EDELWEISS PREPAID SIP - UNCONVENTIONAL BUT EFFECTIVE

Experts unanimously agree that Systematic Investment Plan is the best way to invest in Equity Markets.

But, SIPs are not an option for those who have unstable income like Businessmen, Doctors, etc who do not have "fixed" income to commit for SIP.

For them, it is suggested to invest whenever possible a lumpsum in a Debt Fund and then do a Systematic Transfer Plan (STP).

This ensures that they too get the benefit fo a SIP investment without having to worry arranging funds month on month.

But both SIP and STP have 1 pitfall. That is, they buy units (stocks) on a predetermined date irrespective of market conditions. And, thus even if the market has zoomed up by 5% yesterday and again up by another 5% today, the SIP/STP is triggered making the purchase "costlier".

To counter this drawback, mutual Funds have innovated and brought in products like HDFC Swing STP, Pramerica Power SIP, etc.

But, among all these, the one which I think is most effective and useful is the PREPAID SIP from Edelweiss Mutual Fund.

WHAT’S SO SPECIAL ABOUT EDELWEISS PREPAID SIP??

First let us understand how this Prepaid SIP concept from Edelweiss works.

1. You will be investing a Lumpsum (minimum Rs.25000/-) in Edelweiss Absolute Return Fund/Edelweiss Ultra Short Term Bond Fund/Edelweiss Liquid Fund.
2. Switch from the source scheme (one where you invested the lumpsum) is triggered each time Nifty falls by either 1% or 2% (as you choose) into any of the Target Funds at 5% or 10% (your choice). The Target Fund can be chosen from Edelweiss Select Midcap Fund, Edelweiss Diversified Growth Equity Top 100 (E.D.G.E Top 100) Fund, Edelweiss ELSS Fund, Edelweiss ARF (provided Edelweiss ARF is not the Source Scheme)

Your Prepaid SIP is now active and running

What’s the difference and benefits?

Benefit No.1: Since your investment is in a Liquid Fund/Absolute Return Fund, your funds are generating returns till the time they move into the Target Scheme on trigger.

Benefit No.2: Indirect SIP happens whenever the switch is triggered.

Benefit No.3: NO Exit load is levied in case of switch.

Benefit No.4: Investor need not worry about monitoring the fall in Nifty and investing, the trigger will do the job.

Benefit No.5:

The Biggest Difference and Benefit is that the switch is triggered only when the Nifty falls by 1% or 2% which indirectly lets you “time” the market.

SRIKANTH SHANKAR MATRUBAI advises :

The word PREPAID SIP is misleading as a SIP happens only a specific date with a specific amount.

Still the product is innovative and could be used by investors who have Lumpsum in their hands (Bonus, Land sale, Lottery,etc).

If you are convinced about the product and intend to invest, I suggest you to go for Edelweiss Absolute Return Fund as your Source Fund rather than a Liquid Fund. Edelweiss Absolute Return Fund is a kind of Arbritrage Fund and has consistently beaten its Benchmark by a wide margin and also have a higher CAGR compared to Nifty.

Since the Nifty fall by 1% or 2% do happen regularly, the switch will also ensure that Capital gain taxation comes into play. So, instead of the debt fund, if you are invested in Edelweiss Absolute Return Fund, then Equity Taxation treatment is applied and if the trigger happens within 1 year of your lumpsum investment then only 10% tax is levied.

Also, it is observed that Edelweiss Absolute Return Fund, inspite of being a Equity Fund, is a low volatility fund and has been pretty consistent with its return.

The unique Switching option will ensure that you are buying units when the market falls and benefit from averaging your purchases.

Negatives :

1.       The Switch is done only in In-house funds which ......

2.       Edelweiss AUM is meagre. In fact, no Equity Fund of the Fund House has crossed Rs.100 crores which can make some investors uncomfortable.

3.       Investors may miss out on a extended Bull Market as no units are bought in a continuously rising market. (Though, I personally feel, that even in a continously rising market, there are sure to be 1%, 2% fall every now and then).

