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GOOD NEWS FOR INVESTORS IN FRANKLIN TEMPLETON MUTUAL FUNDS WOUND UP SCHEMES
Dated 18.06 .2020 : M/S Franklin Templeton Mutual funds has received Interest payment from Vodafone Idea Ltd for 8.25% Vodafone Idea Ltd 10-JUL-20 (ISIN INE713G08046) on June 12, 2020. This amount of Rs 102.71 crores so received will be distributed to the investors of following six defunct funds in proportion to their holdings in the plans of the segregated portfolio.
1. Franklin India Low Duration Fund (No. of Segregated Portfolios – 2)
2. Franklin India Ultra Short Bond Fund (No. of Segregated Portfolios – 1)
3. Franklin India Short Term Income Plan (No. of Segregated Portfolios – 3)
4.Franklin India Credit Risk Fund (No. of Segregated Portfolios – 3)
5. Franklin India Dynamic Accrual Fund (No. of Segregated Portfolios – 3)
6. Franklin India Income Opportunities Fund (No. of Segregated Portfolios - 2)
The payout shall be processed by FT by extinguishing proportionate units in the plans of the segregated portfolio of respective schemes. After the payment, the number of units outstanding in the investor account under said segregated portfolio of the scheme would fall to the extent of payout and statutory levy (if applicable). .The payout shall be subject to compliance with applicable regulations and tax deducted at source i.e. TDS, as applicable .
Though percentage of payment against the investment may be small , the interest payment received from Vodafone Idea is against written down value of nil .
To read FT note , CLICK HERE
Dated 18.06 .2020 : M/S Franklin Templeton Mutual funds has received Interest payment from Vodafone Idea Ltd for 8.25% Vodafone Idea Ltd 10-JUL-20 (ISIN INE713G08046) on June 12, 2020. This amount of Rs 102.71 crores so received will be distributed to the investors of following six defunct funds in proportion to their holdings in the plans of the segregated portfolio.
1. Franklin India Low Duration Fund (No. of Segregated Portfolios – 2)
2. Franklin India Ultra Short Bond Fund (No. of Segregated Portfolios – 1)
3. Franklin India Short Term Income Plan (No. of Segregated Portfolios – 3)
4.Franklin India Credit Risk Fund (No. of Segregated Portfolios – 3)
5. Franklin India Dynamic Accrual Fund (No. of Segregated Portfolios – 3)
6. Franklin India Income Opportunities Fund (No. of Segregated Portfolios - 2)
The payout shall be processed by FT by extinguishing proportionate units in the plans of the segregated portfolio of respective schemes. After the payment, the number of units outstanding in the investor account under said segregated portfolio of the scheme would fall to the extent of payout and statutory levy (if applicable). .The payout shall be subject to compliance with applicable regulations and tax deducted at source i.e. TDS, as applicable .
Though percentage of payment against the investment may be small , the interest payment received from Vodafone Idea is against written down value of nil .
To read FT note , CLICK HERE
FRANKLIN TEMPLETON MUTUAL FUNDS WINDS UP SOME SCHEMES PREMATURELY
Dated 24.04 .2020 : Leading Mutual Fund M/S Franklin Templeton Mutual funds has decided to wind up the following Mutual Fund schemes prematurely :
1. Franklin India Low Duration Fund (No. of Segregated Portfolios – 2)
2. Franklin India Ultra Short Bond Fund (No. of Segregated Portfolios – 1)
3. Franklin India Short Term Income Plan (No. of Segregated Portfolios – 3)
4.Franklin India Credit Risk Fund (No. of Segregated Portfolios – 3)
5. Franklin India Dynamic Accrual Fund (No. of Segregated Portfolios – 3)
6. Franklin India Income Opportunities Fund (No. of Segregated Portfolios - 2)
The reason for the early winding up of the scheme as given by the Fund managers is
" There is sustained fall in liquidity in some segments of the corporate bonds market on account of the Covid-19 crisis and the resultant lock-down of the Indian economy . At the same time, mutual funds, especially in the fixed income segment, are facing continuous and heightened redemptions. "
With the announcement , investors in the above funds have to wait for the fund house to sell the assets and pay them back . It is not certain how much time the fund house may need to complete the process .
