Equity mutual fund investors lose up to 34% in past one Year

Equity mutual fund investors lose up to 34% in past one Year

Investors, who put money in equity mf through systematic investment plans (SIPs) in the past one year, are sitting on losses because of the extended weakness in the stock market. Investors are losing money in 123 out of 147 actively managed equity schemes, as per data from Value Research. Small-cap funds have seen the highest fall followed followed by midcap funds and multicap funds.

In SIPs, investors put a fixed amount in schemes every month or quarter. It’s like the recurring deposits of banks. In the last two years, many first-time investors in Equity Mutual Funds through SIPs.

When they began SIPs, the allocations were linked to various goals such as vacations, retirement etc. The start, however, has been wobbly For example, an SIP of Rs 1,000 done in SUNDARAM SMALL CAP FUND for the last one year entailed a total investment of Rs 12,000 which is down to Rs 9,726 as on September 25, a loss of Rs 2,374. But their track record in a two year period is better. At least 22 out of 141 equity mutual funds have given negative SIP returns in the last two years

Five steps to clean up your investment portfolio and meet financial goals

Five steps to clean up your investment portfolio and meet financial goals

The first step towards cleaning up your portfolio is to review instruments and funds.

   Financial planners and customer-friendly online financial marketplaces have simplified the investment and financial planning process for consumers. However, despite their rising popularity, many investors still end up goofing up their investment portfolios. For such investors, I provide a 5-step guide to help clean up their investment portfolio:
I: Revisit financial goals and current investment portfolio

The first step towards cleaning up your portfolio is to review instruments and funds wherein you have invested till date, and find out if they can help achieve your financial goal. Sometimes, we invest in instruments suggested by our friends or family, simply driven by emotions rather than tactics. These may prove to be inadequate to meet our financial goals. There may also be some investments which did make sense in the past but aren’t relevant today.

Reviewing your portfolio would help evaluate the relevance of your past investments as per your short-term and long-term financial goals.

II: Chalk out the junk to trim down your portfolio

Trim down your investment portfolio once you identify investments which no longer cater to your financial goals. This may include funds that have been consistently under-performing for over 2-3 years in a row. Redeem your units from such funds and invest in LIC money back plan instead.

In addition to this, find out whether you invested in a wrong or unwanted fund while diversifying your portfolio. The basic idea behind diversification should be to prevent any damage to your portfolio in the event of an economic slump or under performance/failure of one kind of security.

Many investors decide the type of diversification (whether it’s across or within an asset class, or based upon fund management or geographical location) without taking into consideration factors such as their Risk Appetite, Investment horizon, Market Knowledge, Financial goals etc. This practice often leads to creation of an unsuitable portfolio which neither matches the investor’s financial goals nor assists in wealth creation.

Also, try to understand the difference between diversification and duplication. Duplication takes place when the chosen schemes/securities do not reduce the overall risk of the portfolio and continue providing just average returns.

III: Restructure your portfolio in accordance with your financial goals

Your portfolio would require restructuring in order to get back on track. Whether it’s a short-term goal such as family vacation and purchase of electronic gadgets, (Preferable midium.  or a long-term goal such as child’s higher education and marriage, each goal would require a separate investment. Your portfolio should ideally have a mix of funds to cater to both short as well long-term goals.

Choose appropriate investment avenues as per your risk appetite, investment horizon, age etc. But before finalizing this, make sure your financial goals have been prioritized and the corpus’ amount has been estimated.

As far as long-term goals are concerned, Safe Portfolio (Like LIC,PPF) have proven to be most suitable investment avenue, given that they provide consistent as well as safe and tax free returns in the long run, especially when compared to  investments such as mutual fund or equitys returns are  Taxable, and no capital protection, in case you want to  taking the risk of investing purely in equities.

IV: Review your portfolio periodically

Even after investing in the suitable investment avenues, you must keep reviewing your portfolio from time to time, ideally at least once in five year. Periodic reviews help in assuring you’re your investments are aligned with your financial goals and the funds are performing satisfactorily in comparison to benchmark indices and peer funds.

Restructure or re-balance your portfolio in case you feel your current investments may not be adequate to meet your goals.

V: Learn from your mistakes to avoid future mess-ups

While the aforementioned measures would help you clean up your portfolio, it’s up to you to ensure you do not repeat the same mistakes in future. One effective way to do so is to be aware of the decision points which went wrong in the past and learn from it. This would help maintain healthy portfolio that’s in sync with your short-term and long-term financial goals.

