By Ishita Sharma
A very common question among investors which instrument is better - Ulips or Mutual Funds (MF). Before you start thinking which instrument to invest, let's first understand these two financial instruments.
ULIPs - Unit Linked Insurance Plans
Popularly known as "ULIPs", it is an investment option provided by Insurance Companies. It is a single contract comprising of insurance cover with an investment benefit. The insurance company allots units to the ULIP investors and the net asset value (NAV) is calculated and declared on a daily basis. An investment in ULIP is divided into two parts - a) Life Cover Premium b) Investment. Premium paid in ULIP, certain portion goes for life cover and the remaining portion goes for investment.
Mutual Funds
Mutual Fund is an investment instrument which pools money from many investors and invest in (stocks, bonds, money market instruments). The company allots units to the MF investors and the current value of such investments is calculated on a daily basis and the same is declared through the Net Asset Value.
Difference between ULIPs and Mutual Funds
The basic difference between ULIP and MF is in terms of insurance cover. A ULIP provides a insurance component whereas a MF is a pure investment product. Generally speaking, ULIPs are mutual funds with an insurance cover.
ULIP = Mutual fund + Insurance cover
Now after understanding the difference between ULIP and MF, let's understand in detail which is better investment option - ULIP or MF.
Parameters for comparison
a) Expenses - Expenses incurred in a MF is lesser than the expenses of ULIPs. The reason is expenses in a mutual fund is capped, there is a pre-set upper limit, whereas for ULIPs no upper limit in terms of controlling the expenses is set by the insurance company.
b) Tax benefits - Any investment made in ULIP qualifies under 80 C of income tax act, where an investor can save tax on Rs 1,00, 000. In case of MF, only investment in ELSS (equity linked tax savings scheme) a specific type of mutual fund scheme qualifies for tax benefits under section 80 C.
d) Portfolio disclosure - MF houses are required to statutorily declare their portfolios on a quarterly basis, however there is no such statutory requirements for ULIPs.
e) Return on investment - As both the products are long term investment products, these products have given good returns to its investors. Many analysts' feels, from a long term view ULIP provides better return than MF. However this is not true in all cases, it all depends on the type of investment and the fund manager's skills in managing the funds.
Considering all the above factors, a mutual fund investment is better than ULIPs.
Insurance is meant for your future protection and it takes care of uncertainties in the future. However a MF is meant for only investment. As we investors do not have the expertise to invest in the stock market and other financial instruments, it is possible through MFs.
What is the best investment option?
The best investment option available for anyone is - A low-cost term insurance and a good equity mutual fund is the best option available to every investor.
Ishita Sharma has rich experience in the field of investments. She writes articles on investments and also reviews investment related articles. For more information on various investments visit - http://www.investmentbazar.com
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Article Source: http://EzineArticles.com/?expert=Ishita_Sharma
Tuesday, August 31, 2010
3 Questions to Ask Before Investing in an Equity Mutual Fund
By Chris Blanchet
Equity mutual funds offer a great opportunity for new, small or uncertain investors to take advantage of the potential growth facing the market in the coming years. Some of the benefits to equity mutual funds are that they are professionally managed and normally limit investor exposure through proper diversification.
When it comes to Equity mutual funds, investors really need to understand three basic facts about the fund before they invest in it. By understanding these basics, investors will feel better about investing their money because they will know what the mutual fund is all about.
1. What is the fund's track record compared to its peers? Obviously the past two years have not been terrific in terms of mutual fund returns (although 2009 alone has indeed been positive). However, a poor 2- or 3-year rate of return should not take away from how well the fund has performed against similar funds or the index itself. If the index has returned -9.5% over a three-year period and the fund you are considering returned -7.5%, you would assume this to be safer than the index itself. However, you want to take this investigation one step farther and see how well the fund held up against its peers. If it is better, then your fund should be considered a better-performing fund. Another way to gauge this is to look at Morningstar ratings. The higher the rating, the better the risk-adjusted rate of return.
2. What is the fund's management team? By getting to know the management team, you will get to know how experienced the team is in term of managing funds and managing funds properly. In most cases, funds with high management turnover will likely perform worse than funds with solid investment teams. In addition to the team, try to understand the team's management style. Are they aggressive managers who turn-over their holdings frequently or do they take a buy-and-hold approach to allow for longer-term growth and returns? Are they investing in small, higher-risk companies or larger blue-chip companies? Understanding the underlying management of the fund will allow you to get comfortable with the fund before you pour your money into it.
3. How many assets does this fund have under management? If a fund has little money under management, it could be a sign of two things. One is that the fund is new, the other is that the fund is not popular. If there are few assets under management, you could have difficulty accessing your money when you need it. Invest in larger funds if you are relatively new or know you will need your money within a short period of time.
