Shares Bse

Stock Market Today: FIIs Net Sellers, DIIs Net Buyers

noreply@blogger.com (LK) — Fri, 12 Nov 2010 23:33:00 +0000

Foreign Institutional Investors (FIIs) were net sellers in the equity segment worth Rs 7.83 billion on both the BSE and the NSE on Nov 12, as per provisional data available at NSE. They bought equities worth Rs 31.34 billion and sold equities worth Rs 39.17 billion.

While, Domestic Institutional Investors (DIIs include banks, DFIs, Insurance and MFs) were net buyers in the equity segment worth Rs 2.46 billion on both the BSE and the NSE on Nov 12. as per provisional data available at the NSE. They bought equities worth Rs 14.39 billion and sold equities worth Rs 11.93 billion.

Twitter is down again

noreply@blogger.com (LK) — Wed, 20 Jan 2010 12:28:00 +0000

With Twitter.com being down, the Twitter API also appears to be, taking hundreds of twitter apps down with it.

Tantia Constructions - Reliance MF Buys 6.46%

noreply@blogger.com (LK) — Thu, 14 Jan 2010 12:43:00 +0000

Reliance Mutual Fund A/C Reliance Banking Fund (P) has bought 6.46% stake in Tantia Constructions for an aggregate amount of Rs 130 million.

Reliance Mutual Fund A/C Reliance Banking Fund (P) bought 1million shares of Tantia Construction at Rs 130 million.

Tantia Constructions is engaged in infrastructural construction activities.

Shares of the company gained Rs 21.75, or 16.65%, to settle at Rs 152.35. The total volume of shares traded was 2,542,200 at the BSE (Tuesday).

India's Top Fund Manager Is Leaving Principal - Joining Kotak

noreply@blogger.com (LK) — Sat, 09 Jan 2010 01:02:00 +0000

Pankaj Tibrewal, manager of India's top performing fund for 2009, is leaving the Indian mutual fund unit of U.S. insurer and asset manager Principal, a top executive told Reuters on Friday.

Tibrewal is joining Kotak Mutual Fund, a source at Kotak and two others at Principal Pnb Asset Management in direct knowledge of the matter said, but declined to be named.

Friday is his last working day at Principal, Rajan Ghotgalkar, the firm's country head for India, said.

"We will be replacing him. We are looking for someone," Ghotgalkar added.

Tibrewal, who manages more than $300 million in eight funds for Principal Pnb Asset Management, guided Principal Emerging Bluechip Fund to a 147.3 percent gain in 2009, according to data from global fund tracker Lipper.

Limit Debt Mutual Funds Investment - RBI To Banks

noreply@blogger.com (LK) — Thu, 17 Dec 2009 12:48:00 +0000

Source: Wall Street Journal

The Reserve Bank of India has asked banks to put limits on their investment in debt mutual funds, three people familiar with the matter said Thursday, in what may be a move to cap lenders' off-balance-sheet exposure to companies.

In a recent communication to banks, the RBI has asked them to initiate measures to act as "self regulators" on debt fund investments, the three people told Dow Jones Newswires, asking not to be named.

An RBI spokeswoman wasn't immediately available for comments.

The move comes after Governor Duvvuri Subbarao flagged the issue of large investments by banks in debt mutual funds at the October monetary policy review. The central bank has been concerned as mutual funds have been investing bank funds to lend to corporate houses by buying their commercial paper. The RBI feels that banks won't have control over the quality of lending in such cases. Read More...

Exchange Traded Funds | Experts offer the latest thinking on the active vs. passive management debate

noreply@blogger.com (LK) — Sat, 12 Dec 2009 12:58:00 +0000

Exchange-traded funds [ETFs), which can give investors fairly inexpensive exposure to an asset class tied to an index, continue to attract money. There was a 54% jump in assets held in U.S.-based ETFs in the year ended Nov. 30, to $752 billion, but that's still miniscule compared with the trillions of dollars invested in mutual funds, both actively and passively managed.
Read More...

Mutual fund houses not to ask NOCs

noreply@blogger.com (LK) — Sat, 12 Dec 2009 12:47:00 +0000

Making it easier for mutual fund investors to switch their distributors, market regulator SEBI on Friday said it is doing away with the
practice of obtaining a no objection certificate (NOC) from existing distributors.
Read More...

Indian mutual funds trading on multi terminals

noreply@blogger.com (LK) — Sun, 29 Nov 2009 13:31:00 +0000

The brokers will start trading in mutual funds although through NSE first. The other exchanges may join later. SEBI has made sweeping changes in the recent past to make the trading in mutual funds investor friendly.

After SEBI introduced ban on entry load. In early August, it allowed brokers to trade in mutual funds via NSE terminal

Investors will be able to transact in mutual funds on NSE

noreply@blogger.com (LK) — Wed, 25 Nov 2009 23:06:00 +0000

Source: The Hindu Business Line

Investors will be able to transact in mutual funds units via the National Stock Exchange’s fully automated online system. The exchange has issued elaborate guidelines in this regard.

Investors can place subscription and redemption orders online through their demat account as they currently do while trading in the secondary market for equities. Investors not having demat account can place orders in the physical mode through an AMFI certified broker by providing specific KYC documents.

In the case of physical mode of placing order, investors are required to submit redemption request stating the folio number and PAN card.

The system

Investors can connect to the NSE’s trading platform through brokers’ telecom network.

“A fully automated online order collection system called National Exchange Automated Trading-Mutual Fund Service System (MFSS) will be provided to the participants (brokers).

The settlement of the units will be through the depository in the demat mode for the demat account holders whose designated bank account will be debited/credited for the order placed on T (trading day) + 1 day.

