4 Reasons why these are good times to invest in Mutual funds

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Here are four reasons that support why the time is ripe for an investment in mutual funds.

1. Increased liquidity:
Banks are brimming with liquidity, thanks to the impactful demonetisation move. As a natural progression, the excess liquidity is being channelised into debt and equity mutual funds.Indian investors who characteristically adhere to “opportunistic buying” during times of tumult in the market situation, made the most of the circumstances, taking advantage of the decline in prices. Recent data published by AMFI confirms that overall inflows have grown to a massive Rs 36, 021 Crore, as recorded on November 30, 2016. Experts expect this positive trend to continue in the month of December as well.

RBI

2. Rates left unchanged by RBI
The strategic decision by the Monetary Policy Committee to maintain status quo on key rates in its policy review, coupled with other market volatility inducers such as the forthcoming US Fed rate hike and demonetization has rendered short-term debt mutual funds as safe investment bets. The logic behind this disposition is that short-term debt schemes are relatively firm investment options than long-term debt schemes, in times of unpredictability.

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3. SEBI to approve MF investments via digital wallets
With intense efforts to popularize digital transactions doing the rounds, SEBI sources have revealed that the market regulator is contemplating the possibilities of buying mutual funds through digital wallets. Such a move is bound to heighten the ease of investment in mutual funds and catalyze further growth of the mutual fund investor base.

 4. Market regulator to allow instant redemption of liquid mutual funds
One of the reasons why conservative savers prefer fixed deposits in banks over mutual fund investments is the facility of instant redemption that comes with the former. However, this could change in the coming months, with SEBI weighing the possibilities of instant redemption for liquid mutual funds. If realized, this move will naturally encourage retail investors to consider investments in mutual fund schemes and take asset inflows to a new level of high.

Looking at investing in mutual funds? Go ahead with CAMS. 

An integral part of the Indian Finance sector and a trusted service partner to 8 out of the top 10 AMCs in India, CAMS has revolutionized mutual fund operations in India over the last two decades. Specializing in investor services, CAMS delivers international service standards at Indian cost. CAMS had launched a range of digital technologies to enable anytime, anywhere access to Mutual Funds, to transform investor experience with unique benefits of extraordinary convenience, customization and responsiveness.

Click here to know more about the suite of digital solutions from the house of CAMS.

It is noteworthy that CAMS was recently conferred the prestigious Dun & Bradstreet award for ‘Business Excellence – Mid Corporate Segment’ in the IT/ ITeS sector, in acknowledgment of its world-class service excellence and technology leadership.

About CAMS:CAMS Logo High Resolution

Computer Age Management Services (CAMS) is India’s premier Mutual Fund Transfer Agency serving over 62% of assets of the industry across 16 Mutual Funds. Leveraging superior technology, CAMS brings several innovative services to Mutual Fund investors and distributors. CAMS is also a service partner to leading Insurance Companies, Banks, NBFCs and Alternate Investment Funds. To know more visit http://www.camsonline.com

 

 

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Savings account Vs Liquid Funds..Insights on which could benefit you well

A liquid fund is a debt mutual fund that invests in very short-term instruments — commercial papers, treasury bills, certificates of deposit, and so on. Liquid funds generally invest in instruments that have a very high credit rating.

In fact, liquid funds park your money in instruments not too different from the way banks do and hence are reasonably secure. Though liquid cannot promise a fixed return, their performance over the last 10 years has always been superior to the returns offered by Savings bank. On average liquid funds generate 8-9% returns which are significantly higher than the average savings bank rate of 4%.

Corporate houses have been using liquid funds to park their surpluses and derive some returns. These funds being low risk considering that their exposure to mark to market instruments is limited to the extent of 10%, retail investors can also significantly benefit from these investments.

Liquid fund, just like any other mutual fund have growth and dividend options. While these funds don’t charge you on exit, one could potentially utilize the liquid funds to park money and then systematically invest in other high yield schemes. These funds have short tenures, no lock in period and held to maturity by the fund. With the maturity varying anywhere between 4 days to 90 days and redemption within 24 hours, you could temporarily park your surplus in a liquid fund that you might want to redeem shortly to meet a nearing obligation and still enjoy the benefit of a higher return.

With the deregulation of savings bank interest rates by RBI, some banks offer interest rates as high as 7%. Further, the budget took away most of the benefits that debt funds in general offered until last year. Earlier, all capital gains made on debt funds held for more than one year were treated as ‘long-term’ and taxed at a flat 10 per cent. But now, the tenure for claiming long-term capital gains tax on debt funds has been increased to three years. The tax rate on such long-term gains has also been hiked to 20 per cent (with indexation benefits) instead of a flat 10 per cent. However this change does not affect the liquid funds much which are anyway suited to much shorter investment horizons much lesser than a year.

Capital Gains Tax FY16

 

In any case, the post-tax returns liquid fund still beat the performance of Savings bank.

Investors have a number of liquid funds to choose from. From a performance point of view, one cannot see much of differentiation between them. However, Crisil Liquid fund index serves as a good yardstick to compare their performance. So the next time you have a pile of cash, don’t let it idle in a savings bank account. Learn to manage it better through a liquid fund.

CAMS has a variety of information available in its website and also share excellent inputs on Investments and Savings in our Facebook Page. Like us on https://www.facebook.com/CAMSRTA . To watch informative videos visit https://www.facebook.com/CAMSRTA/videos .

Happy investing….