I have just been handed over Rs 2 lakh as my provident fund from my earlier company. I would like to invest it in a safe and risk-free instrument and get good returns.
- Sudeshna
If you are looking for a safe and risk-free investment, then we suggest you go with a bank fixed deposit or a post office savings scheme. While the returns in mutual funds could surpass what you get there, they cannot be classified as 'safe and risk-free'. Mutual funds can minimise the debt or equity market specific risks to some extent, they cannot obliterate them altogether.
Is it worth investing in Franklin India Prima? How does it compare with its peers?
- Huzeifa Khyrullah
Franklin India Prima falls in the mid- and small-cap category. The fund had a great start but turned out to be an average performer. In recent times, it has shown some pick up and did well in 2009. While it is certainly better than many others in its category, it currently does not rank among the best. Below are the best picks in the mid- and small-cap category.
From the schemes mentioned above, two schemes have slightly different investment mandates. ICICI Prudential Discovery is a value fund, which scouts for undervalued stocks. The objective of ING Dividend Yield is to invest at least 65 per cent of its assets in high dividend paying companies.
In October 2007 and February 2008, I invested in closed-ended new fund offers (NFOs) - Tata Indo Global Infrastructure and JM CORE 11 Series. The funds are due for redemption in 2010 and 2011. Both are not performing since inception. Why are they not performing? Is there an authoritative body like Securities Exchange Board of India (Sebi) or Association of Mutual Funds (Amfi) to monitor funds? Can I write to someone about it?
- Narasimhan Unfortunately for you, all that could go wrong has gone wrong. You invested at one go, a move you can justify because both were closed-end funds. The timing went against you - the peak of the bull run. The funds you invested in were more expensive than the existing ones due to the initial issue expenses which investors had to bear. As if all that was not enough, the investments were in what one would call exotic funds.
Like most investors who erred grievously at the time of the rally, if only you had given more thought to your investments.
The Tata Indo Global Infrastructure fund is a thematic offering that invests in infrastructure stocks in India and abroad. JM CORE 11 is an aggressive fund with no market cap or sector restrictions but aims to have a portfolio of just 11 stocks. When the market crashed, both these funds were hit, badly. Infrastructure was the engine of 2006-07 bull run and it has not yet recovered from the fall.
Mutual funds are market-related products hence the performance is subject to market risk. Your investment strategy is testament to the fact that high risk can also lead to high losses. There is nothing you can do about this. If you cannot stomach it anymore, cut your losses and sell.
To answer the last part of your question, there is no authoritative body as such that monitors fund performance. The market regulator, Sebi, monitors unethical behaviour and violations of regulations.