By answering these three questions, you will get a better appreciation for the fund you are about to invest in. This is important because the more comfortable you are, the less involved you will need to be in monitoring your investments, allowing you to enjoy longer-term growth without compromising your sanity.
Chris has more than 16 years of experience in the financial services industry. He currently manages a debt-related website that helps people with tips on how to Repay Debt at HowToRepayDebt.com. As well, he manages a website about powerful and inexpensive storage devices like the Memory Card 1GB at MemoryCard1GB.com.
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Article Source: http://EzineArticles.com/?expert=Chris_Blanchet
Equity mutual funds offer a great opportunity for new, small or uncertain investors to take advantage of the potential growth facing the market in the coming years. Some of the benefits to equity mutual funds are that they are professionally managed and normally limit investor exposure through proper diversification.
When it comes to Equity mutual funds, investors really need to understand three basic facts about the fund before they invest in it. By understanding these basics, investors will feel better about investing their money because they will know what the mutual fund is all about.
1. What is the fund's track record compared to its peers? Obviously the past two years have not been terrific in terms of mutual fund returns (although 2009 alone has indeed been positive). However, a poor 2- or 3-year rate of return should not take away from how well the fund has performed against similar funds or the index itself. If the index has returned -9.5% over a three-year period and the fund you are considering returned -7.5%, you would assume this to be safer than the index itself. However, you want to take this investigation one step farther and see how well the fund held up against its peers. If it is better, then your fund should be considered a better-performing fund. Another way to gauge this is to look at Morningstar ratings. The higher the rating, the better the risk-adjusted rate of return.
2. What is the fund's management team? By getting to know the management team, you will get to know how experienced the team is in term of managing funds and managing funds properly. In most cases, funds with high management turnover will likely perform worse than funds with solid investment teams. In addition to the team, try to understand the team's management style. Are they aggressive managers who turn-over their holdings frequently or do they take a buy-and-hold approach to allow for longer-term growth and returns? Are they investing in small, higher-risk companies or larger blue-chip companies? Understanding the underlying management of the fund will allow you to get comfortable with the fund before you pour your money into it.
3. How many assets does this fund have under management? If a fund has little money under management, it could be a sign of two things. One is that the fund is new, the other is that the fund is not popular. If there are few assets under management, you could have difficulty accessing your money when you need it. Invest in larger funds if you are relatively new or know you will need your money within a short period of time.
By answering these three questions, you will get a better appreciation for the fund you are about to invest in. This is important because the more comfortable you are, the less involved you will need to be in monitoring your investments, allowing you to enjoy longer-term growth without compromising your sanity.
Chris has more than 16 years of experience in the financial services industry. He currently manages a debt-related website that helps people with tips on how to Repay Debt at HowToRepayDebt.com. As well, he manages a website about powerful and inexpensive storage devices like the Memory Card 1GB at MemoryCard1GB.com.
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Article Source: http://EzineArticles.com/?expert=Chris_Blanchet
Low Minimum Equity Mutual Funds
By Troy Pryczek
In essence, mutual funds were created to work for the small or conservative investor. But while most banks will open an interest bearing checking or savings account with $100 and you can get a Certificate of Deposit for under $1000 at about double the interest rate of the above account, it is extremely difficult to find a mutual fund that will be open to investors with smaller amounts to investors.
So are small investors stuck with low interest rates or savings bonds as the only reasonable way to invest? As it turns out, there are still a few mutual fund companies that will let investors into the fund for as little as $100 a month or, in some cases, even less.
Consider this. If a mutual fund lets an investor in with a $100 account and charges the average of 0.8% per year, that fund will collect less than $1 in fees from that investor. Now consider the funds costs of mailing quarterly statements and annual reports, the fund can easily lose money on these smaller investors. In really, it is difficult for any fund to turn a profit on an account of less that $500 or more.
Some funds, like Vanguard, take proactive steps to keep a low expense ratio, just to give the smaller investor a chance. Vanguard is the United States largest stock fund and it charges investors only 0.18% a year for an unmanaged fund. Vanguard also charges a $10 fee on taxable accounts that carry less than a $10,000 balance. Even with this charge an investor who carries a balance of $5,000 will pay Vanguard only $12.70 a year.
Vanguard isn't the only fund to start charging smaller investors fees. American Century charges $25 a year and Fidelity $12 a year for any account with a balance of less than $10,000. Other funds are even higher on both the fees charged and the annual fees. Some fund companies will waive fees for customers that deal online. Online trading cuts up front expenses such as mailing and management, so the company can pass those savings over to the investor.
Mutual funds are in business to make money. While generating profits for investors it is not unreasonable that the company show a decent profit. Many companies believe that the costs of allowing smaller investors in outweighs any benefits and have increased initial investment requirements to hedge out the little guys out there. A few companies have even done away with programs that they had designed specifically for small investors.
