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Government Bond Purchase – How to open Gilt Account?

Personal Finance

July 15, 2021

Government Bond Purchase – How to open Gilt Account?

Retail investor can purchase Government Bond now. New facility of Retail Direct Gilt Account is launched. Gilt account is required in order to buy and sell bonds. All government securities are available centrally on this site. Earlier the facility of buying bond and government securities were available only to banks and mutual funds. Gilt account or Retail Direct Gilt account is mandatory to purchase bonds by retail investors. No fee is applicable in order to open and maintain RDG account. In this post, we will take a look at how to open Gilt Account and eligibility to open Gilt Account.

Retail Direct Gilt Account

Retail Direct Gilt Account (RDG Account)

Individual have facility to open and maintain the Retail Direct Gilt (RDG) account with RBI. RDG account can be opened at online portal. Registered investor can access primary government securities as well as NDS-OM (negotiated deal system – order matching) system. Following government securities can be purchased via this account.

Government of India Treasury Bill
Government of India dated securities
Sovereign Gold Bonds
State Development Loans

Eligibility to open RDG Account

Eligibility criteria and requirements to open RDG account are given below.

i) Rupee savings bank account maintained in India;

ii) Permanent Account Number (PAN) issued by the Income Tax Department;

iii) Any OVD for KYC purpose;

iv) Valid email id; and

v) Registered mobile number.

Nonresident retail investors can also invest in government securities as per FEMA act. RDG account can be opened singly or jointly with other retail investor.

How to open Gilt Account?

Investors can register on the online portal by filling up the online form. Once form is filled OTP is send on the registered mobile number and e-mail id. On authentication form is submitted.

On successful registration, the instructions of accessing web portal will be sent via SMS and e-mail address. The account can be accessed for both primary and secondary market.

For buying government securities, payment can be made via net banking & UPI facility. The fund will be deducted from linked saving bank account. Once payment is made securities are credited into RDG account.

Services offered on RDG account

Services offered on RDG account are given below.

Account Statement

You can get account statement including transaction history and balance position via account statement. Transaction alert of this account is provided via e-mail and SMS.

Nomination

Nomination facility is available under this account. One can fill up nomination form and after signing form uploading can be done.

Lien Facility

Securities held in the RDG Account will be available for pledge/lien.

Gift Transactions

One can perform online transaction to gift government securities to other Retail Direct Investors. The entire transaction can be performed online.

Grievance redressal

Any query or grievances related to ‘Retail Direct’ Scheme can be raised on the portal which will be handled or resolved by Public Debt Office (PDO) Mumbai, RBI.

No fee will be charged for opening and maintaining “Retail Direct Gilt Account” with RBI.

Note – Above information is taken from RBI Press Release.

Technology Fund for Investment 2021-22 – 130% Returns 1 Year

Mutual Funds

Shitanshu Kapadia

July 2, 2021

Technology Fund for Investment 2021-22 – 130% Returns 1 Year

The technology fund is a sectorial fund. Technology fund makes investment in information technology-related stocks and business. Information Technology is one of the key driving factor behind the economy. IT sector is booming despite of Covid-19.

The growth behind information technology companies are mainly due to technology advancement. The companies dealing in digital services, industry 4.0, Artificial intelligence, machine learning & data science is in demand.

Thus it makes sense to invest in information technology related stocks and technology funds. However, technology funds are risky in nature as performance of these funds purely depends on performance of IT sector. One can expect double digit returns from these mutual funds in 3-5 years.

In this post, I will share list of Top Technology Fund for Investment 2021-22. These funds have generated 130% returns for the investors in 2021-22.

Technology Fund for Investment 2021-22 – 130% Returns 1 Year

Technology Funds

ICICI Pru Technology Fund – Growth

ICICI Pru Technology Fund is one of the best technology fund. It is three star rated mutual fund by CRISIL. This fund is managed by the experience fund manager. The major stock holding of this fund are Infosys, HCL, TCS & Tech Mahindra. Expense ratio of this fund is slightly higher. This fund has generated 134% returns for the investors in last 1 year. 1 Lakh invested this fund has become 2.34 Lakh in 3 years. This fund has generated 1190% returns since launch.

