Indices 3rd 28th Change

November November in (%)

2014 2014

Dear Investor,

The stock market continued its upward march during the month of November 2014. While the BSE Sensex was up by 2.99 percent, the BSE mid-cap and small cap indices were up by 3.31 and 1.75 percent respectively. One of the factors that pushed the indices higher was the hope of a rate cut in the monetary policy. The finance minister as well as industry has been clamouring for the rate cut to prop the economy after GDP growth slipped to 5.3 percent in the second quarter of current fiscal. At the same time, inflation has hit multi-year low and all the parameters are indicating that it is likely to fall further. We believe that RBI will maintain the status quo for some more time before effecting the rate cut to prop up growth.

On the economic front, agriculture and manufacturing sector pulled down the country's economic growth rate to 5.3 percent in the second quarter against 5.7 percent in the April-June quarter of this year. Besides, the manufacturing growth of mere 0.2 percent came as a disappointment. At the same time, factory output, measured by the Index of Industrial Production (IIP), grew by just 2.5 percent during September over the corresponding month of the previous year, pointing towards the persistent weakness in spurring manufacturing activity. However, the falling crude price is one of the key positives for the economy as it will help curb the current account deficit.

The stock market would look for the next round of triggers to move up further from the current levels. If the on-going parliament session fails to provide some triggers, there could be a period of consolidation before the market starts looking towards the upcoming union budget. Although the stock market will be disappointed if the rate cut does not materialize, it may not be a trigger for a correction.

Considering that we are looking at structural improvement in the economy over the next few years, any correction in the market should be viewed as an investment opportunity by investors. As we have always been propagating, an ideal investment strategy for investing in an asset class like equity would be a combination of systematic as well as lump sum investment with a commitment to stay invested for period of at least 5-7 years.

Warm regards,

Hemant RustagiEditor

The Stock MarketPerformanceDuring November 2014.

Sensex 27,860.38 28,693.99 2.99

MIDCAP 9,941.40 10,270.61 3.31

SMLCAP 11,077.12 11,270.79 1.75

BSE-100 8,389.17 8,644.37 3.04

BSE-200 3,398.61 3,510.28 3.29

BSE-500 10,622.42 10,956.16 3.14

Registered - R.N.I. No.: MAHENG/2007/19802 • Postal Regd. No.: MH/MR/N/72/MBI/13-15 • Posted at Mumbai Patrika Channel Sorting Office, GPO, Mumbai on 9th & 10th of every month.

Volume 8, Issue 12

December, 2014

A Month ly Publ icat ion f rom Wiseinvest Advisors Private Limited

Price ` 2

Inside Pg No.

2Have You Started InvestingFor Tax Savings?

“Wealthwise” is a monthly publication brought to you by Wiseinvest Advisors, which is a quality investment advisory firm that specializes in mutual funds. Our CEO, Hemant Rustagi, is a well known personal finance expert. He brings with him an experience of more than 25 years in this field. He regularly writes articles for major national dailies and business magazines as well as appears as a personal finance expert on many investments related TV shows. Besides, our team of advisors has professionals who have spent years in the mutual fund industry. In the last ten years, thousands of our clients have benefitted from our quality advice and have made mutual funds as the mainstay of their portfolio. You can benefit too from our expertise for your existing as well as new investments. All you need to do is to just call up any of the branches or email your requirements at

and our professional advisors will do the rest.information@wiseinvestadvisors.com

Wealthwise

Address to be affixed here

4Performance Of Select Funds

5-6Here's How You Can MakeYour Returns MoreTax Efficient

3Start Investing For YourChild's Education Now

December 2014 | Page No. 2

Many investors make the mistake of not making tax savings investments a

part of their overall investment program. As a result, they end up investing in

a haphazard manner and that reflects in returns they earn on these

investments. Considering that different tax savings investment options have

different lock-in periods and risk-return profile, these unplanned investments

can make investors suffer in more than one ways. It is quite common to see

investors investing in instruments that have much longer lock-in periods and

provide much lower returns than other options under Section 80C. Besides,

the habit of investing at the fag end of the financial year puts a lot of financial

burden in the form of having to generate a lump sum amount. Hence, by

strategizing your tax savings investments and by investing systematically

through the financial year, you can save taxes more efficiently and make the

entire process less taxing for yourselves.