To learn more about investing online Click Here. Or to see how Troy Pryczek can mentor you to make money online, and to claim you're FREE! Internet marketing Boot Camp visit http://www.newonlineinvesting.com/
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Article Source: http://ezinearticles.com/?expert=Troy_Pryczek
In essence, mutual funds were created to work for the small or conservative investor. But while most banks will open an interest bearing checking or savings account with $100 and you can get a Certificate of Deposit for under $1000 at about double the interest rate of the above account, it is extremely difficult to find a mutual fund that will be open to investors with smaller amounts to investors.
So are small investors stuck with low interest rates or savings bonds as the only reasonable way to invest? As it turns out, there are still a few mutual fund companies that will let investors into the fund for as little as $100 a month or, in some cases, even less.
Consider this. If a mutual fund lets an investor in with a $100 account and charges the average of 0.8% per year, that fund will collect less than $1 in fees from that investor. Now consider the funds costs of mailing quarterly statements and annual reports, the fund can easily lose money on these smaller investors. In really, it is difficult for any fund to turn a profit on an account of less that $500 or more.
Some funds, like Vanguard, take proactive steps to keep a low expense ratio, just to give the smaller investor a chance. Vanguard is the United States largest stock fund and it charges investors only 0.18% a year for an unmanaged fund. Vanguard also charges a $10 fee on taxable accounts that carry less than a $10,000 balance. Even with this charge an investor who carries a balance of $5,000 will pay Vanguard only $12.70 a year.
Vanguard isn't the only fund to start charging smaller investors fees. American Century charges $25 a year and Fidelity $12 a year for any account with a balance of less than $10,000. Other funds are even higher on both the fees charged and the annual fees. Some fund companies will waive fees for customers that deal online. Online trading cuts up front expenses such as mailing and management, so the company can pass those savings over to the investor.
Mutual funds are in business to make money. While generating profits for investors it is not unreasonable that the company show a decent profit. Many companies believe that the costs of allowing smaller investors in outweighs any benefits and have increased initial investment requirements to hedge out the little guys out there. A few companies have even done away with programs that they had designed specifically for small investors.
To learn more about investing online Click Here. Or to see how Troy Pryczek can mentor you to make money online, and to claim you're FREE! Internet marketing Boot Camp visit http://www.newonlineinvesting.com/
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Article Source: http://ezinearticles.com/?expert=Troy_Pryczek
Monday, August 23, 2010
Equity Mutual Funds Performance - How to Measure
By Balajee Kannan 
Do you know how the equity mutual funds perform? How to analyze their performance? You can become an expert investor by yourself. Read this article and you can get more guidance.
Guidelines to measure the performance of Equity Mutual Funds:
- First check the profile of the company that has the Asset Management Business. Most of the companies in India like TATA, SBI, HDFC, Axis, Fidelity, Reliance, Templeton and Sundaram etc have good management expertise and they have good expertise team for managing the asset management business. So if these companies launch the schemes, then you can trust them.
- Then you should check the profile of the fund manager who takes care of the investments. Some of the companies have group of fund managers who takes joint decisions for investing. But in some companies, they have individual fund managers who take the decision of investing. So you should analyze his past profile, his decision making capabilities, his past record and performance in economic downturns. Once you get good information on the same you can trust them.
- You should check the history of the performance of the particular scheme. You should collect the details of the performance in the past 6 months, 1 year, 3 years and 5 years. Then you should compare them with the other similar schemes. You should check whether the schemes have generated returns more consistently than the other schemes. Once you spot the scheme that has generated more consistent returns, then you can invest in that particular scheme.
Next Step: Read more guidelines on investing in equity Mutual Funds:
Click here for -------->> Equity Funds performance. You can also read more details on equity schemes in http://www.investmutualfunds.net/.
Balajee Kannan
Article Source: http://EzineArticles.com/?expert=Balajee_Kannan
Top Diversified Equity Mutual Funds 2010 - How to Find the Best
By Balajee Kannan
Diversified equity mutual funds have made last year a turnaround for the mutual fund investors. Some of the funds have generated 201% returns in the last year. The average returns generated by some of the best schemes are also around 115%. Do you want to earn such returns for your savings? Read further and you can learn more.
Diversified Equity schemes invest in equities of diverse sectors. They do not restrict themselves to a particular sector. If they feel bullish on some sector, then they immediately invest in that particular sector. As they are open in their investment policies, they are earning more and generating good returns for their investors.
Some of the top performing diversified equity mutual funds for the year 2010 are listed below. You have to consult a certified financial agent before investing. Also please note that in this type of investments, the past returns are not guaranteed in future.
- Principal Emerging Blue Chip Fund
- Magnum Emerging Business Fund
- JM Emerging Leaders Fund
- ICICI Prudential Discovery Fund
These are some of the schemes that would be recommended under this category. But you can still work smarter and invest in a particular scheme that would outperform the other schemes under the same category.
