The record date for the above dividends is January 18, 2008.
(By Valueresearch)
Mutual Fund News update from Nishit Doshi (9824021680) a leading MF Advisor based in Ahmedabad. Gujarat.
Tuesday, January 15, 2008
ICICI Prudential Announces Dividend in Two Equity Schemes
ICICI Prudential Mutual Fund has announced a dividend of 20 per cent each in the dividend options of the following schemes: ICICI Prudential Tax Plan and ICICI Prudential Emerging Star.
Investing By NRIs
I am a non-resident Indian (NRI). Are NRIs allowed to invest in Indian mutual funds? If yes, what is the incentive for people like us?
-Saloni Verma
Yes, NRIs are allowed to invest in mutual funds in India. The cheques can either be drawn on your FCNR/NRE bank account (on a repatriable basis) or NRO/NRSR (on a non-repatriable basis). You will also need a PAN number.
Since you are based abroad, Indian mutual funds may well serve your needs. A fund can offer you a diversified portfolio of debt and equity securities, or a mix of both. On the fixed income side, higher interest rates on Indian debt securities make it an attractive option compared to developed markets where interest rates are on the lower side. Debt funds would be an ideal way to start your investment innings here. The clear differential between interest rates will also negate the impact of any adverse movement in the exchange rate. However, we suggest that you park your funds for the long-term as short-term investments won't yield much.
Currency risk could be significant in the short term, as witnessed recently. However, over the long term, these fluctuations tend to smoothen out. Further, the current economic indicators point to a strengthening of the rupee over the long term - something that could work in your favour. The Indian economy is one of the fastest growing economies in the world. Also, loads are on the lower side vis-a-vis markets like the US. Among equity funds, there are a number of funds-generally focused on larger and more liquid stocks which have a good track record. Further, most fund houses, banks and brokerages give investors the option of investing on the Internet. As for incentives, there are no special tax breaks for NRI investors.
(Source: Value Research)
-Saloni Verma
Yes, NRIs are allowed to invest in mutual funds in India. The cheques can either be drawn on your FCNR/NRE bank account (on a repatriable basis) or NRO/NRSR (on a non-repatriable basis). You will also need a PAN number.
Since you are based abroad, Indian mutual funds may well serve your needs. A fund can offer you a diversified portfolio of debt and equity securities, or a mix of both. On the fixed income side, higher interest rates on Indian debt securities make it an attractive option compared to developed markets where interest rates are on the lower side. Debt funds would be an ideal way to start your investment innings here. The clear differential between interest rates will also negate the impact of any adverse movement in the exchange rate. However, we suggest that you park your funds for the long-term as short-term investments won't yield much.
Currency risk could be significant in the short term, as witnessed recently. However, over the long term, these fluctuations tend to smoothen out. Further, the current economic indicators point to a strengthening of the rupee over the long term - something that could work in your favour. The Indian economy is one of the fastest growing economies in the world. Also, loads are on the lower side vis-a-vis markets like the US. Among equity funds, there are a number of funds-generally focused on larger and more liquid stocks which have a good track record. Further, most fund houses, banks and brokerages give investors the option of investing on the Internet. As for incentives, there are no special tax breaks for NRI investors.
(Source: Value Research)
Wednesday, January 9, 2008
Ground Rules for Investing
Investing is a complex exercise only because we insist on making it so. But the basic principles are simple. As simple that anyone can become a good investor just by following simple and easily understood rules, which also help avoid big mistakes. Here are my rules for investment success.
Develop a Plan: For your short-term goals, make sure you're taking appropriate risks. Invest money that you'll need in the next two years to five years in cash and short-term bonds. If you've taken on too much risk for short-term objectives, pull back now. There's no telling where the bottom of this market is. It's better to cut your losses and preserve the money you already have for short-term goals. For your long-term financial goals, consider equities.
Keep It Simple: Buy a diversified equity fund or an index fund for equity exposure and a floating-rate bond fund for fixed income exposure. These are the basics of the investment world. Sure, you can buy many other types of funds (Petro, MNC, Gilt, Fixed Maturity, Serial Plans etc), but it's hard to go wrong with these two. To keep fund selection simple, stick with a diversified equity funds of well-established fund families. Equities prove to be the best performing long-term asset class. Stay away from exotic speciality and sector funds, unless you have a huge risk appetite and you can take in your stride a 25% loss in a quarter.
Ignore the hot stocks and funds: If you buy this year's top-performing fund or stock, be prepared to see it at the bottom next year. The fancy academic expression for this phenomenon is -- Reversion to the Mean. But the old saying explains it just as well -- what goes up must come down.
Invest Regularly: Investing a little bit of money each month is the surest way to reduce the risk of investing, because you lessen the possibility of buying at the market top. Also, no one is smart enough to anticipate all the moves, both up and down.