RECOMMENDATION :

Dont treat this Fund as a Emergency Fund.

Those having a Lumpsum to invest can definitely look at investing in Edelweiss Prepaid SIP.

Product is innovative and the Edelweiss funds have proved to good performers in their short history.

However, those who have regular income and can afford monthly are advised to go for the typical Systematic Investment Plan.

Best of luck,

Srikanth Shankar Matrubai

Also visit http://equityadvise.blogspot.com

Read More

IDFC EQUITY OPPORTUNITY FUND - NO Opportunity here. SKIP

Analysis of  IDFC Equity Opportunities - Series 1 NFO
IDFC Mutual Fund is coming out with a New Fund Offer on 9^th April namely IDFC Equity Opportunity Fund. The Fund will be a 3 year Close Ended Fund. The Fund will aim to invest in Small and Mid cap fund.


POINTS TO CONSIDER ABOUT THE FUND:

1. IDFC Equity Opportunity Fund will be investing in small and mid cap and hence I would categorise the fund as a High Risk High Return fund.
2. IDFC, as a Fund House, enjoys a good reputation of investing in mid cap space.
3. The Fund will limit its size to 125cr as the Fund House feel this will ensure investors make early returns in the next cycle.
4. The Fund is a Close ended fund.
5. Fund will have a diversified portfolio of 60-80 stocks. The key for diversification is to manage liquidity/risk considerations and play across sectors.
6. The most interesting aspect of this NFO is that there is NO Growth Option and there is COMPULSORY DIVIDEND option.

POSITIVES:

1. The 3 year lock in allows the Fund Manager the to buy and hold stocks and not worry about the daily NAV as well as any Redemption Pressures.
2. The Fund Manager Kenneth Andrade has gained reputation of identifying small caps which has the potential to become Larger Mid Caps. Some notable examples being Page Inds, Kaveri Seeds among others.

NEGATIVES:

1. Star Fund Manager Kenneth Andrade besides managing the highly successful IDFC PREMIER EQUITY FUND also manages like IDFC 50-50 Equity Fund, IDFC Infrastructure Fund, IDFC Equity Fund whose performance is nothing to boast of.
2. Small Caps and Mid Caps tend to be highly volatile and investing in SIP way would be the BEST method to negate the volatility but sadly this NFO does not give this option as this is a Close ended fund and hence no SIP option.

CONCLUSION:
IDFC is advertising this Fund as “an opportunity presenting itself after a decade”.

Sure opportunity is there, but why should I do go for a Close ended fund when I can do the same with a Open ended fund which I can always switch if the Fund is inconsistently performing poorly which i cannot do with a Close ended fund as this NFO is?
The Fund is for investors who are ready to take High Risk in pursuit of High Returns. Even then, I would prefer investing in proven small cap funds like Religare Mid n Small Cap Fund, Mirae Asset Emerging Bluechip Fund, DSP Small and Mid Cap fund, etc  rather than risking some more by going for a NFO, that too close ended.
My advise.........AVOID.  If you still want to invest in this fund, ensure that your expose is limited to 5% of your overall portfolio.
Best of luck,
Srikanth Matrubai

Also visit http://equityadvise.blogspot.com

Read More

Which Large cap for sip investment??

    A client is confused as to which Large cap he should go for……

Mr.Vijay Sampath wrote :

“Hello Sir, I like your blog for its easy language. Sir, I want to invest in an Large Cap Fund through Sip.
I have zeroed in on Kotak Opportunities Fund and IDFC Imperial Equity Fund, which one would you suggest?”. 

SRIKANTH MATRUBAI replied :
Hi Vijay,
It is good that you have decided to take the sip to investing which is the BEST way to invest as it helps in averaging your costs and help in accumulating corpus with even small sums every month. 

“Opportunity Funds”, as the name suggests are flexible and try to benefit from attractive opportunites that the market keeps throwing up every now and then. 

