Mutual Funds Mutual Funds

Capital Protection Funds

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Capital Protection Oriented Funds

Capital Protection Oriented funds

Capital Protection Funds

Capital Protection Oriented Funds, what are these funds and how do they work? and does these funds really make sense for an investor to have them in their portfolio.

If you analyse the structuring of a Capital Protection Portfolio or try to under stand how does this really work, then you would understand that the Capital Protection Portfolio Funds are no different from the Typical MIP or hybrid schemes of mutual funds with higher debt exposure. Continue reading

Mutual Funds

How to pick and choose good small and mid cap funds

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How to pick and choose good small and mid cap funds?

How to pick and Choose a Small and Mid Cap Funds

How to Pick and choose small and mid cap funds

Many yesteryear’s mid caps have become large cap companies and have created wealth for the investors. Even having one or two stocks in your portfolio which can transform from Small Caps to Mid cap or from Mid Caps to large caps can create significant returns for your investment portfolio. Small and mid-cap stocks have potential to grow at a faster pace compared to their large cap peers. The question is how do you pick the right Small and mid Cap funds. And in fact investing in small and mid cap stocks without having significant experience in the investment space can be disastrous. Therefore what should be the right strategy to invest in small and mid cap stocks if one were to benefit by investing into such space. Experts suggest that as a retail investor you should only take exposure through the mutual funds route to invest in small and mid cap space. In this article we pick – up 5 mutual funds schemes from the small and mid cap space and evaluate how they have fared in during the last few years.

Mutual Funds

Liquid Mutual Fund schemes called as Liquid Funds

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What are Liquid Funds?

Liquid-Funds

Liquid-Funds

When we try and understand the term ‘liquid’ in financial terms, it means an asset which is as good as hard cash. Real estate is the least ‘liquid’ of all assets and a savings deposit is the most ‘liquid’ of all. Similarly, Liquid Funds are a kind of mutual fund or debt fund which can be redeemed in as less as 24 hours. Liquid funds are structured to manage the cash surplus of investors and provide high liquidity and reasonable returns and min to no risk. They offer better yield and return than bank short term fixed deposit.

Where do Liquid Funds invest?

Liquid funds invest in money market instruments. Money market is a market for short term borrowing and lending. This market deals with debt instruments such as certificate of deposits, commercial paper and treasury bills.

What is the ‘lock in’ period for Liquid Funds?

Most funds have a lock-in period of a maximum of three days to protect against procedural (primarily banking) glitches, and offer redemption proceeds within 24 hours. However, some funds may even have a lock in period of a week or a month or more. However, the tenure is always far less than a normal mutual fund.

What are the features of Liquid Funds?

Here are some of the features of Liquid funds:

  • No Entry and Exit load (sometimes exit load is charged if redeemed before the lock in period)
  • Variable Minimum investment amount according to scheme
  • Great tax benefit
  • Easy liquidation, hence the name
  • An average returns as on 22nd September 10.69% for the last one month.
  •  Liquid funds have the restriction that they can only have 10 per cent or less mark-to-market component, indicating a lower interest rate risk.

What are the tax benefits?

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If you invest in a short-term fixed deposit, the returns are taxable as per the investor’s tax bracket. Therefore, if you are in the highest tax bracket most of your returns from the fixed deposit would be wiped out. On the other hand with liquid funds, as mentioned before, if the dividend option is taken, the returns are tax-free in the investor’s hand!

“MUTUAL FUNDS INVESTMENTS ARE SUBJECT TO MARKET RISK, READ THE SCHEME OFFER DOCUMENT CAREFULLY BEFORE INVESTING.”

Disclaimer:The contents of this article aren’t intended to serve as professional advice or guidance and the publisher takes no responsibility or liability, express or implied, whatsoever for any investment decisions made or taken by the readers of this Article based on its contents thereof. You are advised to verify the contents before taking any investment or other decision based on the contents of this Article. The article is meant for general reading purposes only and is not meant to serve as a professional guide for investors.

