Ask ET Mutual Funds: Am I investing in good funds?

mid cap1


I am 25 years old and have been investing since the last two years. For tax-saving purpose, I have invested a lump sum of Rs 15,000 in Tata India Tax Savings Fund, Axis Long Term Equity Fund, Franklin India Taxsheild Fund and Reliance Tax Saver Fund. Also, I have four SIPs of Rs 1,500 per month in SBI Bluechip Fund, Franklin India Smaller Companies Fund, ICICI Prudential Value Discovery Fund and Canara Robeco Emerging Equities Fund. I am a central government employee and I have NPS.Are the current funds good or should I change? — Arnab Das

Chirag Gokani, founder and principal advisor, Wealthwiz Advisors, responds:

You have chosen good funds across market capitalisation for your monthly investments. However, your portfolio is tilted towards mid and small caps. Since, you have not mentioned your preferred investment horizon, I assume that you are investing for a long term (5-7 years or more), since equit ..



‘Mind-Blowing’ U.S. Is the Future for One $60 Billion Money Manager

The $60 billion Scottish fund manager owned by Aegon NV is shrugging off talk of a rise in protectionism under U.S. President Donald Trump to focus on the “mind-blowing” opportunities of the world’s biggest economy.

“The U.S. could be the size of the U.K. for us,” said Martin Davis, chief executive officer of Edinburgh-based Kames Capital, which has about 80 percent of its assets in Britain. “I’m not calling time on the U.K. at all, but the U.S. is a huge market.”

It’s also an untapped market for the firm, which has virtually no assets under management in the U.S. and is only just starting to offer investment products there. Trump’s ascendancy provides a timely boost for Kames’s ambitions, Davis said, because it’s likely to spur the economy.

“Most people view it as not good for global markets but good for U.S. markets,” Davis said in an interview at Kames’s head office in the Scottish capital. “We’ve got to see what measures he manages to pull off around tax and stimulus.”

Kames has been wholly owned by Dutch insurer Aegon since 1998 and is one of Scotland’s biggest money managers behind the soon-to-be-merged Aberdeen Asset Management Plc and Standard Life Plc.

Getting Squeezed

Its plans for expansion in the U.S. come as European asset managers suffer outflows and clients flock to better-performing passive funds offered by the likes of Vanguard Group Inc. and BlackRock Inc. At the same time, regulations such as Europe’s Mifid II rules are pushing up costs, encouraging firms to bulk up to stay competitive.

Davis said that Kames will grow its U.S. business organically rather than through mergers and acquisitions. The firm’s relatively defensive investment approach, he said, makes it a “specialist in taking out market volatility” and means it will prosper if Trump’s “America first” rhetoric sparks market turbulence.

The active manager concentrates on strategies that deliver regular income and mitigate volatility, though that means it can lose out on market rallies when investors want to “ride the wave,” Davis said. Kames’s Diversified Monthly Income Fundhas gained about 26 percent including reinvested income since it started in February 2014, compared with about 23 percent for the FTSE 100 in the same period.

“We feel our strategies in the U.S. will be well-suited because of the volatility that we’re likely to see over the next couple of years,” said Davis, who’s led Kames since 2013 and was previously at a unit of Zurich Insurance Group AG. “For us, the opportunity isn’t doing a bunch of new stuff, the opportunity is taking what we are really good at and finding new customers.”



Careers Clinic: Am I too different for commercials?

John Byrne. Photo: Catherine Usher


I trained in physical theatre and the work I have most enjoyed since graduating is very much the kind of show where I get the chance to use my full range of skills.

I recently signed with an agent who saw me in one of those shows, and while they are putting me up for similar roles, the actual castings they have got so far tend to be commercials.

I’ve been happy to go for these and I put the same prep into them that I would into a drama piece, even if it’s just a minor role selling insurance or something.