Bank of Baroda, Vijaya Bank and Dena Bank to be merged

Bank of Baroda, Vijaya Bank and Dena Bank to be merged

The government has announced that Bank Of Baroda NSE 0.63 % , Vijaya Bank NSE 0.93 % and Dena Bank NSE -0.31 % will be merged into a single bank which will become India's third largest bank. The move follows top lender State Bank of India last year merging with itself five of its subsidiary banks and taking over Bharatiya Mahila Bank, a niche state-run lender for women. 

Rajeev Kumar, Secretary Department of Financial Services, said in a press conference today that employees interest would be protected in the merger process. The merger of five SBI associate banks was done without any job losses, he said. The three banks will continue to work independently post merger.

Kumar said the merger would help improve operational efficiency and customer services. He said it was time for the next generation of strategic banking reforms. The government had initiated numerous reforms over the last four years, especially with respect to banking and to ensure clean lending process, he said.

He said the stock of non-performing assets (NPAs) had reduced by Rs 21,000 crore in last Air India Subsidiaries Sale Fuel Price Hike Video quarter. Banks recovered Rs 36,551 crore in the first quarter of FY19. There was a need to increase scale and synergy for growth momentum to continue, added Rajeev Kumar. 

Kumar talked about various steps the government had taken to clean banking including the Insolvency and Bankruptcy Code (IBC). He said now people knew that if they had taken loan, they would have to return it. He said the IBC was fundamentally changing the creditor-debtor relationship in India. He said all loans over Rs 150 crore would be monitored by a separate vertical in each bank.

Cryptocurrency Bubble Bursts, Price Index Plummets 80% to its Lowest Ever

Cryptocurrency Bubble Bursts, Price Index Plummets 80% to its Lowest Ever

Digital Gold

The virtual-currency mania of 2017 -- fueled by hopes that Bitcoin would become “digital gold” and that blockchain-powered tokens would reshape industries from finance to food -- has quickly given way to concerns about excessive hype, security flaws, market manipulation, tighter regulation and slower-than-anticipated adoption by Wall Street.
Like their predecessors during the internet-stock boom almost two decades ago, cryptocurrency investors who bet big on a seemingly revolutionary technology are suffering a painful reality check, particularly those in many secondary tokens, so-called alt-coins.
As virtual currencies plumbed new depths on 12/09/2018, the MVIS CryptoCompare Digital Assets 10 Index extended its collapse from a January high to 80 percent. The tumble has now surpassed the Nasdaq Composite Index’s 78 percent peak-to-trough decline after the dot-com bubble burst in 2000.

Virtual currency in the form of Bitcoin, Ether, among others registered their biggest fall ever on Wednesday when the collective cryptocurrency index by almost 80 percent.

The tumble has now surpassed the Nasdaq Composite Index’s 78 percent peak-to-trough decline after the dot-com bubble burst in 2000, according to a report by Bloomberg.

Like their predecessors during the internet-stock boom almost two decades ago, cryptocurrency investors who bet big on a seemingly revolutionary technology are suffering a painful reality check, particularly those in many secondary tokens, so-called alt-coins.

“It just shows what a massive, speculative bubble the whole crypto thing was — as many of us at the time warned,” Neil Wilson, chief market analyst in London for Markets.com, a foreign-exchange trading platform told Bloomberg. “It’s a very likely a winner takes all market — Bitcoin currently most likely.”

Wednesday’s losses were led by Ether, the second-largest virtual currency. It fell 6 percent to USD 171.15 at 7:50 a.m. in New York, extending this month’s retreat to 40 percent. Bitcoin was little changed, while the MVIS CryptoCompare index fell 3.8 percent. The value of all virtual currencies tracked by CoinMarketCap.com sank to USD 187 billion, a 10-month low.

The virtual-currency mania of 2017, fuelled by hopes that Bitcoin would become “digital gold” and that blockchain-powered tokens would reshape industries from finance to food, has quickly given way to concerns about excessive hype, security flaws, market manipulation, tighter regulation and slower-than-anticipated adoption by Wall Street.

Crypto bulls dismiss negative comparisons to the dot-com era by pointing to the Nasdaq Composite’s recovery to fresh highs 15 years later, and to the internet’s enormous impact on society. They also note that Bitcoin has rebounded from past crashes of similar magnitude.