Kotak Opportunities Fund relies on combining top-down and bottom-up approaches. Kotak Opportunities Fund is an aggressive diversified scheme which invests a minimum of 60% of its corpus in large cap stocks and remaining in mid-cap stocks.

Kotak Opportunities Fund actively mixes up its portfolio and appears to book profits as and when the opportunity arises. Given this active portfolio management combined with a strategy to actively shift across sector and market caps, the fund would be more suitable for aggressive investors. It should not be the only fund in your portfolio, but rather an addition to perk up returns. 

Now, coming to whether Kotak Opportunities Fund is better or IDFC Premier Equity Fund…………………
Actually the comparision itself is wrong as Kotak Opportunities Fund is more concentrated towards Large caps whereas IDFC Premier Equity Fund is more of a Mid and small cap play.
Kotak has almost 60% in Large Cap whereas IDFC Premier Equity fund has only 6% in Large caps.

It would be more acceptable when Kotak Opportunities fund is compared with IDFC Imperial Equity Fund, which has a high concentration of Large caps.  

Now look at the comparison and take a decision. 

Kotak Opportunities Fund has scored over the IDFC Imperial Equity Fund over 3 year period giving 17.83% v/s 15.22% and both have given similar returns over 5 year period.

On Expenses Front, IDFC Imperial Equity Fund has an expense ratio of 2.29% whereas Kotak Opportunities has a lower expense at 2.05%. 

Cyclical Holdings :
Here too, Kotak Opportunities Fund scores over IDFC Imperial Equity Fund because Kotak has a lesser %age of cyclical stocks at 43% whereas IDFC  has a rather uneasy 64%…

Cash :
Kotak tends to have a cash holding ranging between 6% to 8% whereas at IDFC the cash holding has always been on the higher side at 15% to 20%. I personally feel that the falling markets has helped IDFC because it tends to have a larger portion in Cash…but going forward this could turn against the Fund.

However, on the risk taken to generate returns IDFC scores over Kotak. 

Even if we compare Kotak Opportunities Fund with IDFC Premier Equity fund, during the last 3 year period, IDFC Permier  Equity returned an annualized 7.58% while Kotak Opportunities delivered 7.60%. Both funds beat the benchmark BSE 100 index (return: 3.75% annualized) comprehensively over the same timeframe.

Calendar Year	2010	2009	2008	2007	2006
KOTAK OPPORTUNITIES- GROWTH (%)	18.5	80.13	-56.77	91.01	38.7

The performance figures in the table above are calculated using NAV, assuming Growth option. Performance figures of over 1 year are annualised.(Eg. A 33.1% gain in 3 years works out to a 10% gain per year when annualised.)    

3 yr Annualised Volatility		26.56
3 yr Sharpe ratio		0.52

 

IN CONCLUSION : 

I certainly feel that Kotak Opportunity Fund can add significant value to your portfolio over the long term especially via SIPs. 

Note : I have given the comparison only for the two funds you have specifically asked about, this is not to say that Kotak Opportunities Fund is the BEST Large cap. For the answer to that, keep visiting my blog. 

Regards,
Srikanth Matrubai

Also visit
http://equityadvise.blogspot.com

Read More

AN ANALYSIS OF L&T MIP - WEALTH BUILDER FUND NFO

Now, let us analyses whether this Fund is indeed capable of Building Wealth.

For Starters, note this fund isa Monthly Income Plan with the tweak being that the Fund is ready to invest upto 30% in Equities unlike other MIPs who restrict the same to about 10-15%.

N Sivaraman, president and whole-time director at L&T Finance Holdings, said, “In this present challenging environment, where the risk of rising interest rates has increased and global markets seem to be volatile, we believe that the product could offer risk-adjusted returns and can serve as an alternative under fixed-income products.”


The fund expects short-term rates to remain stable going forward as bank certificate of deposits issuances may not be high as in the previous financial year. Interest rates are not expected to remain high on a sustained basis, therefore, investment at the present levels may provide opportunities when the cycle reverses.

