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The great mutual fund crisis
Fund houses are facing redemption pressure. We look at what triggered the current turmoil and why mutual funds are biased against retail investors.Shaken and stirredThe new rules of the gameFear & loathing on MF street

Fear & loathing on MF street
As institutional investors withdrew money from mutual funds, the industry went into a tailspin. The blind panic led to the small investors exiting at a loss.
Changing fortunes of star funds
The Money Today-IDBI Capital analysis of the top 10 funds during the boom and doom cycles shows that there is no such thing as a consistent performer.
Shaken and stirred
The recent spate of mergers, acquisitions and new partnerships in mutual funds has the investors worried about the fate of their hard-earned money.
What should you do now?
There are opportunities that you can still tap. Here are some tips that will help you weather the current economic storm, says Narayan Krishnamurthy.

2008-12-11

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Your Wallet

Insure 7-8 times your annual income

7-8 times your annual income is the amount that should be your minimum life insurance cover, according to experts.

Small brands, big savings

If you are not brand conscious, switching from big names to in-house brands is a good way to boost your budget, says Priya Kapoor.

BASICS

Formulas for success

The success of any financial plan depends on the investment strategy adopted and the performance of the investments. Here are eight basic computations that are used for making financial projections.

Stocks

Union Bank of India performs well

11% is the return from Union Bank of India stock in the past three months. During the same period the Sensex lost 42%.

Bucking the downtrend

As the markets fell in 2008, some stocks actually rose. Rakesh Rai and Sameer Bhardwaj list five factors that helped them beat the markets.

India story is over, for now

As the global financial turmoil spreads, the NAVs of both portfolios hit all-time lows, I weed out some more losers.

10 value stocks to consider

Value investors have traditionally looked at growth in earnings to pick stocks. But considering the slowdown and high interest rates, R. Sree Ram examines the debt levels, book values and cash flows of companies to fish out 10 winners.

Insight

Your world: currencies

A snapshot of the rupee’s performance to help you take decisions on travel and overseas investments.

Query Corner

What are tax-saving options under Section 80C?

S. Vinayak wants to know which investments qualify for tax deduction under Section 80C. Here are the avenues he can avail of.

Mutual Fund

A safe bet

This type of fund is investment-friendly for retail investors. The only damper is the high exit loads, especially in the first two years.

'Invest in bond funds'

Give importance to SLR—safety (credit), liquidity and returns—during the current uncertain times. Stick to your asset allocation through various market cycles, says Nandkumar Surti.

Dealing with change

Mutual funds might have lost favour after the financial crisis but are still good bets due to the benefits they offer in terms of professional expertise, diversification, liquidity and tax breaks.

Technology

Gadgets for a downturn

With a pinch of prudence and a bit of research, you can find gadgets that will serve your needs even if they don’t score high on the savvy quotient. Here are some options that will help you save money while you sate your desire.

Books

The big bust theory

The book explains how principles propounded by classical economists have led to the crash in the global markets and recommends ways to control the situation. It also proposes a new theory to understand market behaviour, says Namrata Dadwal.

New Business

Vehicle of change

He tapped rickshaws as platforms for advertising. Today, SammaaN is a Rs 1.25-crore venture that also benefits the rickshaw-pullers.

Travel

Top 10 travel aids

Frequent travellers know that journeys and Murphy’s law go hand in hand. To iron out unlikely glitches, here are some accessories picked by Sushmita Choudhury.

Real Estate

The new growth mantra

Given the downturn in the economy and the real estate sector, the realty companies are rushing to diversify in unrelated areas.

Portfolio Doctor

Floundering in high seas

Dehradun-based Oberois are investing in the right asset class, but in the wrong instruments. They must align their choices with their goals and investment acumen.

Upfront

Insure the fit

It is the age of customisation. Slowdown or not, you want everything tailored to your needs. Investment products have followed this lead for some time and to great investor response.

Expert View

5 lessons from the market

When redemption pressures threaten a fund manager, he is not going to sit and evaluate a stock. A sell order by the fund manager (across the fund holdings) will inevitably send panic signals to the broker’s dealing desk, especially at times like these.

The new rules of the game

Have a good mix of mutual fund schemes that will provide aggressive growth and risk containment at the same time. For an average investor to pick up more than eight schemes means that he has not done adequate homework.

Now and Then

Prices on a roll

Car-owners will feel the pinch because tyres need to be replaced after every 50,000 km or so.

My Idea

Wheels of fortune

Mumbai-based Akshai Varde’s passion for bikes made him quit his job as a flight attendant. But the 28-year-old is flying high with Vardenchi, the Rs 2-crore bike customising company.

Tax

Can the service tax paid be deducted from income tax?

Service tax cannot be deducted from the income tax payable by an assessee. However, the cost of any service availed of for business is considered a deductible expense as ‘Income from business or profession’.

Banking

Luring NRIs

The net outflow of funds from NRI deposits amounted to $168 million during April-August 2008. To counter this, leading banks have hiked deposit rates for NRI schemes by 0.5%. Here are the details of the three basic schemes.

Insurance

Take cover to cut tax

The tax-efficient nature of life insurance makes it an ideal vehicle to save income tax.

Talk Back

'Your suggestions to trace counterfeit currency are inadequate'

Experts say that of all the features, intaglio printing of the RBI seal, Mahatma Gandhi's picture, the Ashoka emblem, etc, are the most crucial. For checking bundles of currency notes, it may be easier to scan them under an ultra-violet lamp.

Editor's Note

From the executive editor

There is an upside to this mayhem. Reality check has become the norm. Productivity and efficiency have become paramount as employers hope to extract more work from employees. Therefore, when the dust settles down, you may witness the emergence of a lean and mean India Inc.

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