But even if the optimists prove right and cryptocurrencies eventually transform the world, this year’s selloff has underscored that progress is unlikely to be smooth.

51% investors withdraw from equity funds within a year

*51% investors withdraw from equity funds within a year*

Experts recommend investors to hold on to their equity mutual fund investments for a time period of at least five years

Although more investors are putting their money in mutual funds (MFs) through systematic investment plans (SIPs), they are not necessarily staying invested for the long term. Data from the Association of Mutual Funds of India (Amfi), the MF industry’s trade body, shows that just 29% of equity assets stay invested for more than two years. A huge 51% of equity assets get withdrawn before a year gets over.

The Indian mutual fund industry may be boasting about increased SIP inflows over these past two years, but if investors don’t stay invested for the long-term, have they really benefited?

The prospect of an economic turnaround and a sustained ‘Mutual Funds Sahi Hai’ campaign by the Indian MF industry in the past two years have resulted in more investors coming to MFs. The note ban of 2016 also resulted in an increased financialisation of savings wherein investors shifted from real estate and gold investments to MFs. Falling bank fixed deposit rates at the time also nudged investors to move and invest in MFs, particularly balanced funds and in some cases, debt funds.

From getting around ₹3,122 crore every month through the SIP route in April 2016, a little more than ₹7,500 crore poured into equity funds in July 2018, as per Amfi data. The number of investor accounts have gone up from 47.7 million to 74.6 million in the same period. To be sure, an investor may open more than one account in a single fund or across funds; so the increase in the number of investor accounts may not necessarily indicate an increase in the number of investors.

“Traditionally, investors have been used to investing in one-year FDs. That explains why so many investors withdraw from MFs within a year. But if you look deeper in the number of investors who do stay invested beyond two years, some of them would stay for a really long time,” said Chandresh Nigam, managing director and chief executive officer, Axis Asset Management Co. Ltd.

But surely, rising equity markets would tempt investors to stay on for a little longer given the potential gains they are likely to make? “On the contrary, many investors tend to churn more in rising markets. When their funds don’t go up as much as some other funds, very quickly they get a feeling of being left out. This has been especially so in the past year when many large-cap funds underperformed the equity markets. Equity markets have gone up, but the reality is that very few stocks have pulled the markets up. A broad section of stocks have underperformed actually, and that has also resulted in many equity funds underperforming,” said Tarun Birani, founder and CEO, TBNG Capital Advisors.

Experts recommend investors to hold on to their equity MFs for a time period of at least five years. A Mint-Crisil Research study on the effectiveness of SIPs published in November 2017 pointed out that if you stayed invested for shorter time periods such as 1-4 years, your chances of making losses are higher. The study pointed out SIPs that run for at least seven years or more have bare minimum to no chance of making a loss .

“Too many investors have come into MFs—presumably for the first time ever—in these past two to three years based on recent past performances. They expect to make similar returns over the next 2-3 years. But that is a wrong approach. A majority of investors invest haphazardly and without planning for any financial goals. Then, if they don’t get a good experience, they exit,” said Mrin Agarwal, a financial educator, founder director of Finsafe India Pvt. Ltd and co-founder of Womantra.

One way to develop patience, said Agarwal, is to invest keeping financial goals in mind.

If the goals are long term, then you need to check periodically, at best once or twice a year, as to how close you are getting to your goal. If you are on path, then it doesn’t matter whether your fund gives 15% return as opposed to some other fund that has given, say, 20% return.

Courtesy
(Live Mint :Last Published: Thu, Aug 23 2018. 12 58 PM IST)

Insurance Claims: LIC Tops in Individual Claims while Private Insurers Settled More Group

Insurance Claims: LIC Tops in Individual Claims while Private Insurers Settled More Group

State-run Life Insurance Corporation of India (LIC) has once again, outnumbered private insurers in terms of the number of claims settled for individual customers.

However, in terms of group insurance claim settlement, LIC is found lagging behind private insurance companies, especially during the past two years.

While responding to a question in the Lok Sabha, Shiv Pratap Shukla, minister of state in the ministry of finance, said, “As per Regulation 14 of Insurance Regulatory and Development Authority of India (Protection of Policyholders’ Interest) Regulations, 2017, certain procedures such as immediate processing upon receiving a death claim, adhering to timelines for settlement of a death claim, reasons to be stated on rejection or repudiation of the claim, and interest to be paid due to delay on the part of insurer are required to be followed by insurers for claim settlement in respect of a life insurance policy. Regulation 17 of the said Regulations states that every insurer shall have in place proper procedures and effective mechanism to expeditiously resolve complaints and grievances of policyholders and claimants efficiently." 

