I have the option of breaking a fixed deposit or taking a loan against it and investing it in mutual funds. Which is a better option?
We would like to make our stance very clear - please stay away from investing borrowed money. Investors who use borrowed money for investing in equities usually have deep pockets and they too use different strategies to hedge the risk undertaken.
Apart from a loan against a fixed deposit (FD), many banks offer investment services where you can borrow money and they invest it in mutual funds for you. These funds are then liquidated on a quarterly basis to pay off your interest liability. Investment in a high-risk asset class such as equity is very capable of turning negative and eating into your capital. You could get saddled with a higher interest payout than what your FD earns.If you have a high-risk appetite, a better option would be to break the FD and invest that money in mutual funds.
Alternatively, you can break your FD and invest this capital in a Post Office Monthly Income Plan and create an SIP out of the monthly interest pay-outs from it. Though the amount invested in equities will be less, it keeps your principal amount safe.
(by value research)
Mutual Fund News update from Nishit Doshi (9824021680) a leading MF Advisor based in Ahmedabad. Gujarat.
Friday, December 21, 2007
Crash Unlikely
Anand Shah is an electronics engineer from REC Surat. Soon after graduation, he joined Kirolskar Oil Engines for two years before taking up studies again. Subsequently, he passed out from IIM (Lucknow) in 2000 with a specialisation in finance. Soon after, he joined Kotak on the buy side as an analyst. His role entailed research on various sectors and companies after which he moved to fund management. He joined Prudential ICICI AMC in January this year where he manages two funds - ICICI Pru Power and ICICI Pru Fusion S-II.
Do you see a market crash in the near future?
The rise is the reflection of very strong GDP growth rates in the last three years and expectation of the same being sustained in the foreseeable future. We believe that strong earnings growth of India Inc will sustain going forward and thus market valuations are reasonable on a one-year forward earnings basis. Also, the balance sheet of India Inc is stronger then ever. We are of the opinion that the market might remain volatile in times to come, however a market crash is unlikely.
What is the strategic and tactical orientation of ICICI Prudential Power?
Power fund is a diversified equity fund with a strong bias towards large caps. The fund will continue to focus on bottom-up stock picking and pursue growth ideas. Within the mid-caps, its focus is towards sectors with secular growth opportunities that individual companies can pursue to become large-cap companies.
Which are your top sector preferences?
Capital Goods
Media
Capital goods companies would be one of the largest beneficiaries of investments by government in infrastructure and by investments of the corporate sector in new capacities. The media sector would be one of the key indirect beneficiaries of growing consumerism of the large Indian middle class population, which is benefiting from rising job opportunities and ever-increasing salary levels.
This interview appeared in the October 2007 issue of Mutual Fund Insight.
(by value research)
Do you see a market crash in the near future?
The rise is the reflection of very strong GDP growth rates in the last three years and expectation of the same being sustained in the foreseeable future. We believe that strong earnings growth of India Inc will sustain going forward and thus market valuations are reasonable on a one-year forward earnings basis. Also, the balance sheet of India Inc is stronger then ever. We are of the opinion that the market might remain volatile in times to come, however a market crash is unlikely.
What is the strategic and tactical orientation of ICICI Prudential Power?
Power fund is a diversified equity fund with a strong bias towards large caps. The fund will continue to focus on bottom-up stock picking and pursue growth ideas. Within the mid-caps, its focus is towards sectors with secular growth opportunities that individual companies can pursue to become large-cap companies.
Which are your top sector preferences?
Capital Goods
Media
Capital goods companies would be one of the largest beneficiaries of investments by government in infrastructure and by investments of the corporate sector in new capacities. The media sector would be one of the key indirect beneficiaries of growing consumerism of the large Indian middle class population, which is benefiting from rising job opportunities and ever-increasing salary levels.
This interview appeared in the October 2007 issue of Mutual Fund Insight.
(by value research)
Foreign Money Driving Markets
Armed with a degree in mechanical engineering from REC, Suratkhal and an MBA from IIM (Bangalore), Lahiri's first stint was as an area marketing executive for Crompton Greaves for a year. Pursuing his interest in equities, Lahiri moved to Dolat Capital, a domestic institutional stock broking firm, as part of their equity research team. In June 2004, he moved to DSPML Fund Mangers as part of the equities fund management team.
