Nov 2019

of Independent Financial Advisors

Foundation

May 2020

02Mar 2020

AUM Movement over the last 12 months

Assets under Management(AUM) (in Rs. Lakh crore)

Assets under Management (AUM) (in Rs. Lakh crore)

Type of Fund27.58%

52.39%

11.83%

0.69%7.51%

AUM Composition as at 31st May 2020

Equity Schemes

Debt Schemes

Hybrid SchemesSoluton Oriented Schemes

Others (ETFs/ Index Funds/ FOFs)

How has the AUM changed over the last month?

(All figures in Rs. crore)

Particulars AUM as at 30-April-2020

Net Inflows/ (Outflows)

Increase/ (Decrease) due to market movements

AUM as at31-May-2020

Equity Schemes

Debt Schemes

Hybrid Schemes

Solution Oriented Schemes

ETF/ FOF/ Others

Total

Source – AMFI

What's New?

May 2020

6,87,046 5,046 (14,978) 6,77,113

12,17,970 54,548 13,598 12,86,116

2,84,968 8,652 (3,363) 2,90,257

17,018 97 (106) 17,010

1,86,483 2,471 (4,692) 1,84,263

23,93,486 70,813 (9,541) 24,54,758

24.25

24.54

25.48

24.51

26.33 27.05

26.54

27.86 27.23

22.26

23.93 24.55

20.00 21.00 22.00 23.00 24.00 25.00 26.00 27.00 28.00 29.00

Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20

03 May 2020

Monthly SIP Inflows (in Rs. crore)

SIP Trends

Growth in SIP Inflows

May-20 V/S May-19 May-20 V/S April-20SIP Inflows (Rs. Cr.) SIP Inflows (Rs. Cr.)

May-20 Apr-20 May-20May-19

Monthly SIP Inflows( in Rs. Crore)

8,122

8,324

8,231

8,263

8,246 8,273

8,518 8,532

8,513

8,641

8,376

8,123

7,800

7,900

8,000

8,100

8,200

8,300

8,400

8,500

8,600

8,700

Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20

8,183

8,123

7,800

7,900

8,000

8,100

8,200

8,300

8,400 8,376

8,123

7,800

7,900

8,000

8,100

8,200

8,300

8,400

04Mar 2020May 2020

FIFA WELCOMESNEW MEMBERS

EVENT

Mem Type Mem No.

Type

Member / Organization

Location

General O2259

Girish Pradip Barve

General O2260

Ind

Ind

Ashwin Moreshwar Sorte

General O2261

Ind

Shyam Ranjan Mandal

General O2262

Ind

Prathamesh Gurudas Paibir

Santoshklumar Kisanrao Chaudhary

General O2263

Ind

General O2264 Ind

Rajesh Kumar

General O2265 Ind

Vinay Chhaparia

General O2266 Ind Esack Selvanayagam

General O2267 Ind

Nagpur

Pachora

Jamshedpur

Goa

Vadodara

Mansa

Ranchi

Coimbatore

Coimbatore TSA Easwaran

On 1st May 2020 Mr. Sanjay Khatri conducted zoom webinar on “Handholding Clients During These Times & Way forward” in coordination Mr. Babu Krishnamurthy & Ms. K Shobana .

On 13th May 2020 Principal Mutual Fund conducted webinar on “Covid 19 – Impact on Global Economy & Markets”. Mr. Dhruv Mehta was the Moderator and Mr. Bob Baur was the Speaker for the session.

On 15th May 2020 Mr. Sanjay Khatri conducted zoom webinar on “How to Handhold Clients In Volatile Market” in coordination with Mr. Milind Shah.

On 15th May 2020 Ms.Roopa Venkatkrishnan conducted Live Webinar on “How To Think Big As An IFA ? What Are The Challenges & Opportunities “ in coordination with Mr. Babu Krishnamurthy & M s. K Shobana.

On 20th May 2020 Mr. Dhruv Mehta conducted zoom webinar on “How To Navigate In Uncertain Times” along with Ms. Roopa Venkatkrishnan.

On 22nd May 2020 Invesco Mutual Fund conducted zoom webinar on “Team Dynamics – Selling and Managing With Personality DNA” in coordination with Mr. Deepak Bharadwaj, Mr Ravi Khurana, Mr. Varun Vaid, & Mr. Ramaraj Thirumal.

