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Selling Equity MF to Institutions by Mr.Sandip

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Selling Equity MF to Institutions by Mr.Sandip Powered By Docstoc
					Selling Equity MF to Institutions
Challenges and Strategies Dividend Stripping Target Clients & FAQ on sales
-- Sandip Samanta
Corporate Advisory Group, Kolkata
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Challenges & Strategies
Challenges Investment horizon is relatively shorter Risk averse Lack of informed and timely decisions Internal policy matters Past experiences Capital protection schemes
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Challenges & Strategies
Strategies Investments backed by sound research Educate the importance of timed decisions After sales service Hedging tools available Experience is simply the name given to mistakes A tool for booking short term loss (dividend stripping)

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Dividend Stripping
What is dividend stripping ? Dividend stripping is process, whereby an investor enters into the scheme before the record date. After becoming eligible for dividend, this investor exits from the scheme. This process of entering and exiting from a fund only for the purpose of collecting dividend is known as divided stripping.

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Dividend Stripping
Why dividend stripping? Tax free dividend. Short term capital loss which is allowed to be adjusted against capital gains (either short term or long term). Further the short term capital loss made by the investors is allowed to be carried forward for set off against the capital gains head upto eight subsequent assessment years.

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Target Clients
Corporates & SMEs Educational & Charitable Institutions Clubs & Associations Healthcare Institutions Co-operative Societies Banks & Financial Institutions Insurance Companies Provident Fund Trusts
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FAQs on Sales
What is a Mutual Fund? A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal.

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A RANBAXY Promoter Group Company

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What is the difference between an open ended and close ended scheme? Open ended funds can issue and redeem units any time during the life of the scheme while close ended funds can not issue new units except in case of bonus or rights issue. Hence, unit capital of open ended funds can fluctuate on daily basis while that is not the case for close ended schemes.

ORGANISATION OF A MUTUAL FUND

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FAQs on Sales
When an investor subscribes to a mutual fund – the investor buys a part of the assets or pool of funds outstanding at that time.
Major benefits of investing through a Mutual Fund – Portfolio Diversification, Reduction of transaction costs and Liquidity.

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Frequently used terms
Net Asset Value (NAV) Net Asset Value is the market value of the assets of the scheme minus its liabilities. The per unit NAV is the net asset value of the scheme divided by the number of units outstanding on the Valuation Date. Sale Price Is the price you pay when you invest in a scheme. Also called Offer Price. It may include a sales load.
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Frequently used terms
Repurchase Price Is the price at which a close-ended scheme repurchases its units and it may include a back-end load. This is also called Bid Price. Redemption Price Is the price at which open-ended schemes repurchase their units and close-ended schemes redeem their units on maturity. Such prices are NAV related.
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Frequently used terms
Sales Load Is a charge collected by a scheme when it sells the units. Also called, ‘Front-end’ load. Schemes that do not charge a load are called ‘No Load’ schemes. Repurchase or ‘Back-end’Load Is a charge collected by a scheme when it buys back the units from the unitholders
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Frequently used terms
Expense Ratio The annual expenses of the funds, including the management fee, administrative cost, divided by the fund under management. Fund of Funds A Fund of Funds (FoF) is a mutual fund scheme that invests in other mutual fund schemes. Just as fund invests in stocks or bonds on your behalf, a FoF invests in other mutual fund schemes.
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Frequently used terms
Sharpe Ratio The Sharpe ratio is a single number which represents both the risk, and return inherent in a fund. As is widely accepted, high returns are generally associated with a high degree of volatility. The Sharpe ratio represents the trade off between risk and returns. At the same time, it also factors in the desire to generate returns, which are higher than riskfree returns.
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Frequently used terms
Beta Beta is a statistical tool, which gives an idea of how a fund will move in relation to the market. In other words, it is a statistical measure that shows how sensitive a fund is to market moves. If the Sensex moves by 25 per cent, a fund's beta number will tell you whether the fund's returns will be more than this or less.
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posted:12/16/2008
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