I’m getting a bit frustrated by the cattle-call nature of the auditions. Usually, you join a queue of up to 50 people and you literally get two minutes or less to show what you can do.

I always try to bring a different or offbeat interpretation to make my take on the character stand out, but I have never had a callback.

It’s getting frustrating for me, and, I would imagine, for my agent, too. Am I approaching this wrong?

JOHN BYRNE’S ADVIVE I once spoke with an up-and-coming singer who landed a prestigious and lucrative gig as a backing vocalist for a major recording star.

Unfortunately, she was let go after the first rehearsal. She couldn’t understand why. Not only had she got the widest vocal range of anybody on the session, she had even “out-sung the lead” on several occasions. I had to gently explain that most backing vocalists have had to work with leads they could easily out-sing. The fact that they instead use their voices to make sure the lead sounds good is precisely why they continue to be employed as backing singers.

No matter how much talent a performer has, if there is a secret to turning that talent into gainful employment, it is knowing what aspect of that talent to apply to the job at hand. There are awards for ‘best supporting actor’, but none for ‘best upstaging actor’, which would suggest that a similar principal applies in the acting world. This is especially true of commercials.

By the time most commercial castings arrive in the actor or agent’s inbox there have usually been quite a few cooks working on the broth.

The vision of the scriptwriter and the director are certainly an important factor, just as they would be in any other production, but the casting director is often also having to juggle the views of the advertising agency, the owner of the brand and even the cultural norms of whatever territory the ad will be broadcast in.

The need to leverage the law of averages to find somebody who fits all those criteria is the reason why commercial castings tend to be more crowded than others. It’s also the reason why, like it or not, the casting director needs to see actors who fit the brief fairly tightly so they can make a quick decision before moving on to the next applicant.

It follows that decisions will usually be based much more on your most obvious general casting types rather than any nuances or other interpretations you can bring to the part.

That’s not true of every commercial, of course – sometimes you will be deliberately encouraged to improvise, or to try something a different way. However, I would be inclined to let that instruction come from the other side of the casting table rather than taking it upon yourself to change the brief.

You can, of course, decide that you don’t want to do commercial castings at all, but that can be a slippery slope. Just like somebody waiting for the perfect relationship, an actor who will only show up for the perfect casting is likely to spend a lot of time waiting by the phone.


Customers’ growth drives ING’s earnings

Growth in customer numbers helped drive a 10 per cent increase in underlying earnings for 2016 for ING Australia.

However, at the same time, the company reported a statutory net profit after tax of $295 million which was a six per cent drop, counting year-on-year, on account of one-off loan portfolio and liquid asset sales in the previous period.

However, the company managed to increase the total number of customers by 163,000 new clients.

ING Australia’s chief executive, Uday Sareen, also stressed that the number of primary bank customers increased by 36 per cent, driven by a record take up of the Orange Everyday payment account.

“The Orange Everyday payment account grew 39 per cent, breaking through the 500,000 mark,” he said.

“More than half of our new customers came from the recommendations of existing customers. We are now Australia’s fifth largest retail bank in both household balances and mortgages.

Mr Sareen said the highlight of the loans growth was an increase of more than 12 per cent for owner occupier home loans, which comprised 77 per cent of ING’s retail mortgage portfolio.

He also said ING would continue to develop more products and services as part of the bank’s focused primary bank strategy.


Honest mistakes by young scientists shouldn’t doom their careers

The years spent as a grad student and postdoc are among the most trying times for any scientist. The pressure to publish is intense, as young researchers vie for the few jobs at the heads of academic labs.

Those high stakes and the pressure-cooker atmosphere make mistakes — and sometimes the willingness to cut corners and commit fraud — more likely.

Unfortunately, both can be career killers, if two recent cases are taken as examples. And although fraudsters aren’t welcome, the loss of the innocent overwhelmed is taking a toll on science.