With less than four months to go in the current financial year, it's time to start

planning for tax saving. While it may sound uninspiring, the fact remains that

even tax savings investments require a proper strategy. Remember, a good tax

planning starts with calculating your tax liability and identifying your risk

profile to decide on the kind of instruments you should be investing in. This

can go a long way in getting the best that specified instruments under Section

80C have to offer. Remember, investment limit under Section 80C has been

hiked to ̀ 1.50 lacs from the current financial year.

Mutual funds too have a role to play in this process. Equity Linked Savings

Schemes (ELSS) of mutual funds qualify for tax exemption under section

80C of the Income tax Act. An ELSS is perhaps the best way to achieve the

dual objectives of investing in the stock market thru small contributions and to

save taxes while doing so. For investors in ELSS, it is important to know that

all contributions (within an overall limit of ` 1.50 lacs) are eligible for tax

benefits and that includes units allotted under dividend reinvestment too.

As a product category, it has given handsome returns over the years. While,

the past performance alone should not be the sole criteria for making an

investment, the fact remains that over a period of time equities have the

potential to provide better returns compared to other instruments. Needless to

say, being equity oriented, these schemes carry all the risks that are associated

with an equity investment. However, a three years lock-in period, ensures that

one of the major risks i.e. volatility over the short term, is handled efficiently.

ELSS have the potential to provide better returns than most of the options

under Section 80C. Another notable feature is the tax efficiency in terms of

returns earned through them. It is important considering that ELSS also aims

to distribute income by way of dividend periodically depending on the

distributable surplus. As per the current tax laws, an equity fund investor is

not only entitled to earn tax free dividend but also the long-term capital gains

are not taxable.

ELSS are governed by the guidelines issued by the government. These

guidelines have specified the minimum amount to be ̀ 500 and thereafter in

multiples of ` 500. Being open-ended, ELSS also allow investors to invest

systematically. As regards the investment pattern, these schemes have to

invest at least 80 percent of the corpus in equity and equity related

instruments. However, each of the fund houses launching ELSS can decide its

own investment strategy. Therefore, the portfolio composition becomes a

major deciding factor while selecting a tax savings scheme.

In other words, it is crucial to have a closer look at the scheme's exposure to

different segments of the market i.e. large, mid and small cap before investing

in it. Though, the past performance can not be ignored, it is equally important

to analyze the risk taken by the fund manger in achieving those returns. If the

portfolio composition and the investment philosophy of the fund takes you

beyond your acceptable risk taking capacity, you would be better off

investing in an ELSS that has a well balanced portfolio as well as a consistent

performance track record. The table below highlights the performance track

record of some of the prominent ELSS.

Have You Started Investing For Tax Savings?

Performance as on November 28, 2014

*absolute **annualized.Past performance may or may not be sustained in future.

Scheme Name 1 - Year* 2 - Year** 3 - Year** 5 - Year**

Axis Long Term Equity Fund 69.50 38.68 34.60 -

HDFC Tax saver Fund 64.94 31.46 26.48 16.57

ICICI Prudential Tax Plan 59.73 31.91 30.14 18.76

Reliance Tax Saver Fund 96.97 39.26 37.37 22.25

Religare Invesco Tax Plan 62.80 31.49 28.19 18.25

Page No. 3 | December 2014

objective. With time on your side, you can take higher risk and go for equity

funds. However, if you choose to invest on a regular basis, try and increase the

amount every year.

If your child is in the age group of 6 to 12 years, it would be prudent to have a

mix of equity and debt, albeit with a bias towards equity. Therefore, the ideal

option for this age group would be balanced funds. As the child grows older,

an attempt should be move money to lesser volatile investment options.

If your child is in the age group of 13 to 18 years, the right strategy would be to

invest in funds that are least volatile. In other words, the focus should be on

preserving capital. Also, liquidity should be an important consideration

whiling working out the strategy.

Investing regularly through a Systematic Investment Plan (SIP) is an ideal

investment strategy for a long-term goal like a child's education. It is a proven

fact that a steady plan, both in terms of savings and investments, help pursue

financial goals. When you invest a fixed amount, say ` 5000 a month, you

invest at different levels without having to worry about the market levels.

Here are some important things to remember before you establish your

regular investment process:

• Ascertain how much you need to invest to achieve your target. For

example, if your goal is to accumulate a corpus of ̀ 25 lacs after 15 years,

assuming an annualized return of 12 percent from an equity fund, you

need to invest ̀ 5500 per month.

