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5 Easy Steps to Mutual Fund Redemption & Exit

5 Easy Steps to Mutual Fund Redemption & Exit
by 5paisa Research Team 26/10/2021

Investors in mutual funds may invest and withdraw their money at any time throughout any business day, subject to any lock-in restrictions. Loads and capital gains tax apply to the redemption amount as well.

Source

Investors who have reached their investment have the option of withdrawing their money in a variety of ways. So, if you fall in that ballpark, this post mentioned all the ways and steps that you need to follow for mutual fund redemption & exit.

5 Ways to Exit & Redeem Mutual Funds

Units of mutual funds may be redeemed online or offline. Redeeming mutual fund units may be accomplished in a number of ways, including those listed below:

1. Mutual Fund House Direct Redemption

As long as the lock-in period has not expired and the mutual fund units have been bought through a Mutual Fund House, i.e. the Asset Management Company (AMC), you may immediately connect with them and redeem all or part of your mutual fund units.

To terminate an account, you must redeem every single unit that the account contains. If just some units are redeemed, the account remains open. In addition to the aforementioned redemption procedure being completely online, you may also submit a completed redemption request form in person at the AMC.

After the request has been processed, you will be credited with the redemption amount through NEFT or get a check in the mail at the address you provided at registration.

2. Redemption through an Agent

In the event you invested in mutual funds via an agent, you will also be able to redeem your mutual funds through the same agency.

The agent sends your fully completed form to the AMC, together with information on the plan and folio, as well as the number of units you want to withdraw.

Once the AMC starts the redemption procedure, the money will be deposited into your bank account or a check will be sent to your address on file.

3. Redeeming Mutual Funds Using Certified Third-Party Portals

Some investors purchase mutual funds online via reputable third-party portals like 5paisa, which collaborate with fund houses to provide a wide range of top-rated mutual funds.

Mutual fund redemption requests may also be handled by these portals online, using a more streamlined procedure. The money is credited to your connected bank account as soon as the redemption request submitted via the site is approved.

4. Redemption through Demat Account

Certain individuals choose to invest in mutual funds through an online Demat or trading account. If you purchased mutual funds using a Demat account, you must also redeem them using that account.

A net asset value (NAV) payment against redeemed mutual funds is made electronically and paid immediately to the bank account associated with the Demat account.

5. Redemption through CAMS Website

For investors who want to redeem mutual fund shares from a variety of AMCs, CAMS (Computer Age Management Services) can help.

When a properly filled-out form is sent into the CAMS office, the requested funds are sent to the beneficiary's bank account within 2-4 business days of receiving it. Several AMCs use the CAMS office as a single point of contact for a wide range of services.

Source

What is the Mutual Fund Redemption Timeline?

Once a redemption request has been completed, it cannot be changed or cancelled. So be careful. Once a request is received, it is handled by the NAV of the current business day, especially if it is received before 3 p.m. Unless otherwise specified, the following business day's NAV will be used instead.

3 Reasons Why Investors Might Exit a Mutual Fund

1. An Unexpected Financial Crisis

It's a good idea to keep a portion of your portfolio in open-ended mutual funds just in case anything unexpected happens. Selling off funds that were set up with a specific end in mind is a bad idea.

When redeeming your mutual fund units, keep in mind that there will be tax consequences as well as exit loads. To get the most out of flexible funds, invest over a longer period of time. Capital preservation and growth should always be the primary goals of investment.

2. Low Performance of the Scheme

In the event that your plan has been giving an underwhelming performance for some time, you should investigate the causes of the problem.

If the reason was a shift in your goals or a dramatic change in your portfolio mix, you may want to think about redeeming your fund(s) to get back on track. The recent performance of a fund should not be taken into consideration while redeeming.

In order to maximize their profits, investors should consider holding their investments for as long as feasible.

3. Non-delivery of the Promised fund Performance

Individuals put their money into mutual funds whose goals align with their own. As a result, choosing which funds to include in your investment portfolio depends heavily on the overall goal of the investment.

Active investors who are keeping tabs on the market may decide to sell or redeem their holdings if the outlook is bleak. When investing for the long term, a CRISIL study says that the odds of a fund producing good returns rise.

