In the one-year period ending September 23, 2008, you should credit yourself as a good fund manager if you have not lost any money, let alone got some returns. Which coveted mutual funds in India also managed to perform the same feat? Among the mutual fund investment arena in India, debt funds for sure.

Equity mutual funds as an investment? None of you would even hazard a guess. This is understandable considering that during this period, the benchmark index Sensex lost about 20 per cent of its value. But a category of equity funds braved this storm: arbitrage funds.

Only 10 equity funds managed to stay afloat in the one-year period ending 23, September 2008. And within this pack, the first seven positions in the list were taken by arbitrage funds. The rest went to pharma funds. Topping this list is UTI Spread Fund (Growth) with gave a return close to 9 per cent. It was followed by JM Arbitrage Advantage Fund (Growth), which also rose more than 8 per cent.  The other arbitrage funds in the list are ICICI Prudential Blended Plan – Option A (Growth); Kotak Equity Arbitrage Fund – Growth; SBI Arbitrage Opportunities Fund – Growth; HDFC Arbitrage Fund – Plan B (Institutional) – Growth; and HDFC Arbitrage Fund – Plan A (Regular) – Growth. This category of equity funds try to provide capital appreciation through arbitrage opportunities between the cash and derivative market. Arbitrage funds primarily invest in equity and equity-related securities, and derivatives. The rest is parked in debt securities.

How did these funds manage to sail smoothly in the rough weather? Well, the modus operandi of these funds provided a safety net. Arbitrage funds prey on pricing gap between the cash and future market. For example, a stock X is trading at Rs 100 in the cash segment and Rs 102 in the futures market.

The fund manager enters into a futures contract to sell the stock at Rs 102 and buys at Rs 100 in the cash segment. Meanwhile, irrespective of the market movement till the futures settlement day or until he squares off the position, the fund manger makes a profit of Rs 2 on a stock. Similarly, the fund manager can also make profit even if the futures are trading at a discount to the spot prices. These funds offer a low-risk way of benefiting from the equity markets. As the risk profile is relatively low, the returns are moderate.

On top of that, arbitrage funds offer the tax advantage as that of equity funds. As arbitrage funds invest mostly in equity or equity-related instruments, they are treated as equity funds. So they attract lower short-term capital gain tax of 10 per cent and are completely tax-free after one year. Though the top-performing debt funds during this period offered higher returns than arbitrage funds, the debt funds don’t offer that tax advantage. For long-term capital gains, debt funds are taxed at 10 per cent without indexetion or 20 per cent with indexation, whichever is lower, plus 10 per cent and 3 per cent cess. This translates to 11.33 per cent without indexation, or 22.66 per cent with indexation. And for short term capital gains, debt funds are taxed at 33.39 per cent vs 10 per cent for equity funds.

Question about debt funding

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Finance means providing funds for business or it is a branch of economics which also refers to the concepts of time,money,risk and other assets. In a Business management, finance is a most important characteristic as business and finance are interrelated. One can achieve its goal by choosing the correct financial instruments. Financial planning is essential for both the individual and an organization to ensure a secure future.</p>

Personal financial decisions may involve paying for education, insurance policies, and income tax management, investing and savings accounts. Personal finance is used to avoid burden and life become enjoyable, if getting it from a right source at minimum cost. Personal loan is also a part of personal finance.

Financial planning is very important in business to achieve its objectives. In general, payment plans available under an insurance premium finance arrangement consist of a down payment followed by equal, monthly installments. The amount of down payment required, as well as the number of installments to be paid by the insured, may vary depending on the underlying insurance policy terms and conditions, the nature of the insured’s business and the credit worthiness of the insured. The complete terms of the premium finance loan, including the payment schedule and interest rate charged, are reflected on the finance contract.

Small business finance is a stepping stone for all small businesses. With small business finance borrower can minimize the difficulty of funds that the borrower comes across during the business. There are two main types of finance available to small business. They are Debt Finance and Equity Finance. In Debt Finance, the borrower has to repay the principal and interest where as Equity Finance is a time consuming process. The source of equity finance may be through a joint venture, private investors.

Professionals in corporate finance assist organizations invest money to run the business and grow the business. Theses specialists work to support and expand business operations. Online has proved to be a simple and the fast method of acquiring the small business finance. The small business finance borrower must not forget to compare the quotes of different lenders in respect to repayment period, lower interest rate, and the loaned amount.

Vendor program arrangement is a kind of financing arrangement in which finance is offered to the customers as a sales, marketing & deal closing tool. Country, state, city or municipality finance is called public finance. It is concerned with the budgeting process.

Each type of company requires a unique way of marketing depending on what kind of focus they have for their company. Advertising a company is purely based on the products. Making the plan and getting the overview is not enough. Company needs to put the plan into action and follow it up and evaluate it periodically.

