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N ANDY FINANCIAL ADVISORY ( P ) L TD. Nandy Financial Advisory Private Limited was incorporated in the year 2004 and started its operations as an Investment.

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Presentation on theme: "N ANDY FINANCIAL ADVISORY ( P ) L TD. Nandy Financial Advisory Private Limited was incorporated in the year 2004 and started its operations as an Investment."— Presentation transcript:

1 N ANDY FINANCIAL ADVISORY ( P ) L TD. Nandy Financial Advisory Private Limited was incorporated in the year 2004 and started its operations as an Investment and Financial Advisors in Eastern India. Today, after years of existence we have grown to become one of the most trusted investment and financial consultants with annual mobilization of several crores and serving thousands of investors. Everything is conducted by a team of experienced professionals and sound financial managers. Nandy Financial

2 Dear Sir, Greetings from Nandy Financial Advisory Private Limited!! We are pleased to share with you the excerpts from an article on Liquid Funds which was published in Economic Times on 7th November, Although we at Nandy Financial are convinced that Liquid mutual fund schemes historically have been & will continue to remain a better short term investment option for individual & corporate investors, but we thought of sharing this article for the simple reason that the same has been written by a neutral agency without supporting any particular mutual fund company. I hope you find it meaningful & informative. To make things more informative, we have also attached the in house presentation of Nandy Financial on liquid/ultra short terms funds. Nandy Financial