Conclusion

When it comes to meeting financial investment objectives and building wealth, investing in mutual funds is a long-term solution. However, mutual funds are also adaptable when it comes to how much money you want to put in and how long you want to keep it. It's critical to safeguard one's investment in mutual funds while making such a long-term commitment to wealth development.

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NSE Crosses 5 crore Unique Investors Mark

NSE Crosses 5 crore Unique Investors Mark
by 5paisa Research Team 26/10/2021

In a significant landmark, the National Stock Exchange announced that it had crossed the Rubicon of 5 crore unique investors. This is about 30% lower than the total demat accounts in India at 7 crore. However, that is more because there are scores of investors with multiple demat accounts. The 5 crore unique investors are mapped by PAN numbers.

According to the MD and CEO of NSE, Vikram Limaye, it took the NSE nearly 15 months to go from 3 crore unique investors to 4 crore unique investors. However, the journey from 4 crore unique investors to 5 crore unique investors has happened in just 7 months. Limaye expects the NSE to traverse the next journey to 10 crore unique investors in next 3-4 years.

The NSE has also noted in its press release that the total number of unique client codes registered with the NSE stood at 8.86 crore. While an investors is only allowed to have a single trading account with one broker, they are permitted to have trading accounts with different client codes with multiple brokers.

In the last one year, there has been a tremendous spread of the equity cult in India as is evident from the surge in trading accounts, fresh demat accounts opened and the record number of fresh mutual fund SIP folios opened. This has been underlined by scores of millennials joining the investment mainstream, many of whom are preferring direct equities.

In terms of state level contributions, Maharashtra contributed 17% of the unique investors followed by Uttar Pradesh contributing 10% and Gujarat contributing 7% of the new investors being registered. In fact, the top 10 states have accounted for a full 71% of the total new investors registrations in India via the NSE. 

An interesting trend pointed out by the NSE was that the new client registrations have been largely driven by non-metros. For example, the cities beyond the top-50 cities actually contributed to a whopping 57% of the new client account registrations. This is, perhaps, the first clear indication that the investors were not just growing in numbers but also in terms of a wider geographical spread.

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Bharti Airtel also signs for 4-year moratorium

Bharti Airtel also signs for 4-year moratorium
by 5paisa Research Team 26/10/2021

Almost a week after Vodafone Idea signed up for the 4 year moratorium, Bharti Airtel has also signed up for the moratorium. While Vodafone Idea had only signed up for moratorium on the spectrum dues, Bharti Airtel has signed up with DOT for moratorium on AGR charges and Spectrum Usage Charges (SUC). The last date for signing up was 29-October.

Check - Vodafone opts for 4 Year Moratorium on AGR Charges

In addition, the government has also given the telecom companies an offer by which they would be able to convert the interest portion of the moratorium period into an equity stake and offer it to the government. However, since the telecom companies have 90 days to take a final call on this issue, Bharti Airtel has not committed on this front.

Telecom companies opting for the moratorium on the AGR charges and the spectrum usage charges (SUC) would have to pay interest to the government at the rate of 2% above the incremental prime lending rate. This amount would be payable for the full 4 year period. However, telecom companies have the option to convert this portion into equity stake.

This was part of the relief package announced by the government last month for the telecom companies to relieve them from cash flow stress. While Bharti is not in such a serious financial crunch as Vodafone Idea, they did see merit in conserving cash flows for the time being so as to have a bigger war chest to take on competition from Jio.

Sunil Mittal of Bharti Airtel has already stated that their company would use the cash flows saved during the moratorium to aggressively build the network. In the case of Bharti, the interest component over 4 years alone would work out to Rs.10,000 crore so if they swap it with their equity stake, it would entail handing over 2-3% stake in Bharti Airtel to the government of India.

The more important consideration for Bharti Airtel is that this moratorium will free up cash flows to the tune of Rs.40,000 crore which will give them enough ammunition to ramp up networks and drive profitability in the interim. Telecom companies need to invest heavily in upgrading networks and in spectrum to become 5G ready.

Among other things, the Telecom Relief Package also allowed sharing of airwaves, 100% FDI and change in the definition of revenues on which AGR is payable.

