Skip to main content

Budget 2009 and mutual funds

There was nothing much for mutual funds (MF) in this year's budget. One small change though. Customs duty on gold bars increased to Rs 200 per 10 grams, up from Rs 100 per 10 grams, earlier.

Impact: The net asset values (NAV) of gold exchange-traded funds (ETF) will increase (it did so on Tuesday 7 July; a day after the budget was announced) by Rs 10. Since one unit of most Gold ETFs is equivalent to one gram of gold in a majority of gold ETFs, the increase of Rs 100 in customs duty per every 10 grams of gold would translate to an increase of Rs 10 in the NAV of an average gold ETF.

Apart from the marginal rise of the gold ETFs, there’s not much impact. The reasons for holding gold ETFs still remain true. There’s nothing more to it. Since customs duties of such nature are not in the hands of funds managers and are imposed universally on all gold ETFs, it does not alter your gold ETF holdings. The benefits of holding gold ETF in your portfolio still remains. Stay invested.

What about other MFs?

Budget 2009 brings no change to your MF portfolio. If you have a time horizon of atleast three years and upwards, equities is the way to go. Stick to large-cap schemes, such as DSP BlackRock Top 100, Birla Frontline Equity, Benchmark Nifty BeES and so on if you wish low volatility and steady returns. Mid-cap schemes such as IDFC Premier Equity and Birla Mid Cap Fund would do well for risky investors. Beware of a mad rush for infrastructure funds. Because of the mad rush thanks to the potential of the sector for the next five to 10 years atleast, you'll see a lot of new fund offers (NFO) coming up. These are high-risk, high-return funds and only one or, maximum two, of such funds in your portfolio should be more than enough. And from the looks of it, existing ones like DSP BR TIGER, ICICI Prudential Infrastructure, Tata Infrastructure and so on are good enough.


Popular posts from this blog


As the country oldest mutual fund scheme, now US-64 Bonds, are set be redeemed, it’s tough to find an equally alternative investment. There are some that come closeThe oldest mutual fund scheme in India, Unit Trust of India (UTI)’ Unit Scheme – 64 (US-64), will soon be no more. After more than 40 years of existence, curtains will fall on the US-64 bonds that mature on 31 May 2008. UTI has already sent out letters to all bond-holders about the redemption; investors are told to submit their original certificates, take their money back and leave.

For investors like Kolkata-based, Kumaresh Mukherjee, 72 it’s the end of an era. Soon after he retired from Philips India, he invested his provident fund corpus in fixed – return instruments like company fixed deposits. An electrical engineer by profession, in 1995 he also invested Rs 12 lakh or around one-third of his retirement corpus in the erstwhile US-64. After years of above-average returns, then trapped doors and turmoil that shook the Ind…

Pay Credit Card Bills Through ATMs

Tired of being ignored by ICICI Bank credit cards by being left out of their premium services despite being a loyal customer, I got myself a new credit card by HDFC Bank. It's another thing that HDFC Bank promised me a gold card with a higher spending limit, but then threatened to give me a silver card. When I strongly protested to their ways, they issued me a gold card, but with a much-lower-than-promised spending limit. I think the credit card companies ought to be made more accountable through stricter laws that are widely publicised (I recently read an RBI advertisement in the paper that if a credit card company rejects your application for a credit card, it has to give the reasons in writing; I never knew that!!!) and ought to made to pay for promising one thing, but delivering something totally different. SBI Cards too chased me for a month last year and promised to give me a platinum card with a high spending limit. What I finally got was a much-watered down Gold Card with …

Teachers at Hindi Vidya Bhavan

Being a huge fan of the late Behram Contrator, the founding editor of Afternoon, I have read many of his legendary column, 'Round & About'. In one of them, he makes a poignant irony: that although teachers are our torch-bearers throughout our school and college days, give us education and make us capable of facing and surviving in this world, they would always remain in that one place, while their students would go places in thier lives. Like a teacher would still be at the bus-stop waiting for the bus, all throughout thier lives, while the child will grow in status and stuture and pass by in car. I found that to be very true, so I look back - the least I can do, and appreciate the teachers who have taught me and have a hand to make me who I am today. And while I am at it, let me also tell you about some of them who, unfortunately, I did not like.

I did my schooling (SSC)from Hindi Vidya Bhavan (HVB), Marine Drive, Mumbai. I passed out my school in 1992, so this post will …