CAPITAL LETTER

Volume 2 March
March 7,
7, 2010
2010 Issue
Issue 33
Gr ee t i ng s fr om F u nd s I n dia !
Budget behind us, Taxes ahead...
My name is Srikanth; I’m a director at FundsIndia. Thanks for taking the time out to
read this March 2010 our monthly news letter.
Hope you all had a good Budget Day! At FundsIndia, we followed the pronouncements
of the finance minister with interest – we had to write an article on short deadline for
MoneyControl about the budget and its impact on investors in the country. We
thought it was a moderately good budget providing some relief for tax payer in an in-
flationary climate.

We also thought that the governments commitment to implementing the Direct Tax Code in its
scheduled time-frame of April 1, 2011 was a positive. The DTC has come under a cloud of doubt
recently, and it was good that the FM stood up and clarified his government’s resolve about it.

Speaking of which, with all due apologies to Shelley, if budget season is here, can the tax season
be far behind? The end of the financial year is upon us, and with it the annual chore of getting the
financials in order to file the IT returns will commence.

Good news on this front - At FundsIndia, we are putting together a tax-preparation service in
partnership with a like-minded financial services platform. We will be coming out with the details
soon, but look forward to an innovative, easy-to-use, cost-effective way of preparing your tax re-
turns on our platform soon. When it is all set and ready to launch, we will make a noise about it
and you will hear :-)
Happy Investing!

Top MF schemes in FundsIndia (for February 2010)

Equity schemes Debt Schemes

HDFC Top 200 Birla Sunlife Short Term—Ret(G)

Reliance Regular Savings Equity (G) UTI FRF—ST (G)

Birla Sunlife Frontline Equity-A (G) Templeton India ST Income (G)

SBI Magnum Contra (G) HDFC High Interest—STP (G)

Sundaram BNPP Select Midcap (G) Reliance FRF (G)

Daily and Weekly Systematic Transfer Plans!

FundsIndia recently launched the facility to do daily and weekly systematic transfers within a mutual fund
folio. Our investors have been asking for this feature, and we are happy to oblige. As always, there will be
no limits on the day of week or particular dates for doing the transfers. The criteria for minimum amount
of transfer will be the same as that of the scheme.

Disclaimer: Mutual Fund Investments are subject to market risks. Please read all scheme related documents carefully before investing.
 Fea tur ed Fund and Spotlight Scheme
Reliance Mutual Funds
Reliance Mutual Fund (RMF) is India’s leading mutual fund company in terms of asset size. Its average assets under
management is Rs. 1.15 lakh crores, and it has over 75 lakh folios in its books. It is part of the Reliance-Anil Dhirub-
hai Ambani Group of companies.

The AMC was incorporated in 1995 and has won several

awards over the years, and has been rated CRISIL Fund
House Level 1, the highest rating.

Recently it won the CNBC TV18—CRISIL Mutual Fund of the year award for 2009, as well as the top ranking at the
Money Life magazine rating of mutual fund companies.

Today the company has over a two dozen equity funds, an 29 debt funds, and two balanced funds on offer.

Popular schemes Launched By Reliance MF

1. Reliance Regular Savings—Equity – An open ended equity scheme (large-cap)

2. Reliance Regular Savings Balanced – An open ended equity-oriented balanced scheme
3. Reliance MIP – A open-ended hybrid monthly income scheme

About Reliance Regular Savings—Equity,

the premier equity scheme from Reliance MF

Investment Objective: The scheme aims to generate consistent returns by actively investing in equity or equity
related securities. It will invest atleast 80 per cent of its assets in equity and equity related securities. Upto 20 per
cent of its assets will be invested in debt and money market instruments with an average maturity of 5 to10 years.

FundsIndia Commentary:
“In its short history, Reliance Regular Savings Equity has been subject to frequent fund manager changes, but has
been fairly consistent in its performance. Launched in 2005, it impressed the very next year. Though it was on a high
in 2007 with a return of 93 per cent, way ahead of the category average, it did not fall off the cliff when markets
plummeted in 2008.
“I may take a strong sector view but I don’t get aggressive with individual stock bets,” Omprakash said. Over the past
one year, allocation to a single stock rarely crossed 5 per cent, a significant change from its earlier days. With the
highest Sharpe Ratio in its category, investors here are a satisfied lot.”

