Brother, I've to make some payments by year-end so instead of keeping the money in current account @bank I guess its better to invest in mutual funds. The reason for selecting low risk funds is that am not sure what will happen with the stock market as I've now been following it for a few days before Panama result was announced and its going too much up down. And investing in it now for short term when its already at 49K, not sure what's going to happen in coming days. Keeping in view this, I checked MUFAP where capital remains safe.
I've no idea about Absolute and Annualized returns. Tried to check on google baba but cannot understand. Could you please explain it in simple terms...
Now coming to bottom line...have checked Money Market and Income fund and following seems to have high returns in 180 days. Kindly advise. I think NAFA seems secure?
Money Market
Askari Sovereign Fund
NAFA Govt. Securities Fund
Income FUnd
Dawood Income Fund
NAFA Savings Plus Fund
NAFA Financial Sector Fund
On a side note as I already mentioned that stock market is now already at 49K, is it wise to invest in it now for long term or should I wait? Was waiting for market to go down after panama but it was a total shock and surprise
It wasn't really a shock and surprise. If you go to the
NCCPL website, you can see who the major buyers and sellers in the market are on any particular day. If you look at 19-Apr-17, you will see that the companies and mutual funds (the institutions) were major buyers that day. I have heard that the decision in favor of the government was somewhat expected, therefore many many players took positions leading up to that. I have also heard that the govt. made major govt institutions like NIT (Its the only govt. controlled / public sector AMC), govt pension funds, etc. to buy into the market in order to support it. That's why the market was up around 700 pts the day before the decision. My old company also had many clients convert into/buy equity funds. But still, it was a risk. Sometimes you have to bet against the market sentiments in order to make good returns.
The market is currently trading above 49,000 pts. It is having some trouble breaching the 50,000 psychological barrier / resistance level. Personally, I would wait till the market reaches around 48,800 or below, or wait a couple of months to look at the whole JIT scenario before investing in equity.
I am not directly involved in financial markets anymore so I am not the right person to give you advice. If you are really interested in going into equity markets and have the risk appetite for it, I would suggest opening an account with a good broker. That is the direct approach for investing in equity. Otherwise, if you are interested in Mutual Funds, I would advise you to consider investing through a mutual fund distributor. MUFAP has a section for distributors and you can look at it.
If your money is currently sitting in your current account, then you should really consider investing it. What you can do is, you can invest in low risk Money Market/Income Fund right now and then when you think the time is right, you can convert the investment into equity funds; that is if you want to bear the risk.
Finally, if you are looking at returns, then you really should know the difference between annualized and absolute returns. You can't interpret and compare the historic performance of different assets without knowing the difference.
Simply put, annualized return is the return per year. For example, if an income fund past 180 days historical return (annualized) is 6%, then that means that the fund has actually returned around Rs. 3 (3%) on a Rs. 100 investment. The annualized return / return per year is 6%, i.e 3% * 365/180. The actual calculation is more complex than this.
Go here or use google if you are more interested. Return of some assets are sometimes annualized in order to easily compare their performance/returns, as they can be held for different periods of time.
Absolute return is the actual return you have earned. If the past 180 Days actual return is 6%, then this means you have earned Rs. 6 on a Rs. 100 investment overt the past 180 days.
On MUFAP, you can't compare annualized return and actual returns of different fund categories for periods less than 1 year (365 days). If you want to compare returns, compare the past 365 days returns (last column).