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Axis Bank, Kotak Bank and Bajaj Finance Share Q2 Results

Axis Bank, Kotak Bank and Bajaj Finance Share Q2 Results
by 5paisa Research Team 26/10/2021

On 26th October, 3 heavyweight financials announced their results viz. Axis Bank, Kotak Bank and Bajaj Finance. Here is a gist of the 3 results announcements.
 

Axis Bank - Q2 Results

Axis Bank reported 4.17% increase in revenues in the Sep-21 quarter at Rs.20,967 crore. Profit after tax was up 84.5% at Rs.3,388 crore. Income from treasury was 4% up YoY while revenues from corporate banking were down 1.12%. Retail banking revenues were up 6.7%. Retail pressure showed as EBIT in retail banking almost halved due to spike in bad assets.

 

Rs in Crore

Sep-21

Sep-20

YOY

Jun-21

QOQ

Total Income

₹ 20,967

₹ 20,127

4.17%

₹ 20,056

4.54%

Operating Profit

₹ 6,304

₹ 6,918

-8.87%

₹ 6,511

-3.18%

Net Profit

₹ 3,388

₹ 1,837

84.45%

₹ 2,357

43.73%

Diluted EPS

₹ 11.02

₹ 6.22

 

₹ 7.67

 

Operating Margins

30.07%

34.37%

 

32.47%

 

Net Margins

16.16%

9.13%

 

11.75%

 

Gross NPA Ratio

3.53%

4.18%

 

3.85%

 

Net NPA Ratio

1.08%

0.98%

 

1.20%

 

Return on Assets (Ann.)

1.19%

0.73%

 

0.86%

 

Capital Adequacy

19.23%

18.92%

 

18.67%

 

 

The good news for Axis Bank was that quarterly profits were at an all-time high on standalone basis, while the credit costs stood at 0.54%. The net slippages in the quarter were largely under control at 0.46% and the CASA ratio share improved 200 bps at 42%. The boost to net profits came from the sharp fall in provisions for doubtful assets by 60% at Rs.1,763 crore.

Axis reported 8% higher net interest income or NII for the quarter while net interest margins or NIM stood at a relatively healthy 3.9%. Gross NPAs and net NPAs fell on YoY basis, even as net profit margins at 16.16% was robust on a comparative basis.

 

Kotak Mahindra Bank - Q2 Results


Kotak Mahindra Bank reported 13.24% rise in total consolidated revenues in the Sep-21 quarter at Rs.15,342 crore. Net profits were up just about 1.43% YoY at Rs.2,989 crore although profits were up 65.5% on a sequential basis. The big boost to revenues at a consolidated level came from insurance with revenues growing 36% to Rs.5,083 crore.

 

Rs in Crore

Sep-21

Sep-20

YOY

Jun-21

QOQ

Total Income

₹ 15,342

₹ 13,548

13.24%

₹ 12,571

22.04%

Operating Profit

₹ 4,365

₹ 4,345

0.47%

₹ 3,377

29.25%

Net Profit

₹ 2,989

₹ 2,947

1.43%

₹ 1,806

65.48%

Diluted EPS

₹ 15.06

₹ 14.89

 

₹ 9.11

 

Operating Margins

28.45%

32.07%

 

26.87%

 

Net Margins

19.48%

21.75%

 

14.37%

 

Gross NPA Ratio

3.16%

2.55%

 

3.58%

 

Net NPA Ratio

1.09%

0.70%

 

1.34%

 

Return on Assets

0.60%

0.64%

 

0.37%

 

Capital Adequacy

21.76%

22.05%

 

23.11%

 

 

EBIT contributions of treasury and corporate banking verticals of Kotak Bank were higher on a YoY basis, albeit marginal. However, EBIT of retail business fell 96% due to spike in asset stress in the retail business. Insurance also saw a sharp fall in EBIT due to a spike in claims paid and provisions for COVID-2.0. While NII was up just about 3% at Rs.4,021 crore, Kotak reported 4.45% NIMs., among the most robust in the peer group.

Customer assets at Kotak Bank grew 17% at Rs.256,353 crore on a YoY basis. Healthy CASA has been the hallmark of Kotak Bank and it improved further by 350 bps to 60.6%. While credit costs stood at 0.63%, gross NPAs increased 61 bps to 3.16%.
 

