r2i forum

You may all know the best midcap fund in India is Select Mid Cap offered by Sundram.

Sundram PNB Paribas Mutual fund has opened NFO New fund Offering for Select Small Cap.

This is closed end fund, which means you will not be able to buy it from the company once the NFO is closed. Sundram plans to close when the subscription hit 300 crores.

There are not many small cap funds available in the market also the large cap had a uhge run in the last year, the difference between Sensex and Nifty itself was large. So, one would expect the small cap and mid cap to come back do better this year. Ofcourse it is contrarian thinking, many performance chasers will chase hot large cap funds !!

This is a good fund to invest. Talk to your favourite mutual fund retailer/seller.

Hi RRK,

I am planning to start investing in the following mutual funds

FIFF
Sundaram BNP Paribas Select Midcap

Any contacts in Bangalore I can call up to enter these funds?

thanks,
Qleap

You can go to Sundaram website and download forms and purchase.

Alternately walk into an office of ICICI or HDFC bank and they have a desk for selling financial products including MFs.

Alternately, you can request Sundaram MF reps to contact you - they have a link on their website or

alternately, you could go to Sundaram Bangalore office, the address is on their website.

Desi,

Awesome, thanks.

Qleap.

Desi,
Does any company offer online fund trading in India?
If a NRI is interested in buying the fund..what are some reliable ways?

I checked the website..the closing date is today (1-24-07) too late for this anway..but I am asking in general

Hi LikemyNick,

Much depends on whether you already have investments in a particular fund house [in which case you already a FOLIO NUMBER allocated in that fund house]. In any case you can visit http://www.camsonline.com to get forms for most fund houses like ABN AMRO, Birla, Prudential ICICI, HDFC, SBI, Kotak, Fidelity, HSBC, Sundaram, Tata, DSP ML, Standard Chartered. This is for Fund Houses that use CAMS as their asset management option. Franklin Templeton and Reliance do not use CAMS, so for these you have to visit their own web-sites.

http://www.franklintempletonindia.com
http://www.reliancemutual.com

It is best you do some reading about Mutual Funds in India and in general about the Mutual Industry / Trends in India. Following sites will help

http://www.amfiindia.com
http://www.mutualfundsindia.com
http://www.moneycontrol.com [Chose Mutual Funds Option from Home Page]

Please note that different fund houses have different rules when it comes to allowing NRIs to invest in Mutual Funds ONLINE. It is best therefore to do the process offline [fill in forms and send along with CHEQUE]. Once you have investment in 1 Fund of a Particular Fund House you have a Folio with which to invest in other funds of the same fund house without having to provide all your personal particulars like Address, Date of Birth and so on.

Hope this helps.

Just Googling for INDIAN MUTUAL FUNDS should give you more than enough information about investing in MFs in India and the above are in my opinion just a tip of the iceberg.

Regards

Venkat

Veknat, Thank you for the reply.
As a NRI do I need PAN to buy mutul funds in India?

One more question..I talked to one brokerage service company India..they are asking for POA to sell and buy on my behalf..is that the general practice?

which is a better option for mutual funds - growth or dividend reinvestment? what's the difference between the two?

thanks,
Qleap

Hi #7,

Most Mutual Funds require PAN to be provided for investments of more than 1 Lakh even if it is through an SIP. For e.g. If you are investing Rs 10,000 per month through a SIP for 1 year then total amount invested is Rs 1,20,000 which is greater than 1 Lakh therefore PAN is required. In any case for an NRI it is best to get a PAN because amounts invested are likely to be much higher than 1 Lakh per year. Also to sell immovable property that one has invested in requires a PAN as it involves getting INCOME TAX CLERANCE.

In any case NRI should apply and have a PAN rather than waiting for a situation they are forced to furnish a PAN and then running around to get the same.


Hi #8,

As a concept both GROWTH and DIVIDEND REINVEST work in a similar way but they are still not same. For one the same fund will have different NAV for the DIVIDEND Option as Compared to the GROWTH Option. Growth NAVs are typically higher as they keep increasing ... where as in the case of Dividend Option the NAV goes down each time dividend is declared. For e.g if 20% dividend is declared then NAV goes down by Rs 2 [assuming 1 unit has a face value of Rs 10]

1) In Growth Option there is no DIVIDEND Declared so the amount invested will keep growing assuming the fund is doing well which is more likely if you are looking at a longer time horizon of > 3 years. So if you invest say Rs 10,000 at Rs 10 NAV to get 1000 untis, then after 3 years if the NAV is 20 then you would have 100% on your return over 3 years.

2) In Dividend Reinvest Option if you say invest Rs 10,000 at an NAV of Rs 10 to get 1000 units which after 3 years would have say appreciated to say Rs15,000 [NAV 15]. Also during this 3 year period dividend could have been declared more than once which would mean the no of units would be > 1000.

In the above scenarios if you go in for GROWTH Option and Redeem the units after 3 years you need not pay any TAX on the Long Term Capital Gains [assuming it is an Equity Oriented Fund with at least 75% Equity Component]
However in the case of the Dividend Reinvest Option you may be liable to pay Short-Term Capital Gains [@10%] on the units which were a result of the dividend declared in the recent past provided the units from dividend reinvestment were held for less than 1 year.

One should not construe GROWTH OPTION as more expensive compared to DIVIDEND OPTION just because the NAVs are higher. Typically NAVs for a Fund's Growth Option could even be > 100 for those funds in existence for a longer period like 10 years where as NAVs for the same fund in the dividend option could be much lesser just because there would have been multiple instances of DIVIDEND being declared in a fund that has been in existence for a long period like 10 years...

Regards

Venkat

Hi #7

To Answer your question regarding POA.

Yes it is a common practice to ask for POA if you go in for ONLINE Trading Account. I did this when I opened ICICIDirect Account as well as when I opened HDFCSec account [http://www.hdfcsec.com]

I would recommend going in with someone who can give you 3-in-1 Account Bank, Demat and ONLINE Trading. It works better that way, keeping this in mind your choice is limited to

a) ICICIDirect http://www.icicidirect.com
b) HDFCSec http://www.hdfcsec.com
c) Kotak http://www.kotaksecurities.com

There are lot of other players in the ONLINE Trading Space but I would recommend going with one of these 3 as they are more established also since they offer 3-in-1 movement of funds to bank account and movement of shares into demat account is more seamless as it is from the same bank and therefore they cannot blame someone else if things do not happen with the stipulated time [For e.g T+2 settlement for shares sold/bought online]

Regards

Venkat