Buy and Hold: Short-term trading makes more brokers than investors rich. The income tax department likes the practice, too. If you meet anyone who claims to have made money through short-term trading, resist your temptation to listen any further and move on to a more productive conversation.
Start Early: It is not the "market timing" but time in the market that matters. Power of compounding will turn things in your favour.
Investing is a long-term proposition. Research your investments, remember your goals, re-examine your risk, and limit how much you listen to day-to-day market commentary. And don't let your emotions overpower your sense of reason.
(by valueresearch)
Develop a Plan: For your short-term goals, make sure you're taking appropriate risks. Invest money that you'll need in the next two years to five years in cash and short-term bonds. If you've taken on too much risk for short-term objectives, pull back now. There's no telling where the bottom of this market is. It's better to cut your losses and preserve the money you already have for short-term goals. For your long-term financial goals, consider equities.
Keep It Simple: Buy a diversified equity fund or an index fund for equity exposure and a floating-rate bond fund for fixed income exposure. These are the basics of the investment world. Sure, you can buy many other types of funds (Petro, MNC, Gilt, Fixed Maturity, Serial Plans etc), but it's hard to go wrong with these two. To keep fund selection simple, stick with a diversified equity funds of well-established fund families. Equities prove to be the best performing long-term asset class. Stay away from exotic speciality and sector funds, unless you have a huge risk appetite and you can take in your stride a 25% loss in a quarter.
Ignore the hot stocks and funds: If you buy this year's top-performing fund or stock, be prepared to see it at the bottom next year. The fancy academic expression for this phenomenon is -- Reversion to the Mean. But the old saying explains it just as well -- what goes up must come down.
Invest Regularly: Investing a little bit of money each month is the surest way to reduce the risk of investing, because you lessen the possibility of buying at the market top. Also, no one is smart enough to anticipate all the moves, both up and down.
Buy and Hold: Short-term trading makes more brokers than investors rich. The income tax department likes the practice, too. If you meet anyone who claims to have made money through short-term trading, resist your temptation to listen any further and move on to a more productive conversation.
Start Early: It is not the "market timing" but time in the market that matters. Power of compounding will turn things in your favour.
Investing is a long-term proposition. Research your investments, remember your goals, re-examine your risk, and limit how much you listen to day-to-day market commentary. And don't let your emotions overpower your sense of reason.
(by valueresearch)
No Clear Focus
I have been investing in mutual funds from the last one year but have no knowledge on the funds I am investing in. I am not looking for a short term gain, but would like to stay invested over the next three to five years. Could you share with me some inputs on my portfolio? Do suggest funds that you feel should be replaced.
-Sanjay Pandita
First and foremost your portfolio lacks a clear focus. You are invested in many different kinds of funds, from one that invests overseas to one that actively hedges its portfolio (Reliance Equity). The net result is that your portfolio lacks a robust core holding. To address this we suggest that you look at a five or four star rated diversified equity fund that has a large cap tilt to it. You can make such a selection from our website or from the fund score card printed in our magazine.
-Sanjay Pandita
First and foremost your portfolio lacks a clear focus. You are invested in many different kinds of funds, from one that invests overseas to one that actively hedges its portfolio (Reliance Equity). The net result is that your portfolio lacks a robust core holding. To address this we suggest that you look at a five or four star rated diversified equity fund that has a large cap tilt to it. You can make such a selection from our website or from the fund score card printed in our magazine.
Since you have little knowledge about your funds we suggest that you go through the 'analysis' section of the fund page on our website. This will at least remove ambiguity on the objective of the fund.
As far as your current holdings are concerned, HDFC Mid-Cap Opportunities looks on track. Reliance Equity has delivered returns in line with the average peer; the fund's investment mandate is such that you will have to contend with average returns. SBI Infrastructure Fund has also delivered returns in line with other infrastructure players. The worrisome holding is that of Fidelity International Opportunities. It is too soon to comment on the fund, given that it is yet to release a single portfolio. So we don't know what kind of companies the fund is investing in or anything about the actual investment style. We advise you to keep a close eye on this fund. The only addition you need to make is that of a single diversified equity fund. Don't make the mistake of investing in every fund that sounds interesting, stick to quality funds that have an established track record.
Concerning your investment strategy, there are two aspects that we don't completely agree with. The first is that of investing lump-sum amounts. Especially since you are new to investing, it is better to stick to a systematic way of investing. The logic behind this is to eliminate the risk of adverse timing in entering the market. Opt for a Systematic Investment Plan (SIP).
The second aspect that we would recommend is to avoid investing in close-ended funds. The close-ended nature of these funds means that in the initial years you cannot withdraw your money without incurring a considerable cost. Plus the liquidity window of many such funds makes redemption a tedious job.
(by valueresearch)
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 valueresearch)
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 valueresearch)
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