Basics Of Mutual Funds

About Investments How do I apply for Investments in a fund?
Where do I get applications?
What is a Systematic Investment Plan?
How do I apply for a Systematic Investment Plan?
How do I make an additional purchase?
Are there any minimum amount limits for subsequent purchases in the same scheme?
How do I transfer money between various schemes? Do loads prevail?
Is there a limit to transfer money from one scheme to another?
What is a lock-in period?

About Repurchase (Redemptions) When and how can I redeem my investments? What is a Systematic Withdrawal Plan? Do loads prevail? I have not received my redemption proceeds? What should I do?

About Dividends

How do I get dividends?
What is dividend reinvestment? Do loads prevail?
I have not received my dividend? What should I do?

General

How do Minors apply?
How to apply under Power of Attorney (POA)?
What is Nomination and how does it work?
How do I apply for the PIN facility?
Can I get a loan against my fund units? What is the process?
What do NRIs do for Investments and Redemptions?
I have multiple accounts in a fund. Can I consolidate?
How are monies transferred in the event of Unit holders death ?

Mutual Funds in general What is a Mutual Fund?

Mutual Fund is another saving or investment vehicle, akin to, but different from bank deposits, shares etc., It is an entity wherein people / institutions pool small amounts of money into larger amounts for investment and achieve returns with minimum risk, which otherwise is not possible by a common man. Types of Mutual Funds?

Basically closed ended or open ended. Further with loads and no-loads. Again based on investment objective can be further classified into :-
1) Growth funds
2) Income funds
3) Balanced funds
4) Money Market funds
5) Tax Savings funds
6) Specialized funds and
7) Assured Return funds etc…

What is NAV?

Net Asset value is the networth of the Mutual Fund at the close of any Working Day. What is Applicable NAV?

For the purpose of purchase, redemption & switches, the applicable NAV is the Net Asset Value per Unit at the close of the Working day on which a request, complete in all respects is accepted and received before the cut-off time for the particular scheme. Otherwise, the applicable NAV would be the one for the next business day. What is a load and types thereof?

It is a charge paid by the Investor to the Mutual Fund.

There are 3 types,
1) Entry load – this is paid when an investment is made in a scheme
2) Exit load – this is paid when a redemption is carried out from a scheme and
3) CDSC ( Contingent Deferred Sales Charge) - this is an Exit charge payable by the Investor for a No load scheme.

What is the difference between Fund Scheme and Plan?

A Fund Scheme is the fund itself and based upon the investment objectives. It may have several plans pertaining to growth or distribution of dividends. What is forward and historical pricing?

Forward pricing is the price arrived at after the closing hours of a Working day, which the Investor is not aware of. Historical pricing is a price which an Investor knows before transacting, typically transactions allowed on the basis of the previous day’s NAV.

About Account Statement What is an Account Statement?

It is a statement summarising all the transactions and other details like unit balance, value of units etc. of the Investor. It also records all his / her registration attributes and records changes therein as and when they occur. It is a conclusive proof of their investments and shows the financial standing on a given date. How do I get a duplicate account statement?

An account statement can be obtained from the following sources :-

Requesting any of the CAMS SERVICE CENTREs

Writing / email / phone to back office at CAMS, Chennai or its SERVICE CENTREs

Requesting through CAMS Website under Account Information –

Email robot service sends the account statement to the registered email id in no time

Requesting through CAMS Website under Query / Complaints –

Email / physical account statement would be sent to the Investor at their registered address

I have changed my residence. What should I do?

You have to inform the nearest CAMS SERVICE CENTRE / concerned AMC in writing, appropriately signed, so that the change is recorded in the database. Alternatively, you can submit a request at the CAMS website to record the change by logging on to the Account Information with a PIN reference under Investors section. An acknowledgement will be sent reflecting the change. I have a new bank account. What should I do?

You have to inform the nearest CAMS SERVICE CENTRE / concerned AMC in writing, appropriately signed, so that the change is recorded in the database. Alternatively, you can submit a request at the CAMS website to record the change by logging on to the Account Information with a PIN reference under Investors section. An acknowledgement will be sent reflecting the change.