On fund allocation towards equitie, the Fund Manager Sanjay Gupta said, “Indian growth seems to be relatively strong in relation to the global and developed market growth. At present, the Indian economy is most likely to be at the end of a rate tightening cycle, which may be a favourable environment to invest in equities.”

Benign commodity prices and cooling of oil prices internationally may boost the Indian economy,

COMMENTS & REVIEW :
tHE fUND IS Nothing but actually a Debt Oriented Mutual Fund with a exposure to Equities to provide additional “return kicker”.
Conservative Investors looking for a bit extra return the traditional Fixed Deposits can look at the fund.

If youÂ’re looking for ultra risk-free return, this is not it.

Limit your time horizon of investment to about 2 years and take a Fresh Call at that time.

Who should Invest in MIP’s ?

1. Investors looking for regular Income
2. Conservative investors looking for better returns
3. Investors who want to park a big sum of money with a 2 year time frame….

My suggestion :
1. Choose dividend option

SPECIAL COMMENTS :
Investors are requested to note that with Fund onwards, “Transaction Charge” could be collected depending on the choice of your Distributor.
So, get clear picture from your Advisor/Distributor whether your investment will be subject to this Transaction Charge.

I am NOT Opting OUT of the Transaction Charge, (that is, I am NOT chargingÂ….as I am a Advisor and not a Agent)….  
Also visit
http://equityadvise.blogspot.com

Read More

THE FUND EVERY INVESTOR SHOULD HAVE

HDFC PRUDENCE FUND - THE BALANCED FUND THAT WORKS LIKE EQUITY FUND

WANT EQUITY RETURNS WITHOUT THE ACCOMPANYING VOLATILITY AND HEADACHE?????

Then, the answer is .... without any second thoughts....

HDFC PRUDENCE FUND!!!!!

This seed of thought was sown in my mind when one of clients, Munnawar Ali, asked this question.

Munnawar Ali wrote: "Sir, Can you suggest any one fund which should be the 'ONE' every investor should have. I am a new investor to the Equity field itself. Which fund would suggest me.?"

Srikanth Matrubai answered : "It's good Munnawar,  that you have chosen the Mutual Fund route to take exposure to the Equities.

Equities are the BEST asset class in the long term. While pinpointing any one single fund is very difficult, especially as not only the Markets are dynamic, even the changes in Fund attributes, Fund Manager, would all have bearing on the performance of a Fund.

Still, I would stick my neck out and, without any second thoughts, say if any investor has to a Fund compulsorily in his portfolio,it has to be HDFC PRUDENCE FUND.

HDFC PRUDENCE FUND was lauched on February 1, 1994 and is one of the oldest Balanced in India.

The Fund is managed by Mr.Prashant Jain.

HDFC PRUDENCE FUND is a Balanced Fund with a mandate to invest between 40-75% in equity and the balance in Debt instruments.

The Fund tends to be fully invested in Equity over all periods of time with a passive style of investment touching its peak of 75% most of time.

WORKING OF BALANCED FUND :

Due to their mandate, Balanced Funds have to maintain Asset Allocation in ratio of ,say, 70:30(Equity/Debt). This automatically ensures that whenever the Equity outperforms, the ratio raises in favour of Equity and the Fund Manager has to sell

Equity to maintain the Balance.

Likewise, when Equity markets tank, the equity ratio declines and Debt raises, and thus the Fund Manager has to sell Debt and more Equity to maintain the Balance.

This automatically ensures that the Fund Manager, invariably, is selling at higher rates and buying at lower rates.

This Asset Allocation automatically ensures superior returns over Long Term over even Pure Equity Funds.

FUND INVESTMENT PROFILE :

The Equity investment has tended to veer towards mid caps.

However, in Debt, it is quite aggressive on the lookout to take advantage of any volatility in Debt Market. It has of late started to invest more in Triple A instruments which gives more protection.

HDFC PRUDENCE FUND has been a boringly top quartile performer since a long long time. It has given Equity type returns and inspite of being a Balanced Fund, has fared better than majority of Pure Equity Funds over all all types of Market Conditions.