The terminated funds are in the nature of Debt funds and market is afraid that other MFs may follow suit . Any panic selling by the investors may lead to collapse of mutual funds and investors may return to bank deposits which are considered safer .
For the notice of the FT Mutual Fund , CLICK HERE To visit website of FT Mutual Fund , CLICK HERE
Dated 24.04 .2020 : Leading Mutual Fund M/S Franklin Templeton Mutual funds has decided to wind up the following Mutual Fund schemes prematurely :
1. Franklin India Low Duration Fund (No. of Segregated Portfolios – 2)
2. Franklin India Ultra Short Bond Fund (No. of Segregated Portfolios – 1)
3. Franklin India Short Term Income Plan (No. of Segregated Portfolios – 3)
4.Franklin India Credit Risk Fund (No. of Segregated Portfolios – 3)
5. Franklin India Dynamic Accrual Fund (No. of Segregated Portfolios – 3)
6. Franklin India Income Opportunities Fund (No. of Segregated Portfolios - 2)
The reason for the early winding up of the scheme as given by the Fund managers is
" There is sustained fall in liquidity in some segments of the corporate bonds market on account of the Covid-19 crisis and the resultant lock-down of the Indian economy . At the same time, mutual funds, especially in the fixed income segment, are facing continuous and heightened redemptions. "
With the announcement , investors in the above funds have to wait for the fund house to sell the assets and pay them back . It is not certain how much time the fund house may need to complete the process .
The terminated funds are in the nature of Debt funds and market is afraid that other MFs may follow suit . Any panic selling by the investors may lead to collapse of mutual funds and investors may return to bank deposits which are considered safer .
For the notice of the FT Mutual Fund , CLICK HERE To visit website of FT Mutual Fund , CLICK HERE
TDS AT 10 % WILL BE DEDUCTED WHILE PAYING DIVIDENDS BY MUTUAL FUNDS
Dated 06.02.2020 : While presenting union budget for FY 2020-21 , Finance Minister Ms Nirmala Sitharaman had announced abolition of Dividend Distribution Tax at the hands of company / Mutual Funds and proposed to tax the individual holders of shares / mutual funds . The dividend Incomw will be added to the individual's income and accordingly taxed .
Now Income Tax department has clarified that the companies / mutual funds would be recovering 10 % of the dividends paid as TDS if the dividend paid by them is more than Rs 5,000 in the financial year . Further it is clarified that any gain made by the investor while redemption which is accrued as Capital gain will be not be liable for TDS .
For CBDT Press Release dated 04.02.2020 , CLICK HERE
Dated 06.02.2020 : While presenting union budget for FY 2020-21 , Finance Minister Ms Nirmala Sitharaman had announced abolition of Dividend Distribution Tax at the hands of company / Mutual Funds and proposed to tax the individual holders of shares / mutual funds . The dividend Incomw will be added to the individual's income and accordingly taxed .
Now Income Tax department has clarified that the companies / mutual funds would be recovering 10 % of the dividends paid as TDS if the dividend paid by them is more than Rs 5,000 in the financial year . Further it is clarified that any gain made by the investor while redemption which is accrued as Capital gain will be not be liable for TDS .
For CBDT Press Release dated 04.02.2020 , CLICK HERE
Mutual Fund meaning
MUTUAL FUNDS
. A Mutual Fund is a type of professionally managed Investment fund that pools money from many investors to purchase securities. A mutual fund is an open-end professionally managed investment fund that pools money from many investors to purchase securities. Small investors who do not have capacity / knowledge to invest in many securities , to diversify their portfolio , can invest in Mutual funds
Mutual Fund Investment
MUTUAL FUNDS INVESTING - BASICS TO KNOW HOW TO MAKE MEANINGFUL INVESTMENT
1 . Mutual Fund investing can be done in small quantities and one get diversification of the investment made .
2. Mutual Funds are governed by Securities and Exchange Board of India ( SEBI ) .
3. Under Mutual Fund plan , Asset Management Company ( AMC ) pools monies from varies investors and invest such funds in to such assets as already announced by them before collecting money . They manage such assets and charge a fee for managing them .
