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Mutual Funds


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Know what Mutual Funds can do for you!!

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Mutual Funds

  1. 1. Mutual Funds Module<br />Padmavati Wealth Advisors<br />
  2. 2. Executive Summary<br />Padmavati Wealth Advisors<br />2<br /><ul><li>Concept – Mutual Fund
  3. 3. What is Mutual Fund ?
  4. 4. Types of Mutual Fund
  5. 5. Benefits
  6. 6. Drawbacks
  7. 7. What is NAV ?
  8. 8. Equity As an Asset Class
  9. 9. Why to stay invested for a Long-Term ?
  10. 10. Systematic Investment Plan (SIP)
  11. 11. Power of Compounding
  12. 12. Rupee cost Averaging
  13. 13. Tax Aspects
  14. 14. Past Performance</li></li></ul><li>What is Mutual Fund?<br />3<br />Padmavati Wealth Advisors<br />
  15. 15. Types of Mutual Funds<br />Padmavati Wealth Advisors<br />4<br />
  16. 16. Why Mutual Funds ?<br />5<br />Padmavati Wealth Advisors<br />
  17. 17. De-merits : Mutual Funds<br />Padmavati Wealth Advisors<br />6<br /><ul><li>Exit load
  18. 18. No control over costs
  19. 19. No tailor-made portfolio
  20. 20. No assured Returns
  21. 21. Management Risk</li></li></ul><li>Net Assets Value (NAV)<br />Padmavati Wealth Advisors<br />7<br /><ul><li>The net asset value of the fund is the cumulative market value of the assets fund net of its liabilities</li></ul>Market Value of All Securities Held by Fund + Cash<br /> and Equivalent Holdings - Fund Liabilities & Outstanding Exp <br /> Total Fund Units Outstanding<br /><ul><li>A fund's NAV will change daily as the value of a fund's securities, cash held, liabilities, and the number of shares outstanding fluctuate.</li></ul>NAV = <br />
  22. 22. Risk Return Profile<br />Padmavati Wealth Advisors<br />8<br />Return<br />Risk<br />
  23. 23. 9<br />All time high & correction begins<br />22% one-day decline in US, no linkage then<br />Start of five-year bull market<br />Asian Crisis; Unaffected<br />Harshad Mehta Scam<br />Tech bull market & bust<br />First Major Bull Market<br /> Long Term really matters!!<br />Annual returns 17.6% for equity index<br />BSE Sensitive Index<br />Deep corrections do not matter for long-term investors<br />Padmavati Wealth Advisors<br />Figures as of July 2008; Data Source: Bloomberg; Analysis: In house<br />
  24. 24. Volatility of returns reduces over time<br />10<br /><ul><li>Height of each bar shows the range of returns. Smaller the range shown by the bar, the better for investors
  25. 25. Longer the time frame, the greater is the reduction in risk without an impact on returns</li></ul>Returns %<br />Effective Annual Returns %<br />Padmavati Wealth Advisors<br />Source: Bloomberg; Analysis: as of July 31, 2008<br />
  26. 26. Padmavati Wealth Advisors<br />11<br />Systematic Investment Plan (SIP)<br /><ul><li>SIP is an investment program that allows you to contribute a fixed amount (as low as Rs.1000) in mutual funds at regular intervals.
  27. 27. SIP allows you to combine -
  28. 28. Convenience
  29. 29. Rupee Cost Averaging
  30. 30. Flexibility
  31. 31. Power of Compounding
  32. 32. Investment experts the world over advocate Systematic </li></ul> Investment Plan (SIP)<br /><ul><li>Instills the much needed investment discipline</li></li></ul><li>Power of Compounding!!!<br /> Albert Einstein called “The most powerful force in the universe is compound interest“  because of its amazing abilities.  Essentially, compounding is the idea that you can make money on the money you’ve already earned. <br /> Padmavati Wealth Advisors<br />12<br />
  33. 33. Power of Compounding (An Example)<br />13<br />25 year old Preeti invests <br />Rs.10000 annually for <br />10 years and stops. She<br /> does not withdraw any money.<br />Rohit begins investing<br />at 35 a similar amount<br />of Rs.10000 annually. <br />He invests for the next<br />25 years and he too does <br />not withdraw any money.<br />76.9 lacs<br />24.6 lacs<br />P.S : 1) Assumed Rate of Return: 13% CAGR<br /> 2) Its doesn’t give any guarantee of future returns<br />Padmavati Wealth Advisors<br />
  34. 34. Rupee Cost Averaging<br /> Padmavati Wealth Advisors<br />14<br /><ul><li>Technique of buying a fixed rupee amount of a particular investment at regular intervals, regardless of the NAV</li></ul>Average Cost of Purchase<br />
  35. 35. Start early to reap maximum benefits<br />15<br />Value in Rs lacs<br />Rs 1000 a-month investment till age 55 <br />Portfolio value reckoned at age 60<br />Asset Allocation: Equity 70% and Fixed Income 30%<br />Returns based on historical average. In the equity, based on the Sensex and in the Fixed income, based on the government bond yield<br />Returns assumed 15.3%<br />Starting age of investing<br />From age 25, Rs 1000-a-month could deliver Rs 1.55 crore at age 60<br />Padmavati Wealth Advisors<br />
  36. 36. Tax Treatment : Equity Funds<br />Padmavati Wealth Advisors<br />16<br />
  37. 37. Past Performance of Equity Schemes<br />Source: Value Research, as on Dt 9th sept 2009<br />Padmavati Wealth Advisors<br />17<br />
  38. 38. Back Testing Results<br />Padmavati Wealth Advisors<br />18<br />Figures as of July 2008; Data Source: Bloomberg; <br />
  39. 39. Rich Dad V/S Poor Dad<br />19<br />Income Statement<br />Income Statement<br />Balance Sheet<br />Balance Sheet<br />Padmavati Wealth Advisors<br />
  40. 40. How Qualified Advisor can Make a Difference?<br />Padmavati Wealth Advisors<br />20<br />Source: Value Research 3 Yrs CAGR Returns<br />
  41. 41. Padmavati Wealth Advisors<br />21<br /> Mutual fund investments are subject to market risks. Please read the offer document carefully before taking an investment decision.<br /> Risk Factors: All mutual funds and securities investments are subject to market risks, and there can be no assurance or guarantee that fund&apos;s objectives will be achieved. NAV may go up or down, depending on the factors and forces affecting the securities market. There is uncertainty of dividend distribution and risk of capital loss<br />Disclaimer <br />
  42. 42. Happy Investing!!<br />Padmavati Wealth Advisors<br />Kunal Doshi<br />+91 98334 67999 | O. 91-22-28081677<br />