MIRAE ASSET CHINA ADVANTAGE FUND

TAKE A RIDE ON THIS DRAGON

Mirae Asset Global Investments has come out with a New Fund Offer, Mirae Asset China Advantage Fund. This is a Fund of Fund scheme which will invest 80% in Mirae Asset China Sector Leader Equity Fund through a Feeder Fund named Mirae Asset Global Discovery Fund (MAGDF) operating in Luxembourg and balance 20% in DIRECT CHINESE STOCKS.






The Feeder Fund MAGDF is incorporated in Luxembourg to avoid Double Taxation.

Many financial experts have expressed doubts on Chinese numbers authentiacity. The Fund Manager Gopal Agarwal admits, "yes, there are doubts raised, but you should note that Reputed International agencies like the UN, IMF have endorsed these figures and we have no doubt that China is on the way to become a Global Economic Gaint. Our Fund, Mirae Asset China Advantage Fund is poised to take advantage of this growth and reward our investors".

I asked him why the fund has underperformed its Benchmark in the last 1 year. Mr.Gopal Agarwal said : "Actually, in Dollar terms, our Funds has outperformed its Benchmark, but because of massive depreciation in Koreon Won, this underperformance is reflected. We do not expect a repeat of this".


THUMBS UP :
1. China is on a High Growth trajectory and the macro risk associated with the Country is very low.
2. Provides Good Diversification and meet investor's asset allocation.
3. Mirae Asset Global Investments (HK), the investment manager to Mirae Asset China Sector Leader Fund, has a dedicated research team focusing on investing in the Chinese markets and currently manages over USD 8 billion** (approx Rs. 38400 crores) as on August’09 and has been in China since 2001.




THUMBS DOWN :
1. Investors in this Fund will have to bear with Currency Risk.
2. Being a Fund of Funds, there is a possibility of more expenses compared with a regular Diversified Fund.
3. The Fund will be treated as a Debt Fund due to its investment in Foreign Stocks.

COMMENTS & RECOMMENDATION :
Chinese Markets are quoting below their average at a PE of 12, whereas the average PE for the last 6 years has been 18. Moreover, the Chinese Corporate Growth is expected between 18-24 and shows that Chinese stocks are quoting at less than Fair Value. The Fund is timed right to take advantage of this.
The Fund is a good diversification provider.
Mirae Asset India's Funds have given good returns, especially their flagship fund, Mirae Asset India Opportunities Fund.
Invest with a 2-3 year perspective.




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ICICI RIGHT FUND - RIGHT OR WRONG??

FOR PASSIVE TAX SAVING INVESTORS

ICICI Prudential Right Fund is a 10 year Close Ended ELSS (Tax Saving ) Fund.
The Fund closed for subscription on 09 September.
I sent the following advise on the Fund to my clients.

Read on...........

ICICI Prudential Mutual Fund has lauched a New Fund ICICI Prudential Right Fund. The Fund is a 10 year Close ended ELSS that seeks to generate Long Term Capital Appreciaton.

The Minimum Subscription is Rs.500 and in multiples of Rs.500 thereof.
The scheme will charge an entry Load of 2.25%.
Prashant Kothari will be the fund manager of the scheme. Mr.Prashanth Kothari has over 5 years of experience as Equity analyst and Fund Manager. He is presently managing ICICI Equity & Derivative Fund, ICICI FMCG Fund, ICICI Focussed Equity Fund

ANALYSIS AND RECOMMENDATION :
What is this RIGHT Fund?. RIGHT is an acronym for 'Rewards of Investing and Generation of Healthy Tax Savings'.
The Fund seeks to invest a major part of its portfolio in Large Caps and is thus is 'Safer' compared to other ELSS funds. This is especially more pronounced when you consider that almost all Tax Saving Funds invest in 'Growth' Stocks which are mostly Mid-caps and thus volatile.

PROS :
1. With its Large Cap Focus, the Fund will have reduced volatilty.
2. Most Tax Funds have consistently delivered Better returns than both Nifty and Sensex.
3. The Fund aims to invest 85% in Top 100 Companies by Market Cap which should protect the Fund during Bear Markets.
4. Minimum Investment is only Rs.500.

CONS :
1. Since the Fund aims to invest mostly in Large Caps, the fund may fail to deliver superior returns during market rallies.
2. The Fund has an entry load of 2.25%.
3. Being a Close-ended Fund, you cannot take the 'SIP' route to investing in this fund.

