Do you know - two ways to avoid fees for equity Mutual Funds

Two awesome ways to pay less or no entry load for MFs:

1. Put your money in a 0 load liquid fund of any fund house. Then do a STP (Systematic Transfer Plan) of minimum 4 times (can also be weekly for 4 weeks) to any equity fund of your choice of the same fund house. That way you don't pay entry load to those equity funds.

2. Pay 0 to 1% entry load to get into any index fund of a fund house and then do a "Switch To" any equity fund of your choice among the funds from same fund house. For that there is no entry load.

This is out of my reearch. Any comments are welcome.

Equity MF entry load to be waived - proposal by SEBI

Here is a that much sought after relief for Mutual Fund Investors in India. SEBI is proposing to remove the entry load by Mutual Funds if application has been directly placed to the MF houses or collection centers or through internet without routing through any distributor. We loose 2.25% everytime we invest in a equity MF and churn out a good portion of our money by that entry load which this MF houses pay to the distributors or agents. Let's all support this greatest idea. Send email to ruchic@sebi.gov.in supporting the idea. Hope SEBI makes it a law soon.

Following is the proposal from SEBI:

SECURITIES AND EXCHANGE BOARD OF INDIA
INVESTMENT MANAGEMENT DEPARTMENT

Proposal on waiver of load for direct applications in Mutual Fund schemes

Currently all investors irrespective of the mode of entry are required to pay the entry load.

SEBI has stipulated that the loads collected by the Asset Management Companies (AMCs) for each scheme have to be maintained in a separate account and can be utilized towards meeting the selling and distribution expenses.

As per industry practice the load is normally utilized towards meeting the agent/distributor’s commission. So, the entry load collected from the investor normally goes towards paying the brokerage/commission of the distributor through whom the application was routed to the AMC.

Keeping in view the interest of the investors SEBI is now considering giving a waiver in entry load for direct applications received by the AMCs i.e. applications received through internet, submitted to AMC or collection centre/ Investor Service Centre that are not routed through any distributor/agent/broker.

Interested people may send in their comments on this issue to ruchic@sebi.gov.in or by writing a letter addressed to SEBI, Investment Management Department, SEBI Bhavan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (E), Mumbai – 400051 on or before September 12, 2007.

Best of both the worlds - Fixed income with upside of Equity

The much-awaited Structured Product is here finally which promises besides Capital Guarantee, a worst-case scenario of 21 per cent absolute return and a best-case scenario of upto 81 per cent in 37 months duration.

Scheme is being offered by Benchmark Asset Management Company which is renowned for Exchange-traded funds. The underlying assets in this structured product (usually defined as a debt obligation of a triple-A-rated debenture issued by a financially sound company - in this case, it is DSP Merrill Lynch Capital Ltd.)

Details attached in the file but key points are below:

