Category: Mutual Funds Review

Reliance Capital operated AMC, Reliance Mutual Fund of ADAG has launched the first Natural Resources Fund in India. As obtained from the AMC, the objective of the fund is to invest 65-100% in Indian Equities and/or upto 35% in Foreign Equities. The sectors in which the fund is planning to take exposure are as follows,

• Minerals & Commodities – Copper, Iron-ore, Zinc
• Precious Metals – Gold, Silver, Diamonds
• Energy Resources – Coal, Oil, Natural Gas, Uranium, Lignite
• Non-conventional resources – Air, Water, Solar
• Agricultural Products – Cotton, Wheat, Corn, Rice, Sugarcane, Bio-Fuels
• Ancillaries to the above – Component suppliers, Equipment suppliers

The Fund will be benchmarked against BSE-200 and MSCI World Energy Index. It is an open ended fund and new fund offering closes on Jan-30th. Minimum investment is Rs 5,000.

The SEBI has finally tackled the cartel of AMCs which included ICICI, Reliance, HDFC, HSBC and other Mutual Fund houses which came together in June-06 and started charging entry loads of 2.25% on open ended mutual fund investment schemes. Our Analyst had written to SEBI, Finance Ministry and AMFI complaining the same. [PDF] We are releasing the Copy of the Letter.

SEBI has now directed Mutual Fund houses that starting from Jan-4th all Direct investments [internet submitted to the AMC, collection centre or investor service centre] in Mutual Funds will have no entry load.

All the fund houses are raising money as if there is no tomorrow. Well the problem is tomorrow AMFI is changing the rules of the game. Yes, AMFI will not allow the initial NFO load of 5-6% which the Fund houses amortize on investors beginning from Jan-2008.

JM Agri and Infra Fund: [JAIF]
This is a fund launched by the house of JM Mutual Fund. The investment objective of JAIF is to provide long-term growth by investing predominantly in equity / equity related instruments of companies that focus on agriculture and infrastructure development of India.

JAIF will not have any market capitalisation restrictions, such that the investments will be across market cap range. The agri and infra related sectors account for 62% of the the BSE Market Cap. The portfolio of the scheme will be diversified with 25-30 stocks and may also invest in unlisted securities to a maximum of 10% of the assets while the scheme is close-ended. The share of the 2 sectors will generally be split 50:50. However, based on relative valuations, the mix can move between 30-70%.

The fund will be managed by Mr. Sandip Sabharwal, erstwhile SBI Fund Manager chargesheeted in the Ketan Parekh Security Scam. Mr. Sandip is an alumnus of IIT and IIM, Bangalore.

The NFO is open for subscription and will close on 18/12/2007. We recommend investors with VERY HIGH RISK appetite to subscribe. Value investors can continue with the SIP model of investment.

DBS Chola Small Cap Fund
Opens on: 20th November 2007
Closing Date: 20th December 2007
Fund Category 3-year close-ended equity fund
Investment Objective: The scheme seeks to generate long-term capital appreciation by investing predominantly in equity and equity related instruments of companies with “small market capitalization”. “Small cap Companies for the purpose of the Fund, are companies whose market capitalization is in between the highest and lowest market capitalization of small cap companies on BSE Small Cap Index at the time of investment.

UTI Infrastructure Advantage Fund – Series I
Opens on: 12th November 2007
Closes on: 19th December 2007
Category: 3 Years Close-ended equity scheme
Investment Objective : To provide income distribution and /or medium to long-term capital appreciation by investing predominantly in equity / equity related instruments in the companies engaged either directly or indirectly in the infrastructure growth of the Indian economy.

Sundaram BNP Paribas Energy Opportunities Fund:

NFO Opens On: 12th November 2007
NFO Closing Date:11th December 2007
Fund Category: Close-ended equity scheme
Details: A three-year close-ended fund.
Investment Objective: A three-year close-ended fund. The fund will invest in shares of energy and energy related companies

ICICI Prudential Real Estate Securities Fund

NFO Opens On: 15th November 2007
NFO Closing Date: 14th December 2007
Category: Close Ended Debt Scheme
Details: 3 Year close-ended debt fund
Investment Objective : To generate income through investment in debt securities maturing in line with the maturity of the scheme. Will invest in companies that are associated with or benefiting directly or indirectly from, the real estate sector. The secondary objective is to generate long-term capital appreciation through investments in equity or equity-related securities of such companies. We recommend our investors to AVOID ICICI Prudential Real Estate Fund.

If you look at our recommendations, our Analysts have always recommended various Diversified funds. We had received few e-mails last year on how we missed the opportunity in IT Specific funds. Well Investors, we were the first one to burn our fingures in Sector specfic funds, especially in IT sector in 2000. [Gul Tekchandani’s Sun Emerging IT fund, Samir Arora’s Alliance IT Fund etc]

Now in the image to your left, you can see yourself the returns IT specific funds have given in the past one year Vs Diversified Equity funds.

IT Funds – 0.39%
Diversified Funds – 44.57%

A Year ago IT funds were at 55% and Diversified Funds were again at 40%.

The focus of our investment advise is for disciplined investors who are serious to create wealth. Now to share the insider information, the fund managers of Diversified funds are also very smart. When they feel Banking or Capital Goods stocks are going to rise, they go for the top 5 stocks in the sector and ride the boom and exit. It is not that they are not participating at all.

Happy Investing!!!