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We cover the impact of macros on Indian Economy, and the impact key decisions taken by the government and relagatory authorities have over markets.
Key Events Impacting Currencies are Covered
Currency Impacts are covered, and how it impacts your portfolio and discuss the ways one can manage these.
Key Global Events are Covered
We cover key events, like BREXIT, Ded Rate hike and may other such events that would have the bearing on your investments.
Saturday, December 14, 2013
Dwarka sub-city residents prefer moving to larger homes within locality.
Is Neemrana an investment opportunity?
Gurgaon in the Delhi-NCR space has always been on a real estate investment destination map. However, lately with the rising real estate prices and recessionary environment it may no longer be an ideal investment option available or even qualify for being in the first three choices for real estate investments. Amid such a scenario, a real estate investor has to take an objective and long term view of the real estate investment.
Till a couple of years back, Neemrana was known as the tourist destination only with Neemrana Fort attracting foreign and domestic tourists. However, change in the state government policies with respect to setting up of businesses and attracting foreign companies to set up businesses, turned the tide for Neemrana. This was also because the place was marked by the government for setting up of business and supporting residential units, not to speak about necessary infrastructure support that will come up to support both of them.
Sunday, December 08, 2013
Does Your Financial Advisor / Agent follow SEBI Circular on Risk Profiling..?
Do you know SEBI has issued guidelines for financial advisers and advisory firms..?
Is your bank or agent following those and educated you abut those guidelines..?
Financial Advisory is going a sea change in India, with SEBI having come up with new guidelines and refining of the existing one. There are separate guidelines for banks and Independent Financial Advisers and Wealth Management Firms.
The regulatory body had to take strict decisions in reference to the wealth management services being provided by agents, brokers and bankers. The backdrop of this could be found in our blogpost here.
The key changes have recently been done by SEBI is in KYC (Know Your Customer) norms, that would impact your savings and investments, if your adviser or agent is not adhering to the same.
So, What Does SEBI Guideline Say..?
This is in reference to SEBI Circular No. CIR/MIRSD/11/2012, and it says that:
- Intermediaries shall strictly follow the 'risk based due diligence' approach as prescribed by SEBI Master Circular on AML No. CIR/ISD/AML/3/2010 dated December 31, 2010.
- Also, Intermediaries will conduct on-going due diligence based on Risk Profile and Financial Position of the client as prescribed in the master circular.
- These guidelines are applicable for both new and existing clients.
Each individual has different perception and appetite for the risk he can take in his investments. While as, some are aggressively investing in equities or stocks of companies, others are
only comfortable in fixed deposits or government bonds.
So, it is imperative that a process is followed that enables to determine the investor's preference to investing in the type of securities.
What agents are currently doing...?
Currently, it has been widely observed that investor invests in funds or securities as recommended by their agents, brokers and bankers. Now, there had been cases where regulators have noticed that certain products were sold to investors that were totally against the need of the client. These were the cases of mis-selling. And there was no way to prove the same. Now, client has to fill the risk profile and sign the dotted line.
What does it mean for client...?
As clients have to fill in the risk profile, they are now more aware as to whether they are conservative, moderately conservative, balanced, moderately aggressive or aggressive client. While client finalises his investments with his agen, he can cross check as to whether the fund or security he is investing in actually falls in line with his risk profile.
How are clients safer now...?
As per the guidelines, risk profile has to be documented and the same process has to be done once every year. If at any given point in time it is found out that the funds or securities recommended to the investor didn't fall in line with the risk profile or if there is the case of mis-selling; client grievances can very easily be resolved now.
This is the one step more in the direction of investor protection and in regulating the intermediaries. There are a whole set of guidelines that have to be adhered to in the investment management space; and those agents and firms who will not change are surely be moved out of the market by the regulator and the competition alike.
Friday, November 01, 2013
Dwarka sub-city residents prefer moving to larger homes within locality
Dwarka sub-city is mainly an end-user driven market with the whole infrastructure up and running. It is well-connected with Metro Rail and airport, and a destination of choice for home buying.