In case an order is placed through the physical mode, the Registrar and Transfer Agent (RTA) will provide final redemption information to the exchange on T+1 day; the payout, however, will happen according to the scheme’s provisions and within the timelines.

The new MFSS will operate on all business days of the capital market segment between 9 a.m. and 3 p.m.

To start with, depository settlement will be available only for DP account holders in NSDL.

The value for a single transaction, according to NSE, should be less than Rs 1 crore.

Is your Mutual Fund Agent taking you for a ride?

noreply@blogger.com (LK) — Sat, 14 Nov 2009 14:43:00 +0000

Being a mutual fund agent is one of the easiest things to do in India – anybody could do it. All a person, call him Mr. Anybody, needs to do is pay Rs. 500 to AMFI and score fifty out of hundred on a test where most of the questions are something like this, “What does an equity fund invest in?”. The options are, (a) debt, (b) equities, and (c) neither. Mr. Anybody will then receive an AMFI Registration Number (ARN), regardless of whether he is a bored housewife, a steel magnate, or anybody else for that matter. He is now licensed to tell you where to invest your hard earned money, and of course, earn a healthy commission along the way. No wonder there are more than 90,000 AMFI registered distributors in India. I won’t claim to have spoken to all of them, but of the 500 I spoke to, I can confidently say that most of them are as qualified to give me financial advice as Mr. Anybody. That’s a pretty scary thought.

Our otherwise stringent regulatory system is the first culprit, in particular the Association of Mutual Funds of India (AMFI), which certifiesmutual fund agents. The person selling mutual funds is not selling soap, he is making asset allocation decisions that shape his client’s lives. If fund management – selecting a few stocks from the hundreds out there – requires professional qualifications and experience, why doesn’t wealth management – selecting a few funds from the thousands out there? SEBI on its part has set outstanding standards for fund managers. Mutual funds need five years of stellar investment track record and a net worth of ten crores. Portfolio managers pay ten lakhs in fees to SEBI and complete an application that scrutinizes everything from theirprofessional qualifications to their IT infrastructure to their office space. That is why we have only 40 mutual fund houses and 250 portfolio managers. Why isn’t a mutual fund agent – often your first entry point into investing in the markets – held to a comparable standard?

The industry’s compensation structure is also guilty and consumers are often unclear and unaware of how their agent is compensated. Agents are paid a commission by themutual fund comprising of an upfront fee and a trail fee later in the year. Although SEBI’s recent regulations have improved the situation, the incentive for yourmutual fund agent is still two-fold. One, sell you the mutual funds that are earning him the highest commission, and two, convince you to move from one fund to another frequently, to increase the amount of upfront fees he earns. Agents get paid nothing for either giving you good advice or for picking good funds for you, a grave misalignment of incentives.

The solution is for AMFI and SEBI to upgrade the mutual fund agent into an investment advisor, a full time professionally qualified individual who can say more than choose equities over debt when you are young and choose the best performing fund of the week. An investment advisor should understand the entire range of products available to various classes of investors, the risk profile of each, systematic asset allocation, and the basics of manager selection. Give us good advice and charge us for it. As for buying mutual funds, we don’t need someone to do that for us. We buy stocks online, and with an online platform for mutual funds, we should be able to do the same. I would certainly be happier paying for good advice and knowing I am investing money in what’s right for me, not what makes money for my agent.

What should you do with your favourite mutual fund agent in the time being? For starters, check his qualifications – at the minimum, he should have a degree in economics or finance and multiple years of experience in investment or wealth management. Then, test his asset allocation skills – ask him how his recommendations would change for different individuals in various hypothetical life situations? What does he define as risk and how does he measure and quantify it? Finally and most importantly, understand his incentives and how they are influencing his recommendations. Is he always advising you to choose equities over debt because commissions on equity funds happen to be much higher? Does he periodically recommend you switch to a different fund, because he is running low on commissions? If you suspect that his recommendations favour his interests more than yours, confront the problem.

It’s about time Mr. Anybody stopped giving us financial advice. Money management isn’t rocket science, but it isn’t anybody’s business either.

- Radhika Gupta

The author is co-founder of Forefront Capital Management, a specialized portfolio manager providing equity investment solutions. She can be contacted on radhika.gupta@forefrontcap.com

Source: MoneyControl.com

10 Equity funds with 100% return in one year

noreply@blogger.com (LK) — Sat, 14 Nov 2009 01:21:00 +0000

There are not too many funds returned more than 100 percent in one year.

But coupled with the scorching pace of the market rally, a judicious combination of stocks has ensured that 10 equity funds double their net asset values in 12 months.

This elite list includes Sahara Banking and Financial Services, ICICI Prudential Discovery, Tata Life Sciences and Technology and others (see list), data from MutualFundsIndia shows. Exchange-traded funds have not been included.

All these top funds have grossed between 99.99 per cent and 126.07 per cent in the one-year period ending November 9. Conspicuous by their absence, pure-play diversified equity funds have not made the list with the centurion club being dominated by sector funds seeking to play on themes such as banking (Sahara Banking), healthcare (Reliance Pharma and Tata Life Sciences), logistics (UTI Thematic Transportation).

“The performance in the last one year has come on the back of outstanding returns clocked by the banking sector, management of stocks, timely entry into stocks and research. Its important not only to be sitting on profits but know when to get out to fully capture the profits," said AN Sridhar, who oversees the 13-month-old Sahara Banking and Financial Services Fund.

With mid-cap stocks dominating the show after the rally started on large-cap legs, funds such as JM Midcap Fund, Birla Sun Life Mid Cap Fund and JM Multi Strategy Fund have found a place. An opportunities fund such as Mirae Asset Opportunities and a value fund in the form of ICICI Pru Discovery have found a place in this list.