On 26th May 2020 BSE Star MF conducted session on “Covid 19 : Fast Tracking Digital Transformation On MF Distribution” along with Mr. Ravi Khurana from FIFA and speakers from BSE Star MF Mr Sumit Saxena & Mr Satbir Singh.

On 30th May 2020 Ms. Sangeeta Jhaveri organised zoom session on “Psycho-Geometrics For Finance Personnel” conducted by Mr. Praantik Panigrahi.

05 May 2020

Mr Deepesh Mehta is FIFA Member. His article on “Retirement Bucket Strategy” was published in Money Outlook magazine.

www.outlookmoney.com May 2020 Outlook Money 73

to lower compounding. So if the financial goals are longer, then there would be shortage of funds when the goal is in front of you,” says Deepesh Mehta, Founder and CEO, Grow Wealth and Author, Power Your Child’s Financial Future.

He says that to mitigate the risk, one should explore the alternative asset class, which would benefit from falling interest rates. One does not need to change asset allocation if goals are near. But if their goals are long term, then as per the risk profile, they should shift the money to alternatives that are available today. One should also have an exposure to equity as per as the asset allocation.

However, lower interest rate may pose a challenge to senior citizens. 2019 was already a year of rate cuts and with COVID-19, the returns on fixed deposits will experience a noticeable drop.

Says Mehta, “For senior citizens and retired people they depend on interest income for their regular expenses. A falling interest rate scenario puts less money in their pocket for spending.” However, on the other side, a falling interest

For longer financial goals there would be shortage of funds with low interest rates

DEEPESH MEHTA Founder and CEO, Grow Wealth and Author, Power Your Child’s Financial Future

rate environment will lead to lower inflation. If their entire portfolio beats inflation, then the impact is minimal. If the return on their investment is 7 per cent and if inflation is 6 per cent, they are in a comfort zone. However, if their net investment return post taxes is 5 per cent and inflation is above that, they need to look for an alternative strategy to overcome this problem. (See Retirement Bucket Strategy)

“FDs and RDs have a fixed interest rate for the entire tenure. Hence, senior citizens who had invested earlier when the interest rates were higher will get the

fresh investments will face the heat of the currently lowered interest

of the people in the short term but we don’t see this being a long-term problem,” says Chakrabarty.

Since interest rates are falling and are expected to fall further, retired individuals can consider rebalancing their investment portfolios.

investment avenues within their risk tolerance to ensure regular income.

portion of their funds in a liquid scheme and starting a Systematic Transfer Plan (STP) for investing in an equity fund that invests in blue-chip companies that pay high

investment advisor and restructure their portfolio to meet the regular income requirement,” says Jain.

Shekhar suggests an equity exposure to an index fund even after retirement to make up for their losses for a fall in interest rates. “Ideally, one should never reduce one’s equity allocation to zero. It is also important to have the right advice,” he concludes.

anagh.pal@outlookindia.com

Bucket 0 Bucket 1 Bucket 2 Bucket 3 Bucket 4

What is this for

This is called as emergency bucket. Your monthly expenses x 24 months expenses money should be parked here

This is for all the running expenses that you incur ever month for the next 36 months or 3 years

This is for all the running expenses that you will need from 37th month- 72nd month or from 4th

year to 6th year which is 36 months

This is for all the expenses that you will need from 73rd month to 120th month which is 48 months

This is for all the expenses that you need from 121st month onwards, that is 10 years from now

When this money should be used

Only during medical emergencies. Not for regular expenses

1st month – 36th month

37th month – 72nd month 73rd month – 120th month

121st month onwards

Where should this money be invested

Joint SB account/ Liquid funds/ Bank fixed deposits

Joint SB account and Liquid funds

Senior citizen savings scheme, Debt mutual funds, fixed deposits

Dynamic asset allocation funds

Large cap mutual fund, multicap an hybrid mutual funds

How to refill the buckets when money exhausts

To be refilled from any of bucket no.1,2,3

Refill from bucket number 2

Refill from Bucket number 3

Refill from bucket number 4

This bucket won’t get refilled as it supplies to bucket 1,2,3,4 when they becomne empty

Source: Grow Wealth; Note: 2) This strategy should be done by taking professional help

Retirement Bucket Strategy

MAGAZINE KING

IFA Corner

06 May 2020

IFA Corner

Vinayak SapreInvesting lessons through dohasof Sant Kabir and Rahim

Hi Papa, so yesterday we couldn’t continue on that 7 years thing you were talking about.