Case one: Sergio Gonzalez, a postdoctoral researcher at the Institute for Neurosciences of Montpellier, France. He was hitting the job market in 2015, and he knew he needed a paper in a top journal to stand out in that market.

So he was relieved — elated, perhaps — when editors at the Journal of Clinical Investigation, one of the world’s most prestigious journals, told him they’d be publishing one of his papers. Having an article accepted there would carry a lot of weight on a job application — and in France’s system, success on that application meant a permanent job.

But the paper was flawed — deeply, it turns out. First, a commenter on PubPeer, an anonymous post-publication peer review site, flagged a suspicious-looking figure. Next came a correction in the journal, more comments on PubPeer, an expression of concern from the editors, an institutional review of Gonzalez’s work, and finally, this month, a retraction. Along the way, Gonzalez lost the opportunity for the job he so wanted.

Around that same time, across the Atlantic, another grad student was also on the academic job market. Michael LaCour was a promising graduate student in political science at the University of California, Los Angeles, who managed to publish a headline-grabbing paper in Science, one of the world’s top journals, about attitudes toward gay marriage. Soon after that, he landed a job at Princeton. But then his paper — and academic career — unraveled after two other graduate students at different institutions starting asking questions that would eventually make it clear LaCour had made up the data. The paper was retracted — and so was his job offer.

LaCour’s story and Gonzalez’s take different paths from there. While LaCour, it seems, faked his data, through it all, Gonzalez and his supervisor, Nicolas Tricaud, maintained that the postdoc was innocent of misconduct. Any errors, Tricaud insisted, were the result of Gonzalez’s haste and stress over his impending job search and his desire to land a plum spot.

The university seemed to agree that Gonzalez was honest but sloppy. According to the JCI’s retraction notice: “The institutional review found no evidence of intention to falsify results and concluded that errors were made due to negligence during the assembly of figures. The institutional review panel did not question in any way the authenticity of the published results.”

We may feel relieved that LaCour seems unlikely to return to the ivory tower. But the loss of Gonzalez, who did not win a coveted spot in a laboratory, seems by all accounts to have been a blow to science. Tricaud says the budding researcher has dropped out of academia — a shame considering his willingness to “work like hell” on the project.

It’s not just France where postdocs feel this pressure. In the US, only about 15 percent of postdocs can expect to land faculty jobs, according to one estimate. Meanwhile, the rate of unemployment among this group jumped from 4 percent in 2008 to 10 percent in 2012.

Part of the problem is that academic mentors tend to emphasize careers in academia, rather than all of the other doors a PhD can open. So when someone like Gonzalez is shut out of the academy, they feel the failure even more acutely. One solution would be for such mentors to embrace so-called “alternative careers,” whether in industry, public service, or elsewhere — which aren’t really “alternative” anymore, given that most PhDs end up in them.

But if senior faculty and administrators don’t want to drive young scientists from the field — even the honest ones — they’d best figure out a way to let publish or perish itself perish.


The Political Problems Facing Trump’s Economic Plan

The president outlined a three-part agenda in his Tuesday address that divides Republicans and disadvantages his voter base.

In his first address to a joint session of Congress, President Trump outlined a three-part economic plan. First, he called for an increase in military spending—his budget would reportedly raise it by about 10 percent, or $54 billion, while cutting similar amounts from agencies including the State Department and the Environmental Protection Agency. Second, he called on Congress to repeal and replace the Affordable Care Act. Third, he reiterated his support for tax reform, which, if it follows his previous proposals, would cut taxes by almost $10 trillion, with the benefits largely accruing to corporations and the rich.

Together, these three proposals would represent a dramatic shift away from the policies of the Obama administration: from diplomacy to weaponry, from environmental protection to national-border protection, from public-health spending to private health spending, from eight years of favoring redistribution to a period of falling taxes on the rich, and from a term of falling deficits to the re-emergence of large deficits.

On paper, Trump’s economic policy looks like a profound re-imagination of the government’s role in American life. But in political terms, each leg of this three-legged stool is wobbly.

