Category: Mutual Funds Review

ICICI Mutual Fund announced launch of ICICI Prudential Target Returns Fund – an open ended diversified equity fund scheme. The new fund offer (NFO) is open for subscription from April 15, 2009 to May 14, 2009.

This fund offers two plans namely regular and institutional. Under Retail Option, it will have sub options such as growth and dividend and dividend will further have sub options namely dividend payout and dividend reinvestment. Similarly under Institutional option I, one will have only growth sub-option.

The scheme is benchmarked against BSE 100 Index. The investment objective of the scheme seeks to generate capital appreciation by investing in equity or equity related securities of large market capitalization companies and providing investors with options to withdraw their investment automatically based on triggers for preset levels of return as and when they are achieved.

The New Fund Offer (NFO) price for the fund is Rs 10 per unit. The minimum application amount for retail option is Rs.5000 and Rs.1000 for additional subscription amount.Under Institutional Option I the minimum application amount is Rs. 100,000 and Rs.1,000 for additional subscription amount.

SBI Mutual Fund has announced the launch of SBI Gold Exchange Traded Scheme.

The new fund offer (NFO) has opened on March 30, 2009 and is scheduled to close on April 28, 2009.

The scheme offers only growth option. As a result, no dividend would be declared under the scheme. Minimum Amount for Application in the NFO is Rs 5000 and in multiples of Re 1 thereafter for Authorized Participants and Investors.

The price of the gold is the benchmark for the scheme. The price here refers to, the morning fixing (AM) of Gold by London Bullion Market association (LBMA).

The investment objective of the fund is to seek to provide returns that closely correspond to returns provided by price of gold through investment in physical gold. However, the performance of the scheme may differ from that of the underlying asset due to tracking error.

Here is the outlook for Equity by HDFC’s CIO and Sr. Fund Manager Mr. Jain.

Current valuations are cheap even assuming NIL earnings growth in FY10. Sensex FY09e EPS-Rs.876, FY10e EPS-885. Equities on current yield are cheaper than bonds – Equities yield: 10.0%, Bond Yield: 6.5%. This points to extreme pessimism and significant under valuation.

Fall in oil price has reduced risks for India and has improved longer term economic outlook. Over next 3 years, potentially, HDFC AMC expects approximately 30% earnings growth (assuming nil growth in FY10 and 15% CAGR thereafter) which will lead to approximately 50-80% P/E expansion.

How Small Investors Lose Money ?
According to AMFI data, Equity Investments in Mutual Funds FY 2008 at the Peak was INR +49,360 cr. Between October – January 2009 Bottoming INR -1,072 cr. So they have invested at the Peak and Exited at the Bottom 🙂

Isn’t it easy to say BUY Cheap and SELL HIGH ? Then why aren’t you guys BUYING cheap now ? At least small amounts of SIP.

Here is how Asian Fund Managers are looking at India and China for investments in the next 12 months.

Most long-only funds are underweight India and most hedge funds are running short positions on India, while almost 100% of the funds are overweight on China. The reason they are betting on China over India is the perception that China’s far stronger fiscal position, continued large current account surplus and large Fx reserves give it the flexibility to provide large economic stimulus in the form of infrastructure spending. India faces a number of worries, among them, uncertainty on outcome of the imminent general elections, rising fiscal deficit, and premium valuations. YTD, China’s A share index up ~30% , whereas BSE Sensex is down 8.3%.

67% of funds surveyed are underweight on tech or have short positions on techs, whereas ~ 40% funds are underweight on Real Estate and Cyclicals. Uncertainty on clients’ tech budgets in FY10 and expectations of rupee appreciation are key reasons for clients running an underweight position on techs.

While almost 40% of the funds we polled expect global cyclicals to retest their recent lows, more than 80% expect crude to behave differently from other commodities and rise from here on.

Its been over 3 months I have been telling myself to start an SIP in an Asian Fund. I will review one and post my analysis here.

Reliance Mutual Fund has introduced an additional new feature in Systematic Investment Plan (SIP) facility. This feature will be applicable for new investor wherein he can start SIP plan without any initial investment.

Under this option investor can submit the application for SIP on any working day and the SIP facility would be started with the minimum gap of 21 working days after submission of the application form. The following installment date for SIP shall be 2nd, 10th, 18th and 28th. If the date of installment falls on non working day then units will be allotted on the following working day.

This feature will come into effect from 11th February, 2009.

The Indian markets continued to slide / move sideways in a narrow range amidst global uncertainty and poor economic conditions.

For the first time you will see SIP Investments fairing poorer compared to Lumpsum investment in some funds. This doesn’t mean you stop your SIPs, No way!!! Here is the performance of the funds we have recommended in the past in Q4-2008.

HDFC Equity Fund’s Lumpsum Investment 10 years ago yielded 28.38% while SIP investment yielded 23.84%.
HDFC Top 200 Fund – Performance
HDFC Long Term Advantage Fund – Lumpsum investment since inception yielded 25.47% while SIP investment yielded 22.44%.
HDFC Tax Saver Fund – Performance

HSBC Equity Fund has give an return of 17.84% in the last 5 years as on Dec-2008.Kindly continue with your SIP as this is the time when you will accumulate lot of units / wealth at cheaper price.