Mutual Fund Returns are Annualized or Absolute?

1.Recently one of my freind Dr. Ramswarup Pareek invest in Axis Long Term Equity Fund (G) for tax saving purpose.

2.Axis Long Term Equity Fund (G) is an ELSS you can see top ELSS at this link:-

Top 3 ELSS in India

3.When Shri Pareek visit Icici direct website he found that Axis Long Term Equity Fund (G) give 26.8% returns in last 3 year.

4.Now Dr. RamswarupPareek  has a question "This 26.8% returns is annualized or absolute?

in details if he invest INR 100 in 2012 then in 2015 what he get?

First Option:- He get INR 126.80 if this 26.8% returns is absolute means only 26.8% returns in his 3  year holding period.

Second Option:- He get  INR 203.80 if this 26.8% returns is annualized means after one year his investment grow 26.8% and his portfolio value 126.80 then in second year it again grow 26.8% now his portfolio value is 160.78 and in third year his investment again grow 26.8% means at the end of third year his portfolio value is 203.80.

5.Now he call to Icicidirect and ask this question to there customer care representative .

The customer care officer of Icici Direct told that First option is right and you get only 26.80 rupees return on your investment of 100 rupee in last 3 year plus you get tax benefits on your investments.

6. Shri Ramswarup ji not satisfied from his answer and refer this question to me that I publish an article on this issue with solid proof.

Here is my answer:-

Dear Ramswarup ji,

Option Second is right.

You get total amount  INR 203.80 on your INR 100 investment means after one year this investment grow 26.8% and your portfolio value 126.80 then in second year it again grow 26.8% now your portfolio value is 160.78 and in third year your investment again grow 26.8% means at the end of third year his portfolio value is 203.80.

here are my solid proofs visit these links as my proofs:-

http://www.moneycontrol.com/mutual-funds/nav/axis-long-term-equity-fund/returns-calculator-MAA011.html

or see this fact sheet from axix mutual fund :-

https://www.axismf.com/axisdownload/fact/2015/Factsheet%20_%20with%20direct%20plan%20returns.pdf

Thank you for asking such a useful question.

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Reliance Japan Equity Fund (D) @ 10.846

1. Reliance Japan Equity Fund is a another international fund to diversify our portfolio.

2. You already read my earlier recommendation about Mirae Asset China Advantage Fund - Regular Plan (Dividend) which is a fund of fund.

3. Most of international mutual funds are fund of fund ( fund of fund means a mutual fund which hold units of another funds),  but Reliance Japan Equity Fund is directly invest in Japanese stocks here is the situation of Reliance Japan Equity Fund portfolio as on 30 Sept 2015

Stocks	%
SEVEN & I HLDG ORD	3.61
MITSUI FUDOSAN ORD	3.49
NTT DATA ORD	3.47
NTT ORD	3.39
BRIDGESTONE CORP	3.35
SUNTORY BEVERAGE AND FOOD LTD	3.33
ORIX ORD	3.31
TOYOTA MOTOR CORP	3.28
DAIWA HOUSE ORD	3.27
DENTSU ORD	3.27
JX HOLDINGS ORD	3.24
EAST JAPAN RY ORD	3.22
HITACHI ORD	3.21
MITSUB UFJ FG ORD	3.2
MITSUBISHI HEAVY ORD	3.19
CANON INC	3.17
Kubota Corp	3.15
MS&AD INSURANCE ORD	3.14
NOMURA HOLDINGS ORD	3.13
SUMITOMO ELEC ORD	3.13
DENSO CORP	3.12
Fast Retailing Co Ltd	3.11
PANASONIC CORPORATION	3.09
TOKYO GAS ORD	3.09
MITSUBISHI ORD	3.09
MITSUB CHEM HLDG ORD	3.09
Omron Corporation Ord	3.06
NP STL & SMTM ML ORD	3.01
JAPAN TOBACCO ORD	3
NSK Limited	2.98

4. Generally I like to invest in international funds because in Indian market I directly hold  Indian securities and if I hold international mutual funds then it make my investment more diversified and more safe because if Indian market fall then I get liquidity from my international holdings.

