Here is a comparison of a select set of funds, large cap oriented. Some of the consistent performers. The comparison is as on 08th of July 2008. The funds include, DSPML Top 100, HDFC Top200, Sundaram Select Focus, Reliance Vision, Birla Top100
http://spreadsheets.google.com/pub?key=plxMZsoeADBQPJqaJlIcPJQ&output=html&gid=0&single=true
MARKET WATCH
Wednesday, July 9, 2008
Tuesday, July 8, 2008
RUPEE COST AVERAGING - WHAT IS IT ?
Understanding rupee-cost averaging
Some investors like to speculate on the right moment to invest. But predicting whether the market is going to move up, down or sideways is difficult even for professionals. With rupee-cost averaging you can opt out of the guessing game of trying to buy low and sell high.
With rupee-cost averaging, you invest a specific amount at regular intervals regardless of the investment's share (unit) price. By investing on a regular schedule, you can take advantage of market dips without worrying about when they'll occur. Your money buys more shares when the price is low and fewer when the price is high, which can mean a lower average cost per share over time.
The most important element of rupee-cost averaging is commitment. How frequently you invest (monthly, quarterly or even annually) is less important than sticking to your investment schedule.
The purpose of rupee-cost averaging is to take the guesswork out of investing by providing you with an average cost per share that's lower over the long term.
Let's look at 2 examples to see what your average price per share would be when prices are rising and when prices are falling.
When unit price is rising. Rs.500 is invested in a mutual fund on the first of each month. The investor in this example would methodically acquire 109.89 units at an average cost of Rs.27.83 each. And there's no guesswork or worry about what the price is about to do.
Rupee-Cost Averaging when Unit Prices Rise
Month Amount Unit Price No. of Units Purchased
01-Jan Rs.500 Rs.22 22.73
01-Feb Rs.500 Rs.26 19.23
01-Mar Rs.500 Rs.26 19.23
01-Apr Rs.500 Rs.28 17.86
01-May Rs.500 Rs.31 16.13
01-Jun Rs.500 Rs.34 14.71
Total: Rs.3000 Avg Cost: Rs.27.83 Total: 109.89
For illustrative purposes only. Not intended to represent any specific fund.
When unit price is falling. Rupee-cost averaging in this scenario can reduce loss compared to making a lump-sum investment. Rs.500 is invested in a mutual fund on the first of each month. The investor in this scenario would have bought 98.63 units at an average cost per unit of Rs.30.83. The investment's value at the end of the period would be Rs.2 564.38.
By comparison, someone who invested the entire Rs.3 000 in January at Rs.38 per unit would have owned only 78.94 units, and the investment would have been worth only Rs.2 052.44 at the end of the period.
Rupee-Cost Averaging when Unit Prices Fall
Month Amount Unit Price No. of Units Purchased
01-Jan Rs.500 Rs.38 13.16
01-Feb Rs.500 Rs.31 16.13
01-Mar Rs.500 Rs.29 17.24
01-Apr Rs.500 Rs.32 15.63
01-May Rs.500 Rs.29 17.24
01-Jun Rs.500 Rs.26 19.23
Total: Rs.3000 Avg Cost: Rs.30.83 Total: 98.63
Is rupee-cost averaging right for you?
Rupee-cost averaging is popular among people who invest in volatile funds.
If a fund's share price fluctuates a lot, rupee-cost averaging can help reduce the average cost per share over time when you are investing, and increase your profit when you re systematically withdrawing your money.
It's not for everyone , but many investors believe this systematic approach to investing and withdrawing is an effective way to accumu1ate wealth over the long term.
Rupee-cost averaging doesn't guarantee a profit or eliminate risk, and it won't protect you from a loss if you sell shares at a market low. Before adopting this strategy, you shou1d consider your ability to continue investing through periods of low price levels.
The beauty of Rupee-cost averaging lies in taking a commitment towards achieving your goals by eliminating complex issues like market timing....
Some investors like to speculate on the right moment to invest. But predicting whether the market is going to move up, down or sideways is difficult even for professionals. With rupee-cost averaging you can opt out of the guessing game of trying to buy low and sell high.
With rupee-cost averaging, you invest a specific amount at regular intervals regardless of the investment's share (unit) price. By investing on a regular schedule, you can take advantage of market dips without worrying about when they'll occur. Your money buys more shares when the price is low and fewer when the price is high, which can mean a lower average cost per share over time.
The most important element of rupee-cost averaging is commitment. How frequently you invest (monthly, quarterly or even annually) is less important than sticking to your investment schedule.
Does it work when prices are rising and falling?
The purpose of rupee-cost averaging is to take the guesswork out of investing by providing you with an average cost per share that's lower over the long term.
Let's look at 2 examples to see what your average price per share would be when prices are rising and when prices are falling.
When unit price is rising. Rs.500 is invested in a mutual fund on the first of each month. The investor in this example would methodically acquire 109.89 units at an average cost of Rs.27.83 each. And there's no guesswork or worry about what the price is about to do.
Rupee-Cost Averaging when Unit Prices Rise
Month Amount Unit Price No. of Units Purchased
01-Jan Rs.500 Rs.22 22.73
01-Feb Rs.500 Rs.26 19.23
01-Mar Rs.500 Rs.26 19.23
01-Apr Rs.500 Rs.28 17.86
01-May Rs.500 Rs.31 16.13
01-Jun Rs.500 Rs.34 14.71
Total: Rs.3000 Avg Cost: Rs.27.83 Total: 109.89
For illustrative purposes only. Not intended to represent any specific fund.
When unit price is falling. Rupee-cost averaging in this scenario can reduce loss compared to making a lump-sum investment. Rs.500 is invested in a mutual fund on the first of each month. The investor in this scenario would have bought 98.63 units at an average cost per unit of Rs.30.83. The investment's value at the end of the period would be Rs.2 564.38.
By comparison, someone who invested the entire Rs.3 000 in January at Rs.38 per unit would have owned only 78.94 units, and the investment would have been worth only Rs.2 052.44 at the end of the period.
Rupee-Cost Averaging when Unit Prices Fall
Month Amount Unit Price No. of Units Purchased
01-Jan Rs.500 Rs.38 13.16
01-Feb Rs.500 Rs.31 16.13
01-Mar Rs.500 Rs.29 17.24
01-Apr Rs.500 Rs.32 15.63
01-May Rs.500 Rs.29 17.24
01-Jun Rs.500 Rs.26 19.23
Total: Rs.3000 Avg Cost: Rs.30.83 Total: 98.63
Is rupee-cost averaging right for you?
Rupee-cost averaging is popular among people who invest in volatile funds.
If a fund's share price fluctuates a lot, rupee-cost averaging can help reduce the average cost per share over time when you are investing, and increase your profit when you re systematically withdrawing your money.
It's not for everyone , but many investors believe this systematic approach to investing and withdrawing is an effective way to accumu1ate wealth over the long term.
Rupee-cost averaging doesn't guarantee a profit or eliminate risk, and it won't protect you from a loss if you sell shares at a market low. Before adopting this strategy, you shou1d consider your ability to continue investing through periods of low price levels.
The beauty of Rupee-cost averaging lies in taking a commitment towards achieving your goals by eliminating complex issues like market timing....
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