If you had invested in a tax-saving scheme a couple of years ago, there are chances that a large part of your hard earned money might have flowed out of the drain courtesy your inefficient fund managers.
More than 60 per cent of tax-saving schemes available in India for more than two years have been showing negative returns. The average return given by these tax savings mutual funds in the past two years has been -2.25 per cent as on August 10, 2009. The worst performing funds over the two-year period are Fortis Tax Advantage Plan, Principle Tax Savings and ING Tax Savings, each of which has shown a drop of over 28 per cent in the past two years.
So if you had invested Rs 100,000 in 2007 there are chances that you are left with just Rs 72,000 today. If you go by what the fund managers promised you two years back (a minimum of 30 per cent appreciation in three years,that is Rs 130,000), they need to generate Rs 58,000 in the next one year, that is over 80 per cent return in 2009-10.
Over the past one year, the average return of these funds has been –1.05 per cent. Out of the 30 tax savings schemes that have been in existence for over one year, 15 have given negative returns, the worst being JM Tax Gain, which has given a return of –33 per cent in past one year. In the one-year period, Canara Robeco has given the maximum return of over 22 per cent.
Of the 10 fund that gave positive returns in the past two years, the average return has been around 5.3 per cent, which is less than the two-year annualised return of 7 per cent given by fixed deposit schemes of banks.
The best performing funds during the two-year period are Taurus Tax Shield with a return of 15 per cent in past two years, Sundaram BNP Paribas with a return of around 10 per cent and Canara Robeco Equity Tax Saver with 9 per cent return.
Tax-saving mutual fund schemes are diversified equity schemes with a three-year lock-in period compared with five-year lock-in period of bank fixed deposit schemes that offer tax benefits and six-year lock-in of National Savings Certificate (NSC).
Experts says the returns on equity funds depend on market conditions. In the past two year, the Nifty has given a return of 1.18 per cent while the Sensex has given a return of 0.47 per cent. While some funds outperformed the indices, a majority of them underperformed depending on their investment strategies. Fund with exposure to large-cap funds may have done better than those with mid- and small-cap funds.
In the April-June quarter, due to positive market conditions, fund houses have given very high returns, thus making a sort of recovery from the slump that they saw in between January 2008 and March 2009.
The reason for investors’ travails could be overambitious returns target set by fund managers, as the managing director of a large fund house puts it, “Tax schemes of fund houses often invest in mid-cap stocks because of the formers’ medium-term orientation. During the past two years, the return on mid-cap stocks has been either low or negative, leading to negative average return of tax-saving funds.”
In the past two years, the BSE Mid-cap and Small-cap indices have given a return of –9.5 per cent and –12.35 per cent respectively.
So, while you may have saved some money as tax but you may have lost a bigger amount to inefficient fund managers.
Saturday, September 5, 2009
The Transformation
The Transformation
At this juncture of my career, when I have spent a good two decades writing, rewriting and editing news copies, I stand here looking for change. After being in a profession which demands a big NOSE for news and on-your-toe urgency to meet deadlines, there’s hardly any skills left in you or for that matter acquired by you than to just pick holes in whatever others do.
Always treading (at least presented to do so) on a moral high ground, I am ready to join the army of ‘commoners’ who are constantly under the watch of the fourth estate. But will it be so easy to pass the test to the House of Commons?
Well, to be a journalist is very much like being in politics. Look for holes, potholes, if there ain’t enough dig some or make others to dig some, so that you have enough space (read depth) for manipulation, winning favours, accolade and sympathy. Yeah, manipulation! That’s one hell of a tool for all human kind to turn mediocrity into stardom, and politicians as well as journalists are quite adept in using it in their favour. The case becomes all the more intriguing when one is pitted against the other.
So, when X politician made a politically correct statement to Y reporter on a very crucial issue, the latter, out of habit, juxtaposed the comment with a piece of googled information that made it sound so apolitically incorrect statement. The reporter could easily wash his hands off the ensuing controversy saying that he put X’s comments in exactly his words and therefore, Mr X just cannot complain.
Mr X would have his day also. So, he deliberately leaks a very sensitive piece of information about his colleague and rival to media, stirring the hornet’s nest. The rival is doomed by the media expose even as Mr X chuckles satisfyingly.
This is called mutualism. You scratch my back I will scratch yours. You play to my gallery I will play to yours. But while a journalist is only scanned by his bosses or peers, the commoners, thanks to the former, are on the pubic crosshair for most of the time. One step too right or too left and you are off the tight rope. For journalists, there may be too many strings attached to their jobs, but at least, they don’t have to walk the tight rope.
And I was talking about passing the test to become a commoner. Being a politician, like being a journalist, you don’t need to have a particular set of skills taught in technical university or a business school. The only condition required is you operate in a democracy. The advantage, however, of being in journalism is that a very few people would compete with you as it is the least remunerative professions in the world. However, politics is different. You make money and you bask in power. So the competition is tough. People of all hues, creed and caste are there to share with you their hopes, desires and desperation. If you are a choker you may have no space to suffocate and if you are a winner, there’s no podium to finish at. There’s only the dais that you have to share with so many like you.
It is tough and yet I am ready to give it a go. I have played with words all my life, and all I have to do now is to play with words in a new capacity.
At this juncture of my career, when I have spent a good two decades writing, rewriting and editing news copies, I stand here looking for change. After being in a profession which demands a big NOSE for news and on-your-toe urgency to meet deadlines, there’s hardly any skills left in you or for that matter acquired by you than to just pick holes in whatever others do.
Always treading (at least presented to do so) on a moral high ground, I am ready to join the army of ‘commoners’ who are constantly under the watch of the fourth estate. But will it be so easy to pass the test to the House of Commons?
Well, to be a journalist is very much like being in politics. Look for holes, potholes, if there ain’t enough dig some or make others to dig some, so that you have enough space (read depth) for manipulation, winning favours, accolade and sympathy. Yeah, manipulation! That’s one hell of a tool for all human kind to turn mediocrity into stardom, and politicians as well as journalists are quite adept in using it in their favour. The case becomes all the more intriguing when one is pitted against the other.
So, when X politician made a politically correct statement to Y reporter on a very crucial issue, the latter, out of habit, juxtaposed the comment with a piece of googled information that made it sound so apolitically incorrect statement. The reporter could easily wash his hands off the ensuing controversy saying that he put X’s comments in exactly his words and therefore, Mr X just cannot complain.
Mr X would have his day also. So, he deliberately leaks a very sensitive piece of information about his colleague and rival to media, stirring the hornet’s nest. The rival is doomed by the media expose even as Mr X chuckles satisfyingly.
This is called mutualism. You scratch my back I will scratch yours. You play to my gallery I will play to yours. But while a journalist is only scanned by his bosses or peers, the commoners, thanks to the former, are on the pubic crosshair for most of the time. One step too right or too left and you are off the tight rope. For journalists, there may be too many strings attached to their jobs, but at least, they don’t have to walk the tight rope.
And I was talking about passing the test to become a commoner. Being a politician, like being a journalist, you don’t need to have a particular set of skills taught in technical university or a business school. The only condition required is you operate in a democracy. The advantage, however, of being in journalism is that a very few people would compete with you as it is the least remunerative professions in the world. However, politics is different. You make money and you bask in power. So the competition is tough. People of all hues, creed and caste are there to share with you their hopes, desires and desperation. If you are a choker you may have no space to suffocate and if you are a winner, there’s no podium to finish at. There’s only the dais that you have to share with so many like you.
It is tough and yet I am ready to give it a go. I have played with words all my life, and all I have to do now is to play with words in a new capacity.
Subscribe to:
Comments (Atom)
