|
How to Start Trading Search on Stock Companies ELSS Scheme Dematerialsation Women in Stockmarket History of stockmarket Investment Opportunities for NRI Currencies Delivery instruction slips Demat securities Derivatives Trends in stock market Online trading in Stock-Market Depository BSE-and-NSE Upper circuit value Unpredictable stock market Tips for investing in stock market Attraction of Indian stock market Stock Brokers Stock market the mind game Stock market information Stock exchange and you scenario of indian stock market Corporate Benefits Delivery Instruction Slips Demat Securities Nomination Pledging Rematerialisation Trading and Settlement Transaction Statement Depository and Particpants DP and Stock Broker DP Account Rights and Obligations Derivatives Options Risk Management Settlement Trading Advantages of Trading Stock Glossary Bonus Shares Dabba Trading Global Depository Receiptst Net Market Value Splitting and Consolidation Trade for Trade Mutual Funds How to Make Money From Your Fund Features of Mutual Funds Benefits of Investing Pros and Cons Investment Objective Types of Mutual Funds Primary Market Book Building Investors Guide for IPOs Issue Process Listing Stock Brokers Rules and Regulations 
 
|
|
|
ELSS Scheme- which one to chooseSchemes available in the market Today, there are as many as 17 ELSS schemes of different mutual funds available in the market to choose from. All the big players like HDFC, SBI, ICICI, Sundaram have their own ELSS schemes catering to different classes of investors. The point to remember is that not all the schemes have same risk return matrix. In other words they have different risk and return parameters and therefore it is imperative that you do your own analysis whether you are risk averse and conservative or you can take risk in your investment profile.
Risk parameters can be judged from the point of view of investments made by the schemes in various companies. For example during the period 2000-01 before the tech meltdown, a number of aggressive ELSS has invested heavily in various technology companies, a few of which are not even worth any returns now, but were zooming during those periods. After the meltdown, many such schemes gave negative returns to the extent of 25%. While other non aggressive and conservative funds kept invested in A group and index stocks, which generated decent returns over a long term horizon. As ELSS is a long term investment decision (with a lock in period of 3 years), it is important that risk return profile of the scheme with your own is matched to avoid disappointment in future. During present times, an analysis of the investment portfolio of funds in terms of small cap companies, mid cap companies and large cap ones can give you some idea about the risk profile of the fund. If fund is heavy into small cap and mid cap investment, it is aggressive and can give you better than the market returns. This is because a number of good small cap and mid cap companies have still not rallied to the extent large cap have done in recent past. So you can expect much better returns. However risk is also high in these stocks as in case of meltdown and in overall sentiments, these stocks are the ones which are hit the most. Needless to say that these factors should be a part of your overall decision making.
Another decision to make is whether you would like to make a one time investment or systematic investment plan (SIP), where you make investment every month irrespective of the market movements. This can give you advantages of averaging out your costs of investments. This is all the more important if your investing in high risk schemes as in that case, the underlying volatilities in such stocks is relatively high and you may benefit out of sudden fall in prices of those stocks if you make regular investment at frequent intervals. This is corroborated by studies showing that on an average, schemes investing in volatile stocks have generated better returns on SIP rather than lumpsum investment plans by as much as 15%. ELSS schemes provide fund manager to have a lone term view of investment due to locking period. Hence portfolio churning to generate short term returns is not that high. You too can benefit by investing in these schemes by careful planning and analysis. It is a good investment avenue especially for retail investors having a long term view of the market. |
Copyright © Site Owned By Vcode Infotech, All Rights Reserved |