If you are investing purely for Tax Saving purpose, then you need not look at this Fund. However, if you are looking both for Tax Saving as well as Long Term investment, then this Fund should be in your portfolio.

Best of luck,

Srikanth Shankar Matrubai

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HELP ME ACCUMULATE LONG TERM GAINS

Want to accumulate Long Term Gains???... Then read on..

Niranjan Kumar Boora wrote :

Hi,
I am considering to accumulate long term gains, I have started SIP in mutual funds. My question is did I selected the proper portfolio.
I happened to read your blog today.

I started investing in mutual fund through SIP route Rs2000pm for 1 year starting Nov 2008 in the following funds.

Can you please analyze my portfolio.

1. HSBC Equity Fund - Growth (You suggested to few people to buy Fidelity Equity, what to do?)
2. IDFC Premier Equity Fund - Growth
3. DWS Tax Saving Fund - Growth

Apart from these, I have investments in the following funds (planning to switch from these to some HSBC Equity or some other fund you suggest, should I do?)


4. Sundaram CAPEX Fund - Growth (20K)
5. SBI Multicap Fund - Growth (10K)
6 UTI Mahila Unit Scheme - Growth (20K)
7. SBI Infrastructure Fund (20K)

Thanks,
Niranjan


SRIKANTH SHANKAR MATRUBAI advised :
Dear Niranjan,
Your existing SIP are going into very Good Funds and I do not see the need for change in funds. Yes, I have been recommending Fidelity Equity, but HSBC Equity too has been performing well and should continue to do so. So, in conclusion, your existing sips need not be tinkered with.
However, your lumpsum investments do need a overhaul.
Sundaram CAPEX Fund - Growth (20K) - Switch to the more promising and better performing Sundaram Select Focus Fund

SBI Multicap Fund - Growth (10K) - Better redeem and invest in a Good Large Cap Fund like the HDFC Top 200 Fund

UTI Mahila Unit Scheme - Growth (20K) - continue

SBI Infrastructure Fund (20K) - Switch to SBI Bluechip fund.

If possible reduce the existing sip from 2000 to 1000 in each of the existing sips or increase the sip investments by another 3000 and invest in the following funds to give your fund a Balanced Look.
DSPBR Top 100 Fund
Fidelity Equity Fund
HDFC Prudence Fund

Regards,
Srikanth Shankar Matrubai

http://goodfundsadvisor.blogspot.com


Mr.Niranajan wrote back :
Thank you sir..
I will do what you have suggested for a balanced portfolio. I really thank you for taking time to analyze my portfolio and suggesting the changes.

Thanks
Niranjan


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L&T FINANCE NCD - INVEST

SAFE, SECURE AND LIQUID TOO

L&T Finance is offering its First Ever NCD.

Srikanth Shankar Matrubai

L&T Finance is a 100% subsidiary of L&T. The Company has a good Track record. The Company's Capital Adequacy is very good at 16%.
The NCD is secured and the Company is also setting up a Debenture Redemption Reserve by setting aside 50% of the Capital raised in the NCD.

Net NPA is only 2.04% as on 31/3/09 and that too due to Economic downturn and prudent Accounting norms.

L&T Finance has NEVER been downgraded!!.

COMMENTS AND RECOMMENDATION :
The better return is the biggest attraction. Banks like the SBI is offering around 8% return on a 5 year FD and here L&T Finance is offering 9.5% with a better liquidity.
Good Rating from both CARE and ICRA. CARE has given a AA+ and ICRA has rated the issue LAA+ indicating LOW RISK.

Definitely better than any Fixed Deposit because of its better liquidity and Tax Benefits.

There is even a chance of Capital Gain because of its listing in Stock Markets and the greater interest in Retail Bond Market growing everyday. Any major fall in yields of Debt instruments would present L&T NCD investor with an opportunity to Cash out by selling in the Stock Markets.
The Company has also indicated that it may consider Buyback of the NCD and also consider giving loans to the holders of the NCD, in future.
INVEST preferably in the 10 year option and lock in the higher interest rates offered.



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SHINSEI INDUSTRY LEADERS FUND - INVEST

Focusses on Quality Stocks


Srikanth Shankar Matrubai

One can consider investing in Shinsei Industry Leaders Fund.





Shinsei Mutual Fund promoted by Shinsei Bank, Japan and Rakesh Jhunjhunwala have come out with their First Equity NFO with the name of Shinsei Industry Leaders Fund.

