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Ask Money Today: Are index funds good for long term goals investment?
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Small cap mutual funds gave up to 220% returns in 1 year! Should you invest?
The best performing scheme in the category, Quant Small Cap Fund has given 217 per cent returns in the last one year. The second best performer, Kotak Small Cap Fund has generated 139 per cent returns
The lowest returns in the small cap space in the last one year stood at 96 per cent
After almost around 3 years of muted performance, small cap mutual funds have been at the op of the charts for almost an year now. Looking at the trailing returns, the category on an average has generated 120 per cent returns in the last one year. The best performing scheme in the category, Quant Small Cap Fund has given 217 per cent returns in the last one year. The second best performer, Kotak Small Cap Fund has generated 139 per cent returns. According to equity analysts, the reason for the stellar returns and outperformance of small caps over mid and large caps in last one year is the significant valuation gap at the star
Small cap mutual funds gave up to 220% returns in 1 year! Should you invest?
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How to navigate tax changes to protect your long-term money goals
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Tax uncertainty is a given. Indian investors need to worry more because tax changes are a regular affair in the country. While some changes have benefitted investors, some have been disruptive. Here are ways to minimise the impact on your long-term money goals.
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Uncertainty about future taxes should not stop investors from milking the current tax regime.
It is said death and taxes are the only two certainties in one’s life. But while the tax bit is certain, tax rates are not. Stock markets around the world went into panic mode recently as rumours floated that the US government planned to increase capital gains tax of Americans earning more than $1 million from 20% to 39.6%. As the rumour remained unconfirmed, the jitters subsided and the markets recovered.
Illustration by Raj Verma
If liquid and short-term debt funds gave negative returns in March 2020 when the Franklin Templeton fiasco was on in full swing, duration funds turned negative in March 2021. Most debt schemes with long-duration investments, which had delivered double-digit returns in 2020, are back at single digits now. Experts blame volatility in bond yields for such a high variation in returns in the short term.
Debt funds are considered safe as they hold fixed-income securities. However, as the above examples show, this is not true. Debt mutual funds are subject to mark-to-market valuation on a daily basis due to yield fluctuations which, many times, may lead to negative returns in the short term. However, this is a short-lived phenomenon as, over a longer period, you should generally earn what was the yield-to-maturity at the time of your investments unless there are some defaults in the underlying portfolio, says Raghvendra Nath, Managing Director, Ladderup Wealth
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