I thought, he would have forgotten but Vicky being Vicky, looked at me with a question mark on his cute face.

I said, yeah 7 years is a good time to invest in equity market. No no, you were explaining rolling return or something. I said, oh that’s too complicated you won’t understand.

If you can’t explain it to a six-year-old, you don’t understand it yourself, he quoted Mr. Albert Einstein. Don’t know how many from our generation had this gut to say it to our father, at least I never had.

Anyway, he had a point, challenge accepted.

I started, we often come across people who say I invested for 5 years but didn’t make money, some would say they even lost money.

OMG! Is it true? Why one would invest to lose money? That’s crazy. Isn’t it?

The answer lies in WHY one should invest in the first place.

Arre, to make money papa, it’s simple.

But WHY, what will you do? Is there any plan in place?

Hmm, you are being philosophical now.

No, I am being practical, I said firmly.

Has it anything to do with 7 years rolling return, I don’t think so. Let’s stick to that.

Ok, I said and continued, people tend to look at historic return on point to point basis and make judgement but that’s not the best way of looking at performance, because someone’s 5 year performance in march could be very different than someone’s 5 years performance in February if the market moves very fast in either direction.

07 May 2020

But you said, rolling return.

Shhh! Don’t interrupt. That’s why one should look at rolling return. For example, when I say in 7 years rolling return of Sensex (From 1st Jan 2000 till 30th may 2020) people have never lost money.

Arre, but where is the question of loss. I am getting confused.

et me explain dear. When I say rolling returns, in this case say someone invested on 1st Jan 2000, her 7 years completes on 31st Dec 2006 and next investor invested on 2nd Jan 2000, her 7 years completes on 1st Jan 2007, so on and so forth till 30th may 2020. By doing this we capture maximum entry and exit points over 7 years and do not leave any chance of missing the data. To simplify it further by doing this I had 3318 observations of how investment performance has been over 7 years period. You can understand it as investment performance of 3318 investors over 7 years period who invested on 3318 different dates.

And what’s the conclusion, he said.

People have never lost money at any point in time during the above mentioned period i.e. from 1st Jan 2000-30th May 2020 if they invested in SENSEX.

Again, same thing, no one invests to lose money. They won’t take risk to lose money.

Exactly my point I said, people are primarily loss averse.

Now, ye kya nayi baat hai?

If you are playing a 10 overs match and you being not a risk taker batsman would prefer to play defensively.

Haan wo to hai.

But if the target is 90 would you still not take risk?

How that’s possible? Without taking risk we can’t score 90 runs. Exactly but when WHY is not clear to the investor she takes unnecessary risk without realising that it is suitable only for long term objectives.

WOW, papa you hit two birds with one stone today. Why to look at rolling return and why to take risks, but how much return was made in 7 years, don’t give me average return, it is very misleading I learnt it yesterday

Out of 3318 data points 83% of the time i.e. 2758 data points, return was more than 8%.

08 May 2020 May 2020

That’s interesting. So, Rolling return captures maximum data, it also gives the idea about consistency of the performance. Right ?

Yes Sir, I said.

What about the funds’ rolling returns during the same period?

Should be much better than this because they have performed much better than the SENSEX, now don’t ask me about their performance.

I am sure you have done some work on that as well, he smiled.

Ya, but I won’t tell you that. This is enough for today.

Ok, Thanks a lot and special thanks to Mr. Einstein.

Why thanks to Mr. Einstein, I said.

His quote motivated you to explain the concept and I learnt two concepts. Ek par Ek Free. Hai na Papa.

I smiled and went into the bed, thinking how a child can make you relearn few concepts.