We have seen a trend wherein, existing residents of Dwarka sub-city look for better and bigger apartments within the Dwarka sub-city itself. These are primarily the ones who are residents of the earliest launched societies in the area and are now looking towards societies with better maintenance and construction quality. In a way they are looking for upgrade. Those who are already residing in a 3BHK with twin car parking, power back-up, etc and are looking towards 3BHK+servant’s room with other things remaining the same.
We have seen good inventory available in Sectors 21 and 22 and now Sector 19B being a hot spot. The price range for the 1,500 sq ft, 3BHK apartment, with parking facility and power back-up in Sector 7, is Rs 95 lakh to Rs 1.15 crore, depending upon location of the society, infrastructure quality, internal maintenance and many other factors.
Is it the right time to buy?
For Dwarka-Gurgaon Expressway, this is the best time for the first-time home buyers, as they will not only get the property at discounted rates, but also may get further discount of 3-6 per cent, in terms of freebies.
The charges like PLC (Preferential Location Charges) and club membership can be waived off, based on the level of negotiation and the type of property.
For Dwarka sub-city, we have seen the prices softening for the past six months, and there is no reason for delaying the decision now.
Is it the time to invest?
For Investors, Dwarka-Gurgaon Expressway still holds a lot of opportunities, provided one can spot the properties under distress. We have been seeing the quantum of distress sales and one can have a great bargain in these times, when short term real estate investors are exiting.
It is not recommended to go for investment in the said stretch as far as the newly launched or already launched properties are concerned as better options are already available. An investor could rather consider other alternative such as Sohna in Gurgaon and also Neemrana.
Neemrana provides the best point of price-entry that many have missed at the Dwarka-Gurgaon Expressway. This is backed by the whole infrastructural development that is coming up to support it, with Japanese city coming into existence along with many other international firms setting up their base.
Rajat Dhar, managing partner, Cogent Advisory
The article was published at MagicBricks.Com and can be accessed at: here.
REIT: A new dimension to real estate investing - Part I
ReITs are popular and prevalent in developed markets. They are listed on stock exchanges and governed by transparent norms. ReMFs invest in commercial properties and own them. They make gains by renting out or selling their holdings; like mutual funds and share profits with investors.
Tuesday, September 10, 2013
Avoid Bank Planners, says Law Firm
Saturday, August 03, 2013
Banks' Wealth Services Under RBI Scanner - RBI Guidelines & Observations
- violation of KYC / AML Guidelines
- mis-selling of products, or selling products unsuitable to clients,
- conflict of interest,
- lack of robust risk management system & procedures leading to frauds
- lack of knowledge and
- lack of clarity about products and frauds
- banks did not have clear segregation of duties of marketing personnel from other branch functions
- bank employees were directly receiving incentives from third parties, such as insurance, mutual funds and other entities for seling their products.
- products that are unsuitable to the client profile are sold to him, particularly through misrepresentation or by linking it with banks’ own products e.g., making purchase of insurance compulsory along with a car loan.
- there is a lack of knowledge of the product being sold, and occurs when untrained staff sell products.
- mis-selling may also arise from the provisions regarding payment of commissions and incentives which distort the selling structure.
Accordingly, undermentioned are a few excerpts from the conditions proposed by RBI in addition to the extant instructions:
- Banks should disclose to the customers, details of all the commissions/other fees (in any form) received, if any, from the various mutual fund/insurance/other financial companies for marketing their products. This disclosure would be required even in cases where the bank is marketing products of only one mutual fund/ insurance company etc.
- Banks should disclose in the ‘Notes to Accounts’ to their Balance Sheet, the details of fees/remuneration received in respect of the marketing and distribution function undertaken by them.
- As mis-selling is a serious issue in terms of consumer protection, the bank should put in place a policy approved by its Board regarding marketing and distribution of third party financial products which should, inter alia specifically consider the issue of addressing mis-selling.