Tata Digital India Fund

Tata Digital India Fund is another best technology fund for investment. Tata Digital India Fund invests 80% of net assets in equity related instruments of companies in IT sectors. The top holdings of Tata Digital India fund are Infosys, L&T Infotech, HCL, Persistent system and Tech Mahindra. Tata Digital India Fund has generated 118% returns in last 1 year. 1 Lakh investment in this fund has become 2.17 Lakh in 3 years.

Aditya Birla Sun Life Digital India Fund

Aditya Birla Sun Life Digital India Fund is CRISIL four star rated fund. The prime focus of this fund is to invest in technology and technology related companies. Top holding of Aditya Birla Sun Life Digital India Fund are Infosys, TCS, Tech Mahindra, HCL Technologies and Cyient. This fund has generated 113% returns for the investors in last one year. This fund has generated 210% returns for the investors in last 5 years.

SBI Technology Opportunity Funds

SBI Technology Opportunity Fund is next fund that have generated magnificent returns for the investors in last one year. SBI Technology Opportunity fund make investment in Indian stock as well as foreign stocks. This fund has generated 94% returns for the investors in last one year. Top stocks where this fund have invested money are Infosys, HCL Technology, TCS & Alphabet. The expense ratio of this fund is slightly higher.

Franklin India Technology Fund

Franklin India Technology Fund is next best technology fund in the list. Franklin India Technology fund is comparatively new. It is medium size fund. This fund has generated 74% returns for the investors in last one year. Top holding of this fund are Infosys, HCL and TCS. 1 Lakh investment in this fund has become 1.99 in last 3 years. It is categorized as risky fund for the investment.

Who should invest in Technology Fund?

Technology fund are sectorial fund. Technology funds are risky in nature. The investor with ability to tolerate risk can only plan investment in this fund. Investment in these funds should be done with prospective of 5-7 Years. One should monitor performance of these funds at regular interval. It is advisable to go for SIP route while making investment in technology funds.

Best Focused Equity Funds for Investment 2021

Mutual Funds

Shitanshu Kapadia

June 24, 2021

Best Focused Equity Funds for Investment 2021

Focused mutual funds are also known as concentrated mutual funds. This fund holds limited number of quality stocks. As focused funds invests in limited number of stocks that’s why focused fund does not offer benefit of diversification. Focused equity funds are suitable for long term aggressive investors. If you are planning to invest in focused equity funds, here are Best Focused Equity Funds for Investment in 2021.

Focused Fund

What are Focused Funds?

Focused Funds invest 65% of total assets in equity and its related securities. As per SEBI guideline, focused fund invest in maximum 30 stocks. Focused funds are multicap funds that invests in any capitalization large cap, small cap, mid cap etc. There is no restriction on where these funds can invest. Fund manager are free to allocate funds.

Benefits of Focused Funds

Quality Investment – Fund manager carryout good research before selection of stock. This means fund manager makes quality investment that are expected to give better returns to the investor. The investment done in this type of funds are research funds.

Probability of Higher Returns – Focused fund are risky in nature. However, as investment is made in quality stocks probability of getting returns in these fund is higher.

Mitigation of risk against over diversification – Investor can benefit from concentrated stock portfolio selection. This fund mitigate risk of over diversification. Fund manager keeps low number of stocks in the portfolio. This means tracking of portfolio is easy.

Best Focused Equity Funds for Investment 2021

(1) SBI Focused Equity – Growth Fund

SBI Focused Equity fund is first in the list of best focused funds. SBI Focused Equity fund is three star rated fund. SBI Focused equity fund has generated very good returns for the investor in last one year 52.25% (As on 22^nd June, 2021). This fund is managed by experienced fund manager. One can invest in SBI Focused Equity fund with long term perspective.

(2) Axis Focused 25G

Axis Focused 25G is one of the best focused fund. This fund makes investment in 25 different stocks and create concentrated portfolio. This fund focus on the companies that has capacity to sail through adverse business cycle without volatility. This fund is managed by expert fund manager. This fund has generated 48% returns in last one year.

