indianmutual funds

SBI Multi cap fund

2005-09-13T22:10:00.000+05:30

If you are wondering whether the market will touch 10K ( Senses) as predicted by some, but nor sure of the direction in which the market will go, it is time you look at this fund. This is a pure equity oriented fund and thus offers all the gains and risks associated with stock market. The attraction in the new fund offer is that you do not have pay any entry load for NFO subscribers,if stay invested beyond 1 year. ( I am referring to small investors and not those institutional investors in crores.)
If you are not risk averse to equity funds, this is a fund that can be looked at.
( all usual disclaimers will apply.) The allocation of the fund,is maximum of 40% in mid cap and 10% in small caps. This ceiling really is a compromise looking at perception that mid cap and small cap stocks are high risk investments. Thus the return you can expect from this fund, will be similar to large cap funds. At the same time is that this is not a sectorial fund, thus allows more options to the fund manager to maximise returns. In short this is pure equity funds offering you the advantages of associated tax benefits.

a focussed offer from Sundaram Mutual

2005-08-20T00:21:00.000+05:30

If you are not averse to equity investing, and
If you are not averse to sectorial fund investing,
here is a new fund offer from Sundaram Mutual fund.
" Capex opportunities fund".
The fund proposes to invest in companies associated with capital goods sector. This means that the fund will invest in companies which supply capital goods and other similar items. What attracted me towards this fund?

There is ripple in the loud thinking industry that India is poised for outsourcing in manufacturing sector. With the lower wages, available in india, this ripple may turn into a tide. The outsourcing BPO segment is being transformed into knowledge based industry, If this trend persists, will the manufacturing sector will be far behind?
more about this fund in my next post.

How much?

2005-08-02T21:17:00.000+05:30

From this financial year onwards, your savings in approved instruments are deducted directly from your income upto a limit of Rs. 1 lac. ( Of course there are some restrictions, however investment in tax saving mutual fund can be made upto Rs. 1 lac). This does not mean that your investment should be to the maximu limit. Calculate your present commitments of existing investment such us PF. PPF, Insurance premium, etc. See how much more investment you can make. How much of your investments are in equity based tax savings savings scheme? I suggest that 10 to 20% of the available gap, subject to a maximum of Rs.6K can be utilised for investment in this scheme. Do not forget to utilise the Recurring investment plan , so that your investments are spread over the period of 12 months. ( of course you will be able to deduct only that amount invested during this financial year and rest of the investment can be carried to next financial year.)

Reliance Tax Saver (ELSS)- Reliance Mutual fund

2005-07-24T19:28:00.000+05:30

What type of investors should go in for the fund? Remember the scheme is pure equity scheme. Hence those are risk averse and can not bear the risk associated with Equity, the scheme is no-no.
Another view point is that every investor in the accumulation stage should have equity in his portfolio of investment. The renowned personal finance advisor Bogle ( His bio is available here), says that in asset allocation, as a thumbrule, the asset class of the investor in debt should be equal to his age. Going by the above thumb rule, even if you are aged 40, your standard asset portfolio may consist of 40% debt instruments and 60% in equity. Hence this investment is suitable for all those who are in accumulation and consolidation stage.

The scheme is meant as a tax saving measure. Hence has a lock in period of 3 years indicating that you stay invested in 3 year horizon in the equity. This period is considered as reasonable and optimum for investing in equity markets. Hence the possibilities of obtaining optimum returns exists.

How much to invest?

New Fund Offer from Reliance Mutual fund.

2005-07-23T23:41:00.000+05:30

The ELSS scheme proposed by reliance is a pure equity scheme. The Fund has similar equity oriented schemes.

Reliance Equity opportunities Fund: The fund was launched only in March 2005. The investment portfolio consists of 84.61% in Equities as at the end of June 2005. The net asset value stands at Rs.11.51.( 22/07/05)

Reliance Vision Fund ( Growth) : The fund was launched in Oct 1995. The investment portfolio consists of 95.92 % in equity as at the end of June 2005. The net asset value stands at Rs.100.40 as at 22nd July 2005.