3 Idle cash better off in liquid funds despite savings rate deregulation Article in Economic Times written by Dhirendra Kumar on Nov 7, 2011 L AST WEEK, I WROTE ABOUT THE RBI' S DECISION TO FREE SAVINGS BANK INTEREST RATES. F ROM THE BANK CUSTOMERS ' PERSPECTIVE, THIS NEWS IS IRRELEVANT. N O MATTER HOW MUCH OR HOW LITTLE MONEY YOU KEEP IN A BANK SAVINGS ACCOUNT, THE ADDITIONAL INCOME GENERATED WILL BE TOO SMALL TO BE RELEVANT. I N FACT, IF YOU FEEL YOU HAPPEN TO NEED A SAFE SOURCE OF REASONABLE RETURNS FROM A SAVINGS MEDIUM THAT IS NOT LOCKED - IN FOR A FIXED PERIOD, THEN YOU SHOULDN ' T BE LOOKING AT A SAVINGS BANK ACCOUNT AT ALL. I F YOU FIND YOURSELF GETTING EXCITED BY THE 6% SAVINGS RETURNS THAT SOME BANKS HAVE STARTED OFFERING, THEN YOU ' RE DOING SOMETHING WRONG. W HAT YOU ACTUALLY NEED ARE LIQUID FUNDS. SAVINGS BANK ACCOUNT L IQUID FUNDS ARE WIDELY USED BY COMPANIES AND THE MORE AFFLUENT INVESTORS, BUT ARE UNDER UTILIZED BY RETAIL INVESTORS. T HERE ' S NO REASON FOR THIS. L IQUID FUNDS FIT IN VERY NEATLY BETWEEN FIXED DEPOSITS AND SAVINGS DEPOSITS. C URRENTLY, LIQUID FUND RETURNS ARE IN THE RANGE OF 9.0% TO 9.5% PER ANNUM. T HIS IS SUBSTANTIALLY HIGHER THAN SAVINGS ACCOUNTS BUT LOWER THAN LONG TENURE FD S. C OMPARED TO SAVINGS ACCOUNTS, WHICH OFFER INSTANT LIQUIDITY, LIQUID FUNDS OFFER ONE - DAY LIQUIDITY. A GAIN, THIS IS HUGELY BETTER THAN FD S, BUT SOMEWHAT LONGER THAN SAVINGS ACCOUNTS. LIQUID FUND F ROM AMONG THE OPTIONS FOR HIGH - SAFETY SAVINGS INSTRUMENTS, THE WAY I THINK OF LIQUID FUNDS IS THIS : S AVINGS ACCOUNTS OFFER THE BEST LIQUIDITY. FD SOFFER THE BEST RETURNS. L IQUID FUNDS OFFER THE BEST COMPROMISE. I N MOST CASES, THAT TURNS OUT TO BE THE BEST CHOICE.FD S L ET ' S TAKE A CLOSER LOOK AT THE SAFETY AND LIQUIDITY ASPECTS. U NDER SEBI RULES, LIQUID FUNDS CAN INVEST ONLY IN FIXED INCOME INSTRUMENTS THAT ARE LESS THAN 91 DAYS FROM MATURITY. T HIS PRACTICALLY ELIMINATES RISK. A S FAR AS THE ACTUAL TYPES OF INSTRUMENTS GO, THE VAST BULK OF LIQUID FUND PORTFOLIOS ARE MADE UP OF BANK CD S ( CERTIFICATES OF DEPOSIT ) AND COMMERCIAL PAPER ISSUED BY LARGE RATED CORPORATES. BANK CD S SEBI’ S RECENTLY CHANGED LAWS PERTAINING TO LIQUID FUNDS, WHICH HAVE BEEN APPLICABLE FOR NEARLY 1.5 YEARS, SAY THAT LIQUID FUNDS CANNOT INVEST IN PAPERS WITH A MATURITY OF MORE THAN 91 DAYS. N O MUTUAL FUND CAN GIVE YOU A GUARANTEE OF RETURNS OR THE SAFETY OF YOUR PRINCIPAL, BUT TILL NOW, SINCE THE FIRST LIQUID FUND WAS LAUNCHED IN 1997, THERE HASN ’ T BEEN A FALL IN THE VALUE OF LIQUID FUNDS FOR EVEN ONE DAY. T HE EXPERIENCE HAS BEEN THAT THERE HASN ’ T BEEN EVEN A ONE PAISA DROP IN THE VALUE OF LIQUID FUNDS, EVEN ON AN OVERNIGHT BASIS. T HIS MAKES LIQUID FUNDS REASONABLY SAFE. B UT, THEY ARE NOT DEPOSITS AND DON ’ T GUARANTEE RETURNS. H OWEVER, UNDER THE CHANGED REGULATORY FRAMEWORK, WHICH IS MORE STRINGENT, LIQUID FUNDS HAVE BECOME SAFER THAN THEY WERE THREE YEARS BACK. I N THEORY, LIKE ALL MUTUAL FUNDS, LIQUID FUNDS ARE SUBJECT TO MARKET RISK. B UT THE TYPE OF MARKET AND THE TYPE OF INSTRUMENTS THEY ARE LIMITED TO MAKE THE RISK ZERO FOR ALL PRACTICAL PURPOSES. D ESPITE BEING MARKET - LINKED, LIQUID FUNDS HAVE NEVER HAD A NEGATIVE DAY. P RACTICALLY SPEAKING, THIS IS AS SAFE AS A BANK. L ARGE INVESTORS LIKE CORPORATES UNDERSTAND THIS WELL. T HE TOTAL AMOUNT INVESTED IN LIQUID FUNDS IS 1.76 LAKH CRORE. MUTUAL FUNDS O NE - DAY LIQUIDITY ALSO WORKS IN A VERY SIMPLE WAY. L IQUID FUND INVESTMENTS HAVE A DAILY CUT - OFF TIME OF 2 PM. I F YOU INVEST IN A LIQUID FUND BEFORE THAT POINT, YOUR MONEY WILL BE INVESTED ON THE PREVIOUS DAY ' S NAV, AND YOUR RETURNS START FROM THE VERY SAME DAY. W HEN IT ' S TIME TO REDEEM YOUR MONEY, YOU NEED TO PUT IN THE REDEMPTION REQUEST BEFORE 3 PM. T HE REDEMPTION VALUE WILL BE CALCULATED AS PER THAT DAY ' S NAV AND THE MONEY WILL BE CREDITED TO YOUR BANK ACCOUNT THE NEXT DAY. W HAT MAKES THE WHOLE THING SIMPLE IS THAT WITH MOST BANKS AND MOST MUTUAL FUNDS, THE WHOLE PROCESS CAN BE COMPLETED THOUGH SELF - SERVICE AND ONLINE. O NCE YOU REGISTER WITH A FUND FOR ON - LINE TRANSACTIONS ( AND ASSUMING THAT YOU HAVE A NET - BANKING ACCOUNT ), THERE ' S NO NEED TO FILL UP A FORM OR INTERACT WITH ANYONE PERSONALLY. Y OU CAN MOVE MONEY FROM YOUR SAVINGS ACCOUNT TO A LIQUID FUND WHEN YOU CAN SPARE THE MONEY AND MOVE IT BACK WHEN YOU NEED TO WITHDRAW IT. A NOTHER GREAT CONVENIENCE OF INVESTING IN A LIQUID FUND IS THAT CHOOSING ONE IS A VASTLY SIMPLER EXERCISE THAN CHOOSING OTHER TYPES OF MUTUAL FUNDS. T HE SAFETY JACKET INTO WHICH SEBI REGULATION HAS PUT ALL LIQUID FUNDS MEANS THAT A VAST PROPORTION OF THESE FUNDS ARE PRACTICALLY IDENTICAL.

