicate the level of risk associated with the investment. This came into effect from 1 July 2013 and will help investors understand the risk profile of the fund before considering investing. The MFs have been divided in to three broad categories and assigned specific colours-
The SIP ( Systematic investment plan) route is very popular among investors for long term savings towards their financial goals. Banking on this popularity, ICICI Direct, an online trading and investment website, in collaboration with ICICI Lombard General Insurance has launched a product called “Secure Mind”.
A long time and regular mutual fund investor would be well aware of the risks and rewards associated with investing in equity mutual funds and the various types of equity mutual funds to invest in like large cap, mid cap, sectoral etc. depending upon the funds’ investment philosophy.
There is a general perception (or shall we say a common misconception?) that only equity markets and related investments are volatile while fixed income/debt products give stable fixed returns. While it is true that debt funds seek to protect your capital, they are subject to interest rate risk. What it exactly means is that while one is sure that his or her investment is reasonably safe and is unlikely to fall below the principal over the long term, there is no guarantee on how much you would earn on it. It could be as low as 3-4 % pa or a 10 % plus annual return, depending on the prevailing interest rate scenario. Even during a secular downtrend or an uptrend in interest rates, there could be periods of interim volatility which could affect the returns. Let us understand this in detail-
Like most other ethical financial planners do, I too always advise my clients not to mix their insurance needs with their investments, avoid getting into high cost unit linked insurance plans and opt for a pure term insurance and invest the remaining in good investment products.
Fidelity Asset Management Company has been recently acquired by L&T Mutual Fund. As a result, a few schemes of Fidelity MF are all set to merge with L&T MF effective 16th November 2012.
The following are the schemes to be merged –
Fidelity Flexi Gilt Fund with L&T Gilt Fund
Fidelity Wealth Builder Fund-Plan A with L&T Monthly Income Plan
Fidelity Wealth Builder Fund-Plan B & Plan C with L&T MIP – Wealth Builder Fund
L&T Contra Fund and Fidelity India Value Fund to form “L&T India value Fund”
L&T Hedged Equity Fund, L&T Growth Fund and L&T Opportunities Fund and Fidelity India Growth Fund to form “L&T India large Cap Fund”
Consider the domestic investment scenario – Indian stock markets have returned a single digit average annualized return since 2008 and the future course is unpredictable. Similar is the case with debt markets with high inflation and uncertain interest rate movement. So where does a person invest in such a situation to protect himself from interest rate risk and volatility of the stock markets. Capital Protection Oriented Funds could be one of the solutions.