International finance is the branch of economics that studies the dynamics of exchange rate,foreign investement, and how these affect international trade. It also studies international projects, international investments and capital flows, and trade deficits. It includes the study of futures, options and currency swaps. Together with international trade theory, international finance is also a branch of international economics.

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How Funds are sold

Mutual Funds primarily depend upon individual agents and distribution companies to market their schemes to the investors. Nowadays, they also market their schemes directly.

The individual agents who sell schemes of various Mutual Funds also act as financial advisors to many investors. Hence they are required to clear various examinations before acting as an agent. Many Mutual Funds prefer to deal with distribution agency than individual agents as it is easier to manage. These distribution agencies, with their highly qualified executives, will be able to offer better financial advice than individual agents to the investors.

Nowadays, the sales officers and other employees of the investment companies directly approach the investors (particularly the high net worth individuals and corporate clients) to sell different schemes. However, most of the sales of Mutual Funds happen through other distribution route than from marketing directly.

Investment Policies

Every Mutual Fund has a specified investment policy which will be described in the Mutual Fund’s prospectus. A family of Mutual Funds will be managed by an Asset Management Company. This Asset Management Company will collect funds from investors and charge a management fee for operating them. They enable investors to invest across different market sectors and switch assets across funds while still benefiting from centralized record keeping.

The investment policies of different types of funds are as follows:

• Equity Funds. They invest in stock. However, they will hold 4% to 5% of their assets in money market securities to offer liquidity. Income funds will hold shares of firms giving high dividend yield and Growth funds will hold shares of firms that enable faster capital appreciation. Sector funds focus on a particular industry.

• Debt Funds. These funds invest in fixed-income securities. Different funds will concentrate on Treasury bills, corporate bonds, Mortgage-backed securities and other kinds of bonds. Some of the funds also specialize on maturity.

• Index Funds. Index funds buy shares that are included in a particular index in proportion to each share’s representation in that index. Investing in index funds is a passive strategy because the investors need not do any security analysis.

• Money Market Funds. These funds invest in short-term low-risk instruments of the money market. Since the liquidity is high, some of the funds even offer cheque writing facilities to their investors.

Apart from these funds there are many different varieties of funds with unique investment policies like the international funds which invest in different securities across the world, the balanced funds which minimize risk without compromising heavily on growth opportunities and current income and the flexible funds which depend on market timing.

For more information about how mutual funds work visit Mutual Funds and to know about investing in mutual funds visit Investing in Mutual Funds

Question about debt funding

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Fund managers – they are the ones in charge of distributing and managing the different funding for any one particular company or another. They decide how much money will be spent on employee events and parties, payment bonuses, and decoration around the company or office. Fund managers are also responsible for designated funds to pay for cleaning expenses and repair services, as well a host of other things. As you can see, the job of a fund manager is quite an important one. Despite this fact, however, many companies wonder if a fund manager is really worth all of their wages and bonuses…and they answer may shock you.

The fund manager can be done away with effectively, as long as somebody remains in the company that is qualified to take care of their duties. These duties can be split between several different candidates or all given to one individual – the choice as a business owner is yours. However, this is a choice that should be considered very carefully. The duties of a fund manager are very complex, and the job is certainly not right for everyone. Here are a few tips you can use to better determine if you need a fund manager for your company, and if not, who the fund managing duties should be given to.

Your ideal candidate will be somebody who is trustworthy, and someone who has already built solid professional relationships with everybody in the company. At the same time, you will probably want to avoid anybody who has too many close, personal relationships with anybody who is working within the company. In order to make sure the individual truly has the company’s best interests in mind, you will need to make sure that the candidate is completely unbiased and professional at all times.

Next, you are going to make sure your candidate is reliable. Take a moment to look at their past attendance record. If they have missed an extraordinary amount of days, you should probably look elsewhere. On the other hand, if they have been on time every day and have never missed a shift, you might already have the perfect candidate. Reliability is a big part of the fund manager’s responsibilities, and as we all know, not everybody in this world is reliable.

You also want to choose somebody with a good head on their shoulders. Somebody who can properly analyze financial situations and make recommendations based on that analysis will go a long way as a fund manager. Also, somebody who has fresh, new ideas is a plus, too. You will definitely want an innovative person who is capable of finding unique ways of distributing necessary funds – in this way you might even start a new trend amongst fund managers in the industry, you never know.

While fund managers are a crucial part of any company, their position can be cut in drastic times and their duties put elsewhere. While this might not be an ideal way to operate and manage the funds of your business, many companies do it, and some even rely on it to operate day to day.

For more information on debt funds, visit http://www.emergingmarketsdebtfund.com/

Question about debt funding

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