4 Liquid Mutual Fund’s Advantage…. (Make your surplus money work best for you) ﲤ In the current interest rate scenario most Liquid fund scheme’s of mutual fund are giving daily annualized return in the range of 9.00% to 9.50% Please consider the below given calculation… Rs 1 Crore kept in a current account for 1 month - ROI is ZERO. Rs 1 Crore kept in a savings account for 1 month – ROI is Rs /- (assuming 4.00% annualized return) & ROI is Rs /- (assuming 6.00% annualized return). Rs 1 Crore invested in a Liquid fund scheme for 1 month – ROI is Rs /- (assuming 9.00% annualized return). Nandy Financial

5 Weekend Parking – Investor’s Paradise…. ● Number of weeks in a calendar year – 52 ● No of bank holidays in a year – 26 ● Effective non banking days on which liquid deployment can be considered during each calendar year days  Therefore investment period days (assuming the investment to be made latest by Friday, before 2.00 pm / 3 days return available on every weekend) and also some extended weekends.  This means a effective investment period of nearly ½ year. Now, assuming that liquid funds on an average give an annualized return of 8.00% during the year, the idle funds earn: 8.00%*182/365 = 4.00% on absolute basis.  So if we take a base figure of 1 Crore invested every weekend & take only 8.00% as the average annual return, the idle funds i.e 1 Crore invested every weekend will earn 4.00 lac during the year through week end parking in liquid funds. Nandy Financial

6 L IQUID /U LTRA S HORT T ERM F UNDS A N I DEAL C ASH M ANAGEMENT T OOL May 2012 Nandy Financial

7 Liquid Funds Liquid Funds are schemes which invests predominately in Money Market Instruments like commercial papers (CPs), Treasury Bills, certificates of deposits (CDs), call or notice money etc Money market instruments generally have a maturity period of less than one year and are considered very liquid in nature These funds are an attractive alternative to corporate and individual investors as a means to park their idle funds for short periods Liquid funds endeavours to provide investors with moderate income commensurate with low risk along with relatively higher liquidity These Mutual Fund Schemes are regulated by SEBI and follow the strict guidelines as outlined by SEBI Nandy Financial

8 Liquid Funds – Key Benefits  No Lock in Period: Generally there is no Entry and Exit Load in Liquid Funds, so in addition to week days, this funds can also be used as overnight/weekend funds parking destination.  Same Day Returns : Liquid Funds enables investors to earn same day returns since purchase takes place on pervious day’s NAV  Weekend Parking: Liquid Funds declare NAV on Sunday so returns can be earned over the weekend by parking the working capital instead of keeping funds idle.  Redemptions from Liquid Funds generally happens on a T+1 basis  Most liquid funds are highly rated, signifying minimum loss from credit defaults  Dividend : Tax free in the hands of the investors Nandy Financial

9 Ultra Short Term Funds - UST  Ultra-short Term funds are Mutual Fund Schemes that generally invest in fixed income securities with extremely short maturities, or time periods in which they become due for payment  They invest in a range of money market and debt instruments with maturities ranging from 3 to 18 months  Key Benefits : The ultra short term category funds provide treasury management and short term (up to 6 months) investment solutions to investors Aims to deliver better yield in short term periods in a tax efficient manner Higher accrual rate due to relatively longer maturities than liquid funds Nandy Financial

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13 Disclaimers The views expressed herein constitute only the opinions and do not constitute any guidelines or recommendation on any course of acction to be followed by the reader. This information is meant for general reading purposes only and is not meant to serve as a professional guide for the readers. Certain factual and statistical (both historical and projected) industry and market data and other information was obtained by Nandy Financial Advisory Pvt. Ltd.(Nandy Financial)from independent third-independent, third party sources that it deems to be reliable, some of which have been cited above. However, Nandy Financial has not independently verified any of such data or other information, or the reasonableness of the assumptions upon which such data and other information was based, and there can be no assurance as to the accuracy of such data and other information. Further, many of the statements and assertions contained in these materials reflect the belief of Nandy Financial, which belief may be based in whole or in part on such data and other information. Further, the information contained herein should not be construed as forecast or promise. Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Thank You Nandy Financial


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