Some great facilities for Mutual Fund investors - 1

Mutual Funds and their registrars offer some great and must-use facilities for investors. Am sharing details of some useful facilities which I use regularly. Will do more posts on such facilities you can use as a mutual fund investor.

Missed Call to get folio balances via SMS – at no cost!

Are you aware that you can give a missed call and get the all your folio balances via SMS. The call should be given from your mobile phone number which is already registered in your folios and Karvy offers this facility free of cost. (All balances in all my folios come in one SMS mentioning each fund - folio and the value as on date). However, this facility is only available to investors of Funds serviced by Karvy as Registrar. Save this number +91 92129 93399 and try the facility. After 3-4 rings the number disconnects automatically and you will get the SMS shortly. Do get you mobile number registered in all your folios to use this facility. The same number in all folios would mean one SMS with all values!

This is at no expense to you!! (Among Mutual Funds, UTI Mutual Fund also offers this facility to its investors and the number for UTI is +91 92896 07090.  UTI Mutual Fund restricts this to 3 folios. If you have more than 3 folios in UTI, use the SMS back service as below.)

Other SMS Back Services: Both CAMS and Karvy also offer SMS back services using which you can send an SMS to a number and get back folio / transaction details vide SMS. However you may be charged for sending a request SMS as per the SMS scheme you use. I do not use any SMS package and was charged Rs 3.00 by my service provider for sending an SMS to 56767 - CAMS. The request SMS to Karvy (+91 92129 93399) cost me Rs 1.50. 

Links with details of SMS service and the information you can get:

Karvy Easy SMS Services - get one single SMS with total value of Funds, get branch address and transaction details - try the service to one single total value of all holdings in Karvy serviced funds (this is in addition to the detailed SMS listing folios and the balances)

CAMS SMS Back Service - get folio balances separately for each folio, request for an account statement by SMS, get NAV information and transaction details

Other funds also offer a SMS back service but it is better to use the facility offered by registrars as this is a one-point contact for you.

Mobile Apps:

Both the Registrars have good apps for investors. However, here CAMS scores with a superior app. Both apps enable linking of all your folios. In CAMS app, if the same email id is registered in your entire family's folios, you can have just one login - your email id. Karvy's app requires the creation of a user id and then you can link all yours and your family's folios. The links to download the apps are give here:

   CAMS iOS     CAMS Android     Karvy iOS    Karvy Android

Unfortunately these apps do not have any transaction capability. They will be useful if registrars and mutual funds allow transactions through the app. However, you can view the value of your investments, request for immediate statements through both the apps, and see the last few transactions. CAMS app also has nice charts giving you the total value of your holdings asset allocation wise and mutual fund wise break up. 

Any investor who wishes to keep track of her investments must use the above facilities. I will write more on other facilities you can use in another post.

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Figure out your life before you figure out your investments

I am regularly asked - "Should I invest in equity now?"

There is no straightforward response to this question. Many factors have to be considered - the chief being - Do you know where you want to go? When do you have to reach there? Do you know where you are? Are these well-defined. Once you have a goal - a clear well defined goal, you will yourself have a hint on how to get there - i.e where you should invest. 

Three factors to consider while investing for your goals are Risk, Return and Liquidity

1. Risk: The chance that an investment's actual return will be different from what is expected. It also includes the possibility that you will lose a part of your capital / investment. For example, if you invest in equity shares today and need the money for your daughter's wedding next year, it is silly to invest in stocks today hoping to make a gain!!   The risk of loss is high. The return is not known to you. This is risk.

2. Return: This refers to the gain (or loss) from an investment. An investment is made for returns / gains and we only invest to get returns. However, a point to be noted that the higher the risk, the higher the potential for returns. For example, bank deposits are relatively risk-free. We know that currently we will get a return of about 9% p.a . The returns from stocks is unknown. There is risk, but gains can be high. The stock markets have already given > 25% returns this year!! Gold gave great returns from 2009 - 2013.

3. Liquidity: This is the ability to convert an asset into cash quickly i.e in simple language, the ease of selling of the investment/ asset to get cash. If you have to invest money now for paying your kid's college fees in about 3 -4 years, you would not invest in real estate. It is not easy to dispose off for cash. Whereas, bank deposits, mutual funds can easily and without much cost be liquidated.

Everything you invest in is going to require a sacrifice in one of these areas. If you want high liquidity and low risk, you’re going to have a low return. You’re probably going to be putting your money into something like a fixed deposit. An investment in real estate / property means lower liquidity, but could mean higher risk and returns. If you want high liquidity and high return, you’re going to have to take on some significant risk. You’re probably going to be putting your money into something like stocks and equity mutual funds.

There are different life situations that call for different investment options. So it basically depends on your goals in which your investment time horizon is intrinsic. The longer the time horizon, the more risk you can take and even sacrifice liquidity.

Equity mutual funds / Stocks have given a great return when the investment horizon has been for periods over ten years! For many people, it makes sense to invest in equity funds / stocks for the ease of rebalancing and selling them off in case they should need the money. (more on rebalancing investments later)

Remember that it is your goals and your life that is the key. The situation that you are in and what you need out of the investment will decide where you must invest - a bank deposit or gold or equity.

Without a plan, a goal for yourself, you will only invest at random, or worse still be carried away by advertisements, that neighborhood uncle who sells 'great' policies and will be stuck in illiquid, sub-optimal investments or worse still, face a severe loss.

Figure out your life before you figure out your investments. Know your goals first. The right investment becomes clearer.

Steps to financial independance

Religare Invesco Mutual Fund in a series of tweets gave gave the following pictures - a series of steps to Financial Independence. All of us should make a start to get our hard earned money working for us and these hints below are a useful primer.