(sourced from the research desk of valueresearchonline.com)

Investment Options: Growth, Dividend Payout & Dividend Re-investment

Minimum Investment: Rs. 500/- and Rs. 1/- thereafter
Load Structure:
Entry Load – Not Applicable
Exit Load – If the units are redeemed / switched-out within 1 yr from the date of allotment - 1.0%
If the units are redeemed / switched-out after 1 yr from the date of allotment - NIL
Date of Inception: May, 2005
All Reliance mutual fund schemes are available for investment at www.FundsIndia.com

Disclaimer: Mutual Fund Investments are subject to market risks. Please read all scheme related documents carefully before investing.
 Breaking up the Budget
Dhirendra Kumar

On the day of the Union Budget, in the hours after the Budget speech was over, I was
engaged in an interesting exercise in estimating its impact on various mutual funds.
The idea was to select a representative sample of funds from across different categories
which would be impacted by the Budget. When the Budget came out, the process
turned out to be more complex than we had estimated it would. It wasn't as if the
Budget would not have any impact on any funds - far from it. The stock markets cer-
tainly didn't think so, and nor did the bond markets.

What made the exercise more complex than I'd expected was the selection of a set of mutual funds that
would be impacted more than others. The slope of the impact wasn't flat, but it was very broad. To my
mind, this reveals something about about how the budget process has evolved; and most importantly,
about the process of choosing good mutual fund investments.

The time when the Budget could make or break individual companies or whole sectors of the economy are
long gone. There were companies that will be found to have done better as a result of something that the
Budget did and there would be mutual funds that would do better. But these would not be a direct impact
of something Mr. Pranab Mukherjee said. The Budget would create conditions that some businesses
would be able to exploit better than others. Similarly, there would be some investment managers who
would understand these differentials better than others and thereby make more money, but that is a sec-
ondary impact. There would be other business leaders and investment managers who would take the same
inputs and not be able to create the same outputs.

What I'm saying is that basically, there is no longer a budget impact, rather it is derived from businesses
which use the new conditions created to make one. This leaves the investors in an interesting position.
There is a type of investing where the impact of the budget needs to be understood instantly, but that's the
type that involves making a trade at 11:30 a.m. and reversing it at 3 p.m. However, investing is not even
the right word to use for that activity.

On a more tempered time-scale, especially for mutual fund investors, benefiting from the impact of the
budget - this Budget, or any other - is more about sticking to the same core values that one would go by
anyway. Sensible and goal-oriented mutual fund investing is not about following fashions and events. It's
about sticking to a small number of funds which are genuinely diversified and are not limited to any sector
or theme or situation. It's also about investing gradually and not trying to time the market or a particular
event. And it's about businesses that benefit from the general growth and prosperity over long term.

— Syndicated from Value Research Online —

Disclaimer: Mutual Fund Investments are subject to market risks. Please read all scheme related documents carefully before investing.
 How to select a good mutual fund—Part 1 of 3
P.V. Subhramanyam

Selecting a mutual fund for investing is a very important step indeed. It is not just important it is crucial.
However it is the second step, not the first.

It is surprising at the number of people I meet or hear from – they all have same questions. So when they
ask me ‘How do we select a mutual fund?’ for me it is an amusing question. So like all self respecting advi-
sors I start with the dreaded line- “Well, it depends…..’

Then I ask them – “What are your financial goals, if any?”. Now only if you have big long term goals does
the choice of a mutual fund really matter. If you are investing for a short period of time – you are investing
in say a liquid fund. It hardly matters in which liquid fund you invest – the performance gap between two
liquid funds is not so high. Choose the liquid fund with a high AUM (assets under management) – and one
which gives good service in terms of redemption on the phone or net, or such considerations.

However if you are looking for a longer term investment – which means you are looking to be invested for
at least 8 to 10 years, you are looking to invest in equity mutual funds. This article is aimed at selecting a
good equity mutual fund for a long term.

1. The most important first step is to have an investment goal. A fantastic fund selection done without hav-
ing an investment goal is completely useless. You should know the reason for your investment, how long
you can be in the investment, at what stage you will re-allocate, etc. before you make your first investment.

2. Your focus will lead to the correct asset allocation – the very important factor which will decide how
much money you will put into an equity fund.

3. Do your homework: Buy large cap well diversified good quality funds. Do not buy opportunities funds,
international funds, contra funds as a staple part of your portfolio.

4. All funds in India are no load funds – which means there is no sales cost. This is good and it means all
your money gets invested. For a large cap equity fund, it may not make too much sense to pay somebody
to pick the fund for you, try doing it yourself.
(to be continued…)
(Reprinted with permission from www.subramoney.com)
17, RMG Complex, Phone: 044-4344 3100
TVK Industrial Estate, E-mail: contact@fundsindia.com
Guindy, Chennai 600032 WWW.FUNDSINDIA.COM
Tamil Nadu, India

© Wealth India Financial Services Pvt. Ltd, 2009

Disclaimer: Mutual Fund Investments are subject to market risks. Please read all scheme related documents carefully before investing.