- The sales process should be transparent with full disclosure as to the details of the product. The selling should be need based and mapped to the customer profile.
- Products should be marketed only in branches having specified trained personnel for the purpose.
- The persons undertaking such marketing/distributions services, should not be entrusted with any other approval/transactional process at bank branches. There should be a clear segregation of functions between marketing and operational staff.
- There should be a Code of Conduct for the sales personnel who should adhere to the same.
- The fact that the bank is acting only as an agent should be clearly brought to the notice of the customer.
- Banks should set up SIDD (Seperately Identifiable Divisions or Departments), so that conflict of interest be handled; and seperating marketing / transactional / advisory divisions.
There should be no evasion of these regulations by accepting several amounts for lower values from the same client to avoid the stated threshold.
We have taken excerpts from the draft guidelines issued by RBI. The comprehensive document covers PMS (Portfolio Management Services), IAS (Investment Advisory Services), and much more.
What Options Does a Client Have...?
Monday, June 17, 2013
Pointers On Real Estate Bill Passed By Cabinet.
It also has provisions under which all relevant clearances for real estate projects would have to be submitted to the regulator and also displayed on a website before starting the construction.
The bill also seeks setting up of a real estate appellate tribunal for adjudicating disputes. The tribunal will be headed either by a sitting or a retired judge.
It also suggests setting up of a national advisory council to be headed by housing minister Ajay Maken to suggest ways to advise the regulator on crucial matters.
Sunday, May 12, 2013
BEAWARE & THINK Before You Accept An OPEN OFFER Put Forth By The Company...!
Friday, May 10, 2013
(Important) I-T Returns Might Ask You To Disclose All Assets
Bank Loans - No Interest Rate Reduction In Near Future.
Thursday, May 09, 2013
BeAware of [1st June 2013] : Dividend Distribution Tax on Debt Mutual Funds hiked to 25%, will become Applicable.
Wednesday, May 08, 2013
Reduce Tax Outgo & Also Increase returns by upto 2.5% On Debt Funds
Advantage of double indexation can be had by investing in March of year 1 (FY 2012-13) and then selling in April of year 3 (FY 2014-15). This virtually brings down the tax impact to a very low level if not to zilch. This means whole yield on such investments becomes tax free.
Double indexation would kick in if you invest in the first financial year and sell in the third financial year. So if you invest now in March 2013 (financial year 2012-13) and sell your investment in April 2014 (financial year 2014-2015), you can get the benefit of double indexation. This may help you to reduce your tax liability on long-term capital gains that will arise on redemption of mutual funds.
Let us take a simple example:
If the debt fund is redeemed in April 2014, you can also take into account the CII of 2014-2015. Capital gain with double indexation in this case will be 1,10,000 - 1,14,437 = (-) 4,437. Thus, as per the calculation, you make a loss of 4,437. That means you will pay zero tax, or your returns are tax- free. In fact you can even carry forward this loss for eight years and can set it off against long-term capital gains.
What Are The choices You Have
For risk averse investors, who have invested in the debt market in March this year could be fruitful.
Debt Fund category provides investors a number of products to choose from. Investors looking for capital appreciation plus benefits of double indexation can go for income funds, dynamic bond funds or gilt funds.
Therefore, the fund manager's view would be reflected by the maturity profile of the funds and its duration.
Typically, the duration and average maturity would tend to be longer if the fund manager feels that interest rates are likely to fall, or are falling. Birla Sun Life Dynamic Bond Fund, SBI Dynamic Bond Fund, Reliance Dynamic Bond Fund, IDFC Dynamic Bond Fund are some of the funds in this category.
Investors who merely want the benefits of double indexation and no interest rate risk, can opt for a fixed maturity plan (FMP). However, the returns on these would be under 9.5%.