Do you see a market crash in the near future?
It's difficult to take a call on the market in the short term, given that it is being driven by foreign flows at this point in time. News on the domestic front, especially on the political side, continues to be an issue.
What is the strategic and tactical orientation of DSPML T.I.G.E.R.?
DSPML India Tiger Fund is a thematic fund with a focus on companies and sectors that are likely to prosper from growth related to economic reforms and infrastructure investment. We believe these are the key drivers of economic growth and corporate profitability in India going forward. We continue to remain bullish on this theme and feel that there is significant value that can be extracted over the long term. We're looking to capture the earnings growth story over the next three to five years and are looking towards the power, roads and construction sectors to deliver the returns.
Which are your top sector preferences?
Capital Goods
Cement sectors
They look very favorable right now since the earnings growth in these sectors will be higher than consensus expectations.
This interview appeared in the October 2007 issue of Mutual Fund Insight.
(by value research)
Do you see a market crash in the near future?
It's difficult to take a call on the market in the short term, given that it is being driven by foreign flows at this point in time. News on the domestic front, especially on the political side, continues to be an issue.
What is the strategic and tactical orientation of DSPML T.I.G.E.R.?
DSPML India Tiger Fund is a thematic fund with a focus on companies and sectors that are likely to prosper from growth related to economic reforms and infrastructure investment. We believe these are the key drivers of economic growth and corporate profitability in India going forward. We continue to remain bullish on this theme and feel that there is significant value that can be extracted over the long term. We're looking to capture the earnings growth story over the next three to five years and are looking towards the power, roads and construction sectors to deliver the returns.
Which are your top sector preferences?
Capital Goods
Cement sectors
They look very favorable right now since the earnings growth in these sectors will be higher than consensus expectations.
This interview appeared in the October 2007 issue of Mutual Fund Insight.
(by value research)
New Fund from UTI - UTI Investment Bond Fund
UTI Mutual Fund makes one more addition in its fund's list with the launch of a new debt fund called UTI Investment Bond Fund Plan 60 (60 months plan). It is a close ended income fund, comprising of four series. This is the first series being launched by the AMC and is open for subscription from November 26, 2007 to December 31, 2007.
The scheme aims to generate regular returns by investing in a portfolio of fixed income securities normally maturing in line with the maturity period of the respective plans. It would invest 70 to 100 per cent in debt and money market instruments and upto 30 per cent in equity and equity linked instruments.
Snapshot
Face Value: Rs. 10
Plans: Retail and Institutional
Options: Dividend (payout and reinvestment) and Growth
Minimum Investment
Retail: Rs. 5000 for the growth option and Rs. 10000 for the dividend option
Institutional: Rs.1 crore
Benchmark Index: Crisil MIP Blended Index
Fund Manager: Deb Bhattacharya
Load Structure: The plan would offer redemption facility on a half-yearly basis after the closure of the issue. The investor may redeem the units on the stipulated date (based on the date of the closure of the issue).
(by value research)
The scheme aims to generate regular returns by investing in a portfolio of fixed income securities normally maturing in line with the maturity period of the respective plans. It would invest 70 to 100 per cent in debt and money market instruments and upto 30 per cent in equity and equity linked instruments.
Snapshot
Face Value: Rs. 10
Plans: Retail and Institutional
Options: Dividend (payout and reinvestment) and Growth
Minimum Investment
Retail: Rs. 5000 for the growth option and Rs. 10000 for the dividend option
Institutional: Rs.1 crore
Benchmark Index: Crisil MIP Blended Index
Fund Manager: Deb Bhattacharya
Load Structure: The plan would offer redemption facility on a half-yearly basis after the closure of the issue. The investor may redeem the units on the stipulated date (based on the date of the closure of the issue).
(by value research)
DSPML Balanced-G
The DSPML Balanced fund has a few weak points, but it is one fund that gives out consistent returns. It might not be an obvious option, but the fund is certainly worth a look in
Though it has delivered above average performances, and even managed top quartile returns in a few years, DSPML Balanced does not turn heads.