Even though there are other equity oriented schemes of reliance, I have chosen only the above two, as the investment in equity is more than 80%. The proposed ELSS scheme of reliance proposes investment in equity of 80%.

You have to remember that the latest Net asset value is in the booming market conditions and statutory disclaimer that the past performance is not a guarantee for future performance.
However, these net asset values indicate the level of performance and efficacy of the funds managed.

I have also chosen only the growth option as, the proposed investment in ELSS is locked for a period of three years. The Reliance vision fund has provided an annualised return of 26.55% since inception and it is too early to annualise the return in respect of Equity Opportunities fund.

New Fund offer from Reliance Asset management company

2005-07-22T20:09:00.000+05:30

Reliance Asset management company, belonged to the Reliance group. Now, it should be under the leadership of the financial wizard Mr. Anil Ambani. The company proposes New Fund Offer on 25th JULY 2005. The Asset manangement company manages 31 schemes. As every schemes has various options such as growth, monthly income, quarterly dividend, etc, if we take these options also into account the number of schemes managed by the company is 92, as at the end of June 2005.
Of the 92 schemes, equity oriented schemes account for 33, Debt schemes 51, Equity and debt 1, and Gilt fund numbering 7.
The total assets under management is Rs.9900.00 Crores app as at the end of 30th June 2005.
The company is coming out with another pure Equity scheme. The attraction is that it is a tax savings scheme.

TAX Savings Schemes through mutual funds.

2005-07-21T23:00:00.000+05:30

The budget 2005 have brought cheers to the investment community in equity markets. To the average salary earner, one of the major changes are the restrictions ( excepting in certain cases) have been removed in respect of dealings and choice of investments to plan taxation, has been left to the individual. Instead of earlier system of providing relief in the tax amount, the recent budget has provided for reduction of the investment from the total salary thereby reducing the taxable salary. The ceiling on such deduction has been kept at Rupees one lac for the present.
It is not unusual for mutual funds to come out with tax saving funds every year. During this year, the early birds are HSBC Investments, (who has reported to have filed the prospectus with SEBI) and Reliance Mutual Fund, who is coming with its new Fund offer on 25th July 2005.

SBI Magnum Commo fund

2005-07-17T20:21:00.000+05:30

There is new equity based fund open till 25th July 2005. It is from SBI mutual fund. It is called Comma Fund. When I first heard the name, I thought that SBI is offering an index fund on commodities exchange and was interested in knowing more about it. It turned out to be another sector specific fund with focus on companies who are dealing in commodities and agriculture products.

"COMMA is an acronym for Commodities in Oil, Metals, Materials and Agriculture. The objective of the scheme would be to generate opportunities for growth along with possibility of consistent returns by investing predominantly in a portfolio of stocks of companies engaged in the commodity business within the following sectors - Oil& Gas, Metals, Materials & Agriculture and in debt & money market instruments"- Extract from the offer document!

All the tax benefits available to the equity funds are available for this scheme also- such as exemption from long term capital gains and tax free dividends etc. The attractive feature of the fund is that there is no entry load at the time of initial float. The entry load may be in force when the scheme reopens after initial offer!

Liquid funds and Crisil liquid fund index

2005-07-12T21:18:00.000+05:30

Crisil Liquid fund Index has been constructed with a view to monitor performances of the liquid funds over a period of time. Remember, the data we utilize is based on the past performance and past performances of a fund is a not a guarantee of future performance. But it no doubt indicates, how the fund manager performed ( note the past tense) vis-a vis the goals of the fund.

The index has grown from 1020.66 on 12th July 2002 to 1167.80 on 11th July 2005. That is a growth of 147.14 points over a period of 3 years, averaging an annual growth of 49.05 points in a year. Based on the base index of 1020.66, this growth works out to 4.80%.

How the liquid funds compare with this growth?