WHERE WILL THE FUND INVEST ?
The Fund aims to invest in "Leaders" who not only have Largest Market Share but also includes companies who have Highest Growth in sales and Highest Profitabliity. While AMFi has classifed companies into 43 sectors, the Fund aims to identify about 3-5 companies in each sector and further filter them and ultimately aim to have a portfolio of 25-35 stocks.
The Fund aims to have 60-70% in large cap and about 30-40% in Mid cap.


FUND MANAGER :
David Pezarkar is the Fund Manager of this Scheme. He had earlier managed SBI Magnum Tax Gain 93 and had also worked with UTI Mutual Fund, Way2Wealth Brokers, and Bajaj Allianz Life Insurance as a Equity Head.

COMMENTS AND RECOMMENDATIONS :

Though a New Fund from a New AMC, the persons behind the AMC like Mr.Rakesh Jhunjhunwala and Shinsei Bank do inspire confidence. Also, note that the Fund's investment philosophy is a no-brainer and should form a part of all Risk Averse Investors.
Investors can hope to get a Portfolio comprising of Leading Companies giving Good Market Relative Returns. The portfolio of the scheme has the potential to offer steady relative returns to investors across various market conditions because of its focus on Quality Stocks.
Industry Leaders does not necessarily mean Large Cap Companies.
The Backtesting of the Model that Shinsei proposes to use has shown that the Fund has given an Alpha Return of 10% above its Benchmark of BSE-100 with a Sharpe Ratio of the Fund is 2.06%
the Fund will NOT invest in Small Caps and Micro Caps


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KOTAK SELECT FOCUS FUND - NEITHER HERE NOR THERE

Srikanth Shankar Matrubai

Kotak Mutual Fund recently came out with a New Fund Offer named Kotak Select Focus Fund.





Kotak Select Focus Fund intends to focus on Select Sectors with untapped Current and Future Growth potential. Fund Manager Mr.Krishna Sanghvi says that this Fund provides adequate diversification compared to a Single Sector Fund while at the same time providing benefit adequate concentration in the portfolio on certain sectors expected to show strong performance.
The Fund will aim to invest in Six Sectors at a time.

COMMENTS AND RECOMMENDATION :
The Fund is positioned between a Sector Fund and a Diversified Equity Fund and thus fails to either enthuse Aggressive Investor or the Risk Averse Investor. Also, with a target of having about 60 stocks in the Portfolio, the Fund fails to classify as a Sectoral Fund, which its name suggests.
The Fund seems to be more of an extension of Kotak Opportunities Fund with a Sectorial bias.
Having Three Fund Manager could also result in too many cooks spoiling the broth.
The Difference between Sundaram Select Focus Fund and the Kotak Select Focus Fund is that Sundaram focus on Specific Stocks and Kotak tends to be more focussed on Top Down Approach i.e, Sector Focussed. So, even if a Stock looks attractive, the Fund will shy away and NOT invest in the Stock if the Sector outlook does not look rosy.
A separate Fund Manager for Debt portion too makes the Fund unsuitable for a Risk-Ready investor looking for a 'Alpha' to his returns.
Kotak AMC has a good track record in almost all its Funds but still the Fund confuses investors with its 'neither here nor there' approach. The ball is in your court.
The Fund is obviously not for the First Time Investor. I suggest AVOID.

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CANROBECCO FORCE FUND

FOR HIGH RISK APPETITE INVESTORS

Srikanth Shankar Matrubai





Canara Robecco has joined the NFO Bandwagon with its Canara Robecco FORCE Fund. FORCE is the acronym for Financial Opportunities, Retail and Entertainment. The new fund offer (NFOs) open for subscription from July 20 to August 18, 2009.

The Fund will primarily invest in Stocks of the above sectors. The Fund will be managed by Anand Shah who was earlier with Kotak and ICICI. Mr.Anand Shah presently manages CanRobecco Emerging Equities, CanRobecco Balance, CanRobecco Infra and CanRobecco MultiCap Fund.

COMMENTS AND RECOMMENDATION:
Canara Robecco has had an excellent past year. And the Economic Times rated many funds right in the top Platinum slot. This should give comfort to first time investors in this AMC.

The Force Fund aims to exploit the India Growth Story by focussing on the Sectors most likely to benefit from Rising Consumer Spending.

Because of its Sector Concentration, the Fund is expected to be volatile and should be considered for investment only by Aggressive Investors who have a good risk appetite. However, the Fund does have a wider choice in terms of Stock Universe compared to other Finance Funds and should do well over a longer time frame, especially above 5 years or more.

Invest if you are willing to stay invested for more than 5 years.

Best of luck,

Srikanth Shankar Matrubai


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