Its tactical asset allocation has done little to deliver impressively. Over the past 21 months, the equity exposure has fluctuated in a wide range of 9 percentage points. According to the September 2007 portfolio, the fund has parked 72 per cent of its assets in equity.
The tilt towards mid- and small-cap stocks from December 2006 is here to stay. This automatically gives the fund a riskier tilt. To balance the effect, the shift was accompanied by an increase in the number of scrips from 60 to as many as 75.
Clearly, the fund shies away from taking big sector or even stock specific bets. So don't expect trailblazing returns from such a portfolio. But then one does not look for such returns in a balanced fund.
Our grouse is that even in bearish phases, the fund's track record is not consistent. The instances of the fund losing much less than the category average have been offset by times when it fell much harder than the average. In the recent lean quarters of June 2006 and March 2007, the fund lost as much as the average player. So investors cannot even count on the fund to limit downside risk.
Having listed the weak points, what you can expect from this fund is stability and consistency of returns. The fund will not knock the lights out, but its performance will be in line with the category average.
All in all, the fund may not be the first choice but it is definitely worth a second look.
(by value research)
Though it has delivered above average performances, and even managed top quartile returns in a few years, DSPML Balanced does not turn heads.
Its tactical asset allocation has done little to deliver impressively. Over the past 21 months, the equity exposure has fluctuated in a wide range of 9 percentage points. According to the September 2007 portfolio, the fund has parked 72 per cent of its assets in equity.
The tilt towards mid- and small-cap stocks from December 2006 is here to stay. This automatically gives the fund a riskier tilt. To balance the effect, the shift was accompanied by an increase in the number of scrips from 60 to as many as 75.
Clearly, the fund shies away from taking big sector or even stock specific bets. So don't expect trailblazing returns from such a portfolio. But then one does not look for such returns in a balanced fund.
Our grouse is that even in bearish phases, the fund's track record is not consistent. The instances of the fund losing much less than the category average have been offset by times when it fell much harder than the average. In the recent lean quarters of June 2006 and March 2007, the fund lost as much as the average player. So investors cannot even count on the fund to limit downside risk.
Having listed the weak points, what you can expect from this fund is stability and consistency of returns. The fund will not knock the lights out, but its performance will be in line with the category average.
All in all, the fund may not be the first choice but it is definitely worth a second look.
(by value research)
UTI Infrastructure Advantage NFO Extended
UTI Mutual Fund has extended the date of closing for their new closed ended fund - UTI Infrastructure Advantage. The NFO is now open till December 24, 2007. Earlier this NFO was scheduled to close on December 19, 2007.
(by valueresearch)
(by valueresearch)
Dividend declared in Templeton India Growth Fund
The record date for the declaration of dividend under Templeton India Growth Fund (TIGF) is December 26, 2007. The quantum of dividend is Rs.4.50 per unit on the face value of Rs 10.
(by value research)
(by value research)
Birla Mf launch NFO - BIRLA SUN LIFE SPECIAL SITUATION FUND
Birla Sun Life AMC launches BIRLA SUN LIFE SPECIAL SITUATION FUND(An open ended diversified equity scheme) from today.
A fund targeted at harnessing the potential of Special Situations for the investors.
- No market cap bias
- No style bias
- Would invest in Special situations in stocks
- Contra plays
- A fund that can provide extra returns over the market returns.
Special Situations: By the very name “Special situations” are ones that are not very frequent in a company’s lifecycle. The special situations may arise either because of an event that is intrinsic to the company or at times due to external factors.
Benefits of special situations: Special situations are more often positive surprises that result in enhanced value or rerating of the stock. Special situations may result in significant extra gains in stocks whenever they occur. These gains may get reflected immediately or over a longer period of time depending on the situations.
Kinds of Special Situations: There are multiple kind of special situations – Mergers & Acquisitions (M&A) , Takeovers, Private Equity (PE) infusion, Demergers, Structuring of business, Open offers, Delistings, Contra plays etc.
In this fund we will also be participating in Primary Market Activities i.e. IPOs.
Subscribe to:
Posts (Atom)