Source: http://www.bseindia.com

16.88%

564Observation

0-8%

30.56%

1014Observations

8-12%

18.81%

624Observations

12-16%

11.42%

379Observations

16-20%

22.33%

741Observations

20% and above

09Mar 2020May 2020

Taxation of Units in Segregated PortfolioSegregated Portfolio refers to such a portfolio comprising of debt securities that is affected by a credit event and has been segregated in a mutual fund scheme. A mutual fund scheme, with due approval of the trustees, may, on occurrence of a credit event, generally a default, segregate such securities from the main portfolio and create a separate portfolio. Such portfolio is allotted to the unitholders on proportionate basis as existing on the date of credit event and the NAV of the mutual fund scheme gets reduced to that extent as well. This enables the existing investors to realise potential gains in future, if the default is rectified by the issuer at a later stage. If there had been no segregation of the portfolio, such gains would have to be shared with such investors who even entered at a later stage and didn’t bear the earlier NAV reduction due to the occurrence of credit event.

No redemption and subscription is allowed in a segregated portfolio. However, to facilitate exit to unitholders in the segregated portfolio, such units allotted to the unitholders are required to be listed on the recognized stock exchange within 10 working days of creation of a segregated portfolio and also enable transfer of such units on receipt of transfer requests.

When it comes to taxation of segregated portfolio, such portfolio will be taxed in line with the tax provisions applicable to non-equity oriented mutual funds, since the portfolio comprises only of the debt securities.

Point of TaxationThe mutual fund investors are taxed at the time of transfer of mutual fund units, which in case of a segregated portfolio will be through redemption of mutual fund units or sale of mutual fund units on stock exchange.

Tax RatesThe capital gains on units of segregated portfolio are taxed as under:

Short Term CapitaLGain (STCG)

Less than 36 months

36 months or more 20% with indexation benefit

Regular tax rate applicableto the investor

Long Term CapitalGain (LTCG)

Holding PeriodParticulars Rate of Tax

FUNDABITE

10Mar 2020May 2020

Calculation of Capital GainsIn simple terms, capital gains are calculated by deducting the cost of acquisition (investment value) from sale proceeds (redemption value). Finance Act 2020 has specifically provided the manner in which capital gains are required to be calculated for segregated portfolio and the same is being discussed briefly below:

The amendments clarifying the taxation of segregated portfolio are effective from the units redeemed/ sold during the financial year 2019-20 and thereafter

Cost of Acquisition – While the investor has not paid any additional amount towards segregated portfolio, the same has been allocated from an existing investment. As such, the actual invested amount is allocated towards the segregated portfolio in the same proportion as the NAV of the segregated portfolio bears to the NAV of the total portfolio immediately before the segregation of portfolios. Further, the cost of acquisition for main portfolio will also be reduced to similar extent. For example, if the NAV of segregated portfolio is Rs. 5, and the NAV of total portfolio immediately before segregation was Rs. 100, the actual investment amount will also be allocated accordingly to the segregated portfolio and the main portfolio at Rs. 5 and Rs. 95 respectively.

Holding Period – Normally, the holding period is calculated from the date of allotment of mutual fund units till such units are redeemed. Even while the units of the segregated portfolio have been allotted at a later date, it has been clarified that the holding period of such units shall include the period for which the investor has held the units of main scheme prior to allotment of the units of segregated portfolio.

11 May 2020

All Members are requested to update their email IDs and cell numbers on telegram and database. Also, please provide the GST Number. All those Members who have not paid the Annual Fee are requested to do so at the earliest for both 2017-18 & 2018-19.

Your con owards this newsle er is solicited. Please share your views on events that you at your end.

Mail to response@fifaindia.com

Editor: Nisreen Mamaji

Quiz Q.1 - Investment in the name of minor can be made from the bank account of the guardian.

Q.2 - The date of filing Income Tax Returns for the year 2019-20 has been extended upto 30th November 2020.

A ) True B ) False

A ) True B ) False

A ) True B ) False

Q.3 - An Exchange Traded Fund (ETF) may invest 10% of its assets in the securities out of the underlying index it tracks.

A ) True B ) False

Q.5 - The classification of companies into large cap, mid cap and small cap is updated on half-yearly basis by the Association of Mutual Funds in India (AMFI).

A ) Large Cap Funds B ) Gilt Funds

C ) Exchange Traded Funds D ) Equity Linked Savings Scheme

Q.4 - Which of the following funds provide tax deduction to the investors under Section 80C of the Income Tax Act?

Ans. Q.1 - B), Q.2 - A), Q.3 - B), Q.4 - D), Q.5 - A),