• Continue investing irrespective of whether the market falls or rises as it

will help you in benefitting from “averaging”.

• Remember the objective for which you are investing throughout the

period. This will enable you to remain focused on this very important goal

of your life.

Start Investing For Your Child's Education Now

Investing to build a corpus for your child's education can be one of the most

important goals for your life. After all, good education can help in laying a

solid foundation for success throughout your child's life. The problem,

however, is that many parents, despite their desire to provide the best

education to their children, often fail to do enough to ensure this. It is

important for every parent to remember that a major factor that can come

between their dream and reality is escalating cost of education. It is, therefore,

necessary to plan for an important goal like this and start the process of

investment as soon as possible, preferably as soon as the child is born.

There are parents who make on and off investments towards this goal, but

often face the dilemma of how to save enough for this important goal and that

too without compromising other financial goals. Therefore, it is necessary to

plan when it comes to securing the future of your child. Here's what you can

do to ensure that there is no gap between what you may need for your child's

education and what you accumulate over time for it:

• Begin by establishing how much money you are likely to require for your

child's education. Be sure to consider the escalation in the cost of

education over the years.

• Decide on the type of investments you will need to make in order to meet

this financial requirement. If you begin investing early, investing in an

asset class like equity can help you earn positive real rate of return. In

other words, avoid low-interest yielding traditional instruments like bank

deposits, small savings schemes, debentures and bonds. However, if you

are a late starter, either these instruments or a fund investing in them will

have a role to play in your portfolio.

• Monitor your portfolio on a regular basis. Even though you might not

need the money for 12-15 years or so, it is necessary to make sure that

your investments remain on track through your time horizon. Do not

hesitate to realign your portfolio when necessary.

• Begin to shift your investments as your child approaches college-age.

This will ensure that you won't lose any of the money that you have

worked so hard to save and make it grow.

Mutual funds provide an excellent vehicle for investing for your child's

education as they offer diversification, flexibility, tax efficiency, variety and

simplicity. Remember, investing through a tax efficient vehicle like mutual

funds can help you accumulate more for your child's education.

However, it is important to choose the right fund. Before deciding on the

funds, you must work out your asset allocation i.e. mix of equity and debt. The

asset mix will largely depend upon when you begin investing for investment

process. If you start investing between the time your child is born and till he

attains the age of five years, you will have the maximum time to grow for this

A Note To Our Esteemed ReadersWealthwise is being sent to some of you on a Complimentary basis as a part

of our humble effort to ensure that more and more investors get the best from

their investments. We sincerely hope that you would like the contents of

Wealthwise and in some way benefit from it. However, if you do not wish to

receive “Wealthwise” on a regular basis, please let us know either by

sending us a mail on or by calling us

on (022) 26732676 / 77. You can also write to us at our Corporate Office

address mentioned on page 6.

information@wiseinvestadvisors.com

December 2014 | Page No. 4

Performance Of Select FundsData as on November 28, 2014

Mutual funds, like securities investments, are subject to market and other risks. As with any investments in securities, the NAV of units can go up or down depending on the factors and forces affecting capital markets.

Please check whether you have received dividend for the fund/s that you may have in your portfolio out of this list. In case, you do not maintain any portfolio statement, Wiseinvest Advisors can do that for you free of charge. Once we have the details, we would send your updated statement every month. You can contact our corporate office or any of the branches to avail of this free service.

International Funds Fund Launch 1-Month* 3-Month* 6-Month* 1-Year* 2-Year** 3-Year** 5-Year**

Franklin India Feeder Franklin US Opp. Feb-12 3.43 5.16 14.32 10.60 30.62 — —

ICICI Prudential US Bluechip Equity Jul-12 2.97 4.24 12.02 15.53 29.93 — —

JP Morgan Europe Dynamic Equity Feb-14 3.28 -0.98 -2.11 — — — —

EQUITY FUNDSDiversified Fund Launch 1-Month* 3-Month* 6-Month* 1-Year* 2-Year** 3-Year** 5-Year**

Axis Equity Fund Jan-10 5.80 12.64 22.74 47.79 28.65 27.46 —

Birla Sun Life Frontline Equity Fund Aug-02 4.76 11.09 22.75 51.65 28.01 27.73 15.70

