Mutual Funds

Monthly Income Plans

Learn about how Monthly Income Plans work.

  • Monthly Income Plans - Hybrid funds that mostly hold Debt
  • How do they give you Monthly Income?
  • How they are "slightly" safer.
  • Risks involved
  • MIPs in the real world
  • Who should buy an MIP
  • Selecting a plan

(9 min)

Two New Short Takes

Two new short takes have been added, and in case you were only looking at the blog, here's the list:

Choose between Liquid and Ultra Short Term Funds?

A reader asked how he should decide between buying a Liquid fund or an Ultra Short Term fund. Deepak takes you through the differences, in a continuation from the Lesson on Liquid and Ultra Short Term Funds.

Choose Liquid or Ultra Short Term Fund?

A reader asked how he should decide between buying a Liquid fund or an Ultra Short Term fund. Deepak takes you through the differences, in a continuation from the Lesson on Liquid and Ultra Short Term Funds.

(6 min)

See also: An article by Deepak on our blog on why the NAV change was made.

Liquid and Ultra Short Term Mutual Funds

What are Liquid and Ultra Short Term Mutual Funds in India, and why would you consider them versus a Fixed Deposit?

Deepak Shenoy takes you through:
* The concept of liquid funds
* Where do they invest?
* Dividend and Capital Gains taxes involved
* Interest Rates
* Comparison with Fixed Deposits

(15 min)

Mutual Funds and Demat Fallacies

Some advertisements recently give the impression that you can "Demat" your mutual funds! Yippee! So you should buy through a stock broker on an exchange!

But this is a stupid reason.

Mutual funds are "dematerialized" anyway.

Materialized means that the unit certificate that you have is the be-all and end-all of your ownership; in the past, shares were sold as certificates. When you sold, you gave your certificate to the broker, who would find a way to get it over to the new buyer. If you lost your certificate, you were in deep doo-doo. You had to file an FIR and hope you had a photocoyp and beg and plead and offer your children as guarantee to get your shares back. Many instruments - NSCs for one - are like this.

Dematerialized means what you get in paper is an account statement, that your holdings are really maintained electronically. If you lose your statement, no big deal, you just call them and they send you a new one. You might need some details, but usually they can find your holdings with a PAN number nowadays. Shares are now usually held in demat mode, with demat "depositories" like NSDL and CDSL accounting for a major part of all share holdings in India.

What does 40% Dividend Mean?

Mutual Funds in India often declare dividends like "40%" or "20%" - and if it gets you salivating that

Open and Closed Ended Funds

Learn about Open Ended and Closed ended mutual funds in this 9 minute lesson, part of MarketVision's Mutual Funds module.

  • What are open and closed ended funds
  • Types of closed ended funds
  • Why closed ended funds at all?
  • The Scam of NFO charges
  • Tax arbitrage and Tenure matching with FMPs
  • Should you choose Closed ended funds for equity?

(9 min)

Do let us know your comments!
 

Budget: Mutual Fund Dividends To Companies at 30% Dividend Tax

Now for an interesting hidden (i.e. not yet spoken about) aspect of the budget.

According to the finance bill, any income distributed by debt funds to companies (or anyone other than an individual) will get hit with dividend tax of 30%.

Earlier the rate was 25% for liquid funds and 20% on other funds. Now it's all been bumped up to 30%, presumably to remove the discrepancy with fixed deposits.

Reader Q: How is NAV Calculated For Purchases?

Reader Anon asks:

Hi Deepak,
Could you plz explain if some one newly buying to a fund will affect the NAV? or is it like.... today fund came up with the NAV of the scheme and if I apply for 10000 Rs, they give me units say today's NAV/10000 or is it like (Today's NAV calculated including my 10000)/ 10000 as the NAV of today and I allot the units!

Lets take an example. A fund has Rs. 100,000 as its total assets under management (AUM) and, let's say, 5,000 units.

Short Take: Equity Mutual Funds

See our latest video in the Mutual Fund series on: Equity Mutual Funds.

(Video, 10 min)