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A PRESENTATION ON

COMPARISON BETWEEN EQUITY MUTUAL FUND AND PUBLIC PROVIDENT FUND FOR A LONG TERM INVESTOR

Submitted ToPERSENTED BYAnju Anand mam Amir KhanBhupendra K Goutam Sandip Singh Surender Kumar Vikas Kumawat Vinay Kumar

EQUITY MUTUAL FUNDTYPES OF MUTUAL FUNDPUBLIC PROVIDENT FUNDFEATURES OF PPFPPF INTEREST CALCULATIONCOMPARISONCONCLUSIONEquity Mutual FundDEFINITION of 'Equity Mutual Fund

A mutual fund that invests principally in stocks. It can be actively or passively managed.

Also known as a "stock fund".

Types of Equity Mutual FundDiversified FundSector FundEquity Linked Saving Scheme(ELSS)Thematic FundEquity Income/Dividend Yield SchemeMega Cap Equity FundsLarge Cap Equity FundsMid Cap Equity FundsSmall Cap Equity Funds

Diversified Equity Fund: It is a category of fund that invest in a divers mix of securities that cut across sector.

Sector Fund: Invest in only a specific sector. For example, a banking sector fund will invest in shares of banking companies only.

Equity Income/ Dividend Yield Scheme: Invest in securities whose shares fluctuates less, and the dividend represents a larger proportion of the returns on those share.

Thematic Fund: Thematic fund invest in line with an investment theme. For example, an infrastructure thematic fund might invest in shares of companies that are infrastructure, construction, cement, steel, etc.

Equity Linked Saving Scheme(ELSS): An Equity Linked Savings Scheme (ELSS) is an open-ended Equity Mutual Fund that doesn't just help you save tax, but also gives you an opportunity to grow your money. It qualifies for tax exemptions under section (u/s) 80C of the Indian Income Tax Act,1961.

Mega Cap Equity Funds: These invest in stocks of the biggest companies in the world like, Walmart. Large Cap Equity Funds : These invest in companies with a large market capitalization.

Mid Cap Equity Funds :These invest in companies with a medium market capitalization.

Small Cap Equity Funds : These invest in companies with a small market capitalization.LARGE CAP EQUITY FUNDSRANKRETURN06 MONTH01 YEAR03 YEARBirla Sun life Top 100(G)0114.2%55.8%28.00%Franklin India Copor. (G)0120.5%72.8%27.3%SBI Blue Chip Fund (G)0117.5%58.1%29.00%Total Equity Cop. Fund (G)0118.7%60.6%27.00%Top Equity Mutual FundsSMALL & MID CAP EQUITY FUNDSRANKRETURN06 MONTHS01 YEAR03 YEARCan Robeco Emerg Equities (G)0123.00%106.2%39.5%L&T Mid Cap Fund0122.00%90.3%34.9%Principal Emerging Bluechip (G)0122.5%85.6%39.3%THEMATIC-INFRASTRUCTURE EQUITY FUNDSRANKRETURN06 MONTHS01 YEAR03 YEARFranklin Build Fund (G)0123.2%101.2%37.8%L&T Infrastructure0116.8%85.1%23.6%From : moneycontrol.comThe public provident fund is established by the central government. One can voluntarily open an account with any nationalized bank or post office. The account can be opened in the name of individuals including minor.

ThePublic Provident Fundis savings-cum-tax-saving instrument in India, introduced by the National Savings Institute of the Ministry of Finance in 1968. Public Provident fund is the provident fund for the general public including self-employed, salaried, urban, rural, everyone.

Public Provident FundSalient Features of PPFA long term investment option : A PPF is long term investment option as the money gets locked for 15 or more years. So, this is advisable when the investor has patience and can retain their money invested.

Managed by Government : The Public fund investment is established and managed by the central government. This is an investment opportunity available with a capital protection.

You can open it at : An Indian resident can open an account with a designated bank or post office.

Can invest up to : With effect from August,2014 a minimum of Rs 500.00 subject to a maximum of Rs.1.50 lac per annum may be deposited. The amount can be deposited in lump sum or in a maximum of 12 instalments per year.

Long Term investment : Original duration for PPF is 15 years. Thereafter, on application by the subscriber, it can be extended for 1 or more blocks of 5 years each.Features continueAttractive Rate of Interest : The rate of interest is 8.70% per annum with effect from 01.04.2013. Interest is paid on 31st March every year.

You can avail loans : Loans and withdrawals are permitted depending upon the age of the account and balances as on the specified dates.

There are Tax benefits : Income Tax benefits are available under Sec 80 of IT Act. Interest income is totally exempt from Income Tax. Amount outstanding to the credit is fully exempted from Wealth Tax also.

You have nomination facility: Nomination facility is available in the name of one or more persons. The shares of nominees may also be defined by the subscriber.

Transfer the account when/where you want : The account can be transferred to other branches/ other banks or Post Offices and vice versa upon request by the subscriber. The service is free of charges.

From: moneycontrol.comCOMPARISON FACTORSPPFEMFRISKNO RISKRISK ATTACHEDLOCK IN PERIOD15 YEARSNO LOCK IN PERIODINVESTMENT LIMITATION500 to 150000 IN AN YEARUNLIMITEDLOAN AVAILABILITYAVAILABLENOT LOAN AVAILABILITYTAX SAVINGSYES, UNDER SEC 80C OF IT ACT, 1.5 LACNO TAX SAVINGSCAPITAL SAFETYYESNOFOR NRINOYES, NRI ALSO INVEST IN EMF. He/Shecan invest in equity mutual fundson repatriable basis or non-repatriable basisLONG TERM INVESTMENT In general, an investment instrument (bond, debentures, preferred stocks/preference shares) matures in more than 10 years.

http://www.businessdictionary.com/definition/long-term-investment.html#ixzz3TsceY8fsEquity investments outscore PPF clearly over long term. Less volatility is the only case for PPFs, but in the long term avoiding equity is the biggest risk.For a long term investor

The PPF vs. Equity DebateOn Aug. 25th 2014, the Economic Times published an article titled,PPF investment can beat Sensex returns over 20-year period. They showed that between Aug. 1994 to Aug. 2014, Sensex returned an annualized return of 9.15% while the PPF returned 10.46%.Needless to mention this article created a lot of buzz among investorsanddistributors. Investors panicked and wondered if they were right tohave started that SIP a few months ago.Five days later, the distributor portal CafeMutual carried an article (Can PPF beat Sensex returns over 20-year period?)whosesole purpose was to debunkthe Economic Times article.The CafeMutual article pointed out that only one time period was considered by the ET correspondent and that dividends from the Sensex were ignored.

Sep7 2014 by freefincal

Therefore in order to disprove the ET article three different dividend yields were added to the Sensex CAGR of 9.15% to ensure it is higher than PPF.

www.moneycontrol.comwww.investopedia.comwww.economictimes.comwww.emoneyflow.com ET Fin Pro bookConclusion If you are completely averse to taking any risk with your money. You should opt for the Public Provident Fund.If you are open to taking risk, living with a return that is potentially higher than PPF but not guaranteed and subject to volatility, then you could invest in a mutual fund.