"Value funds have always outperformed growth funds. While value funds did not do too well during April 2006-November 2007, globally, value funds started doing well after this blip. We stuck to value investing even in the difficult period, which has bore fruit," said Shankar Naren, who oversees the ICICI fund.

Global and Emerging Market funds shine as dollar weakens

noreply@blogger.com (LK) — Sat, 14 Nov 2009 01:15:00 +0000

Soaring gold prices and a slumping dollar prompted investors to step up the pace of their diversification strategies in early November. Emerging Market Equity Funds, Global Equity, Commodity Sector, Energy Sector and Global Bond Funds all posted strong inflows during the week ending November 11, according to funds tracked by EPFR Global. Energy sector funds enjoyed their best week since early 4Q08 and year-to-date flows into commodity sector funds are now just shy of $12 billion.

Despite the focus on the weakness of the dollar, flows into US equity funds hit a 47-week high as investors gravitated to stocks in light of recent earnings reports and expectations that domestic interest rates will stay at current levels well into next year. US bond funds, meanwhile, continue to benefit from the belief among US-based investors that higher income tax rates are inevitable, said EPFR.

Overall, all equity funds absorbed a net $10 billion for the week while all bond funds took in $5.58 billion. Redemptions from money market funds totaled $7.1 billion for the week, taking year-to-date outflows over the $450 billion mark.

In addition to being seen as a haven from dollar weakness, emerging markets benefited during the first full week of November from some robust Chinese macroeconomic data showing GDP growth on track to exceed 10% during 4Q09. Flows into the diversified Global Emerging Markets (GEM) Equity Funds totaled $1.48 billion while Asia ex-Japan Equity Funds absorbed $626 million. Latin America Equity Funds and EMEA Equity Funds added an additional $350 million of combined inflows, said EPFR.

Not surprisingly, China Equity Funds stood out among the country fund groups investing in the BRIC (Brazil, Russia, India and China) markets, taking in a nine-week high $256 million, while flows into Brazil, India and Russia Equity Funds ranged from $26 million to $87 million. BRIC Equity Funds absorbed $224 million as they extended their current inflow streak to nine straight weeks, according to EPFR data.

"In addition to providing some cover from the dollar’s anticipated trajectory, emerging markets are again offering a modest reform story," noted EPFR Global Senior Analyst Cameron Brandt. " India and Russia have recently joined the ranks of those making at least a rhetorical commitment to economic reform. Those ranks currently include Malaysia , Nigeria and Indonesia," Brandt said.

Although bullish US earnings and GDP data remains at odds with employment trends and the official rationale for current interest rates, investors committed $6.97 billion to US equity funds during the week ending November 11, their best showing since the second week of December, 2008, with US Large Cap and US Small Cap Blend ETFs accounting for the bulk of the inflows.

Although optimism about the US should be good news for Japanese exporters, investors had other things to chew on including a yen trading below 90 to the dollar and a surge in yields on Japanese debt that could put additional pressure on public finances, EPFR said. Japan Equity Funds posted outflows for the 8th straight week. But with only $5.1 billion of net outflows year to date, it may be cold comfort that Japan funds are on track for their best year for fund flows since 2006.

Flows into Europe Equity Funds rebounded from the previous week, but remained subdued as investors question how strong any recovery will be in 2010 given the competitive burdens created by strong regional currencies and the drag on domestic demand exerted by high unemployment levels. German business confidence has slid in recent weeks despite positive revisions to French forecasts for 2010 and other signs of regional improvement. Nevertheless, Europe Equity Funds are clinging on to year to date net inflows of $923 million. If they finish the year with positive flows, it will be for the first time since 2006, according to data compiled by EPFR.

Source: Financial Chronicle

SEBI allows stock brokers to deal in mutual fund products

noreply@blogger.com (LK) — Sat, 14 Nov 2009 01:01:00 +0000

Source: Hindu Business Line

In a move that could considerably widen the distribution network for mutual funds, SEBI on Friday allowed registered stockbrokers to transact mutual fund units on behalf of their clients through the stock exchange mechanism.

“The infrastructure that already exists for the secondary market transaction through the stock exchanges with its reach over 1,500 towns and cities, through over two lakh stock exchange terminals can be used for facilitating transactions in mutual fund schemes,” the SEBI circular said.

Stockbrokers will be eligible to be considered as official points of acceptance, the circular said. These stockbrokers need to pass AMFI’s (Association of Mutual Funds in India) certification examination, and become empanelled distributors.

Every mutual fund has to disclose the locations of its official points of acceptance in its offer documents and Web sites.

Selling through the stock exchange mechanism basically means an additional order routing system for buying or selling mutual fund schemes; there is no price discovery, said a senior official at a transfer agent’s office.

End-users can use the convenience of their neighbouring broker’s office for their mutual fund transactions, said Mr Mayank Shah, CEO of Anagram Stock broking.

Whether brokers can charge a fee for the service or not is unclear. But Mr Shah felt a fee structure would evolve once the system is in place.

This issue must be seen in the light of SEBI abolishing the entry load on mutual fund investments for distributors, starting August 1. This affected distributor income as well as inflows into equity schemes.

Currently investors roughly pay 1.25 per cent as commission to distributors; 0.75 per cent is upfront commission and the rest in the form of “trail commission” (when an investor remains invested in his fund).

“Once the broker starts acting as a distributor, there is an issue about what commission he might ask for and whether the client would be ready to pay that or not,” said a broker.