Investments

Foreign Direct Investment in India FDI

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Foreign Direct Investment in India (FDI)

Foreign Direct Investment in India

Foreign Direct Investment in India (FDI)

Foreign Direct Investment (FDI) is defined as “cross border investment made by a resident in one economy in an enterprise to another economy, with the objective of establishing a lasting interest in the investee economy.” This definition is analogous to the popular definition of FDI which states “investment into the business of a country by a company of another country”. It is often compared to another mode of investment, known as Foreign Institutional Investment (FII), which constitutes majority of the stock markets. FDIs, as compared to FIIs, are considered more stable and beneficial to Indian economy as the investors bringing FDI are more committed to boost India’s foreign currency reserves, whereas, FIIs are like migratory birds that fly from one exchange to another to book profits. The Finance minister of India, during his budget speech of 2013-14 clarified the definition of foreign investments by distinguishing FIIs from FDIs. Those who held a stake higher than 10 percent were classified as FDIs and those with less than 10 percent as FIIs. India forms an attractive destination for FDI because of its large market, rising disposable income and spending power. The estimated size of the Indian retail market is about $450 billion.

How can Foreign Direct Investment be made in India?

Investments can be made by non-residents, through two routes:

1. The Automatic Route: Under the Automatic Route, the non-resident investor or the Indian company does not require any approval from the RBI or Government of India for the investment.

2. The Government Route: Under the Government Route, prior approval of the Government of India through Foreign Investment Promotion Board (FIPB) is required. Proposals for foreign investment under Government route as laid down in the FDI policy from time to time are considered by the Foreign Investment Promotion Board (FIPB) in Department of Economic Affairs (DEA), Ministry of Finance. Application can be made in Form FC-IL. Plain paper applications carrying all relevant details are also accepted. Decision of the FIPB is usually conveyed in 4-6 weeks. Thereafter, filings have to be made by the Indian company with the Reserve Bank of India.

Who can Invest in India under the FDI route?

  • A non-resident entity can invest in India, subject to the FDI Policy.
  • A citizen of Pakistan or an entity incorporated in Pakistan can invest in India under the FDI Policy, only under the Government route in sectors/ activities other than Defence, Space& Atomic Energy and sectors prohibited for foreign investors
  • A citizen of Bangladesh or an entity incorporated in Bangladesh can invest in India under the FDI Policy, only under the Government route.
  • NRI’s resident in Nepal and Bhutan as well as citizens of Nepal and Bhutan are permitted to invest in the capital of Indian companies on repatriation basis, subject to the condition that the amount of consideration for such investment shall be paid only by way of inward remittance in free foreign exchange through normal banking channels.

FDI POLICY

The Government has put in place a policy framework on FDI, which is transparent, predictable and easily comprehensible. This framework is embodied in the Circular on Consolidated FDI Policy, which may be updated every year, to capture and keep pace with the regulatory changes, effected in the interregnum. The Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry, Government of India makes policy pronouncements on FDI. The authorities involved in dealing with FDI in India are:

(a) Foreign Investment Promotion Board (popularly known as FIPB): The Board is responsible for expeditious clearance of FDI proposals and review of the implementation of cleared proposals. It also undertakes investment promotion activities and issue and review general and sectoral policy guidelines.

(b) Secretariat for Industrial Assistance (SIA): It acts as a gateway to industrial investment in India and assists the entrepreneurs and investors in setting up projects. SIA also liaison with other government bodies to ensure necessary clearances;

(c) Foreign Investment Implementation Authority (FIIA): The authority works for quick implementation of FDI approvals and resolution of operational difficulties faced by foreign investors;

(d) Investment Commission;

(e) Project Approval Board; and

(f) Reserve Bank of India.

Instruments for Receiving Investments through FDI in India:

Foreign investment is reckoned as FDI only if the investment is made in equity shares, fully and mandatory convertible preference shares and fully and mandatory convertible debentures with the pricing being decided upfront as a figure or based on the formula that is decided upfront. The FDI policy provides that the price/ conversion formula of convertible capital instruments should be determined upfront at the time of issue of the instruments.

Foreign Direct investment in different sectors

As embodied in the Circular on Consolidated FDI Policy dated 5th April, 2013, which subsumes and supersedes all Press Notes/ Releases/ Clarifications/ Circulars, which were in force as on April 04, 2013.

