Dhirendra Kumar hosts a weekly TV programme on Star News where he answers questions related to mutual funds. We have briefly reproduced the transcript here.
Time of programme: 1.30 pm/Sunday
Channel: Star News
Q) What is the difference between growth and dividend reinvestment plan? Which one is a better option?
In terms of returns, no difference.
As far as the tax treatment goes:
- Dividend from any fund is tax-free
- The capital gain from equity funds is tax-free for a minimum investment period of 1-year
- For most investors in equity funds, the dividend reinvestment option may be a superior choice.
Q) I invested Rs 50,000 in each fund -- HDFC Equity, LIC Future
Plus, SBI Taxgain, SBI Magnum Global, SBI Magnum Contra. Should I hold or sell?
You hold good funds. But your portfolio can be better structured.
Q) I invested Rs 50,000 in LIC ULIP and Rs 10,000 in Bajaj Allianz. Was that wise?
Q) I invested Rs 40,000 in Horizon II Pension Plan 1 and Growth II Equity fund. Was that a smart investment?
None of the above are “pure investments”. They are Unit Linked Insurance Plans - an investment combined with insurance in a single package.
In my opinion, ULIP is not a great way to invest for the long-term. They have a relatively higher cost and investors lack flexibility.
Q) I invested in Reliance Long-term Equity Fund, SBI One India
and SBI Contra. What should I expect from these funds?
My expectation will be 50% more return than the available fixed income return over the next 10-years.
Q) I invested in Franklin India Prima Fund. Should I hold or sell?
If you are upset with its ups and downs, sell immediately. Because the fund will continue in this way.
Q) How much average return should I expect on any mutual fund in the period of 2-3 years?
It is tough to guess the return from equity over the next 2-3 years.
Q) I invested Rs 5,000 in Bluechip and Rs 10,000 in Magnum Contra in May 2006. Please tell me what the value will be after a year.
Sorry. But I have no clue.
Q) I invested in SBI Magnum Taxgain, HDFC Tax Saver, Sundaram Select Midcap, SBI Magnum Global, SBI Magnum Contra and Reliance Vision.
What can I say? You have made good choices.
Q) I have three funds from the same fund house and same fund manager. How risky is this?
Diversification helps.
Q) I have a SIP in Reliance Equity Opportunity Fund and a one-time investment in HDFC Top 200 Fund. I expect a return over 20%.
You can expect a handsome return from your investment. But I am not sure about specific numbers.
Q) I invested Rs 1,38,000 in HDFC Top 200 and Equity Growth, Reliance Vision, Sundarama BNP Midcap, and Otimix Multimanager. Any suggestions on my portfolio?
Broadly speaking, you hold good funds and a fund of funds.
But your portfolio does require a closer evaluation.
Q) I invested Rs 20,000 in Tata Equity Management Fund last year. Should I continue?
This fund is focused on guarding downside from an equity portfolio. If you are seeking long-term growth, this is not a good choice.
Q) I want to invest Rs 200,000. Please advice.
Investment selection is primarily based on the time horizon of your investments. Other factors such as age and risk taking ability also have to be considered.
Q) Name a fund I can invest in for my children's education.
If your children are very young, then invest regularly in an equity fund. Begin to gradually sell as you near the deadline.
If you need the money few years from now, go for a bank deposit.
Q) Should I hold or sell - Principal Service and Infrastructure, Can Infrastructure and Can-emerging Equities?
The three funds, though relatively new, look promising. But their portfolios overlap substantially.
This article was originally published on May 28, 2007.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