Its Mid cap bais in equity is offset by Debt investment and hence the volatility is not so much as to cause concern.

The returns of HDFC Prudence has been way ahead of its peers like Birla Sunlife 95, DSPBR Balanced Fund, etc.

In fact, the returns compares favourably with even Diversified Equity Funds, despite HDFC PRUDENCE FUND being a Balanced fund.

NEGATIVES :

Its huge huge Asset Size of 5800 crores could be a problem. But Prashant Jain, the Fund Manager, has shown his ability to manage such huge Asset Size even with the other funds he manages (HDFC Equity manages 8400 crores, HDFC Top 200 manages 9600 crores).

RECOMMENDATION :

HDFC PRUDENCE FUND  is a "must" in any investor's core portfolio.

HDFC Prudence Fund will provide good hedge against sharp equity falls.

If any investor wants to invest in only ONE Mutual Fund, then THIS is the Fund, the HDFC PRUDENCE FUND.

Best of luck,

Srikanth Matrubai

http://goodfundsadvisor.blogspot.com

Also visit http://equityadvise.blogspot.com

Read More

ING FINANCIAL PLANNING FUND - A REVIEW

WANT INSTANT DIVERSIFICATION, THEN LOOK AT ING OPTIMIX FINANCIAL PLANNING FUND

ING has come out with a New Fund Offer ING Optimix Financial Planning Fund which is a Fund of Funds and aims to invest in mutual funds of AMCs other than ING.
This, according to ING people, is to help investors simplify their investment.
While on the face of it, the Fund offer and plans look confusing, the concept is good though not new.
The Fund aims to invest in carefully selected BEST OF BREED Funds from differennt AMCs  and get the best returns for your investment.
The Fund will invest in Four Different Asset Classes - Liquid Funds, Debt Funds, Equity Funds and Gold ETFs.
And, yes, the Fund will also aim to give its investors flexibility to choose from four Convenient Plans catering to Different Risk Tolerance levels.

While this isn't the first multi-manager FoF from the AMC, it is unique given its strategy of investing across the equity, debt and gold asset classes. In contrast, FoFs from other fund houses typically invest in funds from their AMC only. Besides, this is the first FoF that has an option to add exposure to gold ETFs.

MY ANALYSIS :
PROS:
1. With hundreds of funds to choose from, this Fund ensures that your job is simplified. And monitoring/switching too is not your headache as the Fund Manager will do the same as and when required.
2. Since this fund will not invest in inhouse schemes of ING, you can be sure of having his investment into the Best of Funds as the selection of funds is done purely on merit.

CONS:

1. The entire performance is based on the funds selected and how they fare.  Wrong selection of funds or delay in identifying laggard funds could affect the overall returns of the fund.
2. Similar products from the same Fund House, like the ING Optimix Multi Manager Equity Option has been very disappointing in their performance till now.
3. Additional Costs due to its Fund of funds approach.


RECOMMENDATION :
As with every fund, this fund too has its pros and cons, Passive Investors and First time investors wanting an exposure to equities, this is a Great Fund to take exposure in.
Others, your Fund Advisor could well do a better job.
Investors would however do better to 'PAY FOR QUALITY ADVISE" and invest in Different Funds of different AMCs based on their Asset Allocation, Risk Aversion which a Qualified Financial Advisor would be in a much better position to advise.

Best of luck,
Srikanth Matrubai

Also visit http://equityadvise.blogspot.com

Read More

RELIANCE GOLD SAVINGS FUND

NEW WINE IN NEW BOTTLE

Investing through SIP is advisable. Avoid LUMPSUM.





 Reliance has come out with a New Fund Offer, Reliance Gold Savings Fund.
Should you invest??. Let us check it out...



Reliance Gold Savings Fund is a Fund of Funds., meaning your money in this Fund will actually be invested in another fund, namely Reliance Gold Exchange Traded Fund. And, this Fund in turn invests in Gold.