Birla Sun Life Equity Fund Aug-98 3.95 10.49 21.45 63.54 31.27 29.07 14.07

BNP Paribas Equity Fund Sep-04 3.43 9.78 26.19 51.52 28.06 26.62 16.09

Canara Robeco Equity Diversified Sep-03 4.75 9.69 20.83 47.94 22.86 23.49 15.79

Franklin India Prima Plus Fund Sep-94 5.64 14.56 30.62 60.69 29.03 27.09 17.48

HDFC Equity Fund Jan-95 5.17 10.98 24.23 66.62 30.77 27.88 16.73

HDFC Top 200 Fund Sep-96 4.56 10.24 21.57 56.33 26.98 25.54 15.10

ICICI Prudential Dynamic Fund Oct-02 2.32 8.57 19.49 45.04 28.33 26.18 16.71

ICICI Prudential Focused Bluechip May-08 3.46 10.35 23.19 47.41 26.59 25.14 17.17

Kotak 50 Dec-98 4.03 10.64 25.16 47.25 23.09 22.05 12.40

Kotak Select Focus Fund Sep-09 6.13 15.33 31.03 63.28 31.54 29.10 16.35

L&T Equity Fund May-05 4.47 11.38 24.08 55.99 26.40 23.83 15.63

Reliance Top 200 Fund - Retail Plan Aug-07 5.36 14.81 29.46 66.34 29.08 29.67 16.11

Religare Invesco Contra Fund Apr-07 5.05 12.49 30.06 73.82 32.33 28.21 15.93

SBI Bluechip Fund Feb-06 3.57 10.58 26.83 53.32 27.54 28.46 14.37

UTI Opportunities Fund Jul-05 3.40 10.25 23.54 48.63 23.61 23.70 16.15

Sector, Specialty & Tax SavingCanara Robeco F.O.R.C.E Fund Sep-09 7.24 17.68 29.26 58.10 23.70 26.86 18.44

ICICI Prudential Infrastructure Fund Aug-05 3.91 8.36 14.71 63.26 23.41 20.21 8.21

Reliance Banking Fund May-03 6.41 15.82 21.57 70.83 23.27 29.07 18.11

Reliance Pharma Fund Jun-04 2.87 13.79 43.09 59.31 35.31 33.48 26.15

Axis Long Term Equity Fund Dec-09 4.64 12.70 33.48 69.50 38.68 34.60 —

HDFC Long Term Advantage Fund Jan-01 4.06 7.74 23.38 53.78 30.43 26.65 16.89

HDFC Taxsaver Fund Mar-96 4.58 10.89 24.79 64.94 31.46 26.48 16.57

IDFC Tax Advantage (ELSS) Fund Dec-08 5.60 10.26 25.28 48.77 27.95 27.70 16.77

Reliance Tax Saver Fund Sep-05 4.34 16.69 34.76 96.97 39.26 37.37 22.25

Midcap & SmallcapFranklin India Smaller Companies Fund Jan-06 4.49 12.36 37.04 91.85 46.72 42.60 23.72

HDFC Mid-Cap Opportunities Fund Jun-07 6.49 14.06 32.61 82.31 39.24 34.60 24.73

ICICI Prudential Value Discovery Fund Aug-04 3.06 9.72 28.79 80.40 38.62 36.38 23.11

IDFC Premier Equity Fund Sep-05 4.39 11.30 28.15 63.48 29.82 29.82 21.60

IDFC Sterling Equity Fund Mar-08 4.86 12.43 28.49 57.06 26.77 28.00 18.76

SBI Magnum Global Fund Sep-94 3.88 12.89 31.99 68.04 34.64 32.59 21.25

Reliance Equity Opportunities Fund Mar-05 7.16 17.68 31.66 71.86 31.06 32.63 22.54

Religare Invesco Mid N Small Cap Mar-08 6.86 14.33 31.54 79.41 38.94 35.90 25.99

HYBRIDEquity, Debt Oriented & Multi Asset ClassBirla Sun Life 95 Fund Feb-95 4.71 11.90 23.20 50.79 25.82 23.15 15.34

Canara Robeco Balance Fund Feb-93 4.52 10.95 23.56 49.90 23.51 23.04 16.05

HDFC Balanced Fund Sep-00 4.38 10.31 23.69 55.90 29.00 25.12 19.40

HDFC Prudence Fund Feb-94 3.81 8.77 21.13 60.46 27.88 25.12 17.45

ICICI Prudential Balanced Fund Nov-99 3.02 9.81 23.22 49.68 28.02 26.03 18.05

Kotak Balance Nov-99 3.08 9.12 15.58 33.16 18.42 18.96 11.53

Reliance Reg. Savings Fund - Balance Jun-05 1.35 8.94 22.09 51.45 23.36 24.36 15.53