The SEBI circular on Friday also said that investors can hold units of mutual fund schemes in dematerialised form, and that the demat statement given by the depository participants would be deemed adequate compliance with SEBI norms.

Further, the stock exchanges should provide for an investor grievance handling mechanism to handle disputes between brokers and their clients. The time-stamping for transactions would be in the form of a confirmation slip issued through the stock exchange mechanism. The markets regulator has asked the stock exchanges to provide detailed operating guidelines for facilitating transaction in mutual funds on their platform by their member-brokers.

Investors pick hybrid Mutual Funds

noreply@blogger.com (LK) — Fri, 13 Nov 2009 20:08:00 +0000

Source: ET

Retail investors are warming up to the idea of hybrid mutual fund schemes with a limited exposure to equity, say investment consultants.
Faced with uncertainties in the equity market and lack of clear direction in the interest rate movement, investors are playing it safe and at the same time hoping to benefit from a possible upside in the stock market.

Debt-oriented hybrid schemes have performed very well in the last one year, with the category returning around 20% in the past year. Debt-oriented hybrid schemes typically invest around 15-20% of its total portfolio in stocks.

"Investor appetite for debt-oriented hybrid schemes have gone up in the recent past. It may be because they can't invest in pure debt schemes like income or gilt schemes because of the uncertainty in the interest rate scenario," says Hemant Rustagi, CEO, Wiseinvest, a wealth management company. "They also find the mandate of restricted investment in equity attractive. If the equity component in the portfolio performs well, it would act as a kicker to the returns from the scheme. At the same time, they don't want to expose themselves to extra risk by allotting more to equity," he adds.

Investors can hope to get around 12% returns from these plans, a slightly superior returns than they could earn from traditionally safer investment avenues, say investment experts. According to Rustagi, conservative investors can look at debt-oriented products like monthly income plan, asset allocation plan and pure debt-oriented hybrid plans in the current market scenario.

Another reason why investors are going for hybrid schemes is they don't want to commit money for a longer period. "Many investors are still a bit concerned about the investment climate. They are not mentally prepared to stay in the market with a long-term commitment because of uncertainties in the economy," says a mutual fund manager, who doesn't want to be named. "Debt-oriented hybrid plans are ideal for these people because they invest in an actively managed debt portfolio with a minor exposure to equity and it is okay even if they have a time frame of one or two years," he adds.

Seeking experts' help in buying MF

noreply@blogger.com (LK) — Fri, 13 Nov 2009 01:20:00 +0000

Source: Economic Times

Rather than looking at recent and past performances as a parameter for investing into an equity mutual fund, you will do well to make a
mental note of a host of qualitative and quantitative factors that a professional at financial management puts before you before recommending which mutual fund to buy.

Buying the best performing mutual fund of tomorrow is the aim of all investors, as ‘buying low and selling high’ is their credo. Both are next to ‘impossible’. Those who get it right are more fortunate than smart.

A study in the US showed that $1 lakh invested in S&P 500 in 1984 would have become $13.01 lakh by 2000-end. But the average stock investor’s money grew to only $2.41 lakh. Investment guru Marc Faber attributes the underperformance of such investments to the chase of ‘hot’ sectors. Those who don’t understand the dynamics of business should best assign the job to professionals — read professional money managers or mutual fund managers.

For most financial planners, the starting point before recommending an equity mutual fund is doing a financial plan for the client. This involves sitting with the client, understanding his/her cash inflows and outflows, goals and needs. Based on all the inputs, they would broadly classify a client as conservative, moderate or aggressive. Once this classification is completed, recommendation of funds would be the next step.

These recommendations would be based on qualitative and quantitative factors. Take the quantitative factors first. Things like the risk-adjusted returns, sharpe ratio, beta and returns over various periods of time like three-, 6-month, 1-year, 3-year are taken into account and given weightages. Then comes research on the portfolio quality: what percentage of the portfolio do the top 10 stocks constitute? What percentage of allocation is done to various sectors? Does the folio comprise illiquid stocks?, and the like. The qualitative aspect encompasses the number of years the fund house has been around, cumulative experience of fund managers and their past track record.

Then there are other important things like accessibility and level of comfort with the fund manager,” says Akhilesh Singh, head of wealth
management, Emkay Global Financial Services. His final recommendation is done by adding together the qualitative and quantitative parameters. Besides, any fund, which has a corpus below Rs 400 crore and less than a year’s track record, is not recommended by him. The top five funds which find favour with him are HDFC Equity, ICICI Prudential Discovery, HDFC Top 200, UTI Dividend Yield and UTI Equity Fund.

“All decisions taken by a fund manager are reflected in the net asset value (NAV) of a scheme. While selecting a fund we look at NAVs on a daily basis and compare them with their peers over a one-year period,” says Yogesh Kalwani, head-investment advisory, BNP Paribas Wealth Managers. Among large-cap funds, Mr Kalwani recommends, are HDFC Top 20, DSP Blackrock Top 100, Birla Sunlife Frontline Equity and ICICI Prudential Focused fund.

“We recommend funds on the basis of philosophy, discipline and predictability of the performance,” explains Sumeet Vaid, founder, Ffreedom Financial Planners. He believes that in the process of reaching one’s financial goals, stable fund houses are key to investment. So, the equity funds that find favour with him in the large-cap category are HDFC Top 200, DSP Blackrock Top 100 and ICICI Prudential Dynamic Fund. Among mid-cap funds, he recommends Birla Midcap and Reliance Growth Fund.

“Qualitative factors are given a higher weightage than quantitative factors while recommending funds to clients,” says the head of investment advisory at a foreign bank. Though qualitative factors such as investment process, service quality and communication with the investors are strictly not measurable, quantitative performance of mutual fund are.”

