Date of Opening : 12th Dec 2007 (Wednesday)
Date of Closing/Switch in : 17th Dec 2007 (Monday) 3.00 p.m.
High Value Pay in : 18th Dec 2007(Tuesday)
Options : Growth (Default option) and Div Reinvest
Plans : Institutional plan, Regular Plan
Min Application : Rs.1.00 Cr for Institutional Plan, Rs. 25000/- Regular Plan
Entry Load : Nil
Exit Load : 0.50% if redeemed before maturity
Date of maturity : 17th March 2008 (Monday)
Date of payout : 18th March 2008 (Tuesday)
Mutual Fund News update from Nishit Doshi (9824021680) a leading MF Advisor based in Ahmedabad. Gujarat.
Thursday, December 13, 2007
Quarterly FMP launched by DSPML Mutual Fund - closes on 17th Dec.2007
DSPML Mutual Fund launch of DSPML Fixed Maturity Plan - 3 months - Series 2 as per following terms:-
Wednesday, December 12, 2007
Get Realistic
I am a government servant aged 36. Following are my mutual fund investments which I began from August 2007. SBI Magnum Global (SIP of Rs 4,000), SBI Magnum Contra (SIP of Rs 4,000), Reliance Growth (SIP of Rs 1,000), ICICI Prudential Smart Kid Plan - Flexi (Rs 20,000 annually). I can even opt for another SIP of Rs 2,000. I plan to continue with the SIPs up to December 2015.
I would also like to deposit around Rs 1 lakh in a mutual fund.
I have quite a few goals.
-Buy a car by December 2009 (Required amount: Rs 5 lakh)
-Build a house by December 2012 (Required amount: Rs 15 lakh)
-Children's higher education 15 - 20 years from now (Required amount: Rs 15 lakh)
Please review my portfolio and advise me on what to exit and enter so that my targets are achieved.
- Jaspal Singh Chaudhary
No matter which asset allocation tool you use, you need to know how many years you have to reach your goal and how much money you will need for it. Only then can one begin working backwards. You have been focused on both those parameters but your goals seem to be too ambitious.
You would like to buy a car within the next 24 months. If you take your SIPs, current and proposed, at Rs 11,000 per month, it amounts to Rs 1,32,000 per annum. Along with the Smart Kid policy, it will amount to Rs 1,52,000 per annum. So your total investment corpus will just be more than Rs 3 lakh at the end of the two years. And at the end of five years, it would amount to Rs 7.60 lakh, assuming that the money is not touched. Of course this is just the principal amount, but even if your investments do well, the money will not be sufficient to cater to your goals.
Just for your car, you would need to invest Rs 17,500 every month earning a compounded annual return of 20 per cent. At the same return, you would have to invest Rs 15,500 every month, to give you sufficient funds for your house. A better option for would be to take a car/home loan or increase your time horizon. With the home loan, you can also avail of tax deductions.
For your children's education, you do have time on your side. Let's assume that you would require Rs 15 lakh after 20 years. If that be the case, you need to invest Rs 600 every month in a diversified equity mutual fund. This is a classic example of how the power of compounding works in accumulating huge wealth by investing a small amount regularly over a longer period.
Fund Selection
It is good to note that you are investing via a SIP and not attempting to time the market. Having said that, you need to take a good look at your portfolio.
Your funds are too aggressive and your portfolio is skewed towards a high mid- and small-cap orientation. In fact, small- and mid-cap stocks account for around 64 per cent of your portfolio. It is advisable to include some large-cap oriented funds like Franklin India Prima Plus or Reliance Vision to provide stability and reduce the downside risk.
You have Rs 11,000 at your disposal every month to invest in SIPs. Equally distribute this amount over the three funds we have suggested. This will give you sufficient exposure to various funds houses, fund managers and investing styles. It will also balance your market cap exposure.
We recommend that you do not invest the Rs 1 lakh at one go but spread it out over time. You could start an SIP and deploy this corpus over a period of 12 months in a balanced fund like HDFC Prudence.
