Mutual Fund Investments Seminar - DENIP Conusltants & Kotak Mahindra AMC

Dear All,

A couple of weeks back on the 18^th of June 2011, DENIP Consultants along with Kotak Mahindra AMC organized a seminar at the Gurukripa Banquet Hall 5:00pm onwards. The seminar had 70 invitees with Dewang Mehta (Director – DENIP Consultants) and Tejas Shah (Branch Manager – Borivali) being the keynote speakers.

The objective of the seminar was to educate the investors on Mutual funds in India. Dewang Mehta started the seminar by defining investments then deep diving in to the mutual fund industry. The objective defined by DENIP was clear: challenge all available investments in the market with regards to their returns and risk profile and to figure out the best possible instrument for all risk profiles.

The instrument would not only have to be good on pre tax returns but also post tax returns for e.g. Bank FDs more often than not tends to offer 9.5% versus Fixed Maturity plan offered by AMCs giving a 9% rate of return. However if tax implications are considered then the Bank FD returns would fall down to 6.56% whereas an FMP would have its returns at 8.07% or higher depending on whether indexation is available or not. The risk profile of both these instruments is almost similar with both the instruments offering a guaranteed return.

The next concept that Dewang Mehta defined was the concept of “Long term investments”. This was done with the help of an example of different forms of a cricket match. Where a team chasing 200 runs would need to score at 10 an over in a T20 format, would only need to score at 4 an over in a 50over format and at a rate of 2 runs an over in a single day of test match format. In the same way if a person started investing Rs. 1000 per month at the age of 25, he would have just over Rs. 1.4crore by the age of 60 against a person investing Rs. 3000 per month at the age of 35 managing to collect only Rs. 98lakhs approximately. A difference of 10 years takes the investment requirement to be over 3 times per month and is still not able to catch up to the returns that began earlier.

Mr. Mehta then went on to compare direct equity investments against investing in Mutual funds. This was done with the help of practical terms; when a person wishes to invest directly in equities although the potential of a 100%+ return is possible on a year on year basis the risk involved is comparatively higher because a sum of Rs. 1000 which could buy you a single stock in direct equity investments, the same amount would potentially buy you close to 30+ companies. Mutual funds investments over the long term do not require knowledge of macroeconomic or even microeconomic terms.

Although MF investments seem simple enough, DENIP ensure to stress enough on the importance of choosing a Mutual fund. Where a large cap fund for e.g. a DSP Black Rock top 100 equity fund could have earned you 32% CAGR since its inception against an ICICI Prudential Focused blue chip equity fund earning you only 16.88% since its inception based on the research done on 24^th May 2011.

Dewang Mehta then went on to stress on the importance of efficient tax planning where PPF was compared to a Tax saver fund both offering the same tax benefits; the result was that although PPF offers a guaranteed rate of return, over the long term the Tax saver fund provides the opportunity to beat the PPF by over 50% when compared for a tenure from 1996 to 2009 with investments limited to the cap of Rs. 70,000 per month.

Mr. Tejas shah who represented Kotak Mahindra AMC was next to the dais and explained the operations of Mutual funds covering the various nitty-gritty’s involved with Mutual fund investments. Mr. Shah ensured that all the categories of mutual funds such as:

1. 1.       Close ended VS open ended funds
2. 2.       Lump sum VS SIP investing
3. 3.       Liquid Funds
4. 4.       ELSS Schemes
5. 5.       Debt Funds
6. 6.       FMP
7. 7.       MIP
8. 8.       Equity Funds
9. 9.       Sector Specific funds
10. 10.   Hybrid Funds

He also covered how NAV is calculated and how investors should consider the risk profile of MF investments. This was followed with a Q&A session where various doubts of the investors with regards to mutual funds were cleared.

The event was a huge success and we at DENIP would like to thank all the participants, Kotak Mahindra AMC and the interns working at DENIP for ensuring the success of this event.

The DENIP Team -
Nimesh Marfatia, Neha Mehta, Tejas Shah (Kotak AMC), Dewang Mehta, Prakash Kabani, Gaurav Agarwal (Front row left to right)
Ravi Jhawar, Monindro Saha, Steven Fernandes, Ankit Wani, Sanchari Sinha, Vivek Agrawal, Mangesh Mahadik (Back row left to right)
Thanks,

Dewang K. Mehta

DENIP Consultants

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