Mutual Fund Research

8/2/2019 Mutual Fund Research

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L & T INFRASTRUCTURE BOND 2011B

Save tax & earn interest at 9% p.a.

The Indian economy is on a robust growth trajectory and the best way to be a part of Indiasgrowth story is to invest in its lifeline its infrastructure. L&T form Infrastructure Finance

Company Ltd. has played an important role in financing projects, funded through long term

investment instruments for Infrastructure development and construction across the country.

L&T Infra is proud to bring to you, for the second year running, the Long term Infrastructure

Bonds. These tax-saving bonds let you invest indirectly on a long term basis, in infrastructure

projects across the country and aid in the growth of India. By investing in L&T Infra 2011B

Bond Series, investors can save tax and earn an annual interest rate of 9%. The 2011B series

provides investors buyback options at the end of 5 years and 7 years. In addition to this, 2011B

Bond Series provides investors the option of holding the bonds in Physical or Demat form.

Heres a defined structure ofinterest rates and tax deduction under these bonds

Issuer L & T limited

Rating AA+ by CARE & AA+ by ICRA

Face value Rs.1000

Issue value at par (Rs. 1000 per bond)

Minimum subscription Rs.5000

Tenure 10 years with the buyback option

of 5 years & 7 years.

Option for subscription Series 1. Annual and buyback -

9% p.a.

Series 2. cumulative and

buyback 9% p.a.

Issue open November 25, 2011

Issue close December 24, 2011

Lock in period 5 years

Eligible investor 1.Indian national resident in

single or joint name( not more

than three)2. HUF, in the individual name

of KARTA

Collecting bank to issue AXIS BANK, City Union Bank,

HDFC BANK, ICICI BANK,

IDBI BANK, SBICheque to be made in favor of L & T INFRA BONDS 2011B


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Series Annual pay back

1

Cumulative pay back

2

Face value Rs. 1000 Rs. 1000

Minimum subscription Rs. 5000 Rs. 5000

Bay back option Yes YesBuy back period At the end of 5 years &

At the end of 7 years

At the end of 5 years &

At the end of 7 years

Yield on buyback 9% p.a. 9% compounded

annually

Bay back Amount Rs. 1,000 at the end of 5

years

Rs. 1,000 at the end of 7

years

Rs. 1,538.62 at the end of

5 years

Rs. 1,828.04 at the end of

7 years

Buy back intimationperiod

The period commencingfrom 6 months preceding

the relevant Buyback

Date and ending 3

months prior to such

Buyback Date.

The period commencingfrom 6 months preceding

the relevant Buyback

Date and ending 3

months prior to such

Buyback Date.

Interest payment Yearly Yearly

Interest rate 9% p.a. 9% compoundedannually

Yield on maturity 9% p.a. 9% compounded

annually

Maturity Amount Rs.1000 Rs.2367.36

Maturity Date 10 years from Deemed

Date of Allotment

10 years from Deemed

Date of Allotment


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Tax Deduction: - 20000 under section 80CCF of INDIAN INCOME TAX ACT, 1961

Document Required

1. Proof of identification for an individual. Following documents are acceptable asproof for individuals.

a. Passportb. Voters idc. Driving licensed. Defense Ide. Photo Pan Cardf. Photo Ratio Card

2. Proof for Residential Address.a. Passportb. Voters IDc. Ration Cardd. Society ongoing Bille. Life Insurance Policyf. Electricity Billg. Telephone Bill

Tax Bracket Tax SlabDeduction

Amount

Post tax

Return

Highest 30.9% Rs. 6180 15.56%

Medium 20.6% Rs. 4120 13%

Lowest 10.3% Rs. 2060 10.85%


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IDFC INFRASTURCTE BOND 2011

IDFC is a leading knowledge-driven financial services company in India and plays a central role

in advancing infrastructure development in the country. The Company provides a full range of

financing solutions to its clients. Established in 1997 as a private sector enterprise by a

consortium of public and private investors, the Company listed its Equity Shares in India

pursuant to an initial public offering in August 2005.

Insure IDFC LIMTED

Rating AAA by ICRA & AAA by FITCH

Face value Rs.5000Issue value at par (Rs. 5000 per bond)

Minimum subscription Rs.10000

Tenure 10 years with the buyback option of

5 years

Option for subscription Series 1. Annual and buyback -9%

p.a.

Series 2. cumulative and buyback

9% p.a.

Issue open November 21, 2011

Issue close December 16, 2011

Lock in period 5 years

Eligible investor 1.Indian national resident in single

or joint name( not more than three)

2. HUF, in the individual name of

KARTA

Listing Bond will be listed on NSE & BSE


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Series Annual pay back

1

Cumulative pay back

2

Face value Rs. 5000 Rs. 5000

Minimum subscription Rs. 10000 Rs. 10000

Bay back option Yes Yes

Buy back period After 5 years After 5 years

Buy back intimation The period beginning

not before nine

months prior to the

Buyback Date and

ending not later than

six months prior to theBuyback Date

The period beginning

not before nine

months prior to the

Buyback Date and

ending not later than

six months prior to theBuyback Date

Yield on buyback 9% p.a. 9% compounded

annually

Bay back Amount Rs. 5000 Rs.7695

Interest payment Yearly Yearly

Interest rate 9% p.a. 9% compounded

annually

Yield on maturity 9% p.a. 9% compounded

annually

Maturity Amount Rs. 5000 Rs. 11840

Maturity Date 10 years from Deemed

Date of Allotment

10 years from Deemed

Date of Allotment


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Tax Deduction: - 20000 under section 80CCF of INDIAN INCOME TAX ACT, 1961