These changes should make your portfolio look healthier.
Insurance
The ICICI Prudential Smart Kid Plan chosen by you is a unit linked insurance plan (ULIP) plan. ULIPs are not smart investments and have huge costs associated with them. Since you have already opted for the plan, you have an obligation to pay the premium for three years. Once you complete three years, we suggest that you exit from this plan. If you have just taken the policy and have the option of surrendering it right now without incurring huge costs, go ahead.
We do not recommend mixing insurance and investments. Life insurance should never be an investment.
Since you have dependents, it would be wise for you to opt for insurance. You can go for a term cover which is the purest and simplest form of life insurance. It also costs less than a ULIP.
Keep Track
As you have a long-term horizon, it is essential to review your portfolio at least once a year.
For this you can use the Value Research Online Portfolio available. Over there, you will even find other tools to help you track and analyse your investments in a more efficient way.
I would also like to deposit around Rs 1 lakh in a mutual fund.
I have quite a few goals.
-Buy a car by December 2009 (Required amount: Rs 5 lakh)
-Build a house by December 2012 (Required amount: Rs 15 lakh)
-Children's higher education 15 - 20 years from now (Required amount: Rs 15 lakh)
Please review my portfolio and advise me on what to exit and enter so that my targets are achieved.
- Jaspal Singh Chaudhary
No matter which asset allocation tool you use, you need to know how many years you have to reach your goal and how much money you will need for it. Only then can one begin working backwards. You have been focused on both those parameters but your goals seem to be too ambitious.
You would like to buy a car within the next 24 months. If you take your SIPs, current and proposed, at Rs 11,000 per month, it amounts to Rs 1,32,000 per annum. Along with the Smart Kid policy, it will amount to Rs 1,52,000 per annum. So your total investment corpus will just be more than Rs 3 lakh at the end of the two years. And at the end of five years, it would amount to Rs 7.60 lakh, assuming that the money is not touched. Of course this is just the principal amount, but even if your investments do well, the money will not be sufficient to cater to your goals.
Just for your car, you would need to invest Rs 17,500 every month earning a compounded annual return of 20 per cent. At the same return, you would have to invest Rs 15,500 every month, to give you sufficient funds for your house. A better option for would be to take a car/home loan or increase your time horizon. With the home loan, you can also avail of tax deductions.
For your children's education, you do have time on your side. Let's assume that you would require Rs 15 lakh after 20 years. If that be the case, you need to invest Rs 600 every month in a diversified equity mutual fund. This is a classic example of how the power of compounding works in accumulating huge wealth by investing a small amount regularly over a longer period.
Fund Selection
It is good to note that you are investing via a SIP and not attempting to time the market. Having said that, you need to take a good look at your portfolio.
Your funds are too aggressive and your portfolio is skewed towards a high mid- and small-cap orientation. In fact, small- and mid-cap stocks account for around 64 per cent of your portfolio. It is advisable to include some large-cap oriented funds like Franklin India Prima Plus or Reliance Vision to provide stability and reduce the downside risk.
You have Rs 11,000 at your disposal every month to invest in SIPs. Equally distribute this amount over the three funds we have suggested. This will give you sufficient exposure to various funds houses, fund managers and investing styles. It will also balance your market cap exposure.
We recommend that you do not invest the Rs 1 lakh at one go but spread it out over time. You could start an SIP and deploy this corpus over a period of 12 months in a balanced fund like HDFC Prudence.
These changes should make your portfolio look healthier.
Insurance
The ICICI Prudential Smart Kid Plan chosen by you is a unit linked insurance plan (ULIP) plan. ULIPs are not smart investments and have huge costs associated with them. Since you have already opted for the plan, you have an obligation to pay the premium for three years. Once you complete three years, we suggest that you exit from this plan. If you have just taken the policy and have the option of surrendering it right now without incurring huge costs, go ahead.
We do not recommend mixing insurance and investments. Life insurance should never be an investment.
