ONE STEP CLOSER TO KILL THE MUTUAL FUND INDUSTRY

Dear Friends,

I am in receipt of the latest circular with regard to the Fee Structure for ARN registration and renewal. It is a shocker to the entire Mutual Fund distributor community.

Currently, individuals and corporate employees are required to pay Rs250 as renewal fees. AMFI has drastically increased it to Rs2,500, which is a hike of 900%. However, an individual seeking a new ARN number will now have to shell out Rs5,000 as registration fees.

After the recent changes brought out by SEBI the earning of the MF distributor has come down by more than 80% but the latest fee structure announced by AMFI is seeing an astronomical jump of 900%. I dont understand the logic behind this move. This apart the distributor has to pay for the exam fee too.

Till date I was of the opinion that AMFI is an association which represents the cause of the mutual fund Industry. I was also of the opinion that AMFI is a non-profitable institution but the latest circular on fee chargeable for ARN registration and renewal from Amfi disproves this status.

When the industry is reeling under lot of uncerternity in terms of present and future business the MF trade body instead of finding ways and means to save the industry and its partners is trying to make profit from fee payable by its partners. Is this justifiable?

Already 32 % of IFA s are already out of the business, we are sure that amfi doesnt want more IFA's to be out of business.

It appears that the AMFI and the AMCs are working in tandem to wipe of intermediaries from the business of selling investments.

So long, the AMFI and AMCs needed us and now that they believe that they have fairly established their business and created a vast data base of investors, they are confident of selling investments comfortably, sending mails and news letters.

The ARN issued to the examinees (in this case the MF advisors) should be for life time of the advisor, as in any case, the advisor will keep himself posted of the developments in investment sector, else, he loses his clientle.

Is AMFI working so naive that they dont appreciate the contribution by the advisors?

With the mutual fund (MF) industry bogged down by a number of problems, the decision of the AMFI to hike ARN renewal fee is likely to prevent new independent financial advisors (IFAs) from entering the market. Needless to say that for the Bank and Institutional Brokers paying Rs. 5000/- will be peanuts. Besides it serves the purpose of killing competition to an extent.

Everyone were of the opinion the new team under Mr. Sinor will do something for the MF Industry but now they have done something for safe guarding their bottom line. Nobody is bothered about the nascent industry called Mutual Fund. In a scenario where there is no proper incentive for the distributor to market Mutual Fund products this move of Amfi will further kill the industry.

Also visit

http://equityadvise.blogspot.com

Read More

SUPER SIP FUNDS

Here is a short list of some selected funds which have given excellent returns





Also visit

http://equityadvise.blogspot.com

Read More

DSP BLACKROCK FOCUS 25 FUND - DOUBLE EDGED SWORD???

FOCUSSING ON 'ALPHA'

FOCUSSING ON “ALPHA”

DSP BLACKROCK has come with a New Fund Offer (other than the FOFs) after nearly 4 years. And it has come out with a Exciting Fund called DSP BlackRock Focus 25 Fund.

Unlike DSPBR Top 100 Fund which is restricted top 100 companies by Market Cap., this Fund has the entire gamut of stocks to choose from and thus could provide an Alpha.

The Fund aims to invest the core of the portfolio in Large Caps and balance in multi caps in the Top 200 market cap companies. The Fund Manager has indicated that he intends to have largest exposure to Banking and Financial services as the outlook appears bright for the sector.

The new DSP Blackrock Focus 25 Fund aims to distill the best of the fund house's stock picks in a concentrated portfolio of high conviction bets.

And yes, being a concentrated portfolio, the Fund will have a potentially higher risk/return profile than a diversified fund.

Surprisingly, the Fund has chosen SENSEX as its Benchmark, whereas BSE200 would have been more appropriate.

The fund will be managed by Apoorva Shah who also manages two 5 Star Rated Fund, namely DSP BlackRock Equity Fund and DSPBR Top 100 Fund which has been a very consistent performer. A clear reflection of the stock picking ability of the Fund Manager.

The fund is positioned in between a pure thematic fund and a diversified fund.

It is a known fact that concentrated portfolio mutual fund schemes often produce outstanding results. These funds tend to raise and fall more than the market and other diversified equity funds.

RECOMMENDATION :

While on the face of it, the Fund looks to be a Double Edged Sword, the pedigree of the fund house gives comfort.

First Time Investors., this Fund is NOT for you. You have better options available.

Investors with reasonable risk appetite could look at taking a bet in this Fund. The fund has potential for high returns, albeit with high volatality due to its limited diversification and should be avoided by conservative investors. Investing through SIP is highly recommended to get advantage of the high volatility this Fund is expected to have. Avoid Lumpsum investment., unless you are following it up with SIP.