Liquid Funds of Indian Mutual funds

2005-07-10T21:10:00.000+05:30

Interesting facts !!. Almost 38% of the total assets under management by the mutual funds in India belong to Liquid funds.There are 205 schemes under liquid funds alone as can be seen from the following table:

Name of the fund	Number of Schemes
ABN Amro Mutual fund	5
Alliance Mutual Fund	5
Birla Mutual Fund	11
BOB Mutual Fund	3
Canbank Mutual Fund	5
Chola Mutual Fund	5
Deutsche Mutual Fund	8
DSP Merrill Lynch Mutual Fund	3
Franklin Templeton Investments	5
HDFC Mutual Fund	6
HSBC Mutual Fund	11
ING Vysya Mutual Fund	5
JM Financial Mutual Fund	12
Kotak Mahindra Mutual Fund	9
PRINCIPAL Mutual Fund	14
Prudential ICICI Mutual Fund	16
Reliance Mutual Fund	15
Sahara Mutual Fund	2
SBI Mutual Fund	8
Standard Chartered Mutual Fund	11
Sundaram Mutual Fund	11
Tata Mutual Fund	22
UTI Mutual Fund	13

Quiet Natural to have such number of schemes. They are designed to suit the varied needs of different classes of investors! That is one of the specialties of mutual funds- A scheme to suit every need and everyone’s needs!!

I am risk averse!

2005-07-07T21:56:00.000+05:30

We were discussing about Banks and mutual funds. No doubt, the investment in bank deposits are safe, but do they offer a reasonable return in these days of inflation which is hovering around 5 to 6%? The Government bond yield is around 7% now. The long term interest rates in most of the highly rated banks are less than this rate. Hovering between 6 to 7%.
You are person who is risk averse! You do not wish to invest in stock market or can not tolerate the ups and downs, but still interested in reasonable returns. You wish to have the same liquidity as that of the banks- money on tap! Mutual funds have a product to satisfy your needs having your perception of NO NO to stock market.
Money market mutual funds fill this gap. These funds invest in Government Bonds or highly rated Bonds of companies and also into money market instrument such as Commercial paper of highly rated companies. The safety is unquestionable. These funds are highly liquid and you get back your funds within 72 hours. We look at some these liquid funds.

Returns you must seek!

2005-07-05T23:06:00.000+05:30

One of the rules of investment is : Do not put all your eggs in one basket!
Another rule of investment is : Apportion your financial assets to seek maximum return!

Having these in mind, let us look at what are the conditions for earning the paltry 3% return on our savings bank account as per the rules on date.
First and foremost: you earn interest every Month but the interest is credited only once in six months.
Second: You earn interest on the Minimum balance maintained between 10th and last calendar day of the month.

The first rule does not permit you the effect of compounding.
Second rule does rob away the interest on the savings you have made from 11th calendar day onwards for that month. In case you close your account between 11th and last day of the month, you lose interest on all savings you have made during that month!

Have you ever thought about this? I have not taken into account, the charges for not maintaining the minimum balances or the cheque book issue charges some banks charge!

A well written note on selection of mutual funds!

2005-07-04T22:18:00.000+05:30

Sorry, I am diverted from the history. Happened to come across, three well written prose, on selection of mutual funds and a must read for every one!

visit:http://www.spendingwisely.com/articles/cat_investing.html.

Liberalisation effects!!

2005-07-03T12:17:00.000+05:30

The major change Reserve Bank of India brought about in the functioning of the Banks, is deregulation of interest rates. It left it to the individual banks to decide on the rate of interest on its resources and assets! The only directed rate of interest on date is interest on savings bank account! This also will be lifted as and when the opportunity arises!
The effect of this move is that you earn 3% interest rates on savings bank account and the maximum long term interest rates stabilising around 7%. Have a rethink on your investments now! Does it deserve the low rate of interest? Is there any other way to improve upon?
I can also visualise your next question! The investments in banks are safe, rock , solid. This statement is borne out of empirical evidence. This comfort comes out of the move from Reserve Bank of India, protecting the depositors of failing banks with larger banks preferably Government owned ones. These were policies till date and whether such policy will continue? I do not think so!
Let me add: This line of thinking is not to indicate that the investments in banks are not safe, but to highlight that they also have risk attached to them!

