Category: Mutual Funds Review

We have been informed that Pru ICICI will launch the country’s first real estate fund. We are not too happy with the fund’s objective, really especially, 65% Real Estate Debt + 35% Real Estate Stocks. Here is the presentation that we have got. [PDF]

Why we are recommending a AVOID on this new fund offer?
The fund will take exposure to debt and it can vary between 50&-70%. Kotak, HDFC and other who raised money abroad for Real Estate have 5 to 10 years lock-in but they are investing directly in property and real estate stocks. That means they are acting as REITS [Real Estate Investment Trusts]. However, ICICI is investing 50% in debt and you have seen the lackluster performance of Realty Stocks lately, which is why we are recommending a AVOID.

We always recommend to invest in well diversified funds and over long period of time, they beat every other sector specific fund.

For example, until April2007, IT specific funds were showing YoY returns of 50%+ while diversified funds were showing 40%+. Today IT funds are showing 17% returns YoY while diversified funds are still showing 38%.

HSBC – The World’s Local Bank has customized offering of Mutual Fund SIPs in India. This a very innovative scheme and HDFC and Reliance Mutual Funds should also launch such schemes.

Here is the details that we received from HSBC.

• The insurance will cover cancer, stroke, bypass surgery, accidental death or permanent disability
• The maximum cover will be for Rs 10 Lakhs.
• The cover that can be claimed is proportional to SIP amount paid every month. Suppose you invest Rs 2,000 / month, you will get insurance cover of Rs 72,000 over three years as that’s the minimum period you have to stay invested to claim insurance.
• Eligible age for investor is between 20 and 50 years

Kindly contact HSBC for further details of feedback @ dalalstreet.biz.

Reliance Gold Exchange Traded Fund is an open ended Gold Exchange Traded Fund which will track the performance of Gold Bullion. The units issued under the scheme will represent the value of gold held in the scheme. It is designed to provide returns that, before expenses, closely correspond to the returns provided by domestic price of Gold.

• You will hold Gold in DEMAT form
• Do not worry about the security as their is a Custodian like for your shares [ NSDL ]
• Transparency – High
• Denomination – 1 Gram and in multiples of 1 Gram
• Retail investors can trade on NSE
• Best advantage is you don’t pay any wealth tax on the Gold units you hold [Physical Gold is liable for Wealth Tax]
• Capital Gains – Applicable [No Security Transaction Tax]

NFO Opens: 15thOct,07
NFO Closes: 1stNov, 07

Investors looking to purchase Gold can invest in this fund. Questions and comments on Mutual Funds maybe sent to feedback @ dalalstreet. biz

ICRA Online, a wholly-owned subsidiary of ICRA is announcing the launch of ICRA Mpower, a web-based platform for mutual fund distributors and financial advisors, which provides all the tools required for making the distribution business more effective and efficient.

A cost effective solution for setting up the business, ICRA Mpower offers mutual fund distributors a gamut of financial tools to cater for both the pre- and post-investment requirements of clients, thereby paving the path for distributors to build enduring relationships with clients on the strength of quality service and appropriate advice.

ICRA Mpower is being offered by ICRA Online, an independent and credible organisation providing information services and software solutions to the financial services community. The effective combination of high quality data, technical expertise and efficient support, differentiates ICRA Online from its competitors.

ICRA Online’s earlier products like MFI Explorer, a mutual fund research and analysis product that has been subscribed to by major mutual funds, distributors and multinational banks, has been the market leader in the country. The company’s website MutualFundsIndia.com has also been rated among the best 150 sites in the world by Forbes.

Sr. Fund Manager of HDFC Equity fund has completely exited the stocks of DLF, Wipro and TCS. Added more of ICICI Bank and United Phosphorous, which has been in the folio for quite sometime now. UBS has a BUY recommendation on United Phosphorous. The new entrants in the folio are Suzlon Energy and Puravankara Projects Ltd. Realty Stocks have undergone quite a churn in this fund – First it was Ansal Properties and Infrastructure, then DLF and now Purvankara Projects.

In HDFC Top 200 fund, Investment in Maruti Udyog has doubled since the end of July. Suzlon Energy is the new entrant. Added more of United Phosphorous. Reduced holdings in Punj Lloyd and exit from DLF.

In HDFC Prudence Fund, Punj Lloyd and Zee Entertainment holdings were reduced. ICICI Bank and Puravankara projects are the new entrants.

ICICI Prudential Indo Asia Equity Fund is a diversified equity scheme designed to invest predominantly in equity & equity related securities with 65% or more directly into Indian equities across market capitalizations [Flexicap], and up to 35% in Asian Equity Fund. It is an open ended equity fund managed by Prudential Asset Management, Singapore.

What is the Rationale behind launching such a Fund ?
Nilesh Shah of ICICI said that India is a great economic growth story amongst Asian countries. China is another which has some complementing industries to India. For instance, the semiconductor industry is absent in India. To cash in on such opportunities, this fund will look to invest in semiconductor stocks available elsewhere in the Asian region. Also 7 of the top 10 fastest growing global economies are in Asia.

Long Term investors can take exposure in this fund. We also advise for SIP and lump sum averaging if the fund provides an opportunity. Most Asian fund managers don’t see any big correction in the indices here.