About Investments How do I apply for Investments in a fund?

By making an application to the Mutual Fund. The same can be submitted to the CAMS SERVICE CENTREs / concerned Fund. Where do I get applications?

The applications can be obtained from CAMS SERVICE CENTREs / Fund offices or branches. Alternatively, they can be downloaded from the CAMSONLINE Website, wherein specific Fund (for a few funds) applications are also available apart from generic ones. What is a Systematic Investment Plan?

Just like a recurring deposit in a Bank, this scheme enables an investor to invest periodically over a period of time. Anybody can avail of this facility subject to the terms and conditions contained in the application form / Offer Document. It is a convenient way to " invest as you earn " and affords the investor an opportunity to enter the market regularly, thus averaging the acquisition cost of Units. How do I apply for a Systematic Investment Plan?

An application can be made through a letter or with a regular application. This needs to be submitted to a CAMS SERVICE CENTRE / concerned AMC along with the no. of cheques for the duration of plan. Make sure that the cheques are drawn locally or as per terms of the Offer Document How do I make an additional purchase?

By submitting an application along with a locally payable cheque /DD at a CAMS SERVICE CENTRE / concerned AMC office. Are there any minimum amount limits for subsequent purchases in the same scheme?

Yes, limits of minimum amount are applicable for additional purchases for schemes and will be mentioned in the Offer Document. How do I transfer money between various schemes? Do loads prevail?

Money can be transferred between schemes by making a switch of units from a scheme to another Scheme. A Source scheme is one from where you want to switch out and a Target scheme is one where you want to switch in. A switch can be effected by applying through the transaction slip available in the Account Statement or by a request letter, appropriately signed. Yes, Switches are subject to loads depending upon the Scheme details Is there a limit to transfer of money from one scheme to another?

Yes, the target scheme should have the minimum subscription amount as specified in the Offer Document. What is a lock-in period?

This is a pre-defined period during which the investments cannot be redeemed. This could be due to a legal implication (erstwhile 54 EA & 54 EB or ELSS sections of Income Tax Act ) or due to a restriction levied by the AMC (this could be for a short period of say, 7 / 10 days depending upon the AMC). This short restriction is to ensure that the Units are not redeemed before encashment of the Investment cheque.

About Repurchase (Redemptions) When and how can I redeem my investments?

Investments can be redeemed after the expiry of the lock-in period, if any, either by submitting a physical request to any of the CAMS SERVICE CENTREs / concerned AMC or requesting the same through the on-line services available under Investors section at the CAMS website. What is a Systematic Withdrawal Plan? Do loads prevail?

This plan enables the Unit holders to withdraw fixed sums from their Unit Accounts at periodic intervals. Any Unit holder can avail of this facility subject to the terms and conditions contained in the application form / Offer Document, to include exit loads if applicable. I have not received my redemption proceeds? What should I do?

You may write / email to any of the CAMS SERVICE CENTREs or to the AMC concerned addressing the same for further course of action.

About Dividends How do I get dividends?

Dividends would be paid by cheques, drawn in the name of the sole holder /first-named holder ( as determined by the account and mailed to the last address recorded in the books ). The Bank name and the Account no. as specified in the records, will also be mentioned in the cheque. The cheque will be payable at par in all the cities designated by the Fund. In case of other cities, you will be paid by a Demand Draft after deducting the demand draft charges (if any and depending upon the concerned AMC). What is dividend reinvestment? Do loads prevail?

Creation of Units in lieu of the amounts due as dividends, is termed as dividend reinvestment. There is no outflow of money here. Normally, loads are not applicable. However, the terms are clearly specified in the Offer Document. I have not received my dividend? What should I do?

You may write / email to any of the CAMS SERVICE CENTREs or to the AMC concerned addressing the same for further course of action.

General

How do Minors apply?

Parents / Lawful Guardians can apply on behalf of a Minor. They can sign the application on behalf of the Minor and status of the Investor in the Account Statement would also reflect the same. How to apply under Power of Attorney (POA)?