Ideal for long term rather than short term.

Also visit

http://equityadvise.blogspot.com

Read More

FT DYNAMIC FOF - AUTO TIMING THE MARKETS

Want a Fund which automatically books profits when the markets are overvalued and enter the markets when they are cheap???

Then, the Franklin Templeton Dynamic PE Ratio Fund of Funds is the fund for you.

Franklin Templeton Dynamic PE Ratio Fund of Funds is one of those rare funds which has an universal appeal and should be in portfolio of every investor.

This is a Hybrid fund which moves into equity and debt in a automated manner.
The Fund protects downside and behaves conservatively because of its mandate.
In another words, the fund automatically rebalances its asset allocation.

Its return since launch (October 2003) is 22.39% and 5 year returns is 22.19% comfortably beating its Category of 14.65%.

The most comforting factor is that the Fund fell by only 25.7% in 2008 when most funds were falling in the range of 70%-80%.

The returns have been on par with Equity Funds without giving you the jitters and volatility associated with Equity Funds.

The Fund, being a Fund of Funds invests in two of its in-house funds, Franklin India Blue chip fund, an Equity Diversified Fund and in Templeton India Income Fund, a Debt Fund.

ASSET ALLOCATION:
The Fund Manager, depending on the PE of the Nifty, increases/decreases his investments in these two funds.

The Fund increases its equity exposure as long as the PE of the Nifty is below 12% and gradually decreases as and when the PE of the Nifty rises and in a rare case, wherein the Nifty PE rises to above 28, the Fund acts like a Debt Fund with equity exposure being less than 10%!!!!!

The reverse happens, when the Nifty PE keeps falling, the Fund increases its Equity weight age gradually.

When the Nifty had plunged to 8000 levels (PE of 12) in March 2009, the Fund had an equity exposure of 91%!!!!

The Fund has beaten even the Balanced Funds comfortably across market cycles.

The only negative about the Fund is, it invests only in its in house funds. Also, if the markets remain bullish for a longer time, the Fund will fail to capture the gains, due to its PE strategy.

The Fund, which dynamically allocates between equity and debt, is apt choice for investors who want to have equity exposure but are shy of risks and volatility associated with it.

Those of you investors, who have no time for asset allocation, should seriously consider having this fund in your portfolio.

Regards,

Srikanth Matrubai
Also visit
http://equityadvise.blogspot.com

Read More

RELIGARE MIP PLUS - GOLD IS THE DIFFERENCE!!

Religare Mutual Fund which has been coming up with Innovative Funds has come out with another curious Fund, Religare Monthly Income Plan (MIP) Plus.

The fund is 'plus' in the sense that it will have an exposure to Gold through Gold ETF in addition to Fixed Income instruments and Equities.


GOLD impact :

Gold has negative correlation with Equities and is considered a good hedge against Inflation. In normal MIPs, the Fund Manager did not have the flexibility to tilt his allocation towards Gold, but the Religare MIP Plus has this option, which can be used by the Fund Manager to improve diversification and enhance performance.

Gold's inverse correlation will stabilize the risk/return profile of the Fund.






The Fund Manager indicated that he would ideally look at

70% Debt

15-20% Equity

10-15% Gold Etf

DEBT : The Fund would like to be more inclined towards 'short term' papers around 1 year maturity. The Fund would prefer to invest in Corporate Bonds rather than Govt Papers.



EQUITIES: The Equity portion would be tilted towards Large Cap, sources at the Religare MF said.

GOLD : Gold investment would be in the form of investment into the units of Religare Gold ETF. The Fund has an option to look at other ETFs as well.

COMMENT & RECOMMENDATION:

Pure Gold ETF is not an easy investment option due to the volatile currency situation which can test your skill.

Pure Equity will always carry the 'volatility risk' and test your patience as well.

Here's where a Fund Manager's skill will come into play. He will tilt his investment towards the Best Asset Class depending on the situation and with Gold too as an option, Religare MIP Plus is a "good investment choice" for the equity-averse investor, as this Fund has the potential to add value in varying market conditions.

The Fund is now open for subscription and will close on May 11, 2010.

Also visit

http://equityadvise.blogspot.com

Read More

ULIPS CON JOB DAYS ARE NUMBERED

SEBI has at last woken up to stop the DAY LOOT carried by Insurance Companies through ULIPs. They were literally looting the hard earned money of the gullible public by the open misselling.



Since the day I have started this blog, I have been telling, asking , requesting, begging people to avoid ULIPs and those who have taken my advise will be surely glad that they have followed my advise.







ULIP's real avatar :

ULIP is saving-cum-investment product that offers the option of life cover along with market liked returns.