Liberalisation and its effects!!

2005-07-02T21:36:00.000+05:30

To answer the question raised, I have to go back into time and recapture the history, of the financial world in India, as I view! First regarding Banking. The sweeping changes on account of liberalisation, was felt more in the financial sector than in any other sector till date. Post independence era, particularly, the sixties saw Reserve Bank of India, the central bank, taking steps to consolidate the Banking industry. There were hundreds of banks in India, everyone serving a geographical area. Reserve Bank of India, in it own way persuaded many such small banks operating in a region, to merge amongst themselves,to present a better financially sound banking system.

India is a country of different culture, languages, with a common interest India. Hence it was natural, that these regional banks were acting more confined to the states where their Head office was situated. Mumbai, the earlier name being Bombay, was the only exception where every bank had its branch. It was the financial capital. The banking system was in the hands of private sector and even the Bank to the Governments, namely State Bank of India, was not wholly owned by the Government of India and it had a miniscule percentage of private shareholding. There were banks which were owned by Tatas and Birlas ( the then representative of Indian commerce). There was little interference by the Reserve Bank of India, in the day to day operation of the banking industry. The controls were exercised mainly with a view of maintaining the interest of the depositors and the annual inspections were conducted mainly with the objective of whether the depositors interest has been well protected or not. There were to directed lending and every bank had its own area and expertise to operate on. It was natural that the banks were not expanding their network, as profitability was considered as a more important parameter than the size of the network.

1970s, and 1980s, changed the scenario dramatically. Major banks of India were nationalised and allowing only handful of smaller and private sector banks to continue, which were smaller but sound. The bigger banks, on the basis of the size of business operations were nationalised. ( it was rupees ten million in 1970 and 30 million in 1980) The nationalisation brought the changes in the banking industry, the government pursuing a policy of planned and centralised economic goals,the directed lending was predominant in the banking policies. Profitability was not given as much importance, as spreading the activity, towards the social goals were the priority. The direction of the lending was to attain the disbursement targets than effective recovery and recycling of funds for better profits. Expansion of network was given a top priority and it was stipulated in the license era, that fresh branch licenses were linked to expansion of network in Rural centers, irrespective of infrastructure or economic viability of the branches. The expansion also brought its positive outcome. Hitherto untapped areas of resource mobilisation was made available to the banking system, who could find additional cash flow for the directed lending. The banks grew in their network and so also the directed lending. During these period the rate of interest on deposits and the rate of interest on lending was also regulated. Thus the spread was determined by the Central Bank ( Reserve Bank of India) than the individual bank boards. The owner being Government of India, can always ensure that the depositors interest is protected and being Government owned banks they can not fail. Thus the depositors, the common investor, was lulled into a false belief that the it is the duty of Government of India to provide them the higher returns on their investments. For more than two decades the practice of regulated interest regime, by a single owner of banking system ( Government of India ) continued, and you were led in a false premise that the return on your investments is a factor of Government. The return on deposits in the banking system is an economic activity and not a budgeted expenditure of the Government. The Government borrows from the public in the form of long dated bonds than bank deposits, but we were lulled into a false belief that Government can continue to provide safety as well as high returns. You,( we) never faced the reality that the returns on investments is a factor of risk. Higher the risk, higher the return is the fundamentals of investing!

Mutual funds - for whom?

2005-07-02T11:23:00.000+05:30

I can hear you, " hey cvrk, stock market is uncertainity, and mutual funds are part of the capital market industry, and investing in stock market is akin to gambling. We, Indians, predominantly, savers in the Banking Industry and Government schemes such as post office savings banks , are satisified. Why you are talking about mutual funds now?"