Any investment made can be operated upon by a POA holder. This is possible after receipt of the POA by the Registrar, duly attested in original. Once the POA is registered, the POA holder steps into the shoes of the Investor. The right of operating the account reverts back to the Investor only after the POA is revoked. What is Nomination and how does it work?

Nomination is a process whereby the Units get transferred to a nominee’s favour upon the demise of the Investor. A form needs to be submitted with relevant particulars of the Nominee by an investor duly signed, to CAMS for recording the same. How do I apply for the Personal Identification Number (PIN) facility?

Upon request, a pre-printed disclaimer form is sent to you for completing the formalities of PIN registration. This form duly filled and signed,

Article Source: http://EzineArticles.com/?expert=Ted_Mathew

Stocks vs. Mutual Funds

Stocks have several pros and cons associated with them. Stocks are a great option if you know what companies you want to invest in. They are also a great option if you are interested in day trading. While stocks offer you flexibility and control over the diversity of your investment portfolio they require a lot of work to keep your portfolio properly diversified. A lot of financial experts recommend that your investment portfolio contain investments in at least 20 different companies and in at least 10 different industries. Making this many stock selections can be difficult to do.

Mutual funds are another investment option that you have. A mutual fund is basically an investment set that is controlled by a financial management company. This management company selects the stocks, bonds and other investments that are held by the mutual fund. Mutual Funds are a great way to easily diversify your investment portfolio. The management company does all of the leg work for you. While mutual funds are a great investment option they do have a few drawbacks. The first drawback is that they charge management fees and carrying fees. These fees cut into your profits and investment capital. The second drawback is that the performance of the mutual funds depends partially on the management company’s ability to select good investments and the company’s ability to manage the fund’s investment portfolio. Another drawback to mutual funds is that you don’t have any say in which investment products the mutual fund invests in. Because of this the fund may invest in a company that you would prefer not to invest in, or they may select an investment product that you think is a bad investment. Finally, mutual funds are susceptible to fraud. In recent years there has been several high profile fraud cases filed against mutual fund management companies.

Finding the right credit card is fast and easy. Browse the nets largest selection of leading credit card offers. Compare interest rates and card benefits. Applying is simple. Fill out the online applications for Visa, Mastercard, Discover, American Express and other trusted credit companies. For more financial information and resources visit the mortgage and finance directory

Mutual Funds Basics

There are a number of investment options available. Many people have chosen mutual funds as their primary means of investing. Mutual funds provide professional management, diversification, convenience and liquidity. As with all investments, mutual funds are not risk free. It is essential that you make an informed investment decision and choose a mutual fund which is right for you depending on your goals, investment time frame and risk tolerance.

Over the long-term, the success (or failure) of your investment in a fund also will depend on factors such as:

Fund's sales charges, fees, and expenses;
Taxes you may have to pay when you receive a distribution;
Age and size of the fund;
Fund's risks and volatility;
Recent changes in the fund's operations.

When you invest in a mutual fund, your money is combined or pooled with the money of other investors and used to purchase specific types of securities. Mutual funds are run by investment professionals who decide which investments to buy or sell for the fund. The professional picks from a wide variety of stocks, bonds, money market instruments, or other financial instruments. The investments selected will depend on the fund's investment objectives. That's why it's so important for you to choose a fund with objectives compatible with yours.

Generally, the success of your investments over time will depend largely on how much money you have invested in each of the major asset classes – stocks, bonds, and cash – rather than on the particular securities you hold. When choosing a mutual fund, you should consider how your interest in that fund affects the overall diversification of your investment portfolio. Maintaining a diversified and balanced portfolio is key to maintaining an acceptable level of risk.

The types of investments that a mutual fund holds, its investment goals, the fees charged, and information about who manages and advises the fund are described in a prospectus . You should receive and review a prospectus before investing.

The prospectus usually tells you how well the fund has performed in the past. This information can give you an idea about what you might earn on your investment. As with all investments, however, past performance is no guarantee of future results. All investments carry some risk, including loss of principal.

