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  • ULIP or MF: Which one is better?
    Dalal Street

    ULIP or MF: Which one is better?

    Many of you might have come across insurance agents or even the bank representatives, who may pitch you about a solution, giving investment option along with insurance cover with a fancy name such as wealth builder or wealth creator. Such products are popularly known as unit-linked insurance plans (ULIP). The main problem is that people do not completely understand the product before buying it and just go with the rosy picture shown by the insurance agents or the bank representative. Hence, it is important to first understand what ULIP is and then move towards understanding whether it is better than mutual funds or not. ULIP is nothing but a combination of investment as well as insurance. Here the policyholder will pay a premium, of which, a small portion would go towards securing your life via insurance cover and the remaining amount is invested in a fund, which is similar to that of mutual funds. Having said, it is a perfect time to bust a myth about ULIPs that they are a bit safer than mutual funds. However, that’s not the case. They are as risky as mutual funds because like mutual funds, they too are market-linked. Though in terms of tax treatment, ULIPs are better than mutual funds. However, does it hold true even with their performance? We shall find that out in the coming paragraphs. Trailing Returns (per cent) Large-Cap 1-Year 3-Year 5-Year ULIP Best ULIP 26.50 12.18 15.36 Worst ULIP 11.98 5.25 11.05 Category Average 19.00 8.77 13.31 Mutual Funds Best MF 29.45 14.86 16.61 Worst MF 5.68 4.10 8.86 Category Average 16.43 8.29 13.33 Trailing Returns (per cent) Mid-Cap 1-Year 3-Year 5-Year ULIP Best ULIP 30.31 7.85 16.51 Worst ULIP 12.89 -2.62 9.51 Category Average 20.94 1.94 12.86 Mutual Funds Best MF 49.92 13.74 16.77 Worst MF 8.26 -0.98 9.41 Category Average 23.86 4.54 13.36 Trailing Returns (per cent) Multi-Cap 1-Year 3-Year 5-Year ULIP Best ULIP 35.61 18.08 22.68 Worst ULIP 10.28 -2.95 8.59 Category Average 20.31 7.19 13.27 Mutual Funds Best MF 49.68 15.52 18.44 Worst MF 3.04 -1.36 8.12 Category Average 18.21 7.18 13.70 Source: For ULIPs – Morningstar & for MFs – Rupeevest If we look at the performance of ULIP as against the MFs, then you can see that apart from mid-cap, in all other spaces, ULIP is in-line with mutual funds. However, a significant thing here to note here is that the performance of ULIP is just a net fund management expense ratio. There are various charges such as premium allocation charges, mortality charges, administration charges, etc. Therefore, the above-mentioned performance is not net charges. However, in the case of MFs, we have assumed regular plans and the performance is net all fees and charges. So, though on paper, the performance of ULIP looks promising as the actual returns that you get are quite disappointing. Moreover, the worst part is that you are not able to cover yourself adequately. Say, in the case of ULIP, for Rs 15 lakh of the sum assured, Rs 1 lakh premium is charged whereas, for a similar sum assured in case of a pure term plan premium hovers around Rs 3,000. The premium of the term plan is calculated proportionately as term plans are not available for such a low sum assured. Therefore, we can conclude that investing in MFs and insurance term plan is the bet suitable options for many. However, if somehow ULIPs reduces the other charges that it is imposing now, then it would definitely be an unbeatable option for investors as in that case, you would be getting better returns net fees & charges along with tax efficiency, which is not available with MFs at present.

  • Business

    Welspun One launches Rs 500 cr fund to invest in warehousing and industrial projects

    New Delhi, Jan 19 (PTI) Welspun One Logistics Parks on Tuesday launched a Rs 500 crore fund to invest in warehousing and industrial real estate projects.

  • BSE launches StAR MF Plus; a premium platform for distributors
    Dalal Street

    BSE launches StAR MF Plus; a premium platform for distributors

    BSE has been leading the way in adopting newer technologies and launching new, innovative products. Its StAR MF platform is known for its superior services including end-to-end value-based services offered to the asset management companies (AMCs), distributors, investors, and mutual fund industry participants. With a new emphasis on providing world class services to its members, BSE has announced the launch of StAR MF Plus, a premium platform loaded with key features for Distributors and their clients. StAR MF Plus offers complete front office, order management, analytics, CRM, back office and business support solutions. Some of its key features are: • Complete power-packed solution for RIAs/Distributors • Enables Client Onboarding & eKYC • Customer portfolio Management • Portfolio reporting & business reporting • Presales tools • Sub-broker network • Multi-asset view • Investor Risk Profiling • Online Market Feeds • Brokerage calculation & reconciliation Module • Customisable Admin utility module • Goal Tracking • Fee management • Regulatory & Compliance requirements • Financial planning tools • CRM & many more All these features are accessible on Web and App (Android & IOS app). Commenting on the new service, Mr. Ganesh Ram, Head - Mutual Funds, BSE StAR MF, said, “Through the services offered by BSE Star MF, we have been able to change the concept of mutual fund distribution in India and provide comfort to investors along with convenience, safety, speed and certainty in execution. BSE StAR MF has been able to simplify the mutual fund investment process and increase efficiency. Through this new service, with one-of-its-kind unique features, we look forward to connecting with more and more Distributors, AMCs, their clients, and strengthen our position as the preferred electronic mutual fund investment platform of choice across India.” Some of the recent key Performance Highlights of BSE StAR MF are: • Processed highest single-day transactions 14.69 lakh in Jan’21. • Processed highest monthly transactions 92.77 lakh amounting to Rs.34,287 Cr in Dec-20. • Highest number of new SIPS registrations 4.30 lakhs on a single month in Dec-20. • During FY 2020-21 (Apr – Dec-20) BSE StAR MF contributed Net Equity Inflow of Rs.14,365 Cr as compared to industry’s total of Rs. -21,293 Cr • Contributed Net Equity Inflow during Q3 FY 2020-21 with a value of Rs.2,376 Cr as compared to industry’s total of Rs. -25,789 Cr • Overall, the platform achieved 112 % of the transaction within 9 months which is 6.43 Cr. during FY 20-21(Apr- Dec) as compared to 5.75 Cr. transactions during FY 19-20. BSE StAR MF’s Net Inflow Contribution to MF Industry in December 2020: • Net Equity Inflow continues to be positive with value of Rs.973 Cr as compared to Rs. -10,147 Cr of Industry. • Overall Net Inflows contribution was Rs. 6,397 Cr as compared to industry total of Rs. 2,967 Cr.