Gold ETFs beat other funds in stability, growth

noreply@blogger.com (LK) — Mon, 09 Nov 2009 02:49:00 +0000

For many of us who have been investing in financial instruments, the relentless rise of old poses a problem because we have no easy framework in which to think of gold. Till as recently as a couple of years ago, gold lived in a completely different world from stocks, funds and debt products. There was no easy way of investing in gold except for buying it as jewellery or coins and bullion trading was a mysterious world that was inhabited by a different set of species altogether. Gold investing was very much an out-of-sight and out-of-mind phenomena.

Since then, the arrival of commodity exchanges, Gold Exchange Traded Funds (ETFs) and gold stock funds has made it trivially easy to invest in gold without having to worry about purity and physical security. Just as important is the fact that these have made gold easily comparable to other investments. When an investor looks at fund performance data on valueresearchonline.com or any other mutual funds portal, he can't help comparing the returns of gold-based investments with equity-based ones. Since about 2005, gold's returns make it looks like a great investment compared to anything else. And it's not just the returns, but the stability when compared to equity that the investor notices. The steepest fall in gold since 2005 has been the 20 per cent it lost from March 2008 to October 2008.

When I talk to gold's new found fans, I find that there are two more factors that make them like gold, if only at a sub-conscious level. One is the simplicity of decision making. Gold is gold and that's all there is to it-all the ETFs deliver identical results. Unlike an investor in equity or equity-backed products, there aren't hundreds of choices. Secondly, most Indians seem to come mentally pre-configured with a propensity to view gold as an ideal vehicle for safe long-term investing.

At an intellectual level, many of us have bought into the logic of why gold doesn't make sense. However, we are a gold-coveting culture and have descended from generations who have lusted after gold. It takes very little to convince us that gold is a great investment, even though the long-term evidence is decidedly patchy. Today, the value of gold is increasingly driven by the demand and supply of paper gold on financial markets. It is a financial asset and is clearly subject to the same volatility as other financial assets as investor interest flows in or out. We could well be in a gold bubble which is just as ephemeral as the stock or oil or real estate bubbles were.

However, it is undeniable that many investors have started buying gold-backed securities of one kind of another as short-term trading opportunities. In the mutual fund space, there are actually two distinct kinds of gold-related funds available. One is the straightforward Gold ETFs. These closely track the price of gold itself and deliver profits and losses that mirror investing in physical gold. The others are a couple of equity funds (one from AIG and the other from DSP BlackRock) that actually invest not in gold but in foreign gold-related stocks, like gold mining and processing companies. Interestingly, these funds seem to act as sort of high beta versions of the gold price itself. Over the last one year, gold has gained 44 per cent but these funds have gained more than twice that. Will the gold run last? If you look around, you will see as many cheerleaders as sceptics. As for me, I'm almost certain that one of the two groups will turn out to be correct!

Source: Economic Times

SBI Mutual Funds highest gainer, adds Rs 3,400 cr

noreply@blogger.com (LK) — Mon, 09 Nov 2009 02:43:00 +0000

SBI Mutual Fund emerged as the highest gainer in terms of monthly accretion with assets growing by about Rs 3,400 crore during October.

The average assets under management of the fund house promoted by the country's largest lender State Bank of India increased by Rs 3,449 crore in October to Rs 38,322.49 crore, according to the data released by Association of Mutual Funds in India (AMFI).

The increase was mainly because the fund house was able to mobilise relatively higher amount in its short term debt schemes and new investors acquisition, SBI Mutual Fund Chief Marketing officer Srinivas Jain said.

SBI Mutual Fund was followed by UTI Mutual Fund as it added Rs 3,258.55 crore to its assets in October. At the end of October the asset under management (AUM)of the UTI MF stood at Rs 76,847.34 crore.

Banks are expected to step up investment of their surplus funds in short-term debt instruments

noreply@blogger.com (LK) — Wed, 04 Nov 2009 02:15:00 +0000

Banks are expected to step up investment of their surplus funds in short-term debt instruments such as commercial papers, treasury bills, and government securities with one-two years residual maturity. This is to address the Reserve Bank of India’s concerns over circular movement of liquidity from banks to the liquid schemes of mutual funds (MFs) and vice-versa.

The central bank’s apprehension over circular movement of funds stems from the fact that should liquidity start drying up (on the back of improved credit pick-up) banks would redeem their mutual fund investments to shore up their funds position.

Faced with redemption pressure, MFs would then resort to heavy borrowing via Clearing Corporation of India Ltd’s collateralised borrowing and lending obligation (CBLO) facility, thereby putting upward pressure on CBLO as well as call money rates.

Bankers hold the view that the RBI’s “banks should lend directly to corporates and not through the intermediation of mutual funds” message implies that the central bank is anxious about the systemic implications of the circular movement of liquidity. According to Mr Arun Kaul, Executive Director, Central Bank of India, once the board approves internal prudential limits for investment in mutual fund schemes so as to mitigate risks, banks will actively invest in short-term debt to manage their short-term liquidity.

According to industry observers, a good chunk of the over Rs 1 lakh crore excess liquidity parked by banks in liquid schemes of mutual funds could find its way into short-term debt instruments. Tepid credit appetite in the economy in the financial year, so far, has forced banks to make large investments in government securities and also fairly sizeable investments in units of mutual funds.

Credit pick-up in the financial year up to October 9 at Rs 1,14,766 crore is less than half the off-take (Rs 2,47,775 crore) during the corresponding period last year. Hence, banks had no choice but to collectively channelise their daily surplus aggregating over Rs 1 lakh crore to the low-yielding RBI’s reverse repo window.