During FY17-18, LIC settled 725,000 insurance claims upon death of the insured, while all 24 private insurance companies settled only 104,000 claims. However, in terms of group insurance, these private insurers settled 477,000 claims while LIC settled 284,000 claims. Interestingly, till FY15-16, there was marginal difference between private insurers and LIC, in terms of settling group insurance claims. However, from next year onwards private companies have settled almost double claims each year compared with LIC. This also means that private insurers could be focussing more on groups insurance business than individual insurance policies. 

SBI Life Insurance Co Ltd (SBI Life) settled maximum number of individual claims at (18274,)
Bajaj Allianz Life Insurance Co Ltd (13,176),
HDFC Standard Life Insurance Co Ltd (12,289),
ICICI Prudential Life Insurance Co Ltd (11,216)
Max Life Insurance Co Ltd at 10,125. However, absolute figures could be misleading.

 

According to the reply given in Lok Sabha, during FY2017-18, there were 519 complaints filed against private insurance companies compared with just 66 against LIC.

According to the minister, based on the analysis of claims data of life insurers, if any variation or abnormal discrepancies are noticed, they are taken up with the insurers. "These variations, deviations, discrepancies noticed are also thoroughly checked by the inspection department of Insurance Regulatory and Development Authority of India (IRDAI), during regular onsite inspection. The Authority also conducts focussed online inspection. In case any grave irregularity is noticed in the claim settlement by the insurer, regulatory and corrective measures are initiated accordingly," he said in a written reply.

Legal Heir Registration under income tax:

Legal Heir Registration under income tax: –

Step 1 – Login to e-Filing portal using Legal Heir Credentials

Step 2 – My Account -> Register as Legal Heir

Step 3 – Select the Type of Request – New Request

Step 4 – Enter the details of Deceased

PAN
Date of Birth
Surname
Middle Name
First Name

Step 5 – Select the files to upload

Step 6 – Attach a Zip File with the below scanned documents

Copy of the Death Certificate
Copy of PAN card of the deceased
Self-attested PAN card copy and
Legal Heir Certificate Or Affidavit in presence of a Notary Public

Step 7 – Click Submit

Note: Following documents will be accepted as Legal Heir certificate.

The legal heir certificate issued by court of law
The legal heir certificate issued by the Local revenue authorities.
The certificate of surviving family members issued by the local revenue authorities
The registered will
The Family pension certificate issued by the State/Central government.

Approval Process of Legal Heir on Income Tax e-Filing Website

Step 1 – Legal Heir New request will be sent to the e-Filing Administrator.

Step 2 – The e-Filing Administrator will verify the request and approve / reject as applicable.

Note: e-Filing Administrator may approve as Temporary Legal Heir or Permanent Legal Heir, based on the documents uploaded. An e-mail is sent to the registered e-mail ID with the details of approval / rejection.

Temporary Legal Heir

A person is treated as a Temporary Legal Heir when fails to submit any one of the five Legal Heir certificates as specified.

Permanent Legal Heir

A person is treated as a Permanent Legal Heir when the person submits any one of the five Legal Heir certificates mentioned above.

Steps involved in Legal Heir Registration – Upgrade to Permanent Legal Heir

Step 1 – Login to e-Filing portal using Legal Heir Credentials

Step 2 – My Account -> Register as Legal Heir

Step 3 – Select the Type of Request – Upgrade to Permanent LH
Step 4
– Select the Legal Heir Certificate

Step 5 – Upload the Scan document of any one of the Legal Heir Certificate.

Step 6 – Click Submit

Upgrade to Permanent Legal Heir request will be sent to the e-Filing Administrator.
The e-Filing Administrator will verify the request and approve / reject as applicable.
To view the status of the request
Login using Legal Heir Credentials
My Request List —> Select Add Legal Heir Request.
The Legal Heir should add his/her PAN in the verification part of the ITR Form, validate and generate the xml of the return (if using offline forms) and upload the return of the deceased using the Legal Heir login.

Key Points to be noted:

Documents in regional language ( other than Hindi) should be translated to  English . The translated document should be notarized (Both the original and translated document should be uploaded).
The uploaded documents should be scanned in PDF format with 300 dpi.
The zip file attachment should not exceed 1Mb.