Monday, May 06, 2013
RBI is responsible for the development of the Government Securities market. Although, debt market in India is not matured; but RBI is taking steps in the good direction to address key concerns.
- it only offered inflation hedging for the principal, while the coupons of the bond were left unprotected against inflation and
- complexities involved in pricing of the instrument. Taking into account past experience as well as the internationally popular structure of Capital Indexed Bonds a modified structure of Capital Indexed Bonds has been designed.
contactus@cogentadvisory.com
Call Centre : +91 - 87 4402 2020
Direct Contact : Rajat Dhar (+91 - 9654.270.100)
Tuesday, April 30, 2013
Indian Americans: How to get your 2013 tax residency certificate
This is the first year that India is mandatorily seeking TRCs and there are likely to be teething troubles.
With effect from financial year 2012-13, India made it mandatory for all foreigners, including non-residents to obtain a Tax Residency Certificate with certain prescribed details from their country of residence in order to claim benefits of the Double Taxation Avoidance Agreement (DTAA).
The complete notification for this was released in September 2012, and hence financial year 2013-14 is the first full year when this will become applicable.
Let us quickly look at what the treaty benefits are and then go on to understand how Indian Americans can get the TRC from the US Internal Revenue Service (IRS).
Treaty benefits:
To put it in a nutshell, the India-US DTAA allows residents of the US who have income from India to pay a lower amount of tax in India provided tax on the same is paid in the US.
"Sections 90(4) and 90A(4) in this regard say that foreign vendors must 'obtain' a Tax Residency Certificate. What this means is that the NRI must obtain this certificate and keep it with him. If he claims the treaty benefits at the time of filing his tax returns, then he must be ready to present the TRC at the time of assessment. However, if he is claiming the treaty benefits at the time of Tax Deduction at Source (TDS), then the payer may ask him to furnish the TRC in order to deduct tax at the lower rate," explains Vineet Agarwal, Director - Tax, KPMG India.
Tax Residency Certificate:
The IRS issues this on Form 6166. Form 6166 is a letter printed on US Department of Treasury stationery certifying that the individuals or entities listed are residents of the United States for purposes of the income tax laws of the United States.
In order to obtain this certificate, you must fill up Form 8802, Application for United States Residency Certificate.
When to apply:
If you need the Tax Residency Certificate for 2013, you can apply now. "The TRC will be available only for one calendar year at a time. So if you need one for financial year 2013-2014, you will need to get two certificates, one for 2013 and one for 2014," explains Roy Vargis, CPA and promoter of IndiaCPA.com.
There are a few challenges here. First is that the IRS will issue the TRC for a future year only after Dec 1 of the earlier year. That means, if you need a TRC for 2014, you can apply only after 1st December 2013. So this is something NRIs must remember and act on later on to get their 2014 TRC.
Secondly, "If someone was deputed to US recently or is a recent migrant, he will not be eligible to file Form 6166 for TRC. The certificate will be issued only if a US tax return was filed. If for the current year you filed a 1040NR (a non resident return), then too you will not be eligible for the TRC," Vargis explains. In such case, you would need to pay tax in India and then claim credit in your US tax returns.
"To take this a step further, if you were a dual resident, a resident of US and India, your application for TRC may be denied. This is possible in a situation where you were either a Green Card holder or a Citizen of US living in India. In this situation, the application should be submitted with evidence to establish that you are a resident of the US under the tie breaker provision of the US India DTAA Article 4(2). Do note that US Citizens or Green Card holders who do not have a substantial presence or permanent home in the US during the tax year are not entitled to treaty benefits," Vargis adds.
Documents:
The IRS needs to know that you are indeed a US tax payer. So if you are applying for the TRC for 2013, then you should have filed your 2012 returns. Since the due date for tax returns for 2012 just passed, it is possible that the IRS may not have your tax return in their system. In such cases, it will be useful if you included a copy of the income tax return with your Form 8802. Write "COPY - do not process" on the tax return.