How to Find the Best Diversified Equity Mutual Fund?
- Compare the returns generated by the scheme for the past 6 months, 1 year, 3 years and 5 years.
- Check the consistency of the returns and dividends declared by the scheme.
- Read more details on the schemes and analyze the other important points.
Next Step: Read more details and start investing. Click here for Diversified Mutual Funds. You can also find more details on http://www.investmutualfunds.net/.
Balajee Kannan
Article Source: http://EzineArticles.com/?expert=Balajee_Kannan
Basic Facts About Growth or Equity Mutual Fund Types
By R Govindan
The mutual fund market is gaining a lot of popularity since more and more investors are looking at better investment options and getting better returns. A growth mutual fund is a specially aimed at achieving capital appreciation by investing in growth stocks and focus on companies that are making significant earnings or revenue growth. In simple words, you can say that they focus on fast growing companies. They are also termed as equity funds.
Types of Growth/ Equity Funds
Generally growth/ equity funds are divided into two categories:
Aggressive: This is a growth fund that focuses at achieving the highest capital gains. The companies that hold such investments have a high growth potential and people investing in such funds should be prepared to face a high risk return trade off.
Conservative: This is exactly the opposite of aggressive funds and generally targets those people who are willing to earn on a regular basis and is considered a safe, a secured and non-risky investment.
Selecting Growth/ Equity Funds
A growth or equity mutual fund needs to be invested into after taking into consideration a variety of factors. These factors include:
Comparison:
Many of the funds belong to different categories like large cap, mid cap or small cap. The small caps target on smaller companies and have greater growth potential, whereas large caps have better stability. If you are a beginner, you might want to consider picking a large cap growth fund.
Choosing Fund Family:
Fund families are companies that assist mutual fund units to investors. It is very essential to decide the exact sponsor or family since factors such as fees, expenditure percentages are closely related.
Minimum Initial Investment:
Once you have finalized on the fund family, you might want to look at the minimum investment needed for investing. For beginners, investing in a certain amount periodically without putting a lump sum of money would be a beneficial option.
Track Record:
Checking the track record both in the bear and bull market for the equity mutual funds will let you know the performance. There are many online websites that allow you to perform such analysis.
Expense Ratio:
Expense ratios are the expenses incurred by companies for managing the funds. The smaller the expense ratio, the better it will be for the investor. The expenses incurred by these companies will get directly charged to the fund.
Benefits of Investing In Growth/ Equity Funds:
- When investing in growth mutual funds, investors get a certain amount of diversity. Since these funds only contain growth stocks, they tend to increase in specific types of economies
- These are a better option for investors who need to lower their immediate income
- In addition to this, they also offer low risks for investors.
Best mutual fund schemes - fixed maturity plan, exchange traded fund, bank mutual funds and tax mutual funds.
Article Source: http://EzineArticles.com/?expert=R_Govindan
Friday, August 20, 2010
Top 10 Equity Mutual Funds
By Divya Kannan
There are many mutual fund companies. They introduce many new schemes and plans. There are different categories of mutual schemes. The various categories are debt, equity and hybrid. At present, numerous equity schemes are introduced. There are sub categories in equity funds. They are Diversified Equity, Large Cap, Equity Linked Saving Schemes, Sectoral fund, Index, Exchange Traded Fund, Global/International Funds and Arbitrage Schemes. These sub categories are introduced according to the nature of the plans and needs of people.
Top fund companies are SBI, Reliance, Tata, HDFC, Kotak, Principal, Franklin Templeton, DSP BlackRock, Sundaram BNP Paribas and Birla Sun Life funds. Since there are lot of companies and schemes, proper research has to be done to select a suitable equity fund.
Important details and information can be collected personally to check the fund manager profile, return percentage and minimum investment required. The duration of the scheme is also important. Many online companies provide recent information on new plans. They give details about past return percentage, minimum investment and plan duration. Other information like profile and history has to be collected from multiple resources. Some of the equity plans are listed below here. The following plans come under Large Cap sub category.
- Principal large cap
- ICICI Prudential power
- Tata Pure Equity
- Reliance Vision
- Reliance NRI Equity
- HDFC Top 200
- Franklin India Bluechip
- Birla Sun Life Frontline
- Birla Sun Life Top 100
- Sundaram BNP Paribas India Leadership
- DSP BlackRock Top 100
How to find?
- Brokers, present fund holders and share traders can give valuable information about the best plans.
- Websites post ratings and comparison about various schemes. It gives a clear idea about the top list.
- Respective company websites also post information about the returns of various schemes. This information can be used.
Click here----> To start investing in New Equity Schemes Find more how to select Suitable Equity Plans
Divya Kannan
Article Source: http://EzineArticles.com/?expert=Divya_Kannan
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