An Exchange Traded Fund (ETF) cant be invested through Sip., and so is Reliance Gold ETF., and here's where Reliance Gold Savings Fund steps in.
You can invest as little as Rs.100 per month!!!


Positives :
No Demat Account.
Can invest as little as Rs.100 per month.
Long Term Capital Gains after holding period of 1 year compared to 3 years holding period in Physical Gold.
Very Liquid compared to Physical Gold.


Negatives :
Being a Fund of Funds, charges could be higher. Gold ETF charges 0.75% whereas Reliance Gold Savings Fund could charge upto 1.5%.
Equity has and will continue to outperform Gold in the Long Run.

RECOMMENDATIONS:
While "experts" are shouting about Higher Expenses, one should not forget that the Expense is fixed at 1.5% by SEBI and moreover, your SIP investment would be working at Rupee Cost averaging and will actually help you gain more than Gold Returns. (Just like a equity sip would give you more returns than a Lumpsum investment).

Prudent Asset Allocation will tell you that you should have a 5-10% Gold exposure depending on your profile and based on this, you should decide how much you should invest in Reliance Gold Savings Fund (or whether you should invest at all).

People in India tend to invest in Gold not as an investment, but more for creating a corpus for their children's marriage, for them, this Fund is God send.
I would still stick my neck out and say that Equity is the Best Asset to Invest, especially if your Time frame is more than 5 years.


If you want to have a Gold Exposure, then investing through SIPs in Reliance Gold Savings Fund is the BEST way to do it.




Also visit
http://equityadvise.blogspot.com

Read More

IDFC INFRASTRUCTURE FUND - OLD WINE IN OLD BOTTLE!!

 There is nothing new on offer in the NFO of IDFC Infrastructure Fund.

IDFC has surprisingly launched an Infrastructure fund when the entire sector is avoided like plague by Fund Managers and Investor alike.

Do the IDFC people found something that many have not been able to???
Well, only time will tell the answer.

But, their guts has to be appreciated to have bought out such a Theme Fund in these difficult times.

I met Mr.Kenneth Andrade recently and he explained, "Infrastructure stocks are valued attractively and Cash Flow visibility is very strong and Investors will flock to these very same stocks sooner rather than later. We want to be there earlier than others and give alpha returns to our investors".

Mr.Kenneth Andrade reasoned that the Infrastructure Stocks were over-hyped during the 2008 highs and and under-performing due to over skepticism and is overdoing by investors on both fronts.
He expects Infra stocks to bounce sharply and lead the Next rally, especially now that many of these infra projects are getting executed and should be monetized sooner.



Infrastructure Sector as a whole has been going tough times and the future does not look too bright with high inflation and hardening interest times.

COMMENTS AND RECOMMENDATIONS: 

A Sector Fund is a strict no-no, especially if you are investing in Lump-sum.
One bad policy decision, and lo, the entire sector looks down and out and you will be left holding a drowning boat.

And yes, there are more than a dozen infrastructure funds in the market today and there is no particular reason for you to pick this Fund over the others unless you have a leaning towards IDFC brand name or you love Mr.Kenneth Andrade.



However, to this Funds benefit, I must add here that Infrastructure Stocks constitute more than 50% of the Nifty, which makes this Fund more diversified than a pure play Theme/Sector Fund.

But,
but,
but,

I would still say...


Go for Diversified Funds as there is nothing that prevents a Fund Manager in investing in Infrastructure sector if he finds the sector attractively valued.


ONE FINAL THOUGHT.....

By the way, I had this thought, that probably the AMC guys at IDFC thought they could piggyride on the IDFC Bond Ad wave which has been doing the rounds for more than 6 months now and would be easy to suck in gullible investors.

Maybe it also is that IDFC people are following the classic saying 'Buy when others are selling"!!  and launching Infra fund when other AMCs are wary of talking about their Infra funds performance.
Best of luck,

Srikanth Matrubai







Also visit http://equityadvise.blogspot.com

Read More

DSP BLACKROCK MICRO CAP FUND

CHOTA PATAKA BADA DHAMAKA





 

My recommendation and pick for this month is the DSP BlackRock Micro Cap Fund.

