TIMES CENTER FOR LEARNING LIMITED
ET FinPro PGDBM COURSE
A PRESENTATION ON
“COMPARISON BETWEEN EQUITY MUTUAL FUND AND
PUBLIC PROVIDENT FUND FOR A LONG TERM INVESTOR”
Submitted To PERSENTED BY
Anju Anand mam Amir Khan
Bhupendra K Goutam
EQUITY MUTUAL FUND
TYPES OF MUTUAL FUND
PUBLIC PROVIDENT FUND
FEATURES OF PPF
PPF INTEREST CALCULATION
Equity Mutual Fund
DEFINITION 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 Fund
• Diversified Fund
• Sector Fund
• Equity Linked Saving Scheme(ELSS)
• Thematic Fund
• Equity Income/Dividend Yield Scheme
• Mega Cap Equity Funds
• Large Cap Equity Funds
• Mid Cap Equity Funds
• Small Cap Equity Funds
Diversified Equity Fund:
It is a category of fund that invest in a divers mix of securities that cut
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 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
Mid Cap Equity Funds : These invest in companies with a medium
Small Cap Equity Funds : These invest in companies with a small
LARGE CAP EQUITY FUNDS RANK RETURN
06 MONTH 01 YEAR 03 YEAR
Birla Sun life Top 100(G) 01 14.2% 55.8% 28.00%
Franklin India Copor. (G) 01 20.5% 72.8% 27.3%
SBI Blue Chip Fund (G) 01 17.5% 58.1% 29.00%
Total Equity Cop. Fund (G) 01 18.7% 60.6% 27.00%
Top Equity Mutual Funds
SMALL & MID CAP EQUITY FUNDS RANK RETURN
06 MONTHS 01 YEAR 03 YEAR
Can Robeco Emerg Equities (G) 01 23.00% 106.2% 39.5%
L&T Mid Cap Fund 01 22.00% 90.3% 34.9%
Principal Emerging Bluechip (G) 01 22.5% 85.6% 39.3%
THEMATIC-INFRASTRUCTURE EQUITY FUNDS RANK RETURN
06 MONTHS 01 YEAR 03 YEAR
Franklin Build Fund (G) 01 23.2% 101.2% 37.8%
L&T Infrastructure 01 16.8% 85.1% 23.6%
From : moneycontrol.com
The 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.
The Public Provident Fund is 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 Fund
Salient Features of PPF
A 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
Attractive 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
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.
FACTORS PPF EMF
RISK NO RISK RISK ATTACHED
LOCK IN PERIOD 15 YEARS NO LOCK IN PERIOD
INVESTMENT LIMITATION 500 to 150000 IN AN
LOAN AVAILABILITY AVAILABLE NOT LOAN AVAILABILITY
TAX SAVINGS YES, UNDER SEC 80C OF
IT ACT, 1.5 LAC NO TAX SAVINGS
CAPITAL SAFETY YES NO
FOR NRI NO YES, NRI ALSO INVEST IN
EMF. He/She can invest
in equity mutual
funds on repatriable
basis or non-repatriable
LONG TERM INVESTMENT
In general, an investment instrument (bond,
debentures, preferred stocks/preference
shares) matures in more than 10 years.
Equity 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
The PPF vs. Equity Debate
• On 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
investors and distributors. Investors panicked and wondered if they were
right to have 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? ) whose sole purpose was
to debunk the 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
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.
ET Fin Pro book
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.
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