4. AMC collects such investment by issuing offer document called NFO ( New Fund Offer ) indicating the goals of the funds , nature of the fund and the period of investment .
5. The interested investors can invest by buying units of such mutual funds at the announced price .
6. Collected funds would be invested in various types of assets indicated in the original offer for which AMC s will have professional managers .
7. The investment would be managed regularly by the funds managers of AMC and its value would be announced on daily basis and it is called Net Asset Value ( NAV ) .
8 . Such units can be sold back by the investors to AMC any time at the rate of prevailing NAV in case of open ended schemes . In closed ended scheme , units can be sold through stock exchanges at the prevailing market price
9. New investors can join the Fund by buying the units at the prevailing NAV in open ended scheme . In closed ended schemes , units can be bought at the market price through stock exchanges .
10. Mutual funds with dividend option would be distributing profit to the holders by way of dividends at regular intervals . other mutual funds will add such profit to the value of the funds .
Advantges of MUTUAL FUNDS for a retail investor .
1. Many retail investors do not have knowledge of the stock market and hence beneficial to hand over the funds to professional manager instead of investing in unknown territory . Further such investors may not have time to actively participate in the market and hence better to invest in mutual funds managed by professionals.
2. Normally mutual funds invest in various assets and hence investment is diversified .
3. The mutual funds can be sold any time and hence liquid .
4. The investment in Mutual funds carry Tax benefits .
5. Small amounts can be invested in mutual funds. Hence we will have a diversified portfolio even for a small investment which would be difficult in direct market participation .
2. Normally mutual funds invest in various assets and hence investment is diversified .
3. The mutual funds can be sold any time and hence liquid .
4. The investment in Mutual funds carry Tax benefits .
5. Small amounts can be invested in mutual funds. Hence we will have a diversified portfolio even for a small investment which would be difficult in direct market participation .
Risks in a Mutual Fund Investment
1. Investors are the mute spectators once units are purchased . The performance of the fund depends on the efficiency of the funds manager .
2. Risks of the mutual funds are pretty same as the asset invested and hence carry same risk weightage .
3. Investment also carries professional charges of AMC and investor has to bear the charges irrespective of the efficiency of the manager .
2. Risks of the mutual funds are pretty same as the asset invested and hence carry same risk weightage .
3. Investment also carries professional charges of AMC and investor has to bear the charges irrespective of the efficiency of the manager .
Types of Mutual Funds
By structure :
Open Ended schemes : An Open-ended Fund is one that is available by the issuers continuously and do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices.
Closed Ended schemes : A Close-ended Fund has a maturity period fixed at the time of issue . The fund is open for subscription at the initial offer period only . Subsequently Investors they can buy or sell the units of the scheme on the Stock Exchanges, if they are listed. The market price at the stock exchange could vary from the scheme's NAV on account of demand and supply situation, unit holders' expectations and other market factors.
Open Ended schemes : An Open-ended Fund is one that is available by the issuers continuously and do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices.
Closed Ended schemes : A Close-ended Fund has a maturity period fixed at the time of issue . The fund is open for subscription at the initial offer period only . Subsequently Investors they can buy or sell the units of the scheme on the Stock Exchanges, if they are listed. The market price at the stock exchange could vary from the scheme's NAV on account of demand and supply situation, unit holders' expectations and other market factors.
By Objective :
Growth Funds
The aim of Growth Funds is to provide capital appreciation over the medium to long term. Such schemes normally invest a majority of their corpus in equities.
Income Funds
The aim of Income Funds is to provide regular and steady income to investors. Such funds generally invest in Debt securities like bonds , & Debentures .
Balanced Funds
The aim of Balanced Funds is to provide both growth and regular income. Such schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents. T
Money market Funds
The aim of Money Market Funds is to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer short-term instruments such as Treasury Bills, Certificates of Deposit, Commercial Paper and Inter-Bank Call Money.
Growth Funds
The aim of Growth Funds is to provide capital appreciation over the medium to long term. Such schemes normally invest a majority of their corpus in equities.