Remember; don't focus too much on returns. Any track record under 5 years is noise. Try to take a look at how a fund has done over longer periods of time and try to compare it to it peers or an index that represents the type of asset class the fund is in. It is not fair to compare a government bond fund to the NASDAQ.

Please visit us at http://www.investology.com

No Load Mutual Funds or Exchange Traded Funds (ETFs)?

If you are fed up with early redemption charges and ever increasing mutual fund management fees on top of bad-performing fund managers, read on. There is a quiet revolution going on in the no-load mutual fund industry and you, the individual investor, may benefit from it greatly.

I am referring to Exchange Traded Funds (ETFs), which have been around for years, but have grown tremendously since their inception. There are currently over 100 choices with around $10 billion in assets.

In a nutshell, an ETF is a specific kind of no-load mutual fund that you might consider to be a basket of stocks. ETFs are diversified like mutual funds, only they trade like stocks. They are cheap to trade (as low as $8.00) and don’t hit you with any short-term redemption fees. And they offer investing opportunities across the board.

ETFs track every index under the sun including the S&P 500, the Nasdaq 100, The Russell 2000 and many others. Available through any discount broker, they basically fall into one of three categories: broad-based U.S. indexes, sectors and international.

The have esoteric names such as iShares, StreetTracks, HOLDRs and SPYDRs. The difference is in the index they are tracking and the company marketing them. You will see big name companies offering them, like the American Stock Exchange, Barclay’s Global Investors, Vanguard, and State Street Global Investors.

In my newsletter I track the currently most appropriate ETFs for you to consider. For more detailed information you can visit these web sites:

 

 

 

• http://www.nasdaq.com

   

   

• http://www.amex.com

   

   

• http://www.ishares.com

   

   

 

In addition to inexpensive trades and no short-term redemption fees, how else can ETFs save you money vs. no load mutual funds? One way is on their annual management fees. That fee for ETFs is in the area of 0.45% vs. 1.5% on average for no load mutual funds. The fees charged by discount broker are so low they almost can be disregarded, usually less than 0.1% of the transaction.

For example, I have used ETFs for some managed account clients during my last Buy cycle, which started on 4/29/03, and paid $27 for a $28,000 order — and that wasn't even with the cheapest discount broker.

So, if these ETFs are so great, why hasn’t your broker or financial planner recommended them to you? Simple! Brokers, and those advisors working on commissions, don’t make money on ETFs; no commissions up front or hidden on the back end. It's simply not in their interest to promote them.

With all the positives for the investor, there is one disadvantage, which may not be applicable to you unless you are a hot shot no load mutual fund picker. It is that in any given economic environment really super performing mutual funds can outperform the indexes, but an ETF can never outperform the index it’s tied to. You would need to look at your own investment record to know whether this is a downside for you.

Here’s a real life example from my advisory practice. My trend tracking indicator signaled a Buy on 4/29/03. Based on my momentum indicators I chose 5 no load mutual funds and 4 ETFs. Over the following 3 months my ETFs gained anywhere from +10.02% to +22.36%, while my no load mutual funds gained from +9.15% to +36.35%. If you’re fortunate enough to make a superior selection you will outperform an ETF. Of course, that presumes you picked a very successful fund as compared to only a moderately successful ETF.

A word of caution! Just because ETFs are cheap and easy to buy doesn’t mean they will guarantee you a profit. You can lose money with them just as easily as you do with no-load mutual funds. You still need to make sure you have a disciplined methodology in place to help you get into and out of the market. If you don’t, you’re gambling no matter what you invest in.

Having gotten the disclaimer out of the way, hopefully these insights into ETFs will broaden your perspective on ways you can prosper in your investments.

© Ulli G. Niemann

About The Author

Ulli Niemann is an investment advisor and has been writing about objective, methodical approaches to investing for over 10 years. He eluded the bear market of 2000 and has helped countless people make better investment decisions. To find out more about his approach and his FREE Newsletter, please visit: www.successful-investment.com; ulli@successful-investment.com

#BREAK#