Since you have dependents, it would be wise for you to opt for insurance. You can go for a term cover which is the purest and simplest form of life insurance. It also costs less than a ULIP.
Keep Track
As you have a long-term horizon, it is essential to review your portfolio at least once a year.
For this you can use the Value Research Online Portfolio available. Over there, you will even find other tools to help you track and analyse your investments in a more efficient way.
(by value research)
SBI Magnum Taxgain Fund
Old horses die hard - a quote proved true by Magnum Taxgain. The fund has had a remarkable recovery from being down in the dumps to being ranked No. 1. Find out what makes this fund a sure bet
Though it tarnished its image during the tech collapse of 2000 and was among the bottom performers for three successive years, it worked hard to regain its composure. Its stellar performance in 2003 was nothing short of a re-birth, and since then the fund has never looked back. It has been ranked No. 1 for three consecutive years from 2004-2006. Along the way, Magnum Taxgain has matured in its fund management. Though historically it has a reputation of losing more than the category average in bearish markets, of late it has displayed an ability to efficiently manage market crashes.
In the quarter of June 2006, the fund lost just 11 per cent compared with the category's loss of 15.35 per cent. And, in the quarter of March 2007, it lost only 4.06 per cent compared to the 6.45 per cent drop in the category.
Since January this year, the fund has consciously reduced its exposure to the construction sector, which has come down to 7.62 per cent (September 2007) from an earlier high of 16 per cent (December 2006). The concentration of technology holdings has also reduced.
There have been other developments too that have reduced the amount of risk assumed by the fund. Small caps, till about a year back, accounted for a quarter of the fund's allocation. This has now reduced to just 6 per cent and given way to large caps.
Owing to its superb performance record and the more recently acquired abilities to protect the downside, we recommend the fund as a core holding in your tax planning portfolio.
(by valueresearch)
Though it tarnished its image during the tech collapse of 2000 and was among the bottom performers for three successive years, it worked hard to regain its composure. Its stellar performance in 2003 was nothing short of a re-birth, and since then the fund has never looked back. It has been ranked No. 1 for three consecutive years from 2004-2006. Along the way, Magnum Taxgain has matured in its fund management. Though historically it has a reputation of losing more than the category average in bearish markets, of late it has displayed an ability to efficiently manage market crashes.
In the quarter of June 2006, the fund lost just 11 per cent compared with the category's loss of 15.35 per cent. And, in the quarter of March 2007, it lost only 4.06 per cent compared to the 6.45 per cent drop in the category.
Since January this year, the fund has consciously reduced its exposure to the construction sector, which has come down to 7.62 per cent (September 2007) from an earlier high of 16 per cent (December 2006). The concentration of technology holdings has also reduced.
There have been other developments too that have reduced the amount of risk assumed by the fund. Small caps, till about a year back, accounted for a quarter of the fund's allocation. This has now reduced to just 6 per cent and given way to large caps.
Owing to its superb performance record and the more recently acquired abilities to protect the downside, we recommend the fund as a core holding in your tax planning portfolio.
(by valueresearch)
New Funds - DBS Chola Small Cap Fund
The DBS Chola Small Cap Fund is the latest offering from the DBS Chola fund house. This scheme aims to achieve capital appreciation by investing predominantly in equity and equity related instruments of companies with smaller market capitalization. Here, small cap companies are defined as those whose market capitalization falls between the highest and the lowest constituent of the BSE Small Cap Index.
The DBS Chola Small Cap Fund proposes to invest at least 65 per cent of the fund proceeds in equity and equity related securities of small companies. It has an option of investing upto 35 per cent in securities of companies other than smaller companies and upto 35 per cent may be invested in debt and money market instruments as well.
This fund would automatically be converted into an open ended fund after the expiry of three years.
Scheme Details
Issue Opens: November 20, 2007
Issue Closes: December 20, 2007
Type: Closed-end, equity scheme
Benchmark Index: BSE Small Cap Index
Minimum Investment: Rs 5000
Entry Load: Nil
Exit Load: Nil.