Income Funds
The aim of Income Funds is to provide regular and steady income to investors. Such funds generally invest in Debt securities like bonds , & Debentures .
Balanced Funds
The aim of Balanced Funds is to provide both growth and regular income. Such schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents. T
Money market Funds
The aim of Money Market Funds is to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer short-term instruments such as Treasury Bills, Certificates of Deposit, Commercial Paper and Inter-Bank Call Money.
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INDIAN MUTUAL FUNDS
Mutual Fund issuers are to be the members of Association of Mutual Funds in India ( AMFI ). One can go to the site of association AMFI (www.amfiindia.com) and find details of the Issuing Company. Click HERE for the list of mutual fund companies who operate in India and to go to their websites ..
TOP MUTUAL FUNDS IN INDIA
MUTUAL FUND RATINGS
There are large number of mutual funds available for investment in India . They are issued by many companies with diverse portfolio . It will be difficult for a new investor to select among those which will suit his needs . Even on the face if MFs look good by their goals , strategies and investment models , it is difficult to know how it has translated in to actual investment and the efficiency of the funds manager to harness the benefits . Hence to assist investors , many rating agencies like CRISIL , Value Research , ICRA rank individual funds with regard to past performance in comparison with peer funds . However it must be noted that past performance is no guarantee for future . Further for new funds , investor has to go only with stated objectives and past performance of the funds manger in managing earlier funds .
While Rating various mutual funds , Rating agencies broadly classify the mutual funds in to various categories and rate them within their categories . CRISIL , one of the leading credit rating agencies of India has categorised the mutual funds as below and rated them . You can reach the ratings of CRISIL by clicking on the category name .
While Rating various mutual funds , Rating agencies broadly classify the mutual funds in to various categories and rate them within their categories . CRISIL , one of the leading credit rating agencies of India has categorised the mutual funds as below and rated them . You can reach the ratings of CRISIL by clicking on the category name .
- Large Cap-oriented Equity funds
- Diversified Equity funds
- Small and Mid-cap Equity funds
- Thematic - Infrastructure funds
- Consistent Performers - Equity funds
- Equity Linked Savings Scheme (ELSS)
- Index funds
- Balanced funds
- Consistent Performers - Balanced funds
- Monthly Income Plan - Aggressive
- Long Term Gilt funds
- Long Term Income funds
- Consistent Performers - Debt funds
- Short Term Income Funds
- Credit Opportunities Funds
- Ultra Short-term Debt funds
- Liquid funds
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Tips on Mutual Funds Investment
1. Mutual Fund Investment is a good option for an small investor who has no time to devote time to continuously monitor his investment and who has no knowledge of the intricacies of stock market .
2. Carefully study the past performance of AMC before investing . Be aware that past performance is no guarantee for future prospects . Efficiency of MF manager is an important factor in generating revenue for the fund.
3. Risk of a MF is same as the risk of asset class it has invested . Further they also carry management charges of AMC which will be taken out from the fund irrespective of profitability . If AMC fund managers take bad decisions , risks of the mutual funds may be compounded and it may turn out worse than direct investment . Hence study the objective and class of funds it has invested and the track record of the manager before investment .
4. Mutual funds normally buy various assets and hence diversified . But remember that funds carry all the risks of class of investment . If equity market is not performing well , chances are rare for the good performance of MFs based on equities .
5.Timing of purchase is also equally important . If you are unable to gauze the direction of market , better go for a SIP ( Systematic Investment Plan ) wherein you would be investing at regular investment and hence cost averages out .
6. Invest in different classes of MFS which will help you in further divesification .
7. Ultimately getting out of the funds invested is a tricky issue . If your goal is achieved , it is better to get out .
2. Carefully study the past performance of AMC before investing . Be aware that past performance is no guarantee for future prospects . Efficiency of MF manager is an important factor in generating revenue for the fund.
3. Risk of a MF is same as the risk of asset class it has invested . Further they also carry management charges of AMC which will be taken out from the fund irrespective of profitability . If AMC fund managers take bad decisions , risks of the mutual funds may be compounded and it may turn out worse than direct investment . Hence study the objective and class of funds it has invested and the track record of the manager before investment .