Check - Axis Bank and Kotak Mahindra Bank – Q1 Results

 

Bajaj Finance - Q2 Results


Bajaj Finance Ltd reported 18.6% growth in revenues for Sep-21 quarter at Rs.7,732 crore while net profits were up 53.5% at Rs.1,481 crore on a YoY basis. Bajaj Finance saw 16% spike in interest income YoY at Rs.6,687 crore and its fee and commission income also grew 27.4% at Rs.733 crore. The big story for Bajaj Finance in the quarter was the 28% spike in net interest income or NII at a healthy Rs.5,335 crore.

 

Rs in Crore

Sep-21

Sep-20

YOY

Jun-21

QOQ

Total Income (Rs cr)

₹ 7,732

₹ 6,520

18.59%

₹ 6,743

14.67%

Operating Profit (Rs cr)

₹ 2,004

₹ 1,305

53.54%

₹ 1,366

46.75%

Net Profit (Rs cr)

₹ 1,481

₹ 965

53.49%

₹ 994

49.02%

Diluted EPS (Rs)

₹ 24.42

₹ 15.98

 

₹ 16.54

 

OPM

25.92%

20.02%

 

20.26%

 

Net Margins

19.15%

14.80%

 

14.74%

 

 

During the quarter, there was a 25% fall in impairment provisions on investments, while the loan losses and provisions fell from Rs.1,700 crore to Rs.1,300 crore. Gross NPAs fell 51 bps to 2.45% YoY. This ensured that the OPM or operating margins stood at 25.92%; nearly 500 bps better than the previous quarters.

The capital adequacy ratio of Bajaj finance is extremely comfortable at 27.68% with Tier-1 capital adequacy at 24.9%. Bajaj Finance saw its AUM grow by a healthy 23% while deposits grew 33% in Q2. Net margins for the Sep-21 quarter at 19.15% were 440 bps better than the previous quarters.

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Cipla Ltd and Dr. Lal Pathlabs Share Q2 Results

Cipla Ltd and Dr. Lal Pathlabs Share Q2 Results
by 5paisa Research Team 26/10/2021

On 26th October, two important companies in the healthcare space viz. Cipla and Dr. Lal Pathlabs announced their quarterly results. Here is a gist of the numbers.
 

Cipla Ltd - Q2 Results


Cipla Ltd reported 9.56% higher sales for the Sep-21 quarter at Rs.5,520 crore. Net Profits for the Sep-21 quarter was up 6.90% at Rs.711 crore. Cipla has received a huge demand notice from the NPPA for overcharging under the DPCO. While the total demand is for Rs.3,703 crore, the matter is currently under litigation in the courts.

 

Rs in Crore

Sep-21

Sep-20

YOY

Jun-21

QOQ

Total Income (Rs cr)

₹ 5,519.80

₹ 5,038.29

9.56%

₹ 5,504.35

0.28%

Net Profit (Rs cr)

₹ 711.36

₹ 665.43

6.90%

₹ 714.72

-0.47%

Diluted EPS (Rs)

₹ 8.80

₹ 8.24

 

₹ 8.85

 

Net Margins

12.89%

13.21%

 

12.98%

 


During the quarter, Cipla did manage its raw material costs fairly well despite the supply chain constraints. However, spike in other expenses led to pressure on the profit growth. Net margins at 12.89% was lower than 13.21% on a yoy basis. Overall, the results had nothing remarkable about them in the quarter.
 

Dr. Lal Pathlabs - Q2 PAT Results


Dr. Lal Pathlabs reported 15.4% growth in sales in the Sep-21 quarter at Rs.498 crore. Net profits for the Sep-21 quarter was up by a more subdued 11.37% at Rs95cr. The board of Dr. Lal Pathlabs has approved the first dividend of 60% or Rs.6 per share on par value of Rs.10. In the first half of the financial year, the company generated 81% higher net cash from operations at Rs.282 crore.

 

Rs in Crore

Sep-21

Sep-20

YOY

Jun-21

QOQ

Total Income (Rs cr)

₹ 498.40

₹ 431.90

15.40%

₹ 606.60

-17.84%

Net Profit (Rs cr)

₹ 95.00

₹ 85.30

11.37%

₹ 131.20

-27.59%

Diluted EPS (Rs)

₹ 11.45

₹ 10.31

 

₹ 15.84

 

Net Margins

19.06%

19.75%

 

21.63%

 


With a sharp fall in COVID related testing and other medical revenues, the revenues and profits fell on a sequential basis. The profits over Sep-20 quarter grew in a more measured way because the raw material costs spiked by 25% during this period. Net margins at 19.06% was slightly lower than 19.75% in the Sep-20 quarter. 