However, redemption will be permitted after deduction of unamortized initial issue expenses Cost: Initial issue expenses, not exceeding 6 per cent of the corpus collected, would be amortized on a daily basis over the three-year closed-end tenure of the scheme.
R. Rajagopal is the designated fund manager for the scheme. He has a total experience of 13 years. His prior assignments were with IDBI Capital Market Services as Vice President Equity Investment, Principal - PNB Asset Management Co. as Senior Investment Analyst, IDBI Investment Management Company as Fund Manager, Kotak Mahindra Finance as Manager and Stock Holding Corporation of India as Executive.
Rajagopal is responsible for managing all equity and the equity portion of DBS Chola MIP Fund.
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Performance History: DBS Chola
DBS Chola AMC stared its operation in the year 1997. Currently their AUM are worth Rs. 5164 crore. The fund house's 9 equity fund offerings constitute just 6 per cent of its total assets under management. Out of its three rated equity funds, DBS Chola Opportunities has a 4-star rating while DBS Chola Midcap Fund and DBS Chola Growth have a 3-star rating.
Opinion
Funds focused on small company shares can be very wild but rewarding as well. The fund manager's track record and experience in investment banking could be useful in running a small cap fund. There are few other focused small cap fund alternatives available today. However, most mid-cap funds with modest allocation to small cap shares as well could superior risk-return trade off. Besides, the closed-end structure also makes it a relatively costly option.
Performance delivered by funds of similar peer group:
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Going Great
This year, both fund managers were given the task of jointly managing Magnum Taxgain. Jayesh Shroff is an old hand at managing funds. Before joining SBI AMC, he was managing several equity schemes at Bank of Baroda AMC. Shroff has over six years of experience in equity research and investment banking. He also worked as a research analyst at Tandem Financials and was also member of their investment banking team. Shroff worked extensively on mergers and acquisitions and brand valuation of companies. Shroff is a commerce graduate with PGD (MBFS).
Asthana also manages two equity diversified schemes at SBI AMC -Magnum MultiCap-G and SBI Infrastructure Fund Series 1-G. Asthana has more than seven years of experience in the financial services industry. He also had a stinit with Quantum AMC as an equity analyst. Asthana has done his MA in Economics from Mumbai University and holds a diploma in investment management from NMIMS.
Do you see a market crash in the near future?
The Indian economy is in great shape and the stock market, as you know, is a reflection of the same. Our opinion is that we are currently in a structural bull market. Within this structural bull run, corrections may come and go, but the story and growth will remain. So we may see a correction in the market but definitely not a big crash.
What is the strategic and tactical orientation of your fund?
Magnum Taxgain is an ELSS Fund where investors come in for at least three years. To that extent, we usually take long-term stock/sector calls in this fund. Of course, intermittent churning and trading opportunities are explored on an ongoing basis.
Which are your top sector preferences?
In this fund:
Capital goods
Cement
(by value research)
Asthana also manages two equity diversified schemes at SBI AMC -Magnum MultiCap-G and SBI Infrastructure Fund Series 1-G. Asthana has more than seven years of experience in the financial services industry. He also had a stinit with Quantum AMC as an equity analyst. Asthana has done his MA in Economics from Mumbai University and holds a diploma in investment management from NMIMS.
Do you see a market crash in the near future?
The Indian economy is in great shape and the stock market, as you know, is a reflection of the same. Our opinion is that we are currently in a structural bull market. Within this structural bull run, corrections may come and go, but the story and growth will remain. So we may see a correction in the market but definitely not a big crash.
What is the strategic and tactical orientation of your fund?
Magnum Taxgain is an ELSS Fund where investors come in for at least three years. To that extent, we usually take long-term stock/sector calls in this fund. Of course, intermittent churning and trading opportunities are explored on an ongoing basis.
Which are your top sector preferences?
In this fund:
Capital goods
Cement
(by value research)
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