Very few people know that ULIP is a long term product and gives decent return only if the holding period is a minimum of 10 years. However the sales persons were selling (mis-selling) ULIP as three year products (after October 2009 as 5 year products).

In a ULIP, the insurance component is very very low and does NOT serve the purpose of Family Protection. Due to the many hidden charges like Policy Admin Charges, Allocation Charges, Fund Management Charges, and all types of atrocious charges, ULIPs are designed to ensure maximum benefit for the Insurance Companies and Insurance Agents and NOT THE INVESTOR!!!! The commission is as high as 40%. This commission is paid by YOU and taken from YOUR pocket.



ULIPs are sold mostly as a 'only 3 year' premium paying product. Investors are not educated that the first three years are the costliest in terms of various charges that the investor pays. To cover this loss, the investor must remain invested for the full term of the ULIP. Calculations show that it is only after 10 years or so that this loss of income (by the way of high front end charges) is covered. The figure of 10 years also alignes well with the concept that any equity investment must be held for atleast a full equity cycle(typically 10 years).



You may also like read more insurance topics. Click here :

http://goodfundsadvisor.blogspot.com/search/label/Insurance

IRDA'S idiotic behaviour :

IRDA (Insurance Regulator Development Authority), instead of clearing the air has published idiotic advertisement inducing the Public to buy ULIPs and continue being conned.

IRDA's behaviour is so low, that people have started calling it as Indecent Regulator Disobeying Authority).

IRDA is functioning NOT as a Regulator with the interest of Investors in mind, but as a Front for the Insurance Companies.



SEBI needs to do more :

Firstly, SEBI needs to clarify what it was doing all these years. ULIPs are being mis-sold for more than a decade.

Why has the LIC ULIP not stopped by SEBI?. A clear case of double standards. Just like Mutual Funds, SEBI should remove the entire 'commission based structure' in the Insurance too and also allow investors to 'Directly' take the Insurance products themselves.





FINALLY,

Do you know that for a Cover of Rs.20 lakhs (for a 30 year old), the ULIP cost would come to Rs.2 Lakhs per year whereas a Pure Term Policy would cost him only Rs.5000/-!!!!!!!!!! You are saving Rs.1,95,000. You can easily invest this amount in Mutual Funds and earn much much higher returns.

This way he is adequately insured and most importantly, getting higher returns.



Take only Term Insurance. They are the cheapest and best way to insurance yourself.

Balance invest in Mutual Funds.



Let me be very clear here. I sell Insurance also. But I have never ever sold any ULIP and I also request you to avoid ULIPs at all costs.





Also visit

http://equityadvise.blogspot.com

Read More

ADVISE ME ON ONE MORE SIP

My First Follower Mr.Akhil sharma from Delhi wrote :

Hello Sir

I hope this mail finds you and your loved ones in the pink of health.

I have as promised earlier two ongoing SIPs in Fidelity Equity Fund and Sundaram Select Focus Fund.(Rs.500 each)





I am planning to start one more SIP for the amount of Rs.1000 per month.

I'm not so sure about the funds though.



I have in mind HDFC TOP 200 Fund and DSP Top 100 Fund.



Please advise where should i put my money.Suggest any other fund apart from these two if necessary.



P.S : I'm planning to invest for a long term.



SRIKANTH MATRUBAI replied :



Dear Akhil sharma,

Thank you for your kind words. I heartily reciprocate your feelings and hope the same there.

Do continue your Ongoing Sips in Fidelity Equity Fund and Sundaram Select Focus Fund.

I am very happy about you starting another sip of 1000pm.

Both the Funds you have selected i.e., HDFC Top 200 Fund and DSPBR Top 100 Fund are very good. You can choose any of them. Both these funds are a 'must have' in any portfolio.

Whereas your two existing Funds are both Diversified Funds with No Sector or Cap bais, it is prudent to have a Large Cap Fund and you are on the Right Track.

My Personal Choice among the two would be HDFC Top 200 Fund. The Fund is not very sexy in terms of its Presentation, but it does its job quitely and has been very very consistent since its inception and boasts of a Great Track Record.

Do evaluate your portfolio every 6 months or so and take appropriate action.

Read this http://goodfundsadvisor.blogspot.com/2010/03/use-8th-wonder-of-world.html

And also this post http://goodfundsadvisor.blogspot.com/2010/03/best-funds-for-new-investor.html

These two articles will help you in your decision making.

Regards,

Srikanth Matrubai,

Bangalore



P.S.:

If you are going for HDFC Top 200 fund, go for a Rs.500 sip on two Different Dates to take advantage of NAV Volatility and in the process earn more.

Also visit

http://equityadvise.blogspot.com

Read More