First, the cuts to agencies like the State Department have riled Republicans; Senator Lindsay Graham has called the White House budget “dead on arrival.” Second, repealing Obamacare sounds easy, but Republicans have struggled to settle on any plan to replace the ACA, or find the votes to repeal it without an immediate replacement.

Third, passing major tax reform is like permanently deleting social media or eating just one potato chip—easy to talk about, nearly impossible to accomplish. An easier lift would be a straightforward tax cut, akin to the ones that George W. Bush signed.

But even Bush-style tax cuts will be awkward politics without any budget cuts to accompany them, since they will immediately expand the deficit. Tea Party Republicans, who stormed into office on promises to reduce the debt, may have to cast their first major vote under Trump for a tax cut that would do the opposite. (The Trump administration may “dynamically” score the plan to be revenue-neutral, relying on optimistic projections of growth to balance things out; the Congressional Budget Office has already signaled that it’s unlikely to go along with that.)

The upshot is that governance is hard, even when your party controls everything. Republican leaders like Senator John Thune and House Speaker Paul Ryan want entitlement reform, which Trump has no interest in signing. Trump wants to eviscerate the State Department and foreign aid, which Republican senators have no interest in doing. Republicans say they want cheaper health care and broader insurance coverage, but repealing Obamacare would make insurance more expensive and less available for many middle- and working-class families.

As a result, Republicans stand divided in unified government.

So, what could happen, besides nothing? A plausible path forward would include a modest tax cut combined with modest budget cuts outside of defense, Medicare, and Social Security. That leaves other safety-net programs vulnerable, like housing assistance and refundable tax credits for the poor; science and medical research; and diplomacy and foreign aid.

Several years ago, Ezra Klein quipped that the federal government is an insurance company with a standing army. It was an illuminating summary of an institution whose spending is concentrated on health insurance, retirement insurance, and military spending. But the metaphor was never supposed to be taken as prescriptive. The most plausible path forward for the White House and the Republican Congress, though, would leave little room for the federal government to do anything except provide health and retirement insurance to senior citizens and oversee an ever-growing military.

It would amount to a reshuffling of post-tax income from households near the poverty line to households above the millionaire line. Medicaid, CHIP, ACA subsidies, and other safety-net programs to protect lower-income Americans would be sacrificed in favor  of “individual freedom” and “national security” to pay for a tax cut that disproportionately benefits the richest 1 percent. And that’s if they manage to pass anything at all.


RadioShack files for bankruptcy for second time in 2 years

A RadioShack location going out of business in Laguna Hills, California.

Scott Mlyn | CNBC
A RadioShack location going out of business in Laguna Hills, California.

Troubled electronics retailer RadioShack has filed for bankruptcy for the second time in just over two years.

The Fort Worth, Texas-based retailer filed its petition in bankruptcy court in Delaware on Wednesday.

The company says it’s closing about 200 stores and evaluating options on the remaining 1,300.

In a statement, RadioShack President and Chief Executive Officer Dene Rogers said since the company’s bankruptcy filing in 2015, the retailer had made progress in stabilizing operations, including reducing operating expenses by 23 percent.

But Rogers says several reasons, including a partnership with wireless carrier Sprint that proved not to be as profitable as expected, prompted the latest bankruptcy filing.

General Wireless, part of hedge fund Standard General, acquired the RadioShack trademark and many of its stores after its 2015 bankruptcy.

RadioShack was founded in 1921. Long known as the place to find batteries and obscure electronic parts, in recent years the company tried to remake itself as a specialist in wireless devices and accessories.

That strategy was largely was stymied by the advent of smartphones.

RadioShack has tried to update its image but faces formidable competition from online and discount retailers.


Singapore shareholder advocate fine with dual-class shares, exchange says idea under review

One of Singapore’s most prominent shareholder advocates has renewed his call for the introduction of a dual-class share structure for the local bourse, as public debate on the hot topic hits fever pitch.