Further, banks also invested Rs 2,11,500 crore in the financial year up to October 9 in government securities (Rs 6,169 crore in the corresponding year ago period) and deployed Rs 1,28,772 crore in liquid scheme of mutual funds (Rs 9,079 crore).

As credit pick-up has been lacklustre, outstanding investments of banks in liquid schemes of mutual funds have been in excess of Rs 1 lakh crore since April. Ease of entry and exit as well as benefit of tax exemption on dividends and regulatory arbitrage have encouraged banks to plough excess liquidity into MFs.

Banks investment in liquid schemes of mutual funds currently fetches them a return of 4.0-4.5 per cent. Depending on rating, investment in commercial papers earns them a return of 5.0-7.0 per cent. Investment in Treasury Bills gets them a return of 3-4 per cent.

Source: Hindu Business Line

Domestic mutual fund assets move up in October

noreply@blogger.com (LK) — Wed, 04 Nov 2009 02:05:00 +0000

Source: Economic Times

Average assets under management (AUM) of domestic mutual funds rose marginally in October from the previous month. Total assets under
management in October stood at Rs 7,52,209 crore against Rs 7,43,696 crore in September, according to data on the Association of Mutual Funds of India (AMFI) website.

Most top fund houses registered a growth in assets this month. Fund managers said several fund houses sold off their equity assets as markets touched the year’s high earlier this month.

Many mutual funds are sitting on cash, fund managers said, in anticipation of a correction, they said. In fixed-income schemes, fund officials said there have been significant inflows into ultra short-term schemes.

Among leading fund houses, Reliance Mutual Fund’s AUM in October was at Rs 1,16,781 crore compared with Rs 1,18,251 crore in September. HDFC Mutual Fund’s assets during the month rose to Rs 93,316 crore against Rs 90,427 crore in the previous month.

ICICI Prudential Mutual Fund’a assets in October was almost flat over the previous month at Rs 80,524 crore. Birla SunLife Mutual Fund’s assets in the month rose to Rs 65,052 crore against Rs 63,055 crore last month.

Foreign Mutual Funds. Is Diversification Good?

noreply@blogger.com (LK) — Mon, 19 Oct 2009 00:34:00 +0000

Diversification is good. But how much diversification is best? And should you keep your investment diversification plans confined to within Indian borders or look beyond them? According to most advisers, diversifying your portfolio by investing abroad is a paying, as well as a cautionary exercise, and the effort is well worth the trouble.

But this aspect of investing needs to be looked at closely, especially on the performance of foreign funds of Indian mutual fund houses which invest abroad on behalf of Indian customers.

Data reveals that these foreign-bound funds have not really delivered when compared to the returns of India-based diversified equity funds. Keeping this in mind, while no one is arguing against geographical diversification, there is surely a need for a re-rating exercise.

To be sure, Indian diversified equity funds were expected to beat all those funds that invest abroad on behalf of Indian investors, simply because Indian stock market indices have beaten the heck out of the foreign bourses, being among the top performers. That means funds looking to invest abroad were fated to lag as other markets fell behind India. Aside from India, the only other indices that have done well are in Brazil and Russia, where the Bovespa has returned 49 per cent and RTSi has returned 47 per cent - Sensex gain was 43 per cent and Nifty 40 per cent (1-year period).

Out of the 14 international funds that are over 12 months old, four funds have given returns between 50-to-70 per cent, 4 funds have given returns between 40-to-50 per cent, while 2 funds have given returns between 30-to-40 per cent. Four funds have given returns between 2-to-20 per cent. Importantly, none of them is in the negative terrain, but if you take them as a category, then they have delivered an average of 36.18 per cent.

In comparison, the diversified equity constellation that includes over 200 funds, have beaten these funds’ performances by posting returns of 49.33 per cent as on October 9, 2009* for the same 1-year period.

If you look at 6-month returns, then the scale tilts in favour of the diversified equity funds even more as they have delivered returns of over 62 per cent, while the international funds are at 38.98 per cent.

The best performing international fund was ING Latin America Equity, followed by Mirae Asset Global Commodity Stocks.

These gains were put in shade by the equity diversified category in India, with the top three funds giving returns of 70 per cent.

While these kinds of data may be pointing away from diversifying geographically, but the overall gameplan that an investor should be looking at is not just maximizing returns, but also security of the investment (via diversification, including geographical ones). In case Indian markets dip, for whatever reasons (since the global meltdown has proved they can be very irrational), it would be better for investors if they have some of their eggs in foreign baskets too.

Also, do be aware of the fact that during the global meltdown, hedging, and even asset allocation, could not stop the global stock market freefall from crushing the portfolios of even the best investors, including stock market guru Warren Buffet.

But then, these kind of mass-scale destructive events are few and far between and can't be taken as a given.

For those who feel geographical hedging is a necessity, then they should consider investing some 80-to-90 per cent of their investment amount in India-based funds while the rest goes overseas, according to Financial Chronicle. The best scope is for the long-term investors as the markets abroad and Indian markets may align in a timeframe that stretches across 3-5 years.

*1-year diversified equity returns on October 12, at the time of finalizing this story, jumped to as high as 62 per cent on the back of Sensex rising 384 points, up 2.31 per cent on Monday from its previous close, while the broader-based Nifty on the National Stock Exchange jumped up 2.21 per cent, taking the former above 17,000-pt mark and the latter above 5,000-pt mark.