(3) ICICI Prudential Focused Equity Fund

ICICI Prudential is four star rated fund. This fund invests in large cap, small cap and mid cap stocks. ICICI prudential focused equity fund has ability to deliver higher returns. This fund has invested majority of capital in financial, health care, technology and energy. This fund has generated 49% returns for the investor in last one year.

(4) Motilal Oswal Focused 25 Fund

Motilal Oswal Focused 25 fund is three star rated fund. This fund has ability to deliver higher returns for the investors. The fund has majority of its money invested in Financial, technology, services, automobile and healthcare sector. This fund has delivered 45% returns to the investor in last one year.

(5) Principal Focused Multicap Fund

Principal Focused Multicap fund is very good fund for the investment. This fund is performing better and constantly generating higher returns for the investors. This fund is managed by experience fund manager. Expense ratio of this fund is slightly higher. In last one year this fund has generated 56% returns for the investor.

Points to consider before investing in Focused Funds

Tax Impact – You should check tax impact before investing focus fund. Focus funds are equity oriented fund. Two types of taxes are applicable on focused fund. LTCG or Long term capital gain is taxed at 10% on the profit above 1 Lakh in a year. In case amount is withdrawn before 1 year you need to pay short term capital gain tax which is 15% on the profit.

Expertise of Fund Manager – Skill and knowledge of fund manager is extremely important. Fund manager has to do research and find out stock that offers assured returns. You should look at fund manager experience and skill before investing.

Financial Objectives – Financial objective of investor is another important factor of consideration. Your financial objective should be long term at least 5 to 7 years. You should be clear with your financial objective before making investment.

Gilt Mutual Funds – Should You Invest?

Mutual Funds

Shitanshu Kapadia

June 3, 2021

Gilt Mutual Funds – Debt mutual funds are considered as safe investment option. Gilt Funds are type of debt fund that makes investment in government securities.

Recently one of my friend asked question about Gilt Mutual Funds. He asked me that he is looking for safe investment option. Should he opt for Gilt Funds? So, here is answer. Gilt funds are safe in nature and suitable for low risk conservative investors. These funds have zero default risk. However, these funds have higher interest rate risk. Interest rate movements affects these funds. Here is complete information about Gilt Mutual Funds including factors that you should consider while investing in Gilt Funds.

Gilt Mutual Funds

How Gilt Fund Works?

Gilt Fund are money market funds. Gilt Fund invests in the government securities with fixed maturity. These government securities are issued by government time to time. As and when state or central government are in requirement of funds, the demand is made to RBI (The Reserve bank of India). RBI takes funds from the banks and insurance companies and lend to the central and state government. RBI issues government securities against this funds. Gilt funds purchase these funds. On the maturity interest payout is received.

As per SEBI norms, gilt funds have mandate to invest at least 80% of their asset in the government securities. There are two types of gilt funds available in the market. First type of fund make investment in the government securities with multiple maturity period. Whereas second type of fund make investment in the government securities with fixed maturity period.

Factors to consider while investing Gilt Funds

Risk

Gilt Mutual Funds are no risk fund. These funds make investment in government funds where risk of default on payment is NIL. These fund only carry risk of change in the interest rates. In case of rise in the interest rate the NAV of Gilt fund falls.

Returns

The return of gilt fund depends on the interest rate change. This fund can offer return up to 8-10%. However, returns in this case is not fixed. This year gilt fund has offered 4.65% return. In the last five years returns are in range of 9-10%.

Expense Ratio

You should also consider Expense ratio while making investment in the Gilt Fund. The expense ratio is fee charged by fund management services. You should look at the fund with lower expense ratio.

Who should invest in Gilt Mutual Funds?

Gilt fund is alternative of fixed deposit scheme. However, fixed deposit offers fixed returns whereas gilt fund gives variable returns. These funds are not liquid in nature. If you are looking for frequent redemption you should not invest in this fund.

The risk adverse investors with conservative approach can think of investing in Gilt mutual funds. If you have lower risk tolerance and you want to stick to government securities these funds are for you.

These funds are for long term duration. You should not invest in this fund for short term duration. In the short term duration, you are likely to face losses.

If you are conservative investor than also you should avoid gilt mutual funds. You should look for other investment options such fixed deposit or post.

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