5. This is the reason that I am also continue a INR 500 per month SIP in Reliance Japan Equity Fund (D) and a INR 1000 per month SIP in Mirae Asset China Advantage Fund - Regular Plan (Dividend)

6. Choose Dividend plan and dividend reinvestment option for getting a long term worth,New readers please read this link for more understanding about this concept here

Benefits of Dividend plan with dividend reinvestment

7. If any reader like to invest in growth fund (not recommended) then do not forget to book profit in my method read details here

How to book profit in a mutual fund SIP

10. Discloser:- Author is not a registered mutual fund adviser but I Mahesh Chander Kaushik author of this research report is an existing research analyst and passed NISM certification for research analysts. I am also registered under SEBI(RESEARCH ANALYSTS) REGULATIONS, 2014 ( SEBI Registration Number INH 100000908 ) hereby disclose about my financial interest in the subject company and the nature of such financial interest:- 1 I am personally hold units  of reliance japan fund and  Mirae Asset China Advantage Fund and continue  SIP in these funds so my personal interest is included in both of fund. 2. Me and my associates or relatives have not any actual/beneficial ownership of one percent or more securities of the subject company ( reliance japan fund and Mirae Asset China Advantage Fund  ). 3. Me and my associates or relatives have not any other material conflict of interest at the time of publication of the research report. 4. Me and my associates or relatives have not not received any type of compensation from the subject company( reliance japan fund and Mirae Asset China Advantage Fund ) in the past twelve months. 5. I am not served as an officer, director or employee of the subject company(reliance japan fund and Mirae Asset China Advantage Fund ). 6. I have been not engaged in market making activity for the subject company( reliance japan fund and Mirae Asset China Advantage Fund  )

Mirae Asset China Advantage Fund - Regular Plan (Dividend)

1. China stock market is crash recently!

2. OK, I think we have a best opportunity to take advantage of a long term SIP in China stock market.

3. For this purpose I recommended a SIP of INR 1000 per month in Mirae Asset China Advantage Fund - Regular Plan (Dividend) and choose dividend reinvestment option.

4. New readers of my blog please visit this link to understand that why I prefer dividend reinvestment

Which option is best in Growth, Dividend, Dividend reinvestment?

5. I am also continue a SIP of INR 1000 per month in this fund.

6. Why I choose this fund ? first point china market is down and in next 3-5 year when china economy is re stable again then I assume that I get a huge profit on my investment., Second point It will be diversified my mutual fund portfolio from Indian market to china market ( I am also continue a INR 500 per month SIP in Japan market for this purpose.).

7. Today NAV of  Mirae Asset China Advantage Fund - Regular Plan (Dividend) is 13.690

8. This is a Fund of fund which hold 99.2% units of Mirae Asset China Sector Leader Eq Class X Cap USD fund So we also get Forex benefit in our investment.

9 . For example  NAV of this base fund Mirae Asset China Sector Leader Eq Class X Cap USD i is 11.79 USD so If you invest INR 1000 in this fund today then Indian arm of  Mirae Asset China Advantage Fund convert your INR 1000 in USD it is

1 INR= 0.015 USD

so 1000 INR= 15 USD

and Indian arm of this fund invest these 15 USD in  Mirae Asset China Sector Leader Eq Class X Cap USD fund @ 11.79 USD per unit

9. Means if you invest in this fund Mirae Asset China Advantage Fund - Regular Plan (Dividend) then NAV of fund depend on 2 factors first China stock market second Forex price of USD.

10. Discloser:- Author is not a registered mutual fund adviser but I Mahesh Chander Kaushik author of this research report is an existing research analyst and passed NISM certification for research analysts. I am also registered under SEBI(RESEARCH ANALYSTS) REGULATIONS, 2014 ( SEBI Registration Number INH 100000908 ) hereby disclose about my financial interest in the subject company and the nature of such financial interest:- 1 I am personally hold units  of  Mirae Asset China Advantage Fund and continue a 1000 per month SIP in this fund so my personal interest is included in this fund. 2. Me and my associates or relatives have not any actual/beneficial ownership of one percent or more securities of the subject company ( Mirae Asset China Advantage Fund  ). 3. Me and my associates or relatives have not any other material conflict of interest at the time of publication of the research report. 4. Me and my associates or relatives have not not received any type of compensation from the subject company( Mirae Asset China Advantage Fund ) in the past twelve months. 5. I am not served as an officer, director or employee of the subject company( Mirae Asset China Advantage Fund ). 6. I have been not engaged in market making activity for the subject company( Mirae Asset China Advantage Fund  ).

Why Mutual Fund Growth Option Is Better Than Dividend Reinvestment Option?