Foreign Returns
Fund	Launch	1-Month	3-Month	6-Month	1-Year
ING Latin America Equity	Jul-08	6.60	32.75	51.07	67.80
Mirae Asset Global Commodity Stocks	Jul-08	3.41	29.62	53.82	61.43
DSPBR World Gold Reg	Aug-07	2.16	27.83	34.26	59.68
AIG World Gold	May-08	2.99	35.26	43.03	58.91
HSBC Emerging Markets	Feb-08	2.46	19.39	38.56	42.92
Principal Global Opportunities	Mar-04	3.14	21.35	38.75	42.72
Tata Growing Economies Infrastructure Plan A	Mar-08	3.44	19.42	53.20	40.64
Franklin Asian Equity	Dec-07	0.88	12.44	34.50	40.40
ING OptiMix Global Commodities	Aug-08	0.32	24.32	34.13	33.28
Sundaram BNP Paribas Global Advantage	Jul-07	2.43	20.34	40.58	30.55
DWS Global Thematic Offshore	Aug-07	0.13	13.20	23.72	15.40
Birla Sun Life International Equity Plan A	Oct-07	-0.44	14.28	18.63	7.04
ING Global Real Estate Inst	Mar-08	-0.51	24.44	40.75	2.89
ING Global Real Estate Retail	Dec-07	-0.55	24.55	40.75	2.86
Source: ValueResearchOnline.com

Top 5 Mutual Funds

noreply@blogger.com (LK) — Mon, 19 Oct 2009 00:29:00 +0000

DSP Blackrock Top 100 Equity
Net Assets: Rs 2,097.97 cr
1-Year return:
50.93%

Known for its track record for a consistent performance, DSP Blackrock Top 100 Equity has proved its mettle in both bear and bull runs. Fund manager Apoorva Shah has a flair for diversifying the portfolio extensively that reduces its risk-per-stock holding, making it relatively safer. While the performance has slid in ’09-10, we expect the fund to make a quick comeback, given its current stock selection and past records. While a good investment for those seeking stable and consistent returns, those seeking higher gains should look at other options.

IDFC Premier Equity
Net Assets: Rs 1,014.27 cr
1-Year return: 66.10%

If mid-cap is what attracts your investment instinct, IDFC Premier Equity is one to watch out for. The fund was noted during the bull run for its higher returns ,but its ability to protect the downside last year was also commendable. The fund has also been quick to align its returns with that of its benchmark in the subsequent recovery. Its fund manager, Kenneth Andrade, is known for his accurate and timely stock picks based on strong fundamentals rather than momentum picks.

Reliance Diversified Power Sector
Net Assets: Rs 5,835.59 cr
1-Year return: 72.38%

Sectoral funds are considered to be the riskiest of the lot, but the risk is justified if the same is compensated by equally encouraging returns. That’s Reliance Diversified Power Sector for you. A limited number of stock holding makes it a risky bet, even within the sectoral space. The stock selection has been good. Not only was the fund one of the top performers of the previous bull rally, surprisingly for a sectoral fund the downside was limited in 2008 — though high cash calls had a major role to play then.

Canara Robeco Tax Saver
Net Assets: Rs 61.14 cr
1-Year return: 76.15%

A year ago, this fund would not have figured on our list. However, a huge turnaround during the market meltdown last year and the subsequent recovery thereafter were too compelling to add this one in the watch list. The fund has been consistently toping the charts under the tax-saving category of funds since the time new fund manager Anand Shah has joined. While there is little history to back the performance of this fund, it’s the new fund manager that needs to be watch out for.

HDFC Prudence
Net Assets: Rs 2,945.97 cr
1-Year return: 60.76%

For a balanced fund, the fund’s returns are impressive, matching that of a pure equity diversified scheme. It is one of the few funds that has been managed by a single person since its launch in January 1994 — Prashant Jain. However, within the equity segment, it has a high orientation towards mid-caps that makes it a relatively risky bet. While the fund has been a strong contender within its category, it now has a couple of equally strong competitors. It’s worth watching if it can continue to outperform its challengers.

Source: Economic Times

Don't bank blindly on Mutual Fund plans

noreply@blogger.com (LK) — Mon, 19 Oct 2009 00:26:00 +0000

Source: Economic Times

Mutual fund investors are dazzled by the outperformance of the banking sector schemes in the last one year. According to mutual fund
advisors, many investors are tempted to bet on the sector.

However, it could be a mistake if investors blindly go for the sector without understanding the risk involved, say investment experts.

‘‘Most investors tend to look at historical returns and decide to invest in a particular sector on the basis of it. But this a big mistake,’’ says Mukesh Dedhia, director, Ghalla & Bhansali Securities, a wealth management firm. ‘‘They should understand that different sectors tend to outperform at different point of time. For example, now the banking sector is performing, but gold was the outperformer sometime back.
Even government securities outperformed for a while,’’ he adds.

According to Krishnan Sitaraman, Director, Crisil FundServices, ‘‘all sectoral indices analysed gave positive returns in September with the banking sector topping gains with an 18% percent monthly rise. The metal, auto and healthcare sectors followed with monthly gains of 14.5%, 13.4% and 13% respectively.’’ If an investor takes a look at the returns in the past one year, he would be even more impressed. According to Value Research, an independent mutual fund tracking firm, banking sector schemes have given an average return of 65% in the last one year. Other sectors like tax planning, pharma, FMCG among others have returned around 50-52% in the same period.

Dedhia says investors should understand why the sector is outperforming and what are its prospects before investing in it. ‘‘Banking is an integral part of the whole economy. At any point of time, it will do better if the economy is in a better shape,’’ he says. ‘‘For example, banks were the worst hit when the economy was doing badly. All banking stocks were hammered down and the they were going extremely cheap. Now that the economy gathered momentum these stocks have also bounced back. That explains the outperformance of the sector,’’ he adds.

