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| Edited By: Harsh Roongta |Source: DNA |Updated: Mar 21, 2018, 06:31 AM IST
You have raised a very valid question. The CNX Nifty is a 50 stock index accounting for 13 sectors of the economy. These 50 stocks are included in varying proportion in the index. There are many Nifty index funds that undertake to invest the funds in exactly the same proportion and thus, the return from these Nifty index funds closely match the Nifty itself. Almost every major fund house has a Nifty (or Sensex) index fund. The expense ratio of index funds is low as the investments mirror the underlying index and no special fund manager skills are required. The traditional logic to invest in index funds has been that index funds give you market returns at very low costs and it is not worthwhile investing in funds that need active fund management skills. These actively managed funds naturally have higher costs and if they do not beat the market index, then it is not worthwhile paying for these additional costs. This is the reason that worldwide index funds are very popular. However, in India, the past data indicates that well managed actively managed funds have managed to beat their benchmark indexes consistently. That is perhaps the reason why index funds are not that popular in India.
Crisil Balanced Fund Index is based on CNX Nifty (65%) and Crisil composite Bond Index (35%). In turn the Crisil Composite Bond index is based on a number of other Bond/Gilt indexes. Details are available on this link: (https://www.crisil.com/pdf/capitalmarket/CRISIL-Composite-Bond-Fund-Index-Factsheet-02-May-2016.pdf). Similarly, Crisil MIP blended Index is based in CNX Nifty (15%) and Crisil Composite Bond Index (85%).
There are no index funds available in the Balanced funds or MIP funds category. There are a number of actively managed Balanced funds and MIP funds that have consistently outperformed these indexes. You can choose to invest in those funds.
The question does not seem to be right as a "fixed" rate loan cannot be linked to base rate. In all likelihood, you are on a variable rate loan @ 10.25% per annum with base rate mechanism. This is much higher than the 9.35% - 9.50% p.a. rate that is prevailing right now. You should talk to your existing lender to check whether they will offer you 9.50% p.a. and the charges for the shift, if any. If this is available at a maximum charge of around 0.29% of the loan outstanding, you can shift within the same lender itself. Otherwise, you can explore the market and you are bound to get this rate from other lenders if you have had a good repayment track record and the property documents are clear. In either case the new loan will be on the MCLR-basis only.
I have availed a home from my bank and am claiming exemptions for income tax for housing loan interest as well as installments under Section 80 C. Recently my wife has purchased a flat by availing a home loan in which I have been made a co-borrower and signed the loan documents jointly with my wife. I am also paying 50% of the loan installment through my salary. Now my query is whether I shall get some relief under Income Tax Act for regularly paying the housing loan installment from my salary. Please note that the agreement is in the name of my wife.
You cannot get any tax deduction in respect of home loan installments paid by you as long as you are not an owner or a co-owner of the property. It does not matter that you are a co-borrower in the loan. You need to be a co-owner to be eligible for getting any deductions on account of home loan installments paid by you.
Harsh Roongta is a chartered accountant and Sebi-registered investment expert. Send your queries – be it on mutual funds, tax, loans or savings – to personalfinance@dnaindia.net or tweet them to @AskHarshdna