(A) 26% FDI is permitted in:

1. Defence
2. Print media (Publishing of Newspaper and periodicals dealing with news and current affairs, publication of Indian editions of foreign magazines dealing with news and current affairs)
3. Petroleum refining
4. Pension sector (allowed in October, 2012 as per cabinet decision)
5. Up-linking of ‘News & Current Affairs’ TV Channels. (Government Route)
6. Insurance (Automatic Route)

(B) 49% FDI is permitted in:

1. Banking
2. Cable network (Automatic Route)
3. DTH (FDI component not to exceed 20%)(Automatic Route)
4. Infrastructure investment
5. Telecom(Automatic Route)
6. Insurance (Enhanced from 26% to 49% in October, 2012)
7. 49% (FDI & FII) in power exchanges registered under the Central Electricity Regulatory Commission (Power Market) Regulations 2010 subject to an FDI limit of 26% and an FII limit of 23% of the paid-up capital is now permissible. [Permitted in September, 2012]

(C) 51% is permitted in:

1. Multi-Brand Retail (Since September, 2012)
2. Petro-pipelines

(D) 74% FDI is permitted in:

1. Atomic Minerals
2. Science Magazines /Journals
3. Telecom (Government route)
4. Teleports, DTH Services, Cable networks, Mobile TV (Government Route)

(E) 100% FDI is permitted in:

1. Single Brand Retail (Increased to 100% from 51% in December, 2011).
2. Agriculture & Animal Husbandry
3. Mining
4. Coal & Lignite
5. Airports
6. E-commerce
7. Non-Banking Finance Companies (NBFC)
8. Industrial parks
9. Petroleum exploration
10. Pharmaceuticals
11. Township
12. Wholesale trading

WHERE IS FDI NOT PERMITTED?

FDI is prohibited under the Government Route as well as the Automatic Route in the following sectors as per the RBI’s official website (www.rbi.org.in):
1. Atomic Energy
2. Lottery Business

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3. Gambling and Betting
4. Business of Chit Fund
5. Agricultural (excluding Floriculture, Horticulture, Development of seeds, Animal Husbandry, Pisciculture and cultivation of vegetables, mushrooms, etc. under controlled conditions and services related to agro and allied sectors) and Plantations activities (other than Tea Plantations)
6. Housing and Real Estate business (except development of townships, construction of residential/commercial premises, roads or bridges to the extent specified in notification)
7. Trading in Transferable Development Rights (TDR’s).
8. Manufacture of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes.

AMOUNT OF FDI IN INDIA

The top countries investing in India according to the data mentioned by the Ministry of External Affairs, Government of India, Investment and Technology Promotion (ITP) Division on their website updated by FICCI are:
1. Mauritius (38%)
2. Singapore (10%)
3. UK (9%)
4. Japan (7%)
5. U.S.A (6%)
6. Netherlands (5%)
7. Cyprus (4%)
8. Germany (3%)
9. France (2%)
10. UAE (1%)

This article Titled ” Foreign Direct Investment in India” has been prepared by Ardent Legal. In case of quereis the reader can contact Ardent legal directly.

Disclaimer:The contents of this article Titled ” Foreign Direct Investment in India” aren’t intended to serve as professional advice or guidance and the publisher takes no responsibility or liability, express or implied, whatsoever for any investment decisions made or taken by the readers of this Article titled “Foreign Direct Investment in India” based on its contents thereof. You are advised to verify the contents before taking any investment or other decision based on the contents of this Article. The article “Foreign Direct Investment in India” is meant for general reading purposes only and is not meant to serve as a professional guide for investors.

Will

Guardian

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Guardian in a will

Person who has been named in a will or appointed by a judge to take care of minor children or a special-needs adult. Naming one person as the executor and another as the guardian can make sense in some cases if the guardian is not well equipped to handle financial matters. The court is not required to honor the guardian named in a will, but usually does unless there is evidence that the individual is incapable of handling the role. (Read Special Trusts For Special Needs for more information on how to ensure your loved ones with special needs are taken care of.)

Have questions - Ask usAlso See the  Checklist of a willPrecautions in Drafting a willRevocation of a willHow to write a willWhat is a will