In addition, you must also sign a 'Penalties of Perjury Statements and Attachments' declaring that you would continue to be a US taxpayer in the year for which you are requesting the TRC, that is, for 2013.
Fee: You must pay a user fee of $85 for each Form 8802. The IRS advices applicants to request all forms 6166 on a single form 8802 to avoid paying $85 for processing a second form 8802.
This is the first year that India is mandatorily seeking TRCs and there are likely to be teething troubles.
Sunday, April 21, 2013
Strategy A Fixed Income Investor Should Implement.
In this article we determine facts and provide reason for including Income funds in the fixed income portfolio.
Our economy is on the downward trend since 2011, with GDP hovering around 6%. Other macro economic indicators as well as weekly and monthly statisticslike IIP numbers also show no sign of relief and the change the the trend. Although, inflation has lowered a bit, but fiscal and current deficit are still posing a grave problem to our economy as a whole.
In July 2012, our recommendation to investors was to park their investments in Short-Term funds with the horizon of 1 year, as we were anticipating reforms to be taken up by the government. However, not much was done in this direction.
INFLATION
We all are aware of the central bank's stance that to tackle inflation is its core responsibility. In the mid quarter monetary policy review do December 2012, the headline inflation was below RBI's projected levels. The same is expected to remain for the rest part of 2013-14. If the government take measures to reduce fiscal gap, and if the currency shows signs of appreciation that would have positive impact on the inflation front.
GOVERNMENT BOND's DEMAND SUPPLY EQUATION
In the current scenario, RBI actively manages liquidity in the banking system. Banks have been borrowing heavily (in the range of INR 80,000 crore to INR 1,00,000/- Crore) under LAF (Liquidity Adjustment Facility) is well above the comfort limit of INR 60,000/- Crore under LAF (Liquidity Adustment Facility) or 1% of Net Demand and Time Liabilities. Another important point to note here is that demand for government securities from banks which is set to rise on account of banks adopting play safe due to their Non Performing Assets (NPA's). Bankscurrently have exposure to Statutory Liquidity Ratio (SLR), well above stipulated ratio of 23%. All these factors would contribute towards the rallying, that could be foreseen in the bond market.
WHERE YOU SHOULD INVEST NOW
In the backdrop of above points, we have decided to shift our stance and suggest that investors start taking ex exposure to long term debt funds. All those who are well versed with the fixed income market, know that their is an inverse relationship between interest rates and bind prices. Thus, whenever there is an expectation that interest rates will be on the downward spiral, yields on the bonds fall resulting in increase in Bond prices. In such scenario, investors with thehorizon of 1 year should invest in Income Funds. Our recommended funds in this category are Templeton India Income Builder Account, DWS Premier Bond Fund and Canara Robeco Imcome Fund.
Research Desk
researchteam@cogentadvisory.com
US: +1(718) 713 8269. UK: +44(20) 3393 4285. IND: +91 87 4402 2020
Disclaimer:
Cogent Advisory or it's employees may own or have positions in the mutual funds of any Asset Management Companies mentioned or referred to in this article! And may dispose, switch to/from or buy more in the same of any other fund. This article should not be construed as an offer or solicitation for the purchase, subscription or sale of mutual fund. No decision should be taken without going through Key Information Memorandum and Statement Of Additional Information. Any information provided herein is made on general basis and does not take into account investment objective on individual or group or individuals. Investors should take professional investment,max and legal advice before taking and decision on investment. Past performance is not indicative of future performance of the fund. Opinions presented herein may change without prior notice. Kindly read disclaimer on our website www.cogentadvisory.com
Friday, April 19, 2013
3 Points and 3 Principles To Follow Before Investing In GOLD.
GOLD has seen a steady crash in prices for the past couple of days. The fall was catalysted with news that Cyprus's central bank would sell its gold holdings. If that happens, it might trigger another countries in Europe also following the bandwagon. Currently US holds biggest Gold Reserves of approx 8,100 tonnes. What would happen if US decides to offload it's reserves.