The Fund has been a clear out performer since its launch. In spite of the markets going into a tailspin immediately after the Fund's launch, the Fund has managed a impressive 15% absolute return. The Fund which was a close ended has become a open ended now and has been ranked NO.1 by money control in the Equity Diversified Category and has been rated 5 Star.

Now, as you can make out by its name itself, this Fund invests in Very Small Companies (by market capitalization). Even here DSP zeroes on a lot more 'micro'. And DSP has announced in clear terms that it will put a ceiling of 500 crores on this Fund, so that it can be managed easily. A Smaller size will enable the Fund house to be quick footed and will have little problem in entering/exiting a stock.  A Bigger Fund size will require the fund to look beyond micro companies.

Micro caps are under-researched and if picked at the right price can be multi baggers. DSP Blackrock has a good pedigree and has proved its mettle before and has a high focus on investment processes and relatively lower dependence on any STAR manager.

DSP BlackRock Micro Cap Fund.  has targeted to invest in Small Companies which are market leaders in that field which will not only reduce risks but bring in assured returns.

Typically Small Cap Fund will be highly volatile and hence works wonders when you invest through SIP.

The Fund is heavyweight on Industrial Capital Goods which account for about 14%. As you can expect, the Fund boasts of stocks which you rarely find in other funds. Some unusual stocks which the Fund holds are...Whirlpool, Jubilant, Zuari Inds, TRF, TTK Prestige, etc.

However, the Fund has restricted its investment to fewer than 40 stocks.

The Fund is managed by Apoorva Shah who has done wonders with DSPBR Top 100 Fund.

Micro cap stocks comprise a large pool of varied, uncorrelated stocks which are relatively unknown and under-researched. Building a portfolio of such companies requires proven expertise in equity fund management and stock-picking. DSP Merrill Lynch Fund Managers Ltd. have however done well in the 3 years since the Fund has been launched.

A major problem with these small caps is their liquidity especially when the markets are going downhill. Hence, it is essential that you have a long term vision when investing in this Fund and keep booking profit whenever you feel the time is right.

Those who wish to take advantage of the private-equity style of investing in which one enters companies with potential and exits after they have grown into winners, can look at this fund.

The Fund will be a good addition to aggressive investors who are willing to ride out volatility associated with small caps.

The Fund should do wonders for a SIP investor.

INVEST

Also visit
http://equityadvise.blogspot.com

Read More

MIRAE ASSET EMERGING BLUECHIP FUND

OLD WINE IN OLD BOTTLE:

Let us today analyze the investment rationale behind the Mirae Asset Emerging Bluechip Fund from the Mirae Asset Mutual Fund.
The fund is primarily a mid-cap fund that invests in Indian equities and equity-related securities of companies that are not a part of the top 100 stocks by market capitalisation, but have a market cap of at least Rs 100 crore at the time of investment.
The NFO is open for subscription and will close on 22 June.
The Fund House has positioned Mirae Asset Emerging Bluechip Fund as primarily a Mid-cap fund which gives investors the opportunity to participate in the growth story of today's relatively medium sized but emerging companies which have the potential to be well-established tomorrow. The Fund will be managed by Gopal Agarwal and Neelesh Surana.
As a Fund House, Mirae has done wonders with its only Domestic Fund offering, Mirae Asset India Opportunities fund which has beaten its Benchmark by a huge margin of 12.6% giving a return of 21.46% compared to 8.86% of BSE 200 since its inception.
The fund manager, Gopal Agarwal, intends to stay fully invested at all times. Gopal explains: “Over the past few years, we have seen that while mid-caps may be more volatile they tend to outperform the broader indices. In this context, a return of about 4-5% higher than broader indices and at around 20% is possible". Very aggressive indication that.
Though the Fund may look similar to Mirae Asset India Opportunities Fund, this Fund is different in the sense, this Fund is more biased towards mid-caps where India Opportunities Fund has a equal weight towards Mid-caps, Small Caps and Large caps.

