Dividends in HDFC Mutual Fund's Schemes

HDFC mutual fund has a declared the dividend under the dividend option of HDFC Core & Satellite Fund and HDFC Long Tern Advantage fund. Record date for both the schemes will be 10 January 2008. The details are as below:

HDFC Core & Satellite Fund Dividend Rs. 3.00 (Amount of Div Per Unit)
HDFC Long Tern Advantage Fund Dividend Rs 6.00 (Amount of Div Per Unit)

60% dividend in Kotak 30

Kotak 30 has announced a 30 per cent dividend (Rs 3 per unit on a face value of Rs 10) under its dividend option. The record date for the same is January 11, 2007.

This is the second dividend from the fund during this year and the eleventh dividend since its launch in December, 1998. Prior to this, the fund had declared a 30% dividend in July 2007.

(by value research)

36% Dividend under JM Basic Fund

JM Financial Mutual Fund has announced a dividend of 36% (i.e. Rs 3.60 per unit on the face value of Rs. 10) under the dividend option of JM Basic Fund. The record date for the same has been fixed as January 11, 2008.

Earlier, the fund paid a dividend of 45% in September 2007.

(by value research)

Reliance Diversified Power Sector - Bustling with Energy -

The Reliance Diversified Power has the numbers to boast, but as any specialized fund, this fund has the chances of falling as well. Investors are advised to take a careful look before jumping in…

You can't blame the fund manager for creating a portfolio that encompasses financial service companies. Power generation is monopolised by the public sector and there are simply not enough sound power companies available. But in all fairness, the stocks in the portfolio are either pure power plays or those that have a significant stake in this sector.

You may disagree with the investment mandate, but you can't argue with the numbers. The fund delivered an astounding 81.37 per cent in 2005 and 58.78 per cent in 2006. As on November 2, the year-to-date (103.97 per cent) and one-year return (130.38 per cent) was impressive. But don't get too swayed by the performance. This is a sector fund at the end of the day and most scrips in this sector are trading at a significant premium to their earnings. In a bear phase, they could get severely thrashed. Going by the returns of the June 2006 quarter, this is quite a possibility.

Besides the usual risk that accompanies a sector specific fund, this one likes to take big wagers. At close to Rs 2,300 crore, the assets under management (AUM) are significant but spread across only 18-20 stocks. Until recently, it was not unusual to find single scrips hogging 13-15 per cent of the fund's AUM. Recently, there has been a decline on this front. The allocation to the top five has reduced to 31 per cent from an earlier high of 41 per cent in January.

If the fund manager is restricted by the investment universe, he has ample flexibility on other fronts. His mandate actually permits him to invest the entire portfolio in not only equity, but also entirely in fixed income securities (of power companies and those related to the power sector). So this equity offering can well turn into a debt fund.

With the mandate to even go 100 per cent in cash and equivalents, the cash holdings are significant if the fund manager does not find good investment opportunities. As of September 30, 25 per cent of the fund's portfolio was held in cash. The high PE multiples could be a reason, but it could also be attributed to the deluge of inflows which have more than trebled the fund's AUM in the past one year. What's interesting is that the high cash holding has not dented the fund's performance.

The fund manager is not restricted by market capitalisation either. The portfolio can tilt towards any market capitalisation, so don't get influenced by its current mid-cap slant.

The power sector has huge potential given the gigantic fiscal outlays and supply gaps in the sector. And the ever expanding directory of listed power generation companies will translate into more investment opportunities and better valuations as well. But bear in mind that the sector is well courted by managers of diversified equity funds. So check your overall exposure to this sector before you consider an investment.

(by value research)