“Activists say we should not be entertaining dual class shares, I say do it, with safeguards,” David Gerald, president and CEO of the Singapore Investors Association told CNBC’s Squawk Box.

The organization represents more than 70,000 retail investors and is the largest organized investor group in Asia.

“Any capital market that is aspiring to be leading in this part of the region should have that,” he said.

“Retail investors should not be taken to be idiots, they’re educated, they’re knowledgeable and they should make an informed decision.”

Dual class shares are just one component of a series of proposals that the Singapore Exchange (SGX) has put forward for public consultation, in a move aimed at improving its international competitiveness, building retail market participation and enhancing overall market liquidity.

Striking a balance

Under current SGX rules, each company has a “one share, one vote” structure.

If introduced, a dual-class structure would allow newly listed companies to offer two separate types of shares. Typically, one class of shares may have more voting rights than the other, even though the share is issued from the same company.

Under the current proposal, companies could offer a maximum voting differential of 10-to-1, meaning if a company listed two classes of shares on the market, one class of share could have at most 10 times more voting rights than the other.

Recent American IPOs such as Snap Inc. took advantage of the dual class share structure in the US. Snap Inc. was the first IPO of its kind to controversially offer “no vote” stock, meaning investors in that class of share would have no say in the company strategy or governance.

Snap Inc. signage is displayed on screens outside of the Morgan Stanley building in New York, U.S., on Thursday, Feb. 16, 2017.

Snap the new Twitter?  Tuesday, 21 Feb 2017 | 2:13 PM ET | 06:01

Major American technology companies such as Alphabet (the parent company of Google), Facebook and Alibaba Group also offer dual class shares on other exchanges.

The introduction of dual class shares would enable Singapore to compete for major international listings, as competition between regional bourses for big IPOs gains momentum.

Speaking at the recent Singapore Equities Dialogue, SGX CEO Loh Boon Chye said investors and companies have become more sophisticated and the SGX must remain relevant.

“An attractive dual-class structure could enable entrepreneurs to swiftly accelerate business expansion, while continuing to lead the strategies and growth of their companies,” he said.

“It is an example of how we can potentially innovate, regulate and conduct business in a forward-looking manner – all with the aim of enhancing our attractiveness as a listings venue and addressing the expectations of different stakeholders.”

If introduced, The Singapore Exchange would be the only major bourse in the region to allow the structure, which may give it a competitive edge for IPOs, specifically in the technology space.

Not that easy

Opponents to dual class shares insist that adequate safeguards must be put in place to ensure retail investors are protected.

“Retail market participation dwindled after the penny stock crash, and it put fear into retail investors,” said Gerald.

“We need to bring about initiatives that will encourage them to enter the market and to make them feel comfortable to come back to invest. We welcome these initiatives, I think it will increase liquidity and I think it will improve the participation of retail over time.”

A man checks his phone at the entrance of the Singapore Exchange (SGX) headquarters in Singapore, on Thursday, Jan. 19, 2017.

Ore Huiying | Bloomberg | Getty Images
A man checks his phone at the entrance of the Singapore Exchange (SGX) headquarters in Singapore, on Thursday, Jan. 19, 2017.

The SGX has proposed restricting the issuance of dual-class shares to new IPOs only. It also proposed that dual class shares be converted to standard, one vote shares when the share changes hands.

A sunset clause, where the dual class share is converted into a single class at a future date, was also part of a series of other protection proposals.

The consultation is open until Apr 17.

A Push for more

In addition to the potential introduction of dual class shares, the SGX has detailed a series of proposals aimed at improving its market structure.

As the public consultations continue to take shape, the SGX says it’s optimistic that as the global economy picks up, more IPOs will come onboard in the coming months.