COMMENTS AND RECOMMENDATION:

The Fund does not try to hide its Mid-cap bias and is very clear about where it will invest its money. There are innumerable mid-cap funds available in the market, so why should you consider Mirae Asset Emerging Bluechip Fund.
You need not.
However, two things are in the favour of those who are inclined towards investing in this Fund.
One, Mirae Asset's only other Domestic fund offering, Mirae Asset India Opportunities Fund has been very very impressive in its performance both during the Bear and Bull periods and thus offers comfort.
Two, Fund Manager Gopal Agarwal. He has been outstanding without being publicity crazy. He does his job quietly and does very well. He had a terrific run in SBI Contra and has been very consistent with Mirae Asset India Opportunities Fund. He has proved his stock picking skills, which is the pillar on which mid-cap funds stand on.
Investors who are willing to ride the volatility associated with mid-caps can consider taking a exposure to the fund. Preferably go for SIP investment. And, of course, those investing would do well to have a time horizon of at least 3 years.
Investors also would do well to have a look at some of the mid-cap funds which have been giving consistently impressive returns., like Reliance Regular Savings Fund - Equity, Birla Sunlife Mid cap Fund, Reliance Growth Fund, Sahara Mid-cap Fund, Sundaram Select Mid cap fund, Sundaram Smile fund.
By the way, I would also like to add here that I had a chat with Mr.Dhirendra Kumar , CEO of Valueresearchonline during the Fund’s launch. I asked him “You are openly against NFOs, so how come you are here speaking under the Mirae Asset Emerging Bluechip Fund NFO banner”?.
He laughed and explained, “I am not here to promote the Fund. But, yes, looking the Fund House’s flagship Mirae Asset India Opportunities Fund’s impressive performance, aggressive investors can look at this fund, if it fits into their risk profile”.

My view is the same. If you are not risk averse and would not mind short term volatility, the Fund can be a good addition to your portfolio if your overall asset allocation allows. Do not forget, SIP should be the route to invest in this Fund.

Regards,
Srikanth Matrubai




Also visit http://equityadvise.blogspot.com

Read More

SBI PSU FUND - ANALYSIS

SBI Mutual Fund has launched a new scheme, SBI PSU Fund. It is an equity diversified fund that mainly invests in stocks of domestic public sector undertakings (PSUs). 

The PSU investment theme looks quite promising as PSUs have strong fundamentals and are generally leading players in their industries. These companies also showed greater resilience than their private sector counterparts during the economic downturn.

Read http://goodfundsadvisor.blogspot.com/2010/06/why-psu-funds.html

While most analysts would blindly recommend SBIPSU Fund over Religare PSU Fund., I would take a contra view and say AVOID SBI PSU FUND AND INVEST IN RELIGARE PSU EQUITY FUND.

WHY RELIGARE SCORES OVER SBI

Here are the key reasons for the same :

1. Equities Outside PSUs :

While SBI has the mandate to invest upto 35% outside the PSU basket, Religare does not. While this may ensure diversification, this also means that the PSU THEME IS DILUTED IN SBI PSU FUND.

2. High Exit Load :

While Religare has an Exit Load of 1% only upto 1 year, as with most funds, shockingly, SBI has exit load for 3 years.

3. RELIGARE'S BETTER PERFORMANCE :

Religare has beaten SBI in almost all funds in terms of performance over 1,2,3 year period. It just shows Religare has performance to back up its claim of being a better fund to invest in.

SPECIAL TIP

Religare has already invested its Assets. More buying in the PSU Stocks by the new Funds like Sundaram PSU Fund and SBI PSU Fund will benefit Religare PSU Equity Fund which is already fully invested. The Scope for Value Unlocking of Public Sector Undertakings is huge and PSU funds  are poised to take advantage of these.

If you are convinced about the PSU story, then you know which fund is a better proxy to play on the theme.

Best of luck,

Srikanth Matrubai

Also visit http://equityadvise.blogspot.com

Read More