PowerMF Blog – Empower Yourself

The last 3 years has probably seen the most action from SEBI in the Mutual Fund space, probably as much if not more than when the Industry was opened up. We have seen action by the regulator across various activities of the Fund commencing from Distribution to Valuation, Fund Management etc.

Having acted on all these areas and making people who run the business responsible for a large number of activities, SEBI has taken the most important and critical step of arming the Trustees with the knowledge and understanding of their role.

As all of us know, the funds invested in the mutual fund scheme is managed on trust and hence the role of the trustees is extremely important. The Industry on its part have been able to attract the ideal profile of respected individuals from across various walks of life to become trustees. This enables ‘faith’ on the trustees. However, with so much of change in the industry and its regulation over years, there is a need for the trustees to clearly understand their roles and responsibilities in order to fulfill their role effectively.

It is in this background that the action of the regulator to get the trustees and independent directors of various fund houses through workshops (See Link: http://www.livemint.com/2011/02/15213117/Sebi-puts-mutual-fund-trustees.html) is a welcome move.

Sure, that we are moving in the right direction to not only have a well regulated environment for mutual funds but also a well empowered people who know their roles and responsibilities to run the same.

Fundu Vishy

One major reason which keeps most savers out of the Equity Markets (either directly or through Mutual Funds) is the Volatility that is part & parcel of the Markets. While most people know that equities provide an opportunity for better returns that most other asset classes over a longer duration, it is the fear of volatility which keeps them out of it. The impact is clearly seen in the number of investors getting into the equity markets. It is understood that there are around 3 cr. investors in Mutual Funds and 1.5 cr. Demat account holders in the country of 120 cr. population and around 10 cr. PAN Card Holders. Read the rest of this entry »

For scoring a six, you need to hit the ball in the air and the ball has to cross the boundary ropes without touching the ground en route. However, if the ball is caught by a fielder, the batsman is out. Hence, in order to get the maximum returns (6 runs) a batsman takes the risk of getting out. Even if he mistimes or misguides his shot by a fraction he will have to walk back to the pavillion.

However, if one keeps defending the balls, he gets very little opportunity to score runs. Hence, there needs to be an ideal mix of defense and risk taking for a batsman to be successful in his batting.

Equally, for a bowler to get a wicket, he needs to entice a batsman to believe that the ball is up for the hitting. For eg. a yorker is a great delivery to bowl for getting a wicket. Smallest deviation from where you want to bowl the ball, it becomes a full toss or a half volley and the ball gets whacked for a six or a four. Similarly, a spinner has to invite the batsman with a lot of air to his ball for getting a wicket, taking the risk of being hit for a six or a four.

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For investing in a mutual fund scheme, choosing the right scheme is very important. The following 6 parameters will be useful in order to idenfity a right scheme.

1. Scheme Objective and its suitability to you

The ‘Objective of the Scheme‘ ( detailed info in earlier blog post ) is the goal the scheme wants to achieve by investing in various securities. Generally, this also provides for the length of investment that is ideal in the scheme. One should necessarily take this into consideration while deciding on the scheme he is interested in investing. One of the ways to look at the schemes is through grouping the schemes with similar objectives . Generally schemes are categorized in various categories and sub categories. PowerMF segregates the schemes under various categories depending on the asset class the scheme invests in and sub classes based on investment objective of the scheme under these asset classes

Equity Schemes:

Schemes which have investment in equities as the main objective.  There are various sub categories under equity schemes, some of which are: Diversified Schemes; Mid Cap Schemes, Small Cap Schemes, Schemes focusing on specific sectors like Banking, Technology etc. Theme based schemes like Infrastructure, Service Industries etc. ELSS Schemes, ETFs, International Equity etc.

Read the rest of this entry »