Now, crucial question is, what an investor should do in such a scenario? Gold, as an asset class has always been considered as a hedge against inflation. Thus, also there should be a certain specific allocation made into Gold.
Basic points to consider while investing in GOLD:
1. Percent Allocation: Of the total investment corpus, allocate only 10% to GOLD.
2. Time Of Purchase: Buy at dips spread over a year, or if not sure of the timing invest using SIPs. Generally, Feb-Apr is the lean season and post which gold sees price rise.
3. Method Of Buying: Gone are the days when one would buy gold from Jewellers, banks for purely investment purpose. Now, state of art distribution channels are available for the clients to invest. NSEL enables investor to buy precious metals, such as e-Gold, e-Silver, etc on the DEMAT/TRADING Platform. On NSEL Spot, and investor can also take the delivery of the same, or even sell it. The best part remains that the holdings are in dematerislised form, and hence very low maintenance costs for the client, and at good price. A client can buy/sell online and even on recorded telephone lines. Contract notes are sent to the client via email or couries (as preferred). Also, the client can acess his Gold investments via an online access. Another option available is to invest in GOLD ETF (Exchange Traded Fund). This fund tracks Gold prices and hence returns closely follow that of gold. But, the delivery of gold by investing in these is not an option available to teh client. Third option is to invest in a product that would enable client to invest in Gold on daily basis; and on the date of maturity client has to take the delivery of the same. In this case, client has no other option but to take delivery upon maturity.
Fact to keep in mind:
Last couple of years have seen very good returns on the gold investment's. This had been predominantly on account of weak global markets and weaker currencies, which led corporates and central banks across the world invest in gold. With global markets showing signs of improvement, slowing emand of Gold in China and Cyprus's central bank's decision regarding selling of Gold reserves led to the crash in GOld prices.
What Should be guiding principles:
1. A investor should keep in mind that investing in Gold should be within allocation limits.
2. Investment horizon shold be long term. Short term investment could be counter productive.
3. Select best distribution channel for buying gold.
However, it is recomended that an investor should always have a financial plan made for his investments and undertake his investments according to the plan. This prevents an investor from falling prey to sentiments while investing. Also, tracking of investments and benchmarking of the same is also as important as investing.
Research Team
researchteam@cogentadvisory.com
Queens, New York, U.S.A London, U.K. New Delhi, India.
+1 (718) 713 8269 +44 (20) 3393 4285 +91 87 4402 2020
About Cogent Advisory
Cogent Advisory manages client finances across geographies, adhering to the Global Standards and needs of UHNW individuals & institutions.
Brand: Cogent Estate is Sub-Brand of Cogent Advisory, and the Real Estate Portfolio Management service is provided under this brand. Cogent Estate manages the client real estate assets as a complete portfolio, implementing the latest tools & expertise to handle & deliver upon the same.
Technology: We strongly believe that the best tools and technology be used to deliver the Best In Class service to our clients. We have implemented the best technology available in the world, the latest being AdviserMatrix, CRM (Customer Relationship Management), Portfolio Analyser & Optimiser and latest data aggregator solutions to name the few.
Global Reach: We provide our clients with the best investment opportunities across the globe. Professional Management of the investments are done and global norms are adhered.
Value for Money: Our Services are fee based, and our clients pay only for the services they take. Fee based mode ensures that there is no conflict of interest and that wide product/service range is available to our clients.
Contact Us at:
Queens, New York, U.S.A
+1 (718) 713 8269
London, U.K.
+44 (20) 3393 4285
New Delhi, India.
+91 87 4402 2020
Disclaimer:
The article is purely for informative purpose and hence not a solicitation for business/investment. It is not a investment advice. Kindly, refer your financial planner/adviser before taking any action. Neither Cogent Advisory, nor its employees or affiliate partners would be responsible for the any loss on account of investments undertaken by investors based on the information contained in this article.