4. Mutual funds normally buy various assets and hence diversified . But remember that funds carry all the risks of class of investment . If equity market is not performing well , chances are rare for the good performance of MFs based on equities .
5.Timing of purchase is also equally important . If you are unable to gauze the direction of market , better go for a SIP ( Systematic Investment Plan ) wherein you would be investing at regular investment and hence cost averages out .
6. Invest in different classes of MFS which will help you in further divesification .
7. Ultimately getting out of the funds invested is a tricky issue . If your goal is achieved , it is better to get out .
Where to Buy MUTUAL FUNDS
AMC websites
Most fund companies offer their products to investors through their websites . If you are a first time investor, you need to approach the fund house or collection centres to submit the application form. You first download the scheme form from the respective website, fill in your details and submit the same along with the initial cheque, photocopy of PAN card and KYC letter. Once you are assigned a folio number along with the PIN, all subsequent transactions in the folio can be done online using your bank account. However you need to have separate account for each AMC .
Broker platfolio
You can also buy mutual funds through your broker account for stocks , if the broker offers such a facility. The units purchased will be credited directly to your demat account.
Independent portals
There are also independent web portals—FundsIndia and Fundsupermart—that cater to mutual fund investors, allowing you to buy and sell online at no extra cost.
Most fund companies offer their products to investors through their websites . If you are a first time investor, you need to approach the fund house or collection centres to submit the application form. You first download the scheme form from the respective website, fill in your details and submit the same along with the initial cheque, photocopy of PAN card and KYC letter. Once you are assigned a folio number along with the PIN, all subsequent transactions in the folio can be done online using your bank account. However you need to have separate account for each AMC .
Broker platfolio
You can also buy mutual funds through your broker account for stocks , if the broker offers such a facility. The units purchased will be credited directly to your demat account.
Independent portals
There are also independent web portals—FundsIndia and Fundsupermart—that cater to mutual fund investors, allowing you to buy and sell online at no extra cost.
DOCUMENTS REQUIRED FOR BUYING MF
1. Application form for opening account
2. KYC form duly filled .
3. Copy of PAN Card
4. Blank cheque
2. KYC form duly filled .
3. Copy of PAN Card
4. Blank cheque
TWO VIEWS ON MUTUAL FUNDS
We have found two opposite views on investing in Mutual Funds . You can go through both of them & decide
We have found two opposite views on investing in Mutual Funds . You can go through both of them & decide
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WHAT IS ELSS SCHEME ?
Subscription to certain notified securities/notified deposits schemes are eligible instruments under section 80C for claiming deductions from taxable income . One such popular investment is tax saving mutual funds or Equity Linked Savings Scheme (ELSS). In this equity diversified fund , investors enjoy the benefits of capital appreciation as well as tax benefits. With recent positive movements in equity market , more interest is being generated in the public on the scheme .
ELSS is basically an equity based diversified Mutual Fund with a lock in period of 3 years . It has got same risk and reward function of any other equity based mutual fund . While under national saving certificate , funds are locked in a period of 6 years , ELSS has lock in period of 3 years only . One who is willing to take market risk , ELSS is a good option as investment is tax free under 80C as also all the returns . Some ELSS funds have been reported giving good tax free returns over a long period of time . One has to carefully study the past performance of the fund as well as fund manager's performance before investing . As returns or principal is not guaranteed and classified as high risk investment , Risk averse persons may avoid such investment .
Persons interested in investing in ELSS may understand Mutual Funds and go to the websites of Mutual fund Issuers
ELSS is basically an equity based diversified Mutual Fund with a lock in period of 3 years . It has got same risk and reward function of any other equity based mutual fund . While under national saving certificate , funds are locked in a period of 6 years , ELSS has lock in period of 3 years only . One who is willing to take market risk , ELSS is a good option as investment is tax free under 80C as also all the returns . Some ELSS funds have been reported giving good tax free returns over a long period of time . One has to carefully study the past performance of the fund as well as fund manager's performance before investing . As returns or principal is not guaranteed and classified as high risk investment , Risk averse persons may avoid such investment .
Persons interested in investing in ELSS may understand Mutual Funds and go to the websites of Mutual fund Issuers