Tata Balanced Fund - Plan A Oct-95 4.67 11.47 24.84 53.66 26.26 26.13 16.56

Canara Robeco Monthly Income Plan Apr-01 1.68 5.29 9.50 21.14 13.08 12.58 10.26

HDFC MF Monthly Income Plan Dec-03 2.34 6.27 10.52 26.24 14.72 13.94 10.52

IDFC Monthly Income Plan Feb-10 1.93 6.31 10.70 20.14 12.30 13.76 —

Reliance Monthly Income Plan Dec-03 2.52 7.62 11.86 23.39 13.11 13.94 10.10

Axis Triple Advantage Fund Aug-10 2.00 4.36 9.99 15.12 8.06 10.40 —

Franklin India Dynamic PE Ratio Fund Oct-03 2.55 7.21 14.29 27.91 15.02 15.31 10.83

Arbitrage FundsICICI Prudential Equity Arbitrage Fund Dec-06 0.39 1.68 3.87 8.69 9.18 9.46 8.15

IDFC Arbitrage Plus Fund Jun-08 0.41 1.59 3.46 7.94 8.37 8.62 7.42

Kotak Equity Arbitrage Fund Sep-05 0.42 1.82 3.87 9.16 9.07 9.12 8.19

GOLDFund of FundsKotak Gold Fund Mar-11 -1.33 -6.02 -3.63 -15.84 -10.94 -5.16 —

Reliance Gold Savings Fund Mar-11 -1.03 -6.22 -4.22 -16.10 -10.79 -4.84 —

*Absolute ** Annualised. Past performance may or may not be sustained in future.

Income, Short Term & Ultra Short Term Funds Funds Launch 1 Week* 1 Month* 3 Months*6 Months* 1 Year* 2 year** 3 Year**

Birla Sun Life Short Term Opp. Fund Jun-08 0.33 1.16 3.69 5.68 11.54 10.79 10.90

Birla Sun Life Dynamic Bond Fund Sep-04 0.64 1.70 5.39 6.78 13.01 10.03 10.29

Kotak Income Opportunities Fund May-10 0.23 0.97 3.18 5.41 10.93 9.26 9.49

Religare Invesco Short Term Fund Mar-07 0.33 1.12 3.24 4.71 9.34 8.01 8.98

Religare Invesco Bank Debt Fund Dec-12 0.22 0.80 2.54 4.26 8.78 — —

Reliance Regular Savings Fund Jun-05 0.20 0.96 3.28 5.47 11.07 9.54 9.60

SBI Magnum Income Fund Nov-98 0.66 1.58 4.78 6.16 10.53 7.87 9.43

L&T Income Opportunities Fund Oct-09 0.22 1.01 3.46 5.68 11.55 8.51 8.71

BNP Paribas Flexi Debt Fund Sep-04 0.70 1.64 4.86 6.48 11.94 10.25 10.34

BNP Paribas Money Plus Fund Oct-05 0.18 0.68 2.21 4.16 8.55 8.44 8.71

L&T Ultra Short Term Fund Mar-02 0.17 0.69 2.26 4.22 8.84 8.67 8.89

Kotak Floater Long Term Aug-04 0.14 0.70 2.44 4.57 9.58 9.25 9.37

UTI Short Term Income Fund Jun-03 0.21 0.92 2.97 5.02 10.50 9.83 10.04

Kotak Banking and PSU Debt Fund Dec-98 0.16 0.66 2.16 4.31 9.59 9.69 9.37

DEBT

Dividends declared by equity and equity-oriented funds duringthe month of November 2014 Scheme name Date Dividend declared in ̀ Per unit

