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 The mix of equity and debt makes balanced funds. balanced works well beginner investor

Why balanced fund work well for investor? Sensex has given a 2.74% annualized return amidst bouts of volatility

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MUTUAL FUND

 According to Morningstar , balanced fund ,as a category delivered annualized of 5.02%, for 5 years ending dec 31,2011 period whereas large cap equity funds (3.16%) Small and mid cap equity funds (2.97%) Balanced funds are in India for two decade now Typically, these funds invest 65-75% in equity and debt

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MUTUAL FUND

 In 2008 balanced fund lost 37% against a fall of 53.08% in large cap and 59% incase of mid and small cap. a similar performance was recorded in 2011 , When balanced fund lost 13.47%,whereas largecap diversified equity fund lost 24.33%and 24.99% incase of mid and small cap funds.

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 Most investor have uneasy relationship with volatility in the stock market . Many try to sell their stock even at a loss to get out of the market A balanced fund offer some comfort to such investor

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 Standard deviation a statistical measure of volatility . Standard deviation for balanced funds in the last five years ending 31, 2011 stood at 20.47. Lower standard deviation less the volatility
large-cap diversified equity 29.65%

mid and small cap funds

32.46%

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MUTUAL FUND

10year 5year 3year 1 year open ended large cap funds 10year 5year 3year 1 year open ended balanced funds 10year 5year 3year 1 year OPEN ENDED SMALL AND -40 3/21/2012 -20 0
MUTUAL FUND

standard deviation returns%

20

40

Funds

rating

returns% 1 year -13.3 -17.46 -11.80 -8.56 -15.04

3 year 24.86 18.61 19.96 17.86 16.61

5 year 10.58 10.89 9.96 8.74 8.43

10 year 25.48 na 20.10 20.29 20.30

Hdfc prudence fund reliance regular saving fund Birla sun life 95 canara robeco balanced DSPBR balanced

***** ***** **** **** ****

hdfc balanced
tata balanced

****
****

-7.70
-10.33

24.34
20.08

9.75
9.05

18.22
20.75

Data as on jan 05,2011;return data for one year is absolute and rest annualised
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scheme

Benchmarked against the crisil balanced fund index launch date fund benchmark out perform return(since 1/4/2002) 30.57% 25.94% 13.45% 16.35% 16.35% 16.35% outperform outperform underform 27-may -99 15-sep-03

hdfc prudence 1 feb -94 DSP blackrock baroda pioneer balance escorts opportunities kotak balance reliance RSF balanced jm balanced
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21-mar-01 29-nov-99 9-jun-05 7- apr-95

11.64% 11.33% 10.75% 5.01%

MUTUAL FUND

16.35% 16.35% 16.35% 16.35%

underform underperform underperform undeperrform

9

 Fund houses based on five-year performance of their schemes. While staying focused on performance, rankings are based on three other factorsdownside risk, frequency of new fund offers and the size of equity assets Downside risk: We believe that when investors buy into an equity scheme, they assume that there would be an upside. What they need to be concerned about is losses in a falling market. The Sortino ratio isolates the downward volatility of a scheme. The higher the Sortino ratio, the lower is the risk of large losses occurring with a given portfolio

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10

 Frequency of NFOs: This factor is used negatively. In our model, the more numerous the NFOs during a rising market, the lower is the rank. This is because NFOs in a rising market are essentially an exercise in asset-gathering and therefore detrimental to investors interest. Asset size: This is a debatable factor. We recognise that size alone has nothing to do with performance and should not be a factor in making investment decisions. But the reason we bring in equity asset size as a measure of performance is that, over the years, a scheme that does various critical things right, would have growing asset size. If it does most things wrong, its assets would shrink

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 How equities investment will be effected: Exemption on long term capital gains continuing However ELSS Mutual Fund schemes tax exemption will go and they will be treated at par with other schemes in market with no tax exemption. Investors who are looking for Mutual Funds for tax exemption should consider this factor while investing Debt Funds and Other Non Equity Schemes Long term gains to be taxed as income

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12

do you invest in share

no 18%

yes 82%

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13

Do you invest in mutual fund (MFs)?

no 4%

yes 96%

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14

IF yes, are your decision based on?

800% 700% 600% 500% 400% 300% 200% 100% 0%

MUTUAL FUND

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15

IF you invest in MFs, how do you do so?

800

700
600 500 400

300
200 100 0 A lumpsum sip(systematic any other system investment plan)
MUTUAL FUND

not applicable

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16

In order of preference,which asset class do you think will deliver higher long term returns
50 45 40 35 30 25 20 15 10 5 0 mutual bank FD fund
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In order of preference,which asset class do you think will deliver higher long term returns

gold

ppf

property

MUTUAL FUND

17

Do you think mutual fund (MFs) is a tool for long term wealth creation??
no 4%

8%

yes 88%

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MUTUAL FUND

18

How long do you hold your mutual fund (MFs)?

more than a year less than a year not applicable

2%

8%

90%

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19

Are you satisfied with the service of your mutual fund company (MFs)?

can't say 15%

No 19%
yes 66%

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20

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22

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25

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