Also Read About:- Do You know About Indian Pharma Sector?

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SIP vs Mutual Fund: What's the Difference?

SIP vs Mutual Fund: What's the Difference?
by 5paisa Research Team 27/10/2021

Many investors see mutual fund investments as a simple and comfortable method to invest in equities. Mutual funds are managed and operated by professional specialists in the form of fund managers.

Before investing in stocks, they thoroughly study and analyze the businesses, their fundamentals, stock price movement patterns, and long-term prospects. The fund managers decide on the best investment choice based on the findings.

When it comes to their money being invested in the stock market, an investor does not have to be concerned beyond reason. Research staff and a fund management team support their investments.

Due to the diversification of the investments, the danger of market fluctuation is reduced. Reduced risk means that a portfolio's loss in one asset may be offset by a gain in another. Investing in stocks may be time-consuming and difficult for the uninitiated.

This is where fund managers step in to save the day; they make the right decision at the right moment. Therefore to clear misconceptions and get a better idea of the similarities and dissimilarities between mutual funds and SIP, we have discussed the differences between these investment approaches in this post. Let’s begin with the sip vs mutual fund debate!

 

What is a Mutual Fund?

You and thousands of other investors combine their money in a mutual fund, which then invests it in various securities like individual stocks, bonds, and other types of financial instruments. Investments are made in a range of assets by a fund house with the aim of meeting a certain objective while also managing risk. 

Units purchased by mutual fund investors may be swapped for other funds on the secondary market. It's possible to categorize mutual funds according to their goals, approach to debt and equity, sectors they invest in, and risk tolerance.

 

What is a Systematic Investment Plan?

The acronym SIP stands for Systematic Investment Plan. Investments may be made in a single sum or over time, such as investing a little money each month. Depending on the fund house and the program, SIP enables you to contribute as little as Rs 500 each month in mutual funds. Almost all mutual funds provide systematic investment plans (SIPs), although the minimum investment amount differs. SIPs.

 

Mutual Fund vs Systematic Investment Plan: What's the Difference?

1. Mode of investment

When investing via the Systematic Investment Plan, regular contributions are made to purchase mutual fund units (SIP). When you invest on a regular basis, it becomes second nature. Compounding power is enormous in SIP investments. 

To accumulate wealth over time, SIP is a method in which an investor makes disciplined investments on a regular basis. One of the most effective ways to reach your financial goals is via the use of a systematic investment plan (SIP). 

An investor in a mutual fund can choose to reinvest their profits or receive a return, depending on his or her investment objectives. Instead of taking a loss, an investor may benefit from compound interest by reinvesting in the same plan.

 

2. The ability to change course when necessary.

It is possible to invest small amounts on a weekly, fortnightly, or monthly schedule with SIP investments since they provide you more flexibility in terms of when you want to invest. As a result, SIP works best for those who are employed or have a regular source of income. 

Systematic investment plans (SIPs) may be used to invest in mutual funds without disrupting your existing spending patterns. If you have a lot of spare cash, putting it in a mutual fund may be a good idea.

 

3. Reduced Costs

Cost averaging is available to you if you invest in SIP. Buying more units when the market is down and fewer units when the market is high can reduce your total purchasing cost.

As a result, your average purchase cost will be lower. In contrast, if you invest in a lump amount, you'll pay a greater price since you won't receive the advantage of averaging over all of your purchases.

 

4. Market Volatility

Inexperienced investors, in particular, are often perplexed as to when the ideal moment is to join the market is When investing in a lump amount, there's always the concern of when to make the purchase, which puts you at risk during times of high volatility.

With a SIP, your investment is spread out over time, so only a portion of it will be subject to higher-than-normal market fluctuations.

Conclusion

SIPs provide versatility, reduced costs as a result of averaging, and a useful method to deal with volatility. It's just a better investment strategy.

If an investor is arguing between SIP and mutual funds, he or she should evaluate the ease with which they may invest their income and profits.

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