Document Required

1. Proof of identification for an individual. Following documents are acceptable asproof for individuals.

g. Passporth. Voters idi. Driving licensej. Defense Idk. Photo Pan Cardl. Photo Ratio Card

2. Proof for Residential Address.h. Passporti. Voters IDj. Ration Cardk.

Society ongoing Bill

l. Life Insurance Policym. Electricity Billn. Telephone Bill

Tax Bracket Tax Slab DeductionAmount

Post taxReturn

Highest 30.9% Rs. 6180 15.56%

Medium 20.6% Rs. 4120 13%

Lowest 10.3% Rs. 2060 10.85%


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Equity Linked Saving Schemes (ELSS)

About ELSS:-

An ELSS (Equity Linked Savings Scheme in equity and equity-related securities.ELSS is just

like a diversified equity fund in terms of their portfolio. Subject to change in income tax

regulations. They have a 3- Year lock-in- period. ELSS offer a tax deduction under section 80C

up to investments of Rs 1, 00,000*

The purpose of tax exemption under section 80C is to promote the habit of savings and long term

investment. Unfortunately, however, we generally dont plan for the ideal investment avenue in

advance and take last minute decisions, disregarding all the good advice we know about

choosing investment products well. With this article, we evaluate the ELSS mutual funds

category, a Section 80C favorites, and discuss the best way to get the most out of your ELSS

investments.

As per Section 80C of Income Tax Act, individuals are allowed to invest up to Rs. 100,000 in tax

saving instruments, which will be deductible from their Gross Total Income. Tax-saving mutual

funds (or ELSS i.e. Equity Linked Saving Schemes as they are more popularly known),

Insurance Plans, PPF, and NSCs are some of the avenues where an investor can invest and save

tax. When selecting a tax saving product, choose one that can help you meet your financial

objectives and matches your saving patterns


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Why ELSS?

1. Claim Deduction on Rs 1 lakh:-

Those readers who have still trying to search for an investment option for tax savings, can get

deduction u/s 80C which by virtue of clause 2(xiii) gives deduction up to Rs 1 lakh

2. Minimum lock in period:-

The PPF or NSC gives you risk free returns but they have lock in period of six years, whereas

ELSS has only 3 years of lock in period. SO, after three years only you can get your wealth back

3. Tax free gains:-

While interest from PPF is tax free , interest from NSC is taxable. Whereas in case of ELSS, not

only tax on the long term capital gains is tax free, even dividends you receive are tax free.

4. Tax free dividends :-

ELSS schemes keep giving dividend on regular intervals & the whole dividend you receive is tax

free.

5 .No entry Loads (Less Expensive):-

Say if you invest Rs 10000 in ELSS Scheme your complete Rs 10000 is invested in Mutual

Fund.

6. High Growth:-

Equity funds can be volatile in the short run, but have been known to beat inflation and create

wealth over the long run.


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Investment pattern

The asset allocation under the respective Plans will be as follows :

Sr.No. Asset Type (% Of Portfolio) Risk Profile

1 Equities & Equity related instruments Minimum 80%Medium to

High

2Debt Securities, Money Market

instruments(including cash/call money)Maximum 20%

Low to

Medium

*Investment in Securitized debt, if undertaken, would not exceed 20% of the net assets of the

scheme.


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ELSS v/s other sec 80C Avenues

ParticularsPPF NSC ELSS

Bank

depositULIP

Tenure 15 Years 6 Years 3 Years 5 Years 5 Years

Minimum

Investment500 100 500 10,000/

Depends

upon

premium

Maximum

investment

for 80c

benefits

70,000/- 1,00,000/ 1,00,000/ 1,00,000/ 1,00,000/

Returns % 8% 8%

Market

Drivenbut

One can

expect 15-

17%

return

7.25% N.A.

Interest

frequency

Compounded

Annually

Compounded

semi

Annually

Not

assured

Various

option

available

Not

Assured

Taxation

IncomeTax Free Taxable

Dividend&

Long

Term

Capital

gains

Tax Free

Taxable

Variable

as per IT

Law

Better returns in comparison to other tax saving instruments


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Performance of Top 10 ELSS based on 3 year returns

CAGR %

Scheme Name 3 Years 5 Years 7 Years 10 Years

Canara Robeco Equity Tax Saver Fund (D) 32.49 14.10 22.09 21.89

ICICI Prudential Tax Plan (G) 31.83 6.21 19.30 28.35

HDFC TaxSaver Fund (G) 28.91 7.86 21.81 29.10

Fidelity Tax Advantage Fund (G) 28.56 11.30 NA NA

Religare Tax Plan (G) 28.19 NA NA NA

Franklin India Taxshield Fund (G) 27.54 10.20 19.41 25.69

ING Tax Savings Fund (G) 26.63 1.55 14.53 NA

HDFC Long Term Advantage Fund (G) 26.46 6.70 16.91 29.40

Sahara Tax Gain Fund (G) 25.92 11.13 8.19 15.29

Taurus Tax Shield Fund (G) 25.46 13.06 14.33 16.87

Equity Linked Saving Schemes have a good track record, with performance similar to diversified

funds. The category average returns on 3-yr, 5-yr, 7-yr and 10-yr are 22.23%, 5.20%, 15.41%

and 22.17% CAGR respectively. Even the returns for SIPs (Systematic Investment Plans) are

also good. However, market slumps in recent times have hit the performances of equity oriented

funds including ELSS.

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