ULIPs represent the GenX of the insurance industry. Unit linked insurance plans basically function like a mutual fund with an additional life cover that is thrown in. Another financial product that is frequently considered as a tax saving option is equity linked savings schemes. Such schemes offer similar tax benefits under section 80C of the income tax act.

In order to appreciate the salient features it is necessary to understand the nuances of the two products. In the case of unit linked insurance plans a portion of premium is invested in market linked instruments. However, before the investment is made, certain sums are deducted from the premium, which vary from company to company. For example: in the case of Flexisave plus plan of Birla Sun Life Insurance company, the various charges include:

• A loading charge of 65% in the first year.
• A fund management charge of 1% of sum assured which will be applicable for all schemes.
• A policy administration fee of Rs.22 per month.
• Since, a portion of the premiums will be invested, an investment management fee will be charged at a rate not exceeding 1.5% per annum.

The premium net of the above expenses will be used for making the investment. Thus, before any decision regarding ULIPs is taken, it is important to understand the deductions that will be made.

On the other hand, in the case of ELSS the only deduction is in the form of an entry load which is generally 2.25% on the initial amount. This entry load will also be applicable for systematic investment plan. After reducing the entry load, the balance will be used for investment purposes.

Both ULIP and ELSS as such cannot be compared. Both have their unique features. While ELSS provides market linked returns with tax benefits, ULIPs provide tax benfits, market linked returns along with risk cover. To each, his own!

Magnum Multiplier Plus is a pure equity diversified fund from the stable of SBI Magnum. The fund has delivered the performance in terms of rise and fall of the majority. The fund aims to provide the long term capital appreciation by investing in equities. With the inception of this fund in 1998, it expanded its investment in the growth stocks like software, pharma and FMCG. When growth stocks rally took up in the year 1999 the fund competently slash its exposure in these stocks by booking profits. The deftly journey of this fund has crashed in year 2000 due to it's over weight position in the growth stocks like software, pharma and FMCG. Its concentration in these funds has risen to 70% at the peak. This unhealthy concentration left the fund with a vast damage in year 2000. The fund plummeted sharply with a 50% loss. At that moment the fund went through real test of loss. That made the fund to change its path of investment. Now its new restructuring procedure made the fund in favor of the consumer. It has spread its portfolio in diversified regions rather than any monopoly holdings. With the current FMCG boom the fund has delivered good returns and shown a brighter performance. Also the fund had taken major pro of this changing dynamics of the market.

The fund follows a top-down approach in identifying the preferred sectors and then follows a bottom-up approach for the selection of individual scrips. Now it adopts the opportunity based approach due to the market volatility. Overall the fund has a good response to the market. But the crucial point to be seen that the fund has to maintain its diversified allocation to offer steady return on regular basis.

Minimum investment (Rs.)	1000
Type of fund	Equity
Entry / exit load	2.25% / nil
NAV as on August 4, 2005	29.07

Performance update (%) as on July 27, 2005

1M	3 M	1 Yr	3 Yr*
16.19	32.56	96.95	60.90

*Returns annualised, Source - Bloomberg

• In view of the emergency situation in Mumbai, the Insurance Regulatory & Development Authority has relaxed certain norms to facilitate speedy settlement of claims, estimated at over Rs.2,000 crore, filed by policyholders in rain-ravaged Maharashtra and Gujarat.
• FIIs, due to their inability to buy shares of key banking stocks as they have reached the maximum limit in major banks, have started buying units of Benchmark Bank Bees, an ETF.
• With effect from September 23, 2005, the schemes of Alliance Capital Mutual Fund will come under the management of Birla Sun Life Mutual Fund.
• SEBI will soon come up with the guidelines for allowing mutual funds to launch gold exchange traded funds.

• The ABN Amro Dividend Yield Fund will be initially open for subscription from August 1 to August 30, 2005.
• Reliance Tax Saver Fund, an ELSS will remain open for the new offering till August 23. No entry load will be charged through SIP.
• UTI Opportunities Fund, from the stable UTI Mutual Fund will remain open till August 19.
• Sahara Wealth Fund, from the stable Sahara Mutual Fund will open for subscription from July 4 till August 19.
• Prudential ICICI Mutual Fund has extended the closing date for the new fund offer period of Prudential ICICI Infrastructure Fund till August 16, 2005.
• Cholamandalam Mutual Fund has extended the new fund offer period for Chola Short Term Floating Rate Plan from August 4 to August 8, 2005.
• HDFC Mutual Fund has extended the new fund offer period of HDFC Multiple Yield Fund - Plan 2005, up to August 5, 2005.

Sundaram Mutual Fund is set to launch a diversified equity fund, named as Sundaram CAPEX Opportunities Fund. It will invest in stocks of the companies in the capital goods sector. The fund would be initially open for subscription from August 10 to September 5, 2005. During the initial subscription period, the fund will not charge any entry load.

Fund	NAV (Date)	Returns(%)
HDFC Taxsaver	90.58	40.35
Prudential ICICI Tax Plan	62.44	40.24
Tata Tax Saving	40.29	29.83
Sundaram Taxsaver	16.26	28.57
Birla Equity Plan	45.30	26.21

Fund	NAV (Date)	Returns(%)
Franklin India Prima	142.64	47.13
Magnum Contra	20.47	46.07
Reliance Growth	155.43	45.00
Alliance Basic Industries	42.18	37.35
HDFC Equity	83.18	35.32