Tata Balanced Fund (MD) 03/11/2014 0.30

Birla SL Frontline Equity (D) 05/11/2014 1.20

IDFC Equity Opport. -Sr 2- Reg (DP) 05/11/2014 1.50

UTI Mastershare (D) 05/11/2014 2.75

ICICI Pru Tax Plan (D) 07/11/2014 2.00

Birla SL (I) Opportunities (D) 13/11/2014 2.76

Sundaram SMILE Fund (D) 14/11/2014 1.00

Birla Sun Life MNC Fund (D) 20/11/2014 5.50

Kotak Nifty ETF 21/11/2014 9.50

Kotak PSU Bank ETF 21/11/2014 19.00

Kotak Sensex ETF 21/11/2014 6.00

Motilal MOSt Focused 25 - RP (D) 21/11/2014 1.09

Tata Mid Cap Growth Fund (D) 21/11/2014 2.75

UTI MNC Fund (D) 25/11/2014 2.50

Peerless Equity Fund (D) 26/11/2014 1.00

SBI Arbitrage Oppor. Fund (D) 26/11/2014 0.07

BNP Paribas Dividend Yield (D) 28/11/2014 0.10

Can Robeco Emerg-Equities (D) 28/11/2014 2.70

Canara Robeco Large Cap+ (D) 28/11/2014 1.30

ICICI Pru Balanced Adv (MD) 28/11/2014 0.08

Kotak Tax Saver (D) 28/11/2014 0.50

Religare Invesco Business Leaders (D) 28/11/2014 2.20

SBI Emerging (D) 28/11/2014 2.70Businesses

Page No. 5 | December 2014

Here's How You Can Make Your Returns More Tax Efficient

While paying taxes when necessary is understandable, paying more taxes

than necessary is not! Therefore, ensuring that your portfolio has the utmost

tax efficiency is one of the key factors that can help you in improving your

portfolio returns. While it is true that tax efficiency alone cannot guarantee

investment success, a tax-aware investment strategy can make a substantial

difference to your portfolio's ultimate size.

Remember, tax efficiency is important for both short-term as well as long-

term investing. However, it is common to see investors keeping large sums of

monies in low-yielding savings bank account for months, especially when

they are not sure when they will need this money. Of course, the fact that they

feel safe putting money in the bank is another reason why they prefer

traditional investment option over market-linked products offered by mutual

funds.

Although mutual funds are perceived to be riskier than traditional options like

bank deposits, the fact remains that they offer a variety of funds for different

time horizons and if one makes the right selection, it can make a huge

difference to the returns i.e. both gross as well as post tax and that too without

compromising on safety and liquidity. For example, there are funds like

liquid, ultra short term and short-term income funds that are ideal for short-

term parking of funds. Since these funds invest primarily in money-market

instruments and short-term debt instruments, they can be considered as a safe

investment option. Moreover, being open-ended funds one can withdraw

money at a day's notice. However, it is important to choose the right option i.e.

growth or dividend reinvestment/payout to improve tax efficiency of returns.

Considering that short-term capital gains from a debt fund i.e. any gains on

investments redeemed within three years is taxed at one's applicable tax rates,

those investors who belong to tax bracket of 10 or 20 percent should opt for

"growth" option. Although the tax rates applicable on interest from FD and

short-term capital gains on a debt based fund are the same, these funds have

the potential to deliver higher returns than traditional investment options. As

for investors who are liable to pay tax at 30 percent, dividend re-investment

option would be a better bet as the applicable Dividend Distribution Tax

(DDT) to be paid by the fund is 28.325 percent. Since dividend is tax free in

the hands of investors, the tax outgo will be lower.

For investors belonging to the highest tax slab of 30 percent looking to invest

for short term, there is another option in the form of arbitrage funds. An

arbitrage fund is an equity-oriented scheme which seeks to generate income

through arbitrage opportunities emerging out of mis-pricing between the cash

market and the derivates market. In other words, arbitrage funds capture the

"interest" element in the equity market and offer an opportunity for investors

to earn higher returns, without taking an equity market exposure. Although

arbitrage funds fall in the category of equity funds, they are not risky as they

invest in stocks and their futures simultaneously. This eliminates the risk of

volatility normally associated with equity funds.

For tax purposes, arbitrage funds are considered as equity funds and hence

any short term capital gains i.e. any gains on investments redeemed within 12

months is considered as short term capital gain and is taxed at a flat rate of 15

percent and long-term capital gains i.e. gains on units redeemed after 12

months is tax free. However, investors can make their return almost tax free

by opting for monthly dividend payout offered by most of these funds. Since

arbitrage funds are treated as equity funds for tax purposes, the fund is not

required to pay any DDT. Therefore, even investors belonging to lower tax

brackets of 10 and 20 percent can also improve their post tax returns.