Structured Products are products which have a higher tax-efficiency than fixed deposits or debt instruments because they offer assured downside protection and pre-defined returns (usually linked to market returns.)
This product is Structured Product Series XI from Benchmark AMC and has been fine-tuned by our bank after elaborate feedback from discerning clients across a wide cross-section
In a bank deposit, you get taxed at 33% but in a structured product which has debt instruments listed within 3 months, your tax outgo is only 10% plus surcharges - there's a steep advantage in favor of structured products.
In the present product, for the first time, apart from Capital guarantee, there's an absolute return promised at the end of 39 months (3 months more because of time-frame to wind down positions in nifty-linked instruments).
Higher of floor payout of 25 per cent on the face value of the debenture at maturity, if Nifty does not close at or above 190% of its intial valuation date (17th September 2007) on any of the monthly observation dates from 13th month till 36th month (24 observations) or
participation in the Nifty within the range of movement of Nifty from 0% to 189.99% (in which case the return can go as high as 89.99% * participation, which is 0.90 or 90 per cent = 81 per cent.
If Nifty closes at or above 190 per cent on any of the monthly observation dates, the payout is capped at a fixed payout of 30 per cent absolute return on maturity.
The payout has another condition which accordingly subjects it a scenario where the base-case return works out to be 21 per cent. (please see illustration to understand the scenario)
Expenses Ratio is only 4% one-time - no charges subequent will be levied.
Reporting is done every six months for Investment Performance.
Minimum Investment is Rs.10 lacs plus fees. Say, for Rs.10 lacs, the amount of investment is Rs.10.40 lacs.
Offer closes on 10th September, 2007
Ideal for:
Individuals, Trusts, Institutions who seek capital protection plus fixed return plus potential of upside return.
The product is itself structured in such a manner that it is tax-efficient and gets an annualised return of over 7% in worst-case, over 10% in medium-case scenario and higher return in other scenarios of outperformance of Nifty.
Investors who invest significantly into fixed deposits, RBI Bonds, Post-Office Schemes - who are risk-averse.
Investors, who having substantial exposure to Equities, are looking to lock their ESOP share-sale proceeds or Rebalancing proceeds or Equity assets into Higher-Return seeking Avenues without capital loss risk.
Investors who do not expect Nifty to go beyond 190 per cent in the next three years (with Domestic Elections, etc.) should lock portion of the Assets in this instrument. (This is reasonable assumption, because Nifty today is at 4412 points. Expecting it to cross 8382 points in next 3 years is a tall order given that stock prices of the top 20 companies have already priced in.) This is a significant pointer to consider this Asset-Class with upside potential with zero downside and a reasonable fixed-income return.

See attached for more details

September 2007 New Fund Offerings

ABN Amro China India Fund - An open-ended equity fund which invests 65%in Indian stocks and 35% in Chinese stocks. Previous successful NFOs: ABN Amro Future Leaders, ABN Amro Opportunities. Scheme closing October 1, 2007. Taxation Rate: same as Equity Funds (not debt).

ICICI Prudential Indo Asia Equity Fund - An open-ended equity fund which invests 65% in Indian Stocks and 35% in Asian Stocks. Previous successful NFOs: Prudential Discovery, Prudential Emerging Star, Prudential Infrastructure, Prudential Services, Prudential Fusion 1 and 2, Prudential Wealth Optimiser. Scheme closing September 21, 2007. Taxation Rate: same as Equity Funds.

Fidelity India Growth Fund - An open-ended equity fund which invests concentrated positions in Indian stocks growing faster than GDP. Previous successful NFOs: Fidelity Equity, Fidelity Special Situations, Fidelity International Opportunities, Fidelity Tax Plan. Scheme closing September 26, 2007.

Pay zero tax on unlimited gains in India - a very interesting article on rediff

India has truly become a tax haven. If you are willing to take market-related risks, you can arrange your affairs in such a fashion that you don't have to pay even one single rupee as tax, irrespective of the extent of your gains.

And, it's all perfectly above board and legal! Here's how.

With a view to giving a boost to the Indian equity market, successive recent finance ministers have doled out many tax concessions to the income and gains from:
Shares traded on a recognised stock exchange in India, and Equity-based mutual fund schemes (equity funds).Now, all you have to do is to park all your investible funds in either of these two avenues -- and relax.The dividends are tax-free, and so are all long-term capital gains. The only question that needs an answer is -- which of the two avenues should you choose?

Read rest of it here...
http://www.rediff.com/money/2007/jun/22tax1.htm

Free Tax Filing in India ITR Forms (ITR1 and ITR2)

http://www.simpletaxonline.com - A free service from CTE Ltd for Tax Paying Community in India

Everonn IPO - Grey market premium more than 100%

Everonn systems IPO is a very good one and rated 5 stars by CNBC TV18. But till now it has been over-subscribed by 19 times. But in Non-institutional category it is not oversubscribed that much (unlike retail category). So who wants to get a better luck in the allotment, and wanted to subscribe near 1 Lakh, it's better to subscribe for little more than a lakh and in Non-instituitional category. I subscribed for 1400 @ Rs. 140 bid.

See Everonn profile at http://www.moneycontrol.com/stocks/pickoftheweek/equityreportfinal.php?eqid=ESI04

Good Luck and happy investing!!