As for the future prospects of the banking sector, analysts believe it may continue to do well. ‘‘We are again on the path of growth. If the economy is growing at a decent pace, it is inevitable that banks would do well,’’ says an analyst with a broking firm. Dedhia also share the view: ‘‘The sector would continue to do well, but it can be volatile as it is directly linked to the economy,’’ he says. That is why he believes that it is not the right time to recommend it to investors.

‘‘As a general rule, investors should have 80-90% of equity portfolio in diversified schemes. Rest they can invest in sectoral schemes, provided they really understand how the sector works,’’ says Dedhia. ‘‘Investors should remember that sectors tend to get into cycles and one can lose money if you don’t properly understand how it works,’’ he adds.

Twitter Networking Problems ( Twitter is down )

noreply@blogger.com (LK) — Sun, 18 Oct 2009 17:01:00 +0000

Some Twitter clients in widely scattered network locations are unable to connect to twitter.com.

Changes in MFs and ULIPS - good for the consumer?

noreply@blogger.com (LK) — Sat, 17 Oct 2009 03:04:00 +0000

Source: Yahoo News

It is a contest that could prove to be ultimately beneficial for the informed investors. The recent regulation changes introduced by the Securities Exchange Board of India (SEBI) for the mutual funds and the Insurance Regulatory and Development Authority (IRDA) for unit linked insurance plans more popularly called the ULIPs has created a level playing field in both the mutual funds and the ULIPs investment scenario.

Recently, SEBI removed the entry load for mutual funds while the IRDA has come out with a cap on ULIP charges. These regulation changes will create the much needed transparency in both the fields, ensure better accountability and more importantly help the informed investors reap better value on their investments.

IRDA's new cap on ULIP: the highlights

Let us briefly see the IRDA’s cap on ULIP that will come into effect from October 1, 2009 and how as an investor this will benefit you.

There are changes in the overall charge structure for policies with tenure of less than or equal to 10 years and for policies with tenure over 10 years.

In the former case, the maximum cap will be at 3 percent of gross yield while the fund management charges will be at 1.5 percent and in the latter case the max cap will be at 2.25 percent and the fund management charges not to exceed 1.25 percent.

Other changes in the charge structures include no surrender charges applicable post 5 years of policy, and an obligation on the part of the insurers to give on maturity a certificate to policy holders showing the break up of the policy amount including annual premiums, charges deducted, the actual fund values, and partial withdrawals (if any) and the final amount payable.

So how this will benefit you?

As an investor you may have a reason to smile and might stand to gain!

The new ruling will give you net yield of 9.75 per cent back to you for a fund that is earning a gross yield of 12 per cent.

For instance if your policy with premium is worth Rs 100,000 per year for a term of 10 years, the new cap at 3 percent on overall expenses for year-on-year will put your fund value at Rs 14.78 lakh at the end of the term.

Also, the new obligation on the insurers’ part to show the break up of the policy amount will enable you to make an informed decision.

SEBI's 'no' to entry load for mutual funds: the highlights

The SEBI's removal of entry load for mutual funds is effective from August 1, 2009. The market regulator has also capped the expenses of asset management companies out of exit load to 100 bps.

SEBI has asked the mutual funds to chew over the idea of reducing the tenure of the exit load which has been revised to higher than one year effective from August 1.

So what this means to you!

If you are an informed customer SEBI’s new rule to end the entry load on mutual funds is an obvious advantage for you as there will be more transparency. Gone are the old times when the payment of a separate fee for the distributor/agent was made out of the units that you buy which resulted in you getting only a fewer number of units for what you paid for.

With the new rule, you can now know how much commission is being paid to the distributor/agent or simply choose to not take any advice from your distributor/agent on the scheme to invest in and thus save the payment of the separate fee for the distributor/agent for the service. Also, you can buy the units directly from the fund management company.

What to choose now: ULIPs or mutual funds?

Well, it depends on the individual’s preference as the two are two different avenues offering two different types of investments.

If you are someone daring to invest in a moderate to high risk investment scenario then mutual funds could work better for you. The objective of a mutual fund investment is usually short term.

And if you have a medium or a long term objective with moderate risk factors, then ULIPs will suit you better. ULIPs will essentially serve the medium or long term purposes of retirement, children education and others.

Despite the recent SEBI regulation to do away with the entry load for mutual funds, the fee on Assets under Management (AUM) could, in some cases, prove to be costlier than the entry load on the invested amount!

However, if you are an informed customer then you could choose to skip seeking the advice of the distributor/agent and thus save the AUM charges.

Also, the ULIPs are better placed in the sense they come with the element of insurance. Mutual funds could cost you more if insurance needs to be added.

The new EET regime (Exempt-Exempt-Taxable) proposed recently could move the investors away from mutual funds as irrespective of when the investment was made, the returns are still taxable post EET regime. In the case of ULIPs, the returns on the ULIP investments made before the EET regime are tax free.

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Birla Sun Life Mutual Fund Revises load structure under Birla Sun Life Dynamic Bond Fund

noreply@blogger.com (LK) — Sat, 17 Oct 2009 03:01:00 +0000

Birla Sun life mutual fund has revised the exit load structure under Birla Sun Life Dynamic Bond Fund. After the revision an exit load of 0.50 per cent will be charged if the units are redeemed within 180 days from the date of allotment; after 180 days from the date of allotment, the exit load charged will be nil. Birla Sun Life Dynamic Bond Fund is an open ended income scheme, with the investment objective to generate optimal returns with high liquidity through active management of the portfolio by investing in high quality debt and money market instruments. The changes will be effective from 20th October, 2009.