Evidently, arbitrage funds can be a good alternative for investors for their

short term investment needs. These funds have the potential to provide

healthy returns during the volatile market conditions and that too with a

reasonable degree of safety and in a tax efficient manner. Of course, there are

pitfalls too. A depressed stock market may not provide enough opportunities

for an arbitrage fund. Besides, it is not necessary that on the day of expiry the

price of the stock and its future contract will coincide.

Mutual funds also offer a variety of income funds for medium and long-term

term investments such as income funds, gilt funds and fixed maturity plans.

Since, every fund that has an exposure of less than 65 percent in equity is

considered as a debt fund for tax purposes, hybrid funds with varying degree

of exposure to equities within this limit are also considered as debt funds. If

one invests in these funds with a time horizon of three years or more, not only

the returns can be much higher than traditional options like deposits and

bonds but also the tax efficiency can improve post tax returns considerably.

For such funds, any gain on units redeemed after three years is considered as

long-term capital gains and is taxed at the rate of 20 percent after taking

inflation indexation into account. Considering that in a country like ours,

inflation generally remains at persistently high levels, one would barely pay

any capital gains tax.

For investment to be made with a time horizon of more than one year and less

than three years, equity savings schemes, a recent addition to the basket of

Cont. on page 6...

December 2014 | Page No. 6

DISCLAIMER: All reasonable care has been taken to ensure that the information contained herein is neither misleading nor untrue at the time of publication, but we make no representation as to its accuracy or completeness. All information is provided without any liability whatsoever on the part of Wiseinvest Advisors Private Limited.

RISK FACTORS: Mutual funds, like securities investments, are subject to market and other risks and there can be no assurance that the scheme's objectives will be achieved. As with any investments in securities, the NAV of units can go up or down depending on the factors and forces affecting capital markets. Please read the offer document before investing.

Edited, Published and Printed by Mr. Hemant Rustagi, on behalf of Wiseinvest Advisors Pvt. Ltd. from 202, Shalimar Morya Park, New Link Road, Andheri West, Mumbai 400053 at AdvantEdge Offset Printers, K-7 Rizvi Park, S V Road , Santacruz (W), Mumbai 400 054. Design by Mosaic Design. Copyright reserved © 2007. All rights reserved in favour of Wiseinvest Advisors Pvt. Ltd.

• Corporate Office:

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Here's How You Can Make...

funds offered by mutual funds, can be an ideal option. The schemes invest in

a combination of debt, arbitrage and equity in such a manner that exposure to

equity is capped at around 20-25 percent and the aggregate of arbitrage and

equity is more than 65 percent, which qualifies them to be an equity fund for

tax purposes.

For investors who want to build a hybrid portfolio investing pre-dominantly

in equities for a particular goal, there is an option of either investing in equity

and debt fund separately or in an equity oriented balanced fund. If the fund is

chosen well, a balanced fund can be a better option as the entire long-term

capital gains becomes tax free after one year. Moreover, in a balanced fund,

the fund manager keeps rebalancing the asset allocation in keeping with the

fund's objectives, without any tax implications on investors. However, if the

intent is to build a hybrid portfolio with a bias towards debt instruments,

investing separately in debt and equity funds would be a better option. By

doing so, capital gains on equity portion can be made tax free after a year and

one would have the flexibility to realign the portfolio, if need be.

Similarly, while investing for long-term, it is important to invest in an asset

class that has the potential to beat inflation as well as provide tax efficient

returns. Equity, as an asset class, fits the bill as it has a proven long-term track

record of delivering higher post tax return than other asset classes. However,

it is important to minimize portfolio turnover to improve tax efficiency of

returns.

To do so, one must follow the right strategy. First, by assessing the tax

consequences before making abrupt changes in the portfolio and resisting the

temptations to sell investments for reasons other than poor performance and

changes in one's personal circumstances, one can reduce the tax burden.

Second, one must try to make the right selection of investment options to

minimize the need to make changes in the portfolio in the short term. Third,

by honouring one's time commitment, one can avoid making haphazard

decisions. This also helps in tackling the market volatility from time to time.

Last but not the least, by following the strategy of portfolio rebalancing once

a year, one can not only book profits during market upturns but also invest in

it when the chips are down. Needless to say, a tax aware investment strategy

has the potential to ensure that one gets to keep more in the end.

(This article written by our CEO, Hemant Rustagi, was published on

www.businesstoday.intoday.in on November 24, 2014).

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