1. Calculate your monthly savings. This would mean that you are at first aware of your earnings and your expenses! Therefore awareness is the first step!

2. Set aside cash for emergency expenses. This may be kept in a fixed deposit.

3. Identify your financial goals and give them a deadline for accomplishing

4. Invest your savings. Money lying in the savings bank account does not build wealth or grow and help you fulfill financial goals. Systematic and consistent investing builds up wealth and helps you fulfil goals

5. Control your expenses. In fact you must spend only after saving!!

6. Goal setting is always followed by review. Review at least once a year to find out where you are and how far you have to go!!

Start your journey to financial freedom

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SEBI Board approves REIT regulations - A Primer on REITs

  

The SEBI Board has cleared the final guidelines for setting up REITs. Announcing the final guidelines for REITs, SEBI has set the ball rolling for product manufacturers to launch their product to be subscribed by investors with a minimum investment of Rs 2 lakh.

While the concept of REITs been in existence in developed markets for several years now, it is a new concept in India and investors need to know what it is and how it works before they invest in them.

What are REITs

They are investment trusts that operate much like mutual funds. While mutual funds invest in equities, debt instruments, REITs invest in real estate. So then, REITs pool money from investors and invest the same in real estate. For investors who wish to allocate money to real estate, this is an option as one can own a piece of a prime / income generating property for a modest sum. Otherwise, an investment in developed property  is difficult for small investors.

REITs, as per the guidelines, should invest primarily in income generating real estate assets — commercial or residential and thereby look to generate regular return for investors.  The regulations aim to make investment in real estate through REITs less risky as investments are in developed properties that provide regular income.

REITs abroad are a popular investment option for long term pools of capital such as pension funds and insurance companies due to the regular stream of income which helps them in managing regular outflow to their investors.

The Proposed Framework in regulations

1. REITs will be set up as a Trust (similar to mutual funds)  and will have parties such as trustee (registered with SEBI), sponsor, manager and principal valuer with specific responsibilities.

2. After the registration, the REIT would raise funds through an initial offer from investors and get listed. The minimum issue size of the initial offer to the public has been specified at Rs 250 crore and the regulator has specified that the size of assets under the REITs should not be less than Rs 500 crore.

3. The regulator has said that till the market develops, the units of REITs may be offered only to HNIs/institutions and therefore, the minimum subscription size has been kept at Rs 2 lakh

4. The units offered to the public in initial offer shall not be less than 25% of the number of units of the REIT on post-issue basis

5 .Units of REITs shall be mandatorily listed on a recognized Stock Exchange and the REIT shall make continuous disclosures in terms of the listing agreement. Trading lot for such units on stock exchanges shall be Rs 1 Lakh.

6. In India REITs will invest in commercial real estate assets, either directly or through Special Purpose Vehicles (SPVs). In such SPVs a REIT shall hold controlling interest and not less than 50 per cent of the equity share capital or interest.

7. Not less than 80% of the value of the REIT assets shall be in completed and revenue generating properties. Not more than 20% of the value of REIT assets shall be invested in following :

i.                      developmental properties( restricted to 10% of the value of REIT assets),

ii.                     mortgage backed securities,

iii.                   listed/ unlisted debt of companies/body corporates in real estate sector,

iv.                   equity shares of companies listed on a recognized stock exchange in India which derive not less than 75% of their operating income from Real Estate activity,

v.                    government securities,

vi.                   money market instruments or Cash equivalents.

8. A REIT should invest in at least 2 projects with not more than 60% of value of assets invested in one project and should  distribute not less than 90% of the net distributable cash flows, to its investors, at least on a  half yearly basis.

9. REITs, through  valuers, should undertake full valuation on a yearly basis and update the same on a half yearly basis and declare NAV within 15 days from the date of such valuation/updation.

Read the details of the SEBI Board meeting here.

     

Investor awareness initiatives by IDFC Mutual Fund on social media

IDFC Foundation had earlier put out a great video on You Tube -  One Idiots -  which was part of their initiative to spread financial awareness. Those who haven't seen it must do so.

Now the twitter handle of IDFC AMC  has come out with a great series of tweets giving the highlights of the book The Intelligent Investor by Benjamin Graham. This is a widely acclaimed book on value investing. Some of the tweets are given below.

10 seconds is all it takes to become a Wise Investor! Get highlights of The #IntelligentInvestor in 140 characters daily, starting Aug 7!
— IDFC Mutual Fund (@IDFCMF) August 5, 2014

Watch out for the Core principles by Benjamin Graham in the next few tweets, before we start the series! Source: http://t.co/UU6hMBMmld
— IDFC Mutual Fund (@IDFCMF) August 6, 2014

T1: A stock represents an ownership interest in an actual business with an underlying value that does not depend on its share price.
— IDFC Mutual Fund (@IDFCMF) August 6, 2014

T2: The market is a pendulum that swings between optimism (making stock too expensive) and pessimism (too cheap). #IntelligentInvestor
— IDFC Mutual Fund (@IDFCMF) August 6, 2014

T3: The future value of every investment is a function of its present price. The higher the price you pay, the lower your return.
— IDFC Mutual Fund (@IDFCMF) August 6, 2014

T4: No matter how careful you are, you need a margin of safety - never overpaying after considering all risks. #IntelligentInvestor
— IDFC Mutual Fund (@IDFCMF) August 6, 2014

T5: The secret of financial success is inside yourself. In the end, how your investments behave is much less important than how you behave.
— IDFC Mutual Fund (@IDFCMF) August 6, 2014

T5 contd: Lastly, be a critical thinker & Invest with patient confidence! #IntelligentInvestor
— IDFC Mutual Fund (@IDFCMF) August 6, 2014

Follow IDFC AMC on twitter for more!!

My twitter handle: @invest_mutual

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