Ulips will now become more of an insurance product and less of an investment scheme following a change in regulatory norms proposed by the Insurance Regulatory and Development Authority (IRDA) today.
The regulator has tightened its rules for unit-linked insurance plans (Ulips) by increasing the lock-in period to five years from three years; spreading out the overall charges evenly over the lock-in period and thereby reducing the high commissions paid to agents in the first year; and hiking the minimum sum assured to 10 times the annualised premium as against five times now.
According to a circular issued by the regulator today, all Ulips sold after September 1 must comply with the changed norms.
Ulips will have a lock-in period of five years, and if a policy is surrendered or lapses because of the non-payment of premium during the lock-in period, the residuary payment will be paid only after five years from the commencement of the policy.
The high, front-ended charges in Ulips, particularly in the initial years, will go.
The regulator said, “Insurers will now distribute the overall charges in Ulips in an even fashion during the lock-in period. Charges on Ulips are mandated to be evenly distributed during the lock in period to ensure that high front ending of expenses is eliminated,” the IRDA circular stated.
Following this, insurance agents will no longer get a commission as high as 40 per cent in the first year from an Ulip.
The regulator has also increased the minimum sum assured in case of an Ulip with a regular premium payment option to 10 times the annualised premium from five times at present.
The sum assured has been increased to 10 times in cases where the policyholder is below 45 years of age. It will be seven times the annualised premium for policyholders who are aged 45 years or above.
An increase in sum assured means a larger amount of the premium will be deducted towards mortality charges, and this will lower the allocation of premium to the investment fund.
In other words, Ulips will yield lower returns to policyholders.
In single premium policies, the minimum sum assured is 1.25 times the single premium for policyholders aged below 45 years and 1.10 times for policyholders who are 45 years or more.
Wednesday, June 30, 2010
Thursday, June 17, 2010
Axis Income Saver Fund NFO: Review Analysis & Details
Here are some basic details about Axis Income Saver Fund.
What are the NFO dates for Axis Income Saver Fund?
The NFO for Axis Income Saver Fund is from May 24 2010 and will close on 16 June 2010. After that, regular buying and purchasing will commence through the end of the day NAV system.
What is so unique about this Axis Income Saver Fund?
This fund claims to be an income fund providing regular income for short duration of time in future, say 2 to 4 years period. This fund is said to have the following investment objectives: Majority of the money collected from investors of this fund will be invested in debt and money market securities and hence it will try to generate some form of regular income in form of dividend payments, coupon payments, etc. That is where the word "INCOME" is derived. A small portion of money will also be invested in the equity as well as derivative products. The purpose for this leg of investment in equity & derivative products is to generate some form of capital appreciation. Therefore, this fund will try to achieve regular income for regular payouts through majority of investment in Bonds, Debt and money market instruments, while some investment in equity & derivative products will try to get some capital appreciation.
However, from a analyst point of view, I look at it as the sole discretion of the fund managers, where they want to put the money on. As like any other funds, this fund is not promising or giving any guarantee that it will provide regular monthly or yearly income or this much percentage of returns in guaranteed if you invest so much for so long time. Overall, it looks like another mutual fund with majority of exposure to the debt instruments, hence investors willing to go for a dent-oriented scheme can put their money in. However, no guarantee of any returns.
The fund also claims "Risk Management", but in the PDF on their site, there is no explanations on how the risk will be managed or what guarantee do their risk management practices will provide. They mention about some simulation model, even have a graph showing how the simulation is beating the underlying benchmark index, but again, no guarantee of anything in future.
Some 5 different reasons are cited for investing in Axis Income Saver Fund: Exposure to Fixed Income security, quantitative asset allocation, professional money management, open ended scheme, Exposure to equities for capital appreciation. Now which mutual fund does not provide these (except for quant asset allocation)? Even for quant asset allocation and so called risk management, there is no guarantee for anything.
The Axis Income Saver Fund will be benchmarked to CRISIL MIP Blended Fund Index Ninad Deshpande will be the Fund manager for Fixed Income investments, while Pankaj Murarka will take care of equity investments.
After the NFO period, the regular buying and selling will commence from 16th July 2010.
