I want to invest some money in the market but I think it is already at a very high level. Should it fall, I may lose my capital. But should it continue to rise, I will gain. I am planning to invest in an equity fund as and when the market corrects 200 points. Please advice.
- Anonymous
What you are doing is trying to time the market. Here's our advice to everyone waiting for a correction. There may not be one. The laws of physics do not apply to stock markets; therefore what goes up need not come down. At least not in the near and immediate future.
Stick to a simple principle of investing regularly. If you have a lump sum amount, invest it in an ultra short-term debt fund and institute a Systematic Transfer Plan into an equity fund. Else stick to a plain vanilla SIP. Once done, all you need to do is monitor your fund for slackness in performance. If you are invested in a Value Research rated fund, look out for a re-rating of the fund. It's really as simple as that.
(valueresearchonline)
Mutual Fund News update from Nishit Doshi (9824021680) a leading MF Advisor based in Ahmedabad. Gujarat.
Thursday, December 27, 2007
Friday, December 21, 2007
Borrowed Funds
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)
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)
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)
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