“As a fund-raising platform, we not only want to facilitate capital raising for established and mature companies. We also want to be an attractive platform to early-stage companies, which may have disruptive business models and potentially be tomorrow’s Google or Facebook,” said Loh.

“Since the beginning of this year, our securities daily average value is up 14% year-on-year for January and February. We have also welcomed two IPOs and two RTOs which raised a total of S$182 million and added a combined market capitalization of close to S$1 billion to our market.”

But the work is just getting started.

“Our market is still a small market,” said Gerald.

“Valuation has been a major reason why we have not been that attractive. Having said that, within South East Asia, I think Singapore is still the number one. We are the gateway to Asia but there is a lot more to be done.”


Merrill Lynch may keep commission-based retirement accounts: Source

The Merrill Lynch bull, statue and corporate symbol, outside the Merrill Lynch Denver Meridian complex

Merrill Lynch, a unit of Bank of America, may not entirely do away with its commission-based retirement accounts, after Trump ordered the Labor Department last month to delay the proposed retirement-savings rule.

In a conference call with the advisors on Thursday, the bank said it plans to shift most of its retirement savers to accounts that charge a fee based on percentage of assets from those that charge a commission, according to a source familiar with the matter.

However, Andy Sieg, head of Merrill Lynch Wealth Management, noted in a memo seen by Reuters that the account conversions may not apply to all of its customers.

“We’ve recognized that there may be limited situations in which a fee-based arrangement would not be in a client’s best interests. We are reviewing those limited circumstances to consider potential alternatives to IAP for some clients in a manner consistent with a higher standard of care,” Sieg said in the memo.

Last month U.S. President Donald Trump ordered the Labor Department to review the implementation date of the new fiduciary rule, proposed by Obama, which was set to take effect in April.

The proposed rule was staunchly opposed by the financial services industry. Wall Street had argued that the rule would harm consumers as it would raise compliance costs and therefore fees, and force them to get rid of Main Street clients and small businesses that offer 401(k) plans.

Merrill Lynch was not immediately available for comment.

The Wall Street Journal had earlier reported that Merrill Lynch was planning to still offer commission-based retirement accounts.


Think twice as that second home won’t save much tax

TNN | Feb 2, 2017, 06.01 AM IST


(Representative Image)(Representative Image)
While the Budget has let sellers of immovable property claim long-term capital gains after two years instead of the earlier three, it has discouraged investment in the housing sector for rental income by taking away a benefit provided on buying a second house.

Tax breaks on interest paid on rented homes (whether first or second) have now been capped at Rs 2 lakh a year. So far, the entire payment of interest on home loan taken to buy a house for investment purpose was allowed to be set off from the gross income. The only condition to avail the facility was that the rental income was included in the total income.

In fact, this provision will take away a major avenue to avoid paying taxes by creating assets. At present, the interest cost of a house is around 9% of capital value, while rental income is at best 2% of capital value. Therefore, the investor gets a deduction of almost 7% of capital value from taxable income. If the investor is in 30% tax bracket, the saving is over 2% of capital value each year.

In fact, a senior CA pointed out that this would be a major setback for high-net worth individuals who have invested in real estate. He felt that even though the additional interest -above Rs 2 lakh paid during the year -can be set off in the next eight assessment years, this won’t be of much use as the interest payments would mount every year.

Latest Comment

great article………………………………………………. and news give me some points………………………….Manoj singh Pharshwal

There was some reason for cheer though. The Budget has reduced holding period for property from three years to two years. Now if you sell it after two years, the profit will be taxed at 20% after indexation. Indexation takes into account the inflation during the holding period and accordingly adjusts the purchase price, thereby reducing the tax burden for the seller.

For those who want to sell their ancestral houses, the base year for indexation will now be taken as 2001, instead of 1981. This will inflate the base price for those houses which were purchased earlier. With the increase in base price, the net capital gains will reduce, and so the tax liability will come down. This provision will enable investors to book profit faster.

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