1. When you compare dividend option and growth option of any scheme, then you always find that growth funds are the winner in bull phase of the market. Because in bull phase of the stock market, most of the stocks get a higher valuation and NAV of growth scheme high, and we see an attractive current portfolio value when we compare it to dividend option. 

2. In opposite side, you know dividend payout funds are the winner when market correct more than 30 % because in this situation past dividends are consider as profit bookings. 

3. Today we compare dividend reinvestment option with growth option because they look like same. So if you read this article carefully then you understand the difference in growth option, dividend reinvestment option and dividend payout option in any mutual fund scheme. 

4. For example, we choose Franklin India Prima Plus plan and see this comparison sheet which provided by Shri Vineet Agarwal:- 

Click Here to Download Excel sheet for Compersion

7. So:-
(1) From Jan 2000 to Sept 2016 SIP of 1000 per month in Franklin India Prima Plus plan growth option NAV value of units is INR 15,65,344.
(2) From Jan 2000 to Sept 2016 SIP of 1000 per month in Franklin India Prima Plus plan Dividend option we get INR 385887 as NAV value of units and INR 298756 as dividend, so total NAV value+dividend is 6,34,644
(3)From Jan 2000 to Sept 2016 SIP of 1000 per month in Franklin India Prima Plus plan , dividend reinvestment option NAV value of units is INR 15,42,689.

12. Conclusion: - Growth option and dividend re-investment option are near about same, but growth option is slightly winner over dividend reinvestment option so if you want regular tax-free dividend income then choose growth option and use my monthly tax-free dividend idea which I describe in this article:- 
How to get Monthly Tax-Free Dividends from Growth Funds

regards.

Mahesh Kaushik
Suggested reading:-

Smart Systematic Investment Approach In Mutual Funds

How to make a full-time passive income with the help of mutual fund?

Discloser:- I Mahesh Chander Kaushik author of this research report is an existing research analyst and passed NISM certification for research analysts. I am also applied for a grant of registration under SEBI(RESEARCH ANALYSTS) REGULATIONS, 2014 hereby disclose about my financial interest in the subject company and the nature of such financial interest:- 1 Me and my associates or relatives already hold some units of HDFC mutual fund scheme, so my personal interest is included in this scheme. 2. Me and my associates or relatives have/have not any actual/beneficial ownership of one percent or more securities of the subject company(HDFC mutual fund ). 3. Me and my associates or relatives have /have not any other material conflict of interest at the time of publication of the research report. 4. Me and my associates or relatives have/have not received any type of compensation from the subject company(HDFC mutual fund ) in the past twelve months. 5. I am not served as an officer, director or employee of the subject company(HDFC mutual fund ). 6. I have been not engaged in market making activity for the subject company(HDFC mutual fund ).

Top 10 Mutual Funds for SIP to Invest in 2015

Stock market is traded near his all time highs and it is still safe to invest in SIP method . Some of my followers ask top 10 mutual funds for SIP to invest in 2015, So here are the list of my top 10 mutual fund where I choose these top mutual funds based on It's Largest fund size .
I think if any fund AUM ( Assets under management) is large then it perform better for example if fund X corpus is 100000 rupee and fund Y corpus is 500000 rupee then which fund have better chance to diversification I think it is fund Y have better chance of diversification due to It's large AUM size.
And all of my choices are dividend funds because if you read my book then you knew that dividend mutual funds are best source of long term regular income read this article for more detail about why I Prefer dividend funds among growth funds
http://mutualfundgenius.maheshkaushik.com/2014/04/how-to-make-full-time-passive-income.html
So These are the my top 10 MF plans making SIP in 2015
1.HDFC Equity Fund (D) 
2.Reliance Equity Opportunities Fund - Retail Plan (D)
3. ICICI Prudential Dynamic Plan (D) 
4.Reliance Growth Fund - Retail Plan (D) 
5.Franklin India Prima Plus Fund (D) 
6.SBI Contra Fund (D) 
7.Franklin India High Growth Companies Fund (D) 
8.Birla Sun Life Equity Fund (D) 
9.Axis Equity Fund (D) 
10.SBI Magnum Multiplier Plus (D)

Discloser:- I am not a registered mutual fund adviser, I am an exiting research analyst and applied for a grant of registration under SEBI(RESEARCH ANALYSTS) REGULATIONS, 2014 and I have/my wife have no any investments in above fund schemes so our personal interest is not included in these mutual fund schemes.