Minimum Investment:
Purchases: Rs. 5000/- and in multiple of Re. 1 thereafter.
SIP or Systematic Investment Plan is also available.
Investment Options for Axis Income Saver Fund :
- Growth
- Dividend (Payout and Reinvestment)
No Tax Benefit is available in the Axis Income Saver Fund
The entry load for Axis Income Saver Fund is as follows:
Entry Load for Axis Income Saver Fund :
Zero Entry Load
Exit Load for Axis Income Saver Fund:
Exit within 1 years from the date of allotment - 1 %;
Exit after 1 years from the date of allotment - Nil
Final Thoughts about the Axis Income Saver Fund?
By investing in this fund, one is betting on the skills of the two fund managers. Since the fund is both a mix of debt and equity investments, the asset allocation becomes important. In addition, focus is more on the debt side.
Overall, this Axis Income Saver Fund is just another new fund offer for a hybrid kind, without anything unique that sets it apart.
What are the NFO dates for Axis Income Saver Fund?
The NFO for Axis Income Saver Fund is from May 24 2010 and will close on 16 June 2010. After that, regular buying and purchasing will commence through the end of the day NAV system.
What is so unique about this Axis Income Saver Fund?
This fund claims to be an income fund providing regular income for short duration of time in future, say 2 to 4 years period. This fund is said to have the following investment objectives: Majority of the money collected from investors of this fund will be invested in debt and money market securities and hence it will try to generate some form of regular income in form of dividend payments, coupon payments, etc. That is where the word "INCOME" is derived. A small portion of money will also be invested in the equity as well as derivative products. The purpose for this leg of investment in equity & derivative products is to generate some form of capital appreciation. Therefore, this fund will try to achieve regular income for regular payouts through majority of investment in Bonds, Debt and money market instruments, while some investment in equity & derivative products will try to get some capital appreciation.
However, from a analyst point of view, I look at it as the sole discretion of the fund managers, where they want to put the money on. As like any other funds, this fund is not promising or giving any guarantee that it will provide regular monthly or yearly income or this much percentage of returns in guaranteed if you invest so much for so long time. Overall, it looks like another mutual fund with majority of exposure to the debt instruments, hence investors willing to go for a dent-oriented scheme can put their money in. However, no guarantee of any returns.
The fund also claims "Risk Management", but in the PDF on their site, there is no explanations on how the risk will be managed or what guarantee do their risk management practices will provide. They mention about some simulation model, even have a graph showing how the simulation is beating the underlying benchmark index, but again, no guarantee of anything in future.
Some 5 different reasons are cited for investing in Axis Income Saver Fund: Exposure to Fixed Income security, quantitative asset allocation, professional money management, open ended scheme, Exposure to equities for capital appreciation. Now which mutual fund does not provide these (except for quant asset allocation)? Even for quant asset allocation and so called risk management, there is no guarantee for anything.
The Axis Income Saver Fund will be benchmarked to CRISIL MIP Blended Fund Index Ninad Deshpande will be the Fund manager for Fixed Income investments, while Pankaj Murarka will take care of equity investments.
After the NFO period, the regular buying and selling will commence from 16th July 2010.
Minimum Investment:
Purchases: Rs. 5000/- and in multiple of Re. 1 thereafter.
SIP or Systematic Investment Plan is also available.
Investment Options for Axis Income Saver Fund :
- Growth
- Dividend (Payout and Reinvestment)
No Tax Benefit is available in the Axis Income Saver Fund
The entry load for Axis Income Saver Fund is as follows:
Entry Load for Axis Income Saver Fund :
Zero Entry Load
Exit Load for Axis Income Saver Fund:
Exit within 1 years from the date of allotment - 1 %;
Exit after 1 years from the date of allotment - Nil
Final Thoughts about the Axis Income Saver Fund?
By investing in this fund, one is betting on the skills of the two fund managers. Since the fund is both a mix of debt and equity investments, the asset allocation becomes important. In addition, focus is more on the debt side.
Overall, this Axis Income Saver Fund is just another new fund offer for a hybrid kind, without anything unique that sets it apart.
Saturday, June 12, 2010
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