-
Disclaimer: Mutual Fund Investments are subject to market risks.
Please read all scheme related documents carefully before
investing.
SEBI’s mutual fund moves My name is Srikanth; I’m a director at
FundsIndia. Thanks for taking the time out to read this August 2011
issue of our monthly newsletter. At its recent board meeting, SEBI
has made a slew of decisions relating to mutual funds. Some are
aimed at strengthening the mutual fund industry, while some are
meant for simplifying proc-esses and having more disclosures. Here
is a quick summary and our comments on the various decisions:
1. Transaction fee – distributors will be allowed to charge Rs.
100 or Rs. 150 for every investment transaction. While this grabbed
the headlines in the newspapers, for FundsIndia investors this
should be a non-announcement. As we indicated in our blog
immediately after the announcement was made, we do not plan to levy
this charge. However, if this leads to mutual funds being more
popular and incentivises small advisors, we would be happy. We
trust this charge would stay optional, and we are awaiting the
official circular for confirma-tion in this regard.
2. UID can be used for KYC purposes – now, this will really make
entry into mutual funds easier. When this comes into practice,
there will be no more separate KYC registrations done requiring
people to provide yet another copy of address proof, identity
proof, passport photo etc. etc. A real welcome move.
3. More disclosures – Funds will be required to provide both
absolute returns and comparisons with Nifty and/or government bonds
(apart from comparisons with their benchmark returns). Again, we
like this move – more disclosures are always good.
4. More frequent statements to investors – if an investor does a
transaction in a month, they will get a consolidated statement of
account that month. If they do not do any transactions for a
period, they will atleast get half-yearly consolidated statements.
This is a fantastic move – will really keep investors well informed
about their invest-ments and let them view their MF investments as
a whole.
Overall, we are happy to see the promise of a mutual fund
industry veteran helming SEBI starting to deliver results. Hope
these moves will both bolster the industry and the confidence of
investors in the industry.
In these troubled times in the market, we can definitely use a
dose of confidence! Happy Investing!
Volume 3 August 7, 2011 Issue 8
CAPITAL LETTER
Greetings from FundsIndia!
Volume 3 August 7, 2011 Issue 8
CAPITAL LETTER
FundsIndia All Insurance Ranking – FAIR
FAIR is designed for individuals and families, to simplify their
in-
surance buying decisions. It helps you choose the insurance
plan that gets the most out of the money you invest in it. In
its first avatar, it ranks the
various term insurances available in India, across insurance
companies, in a scientific
and time-tested manner.
Login to
http://www.pelicaninsuranceonline.com/
content/jsp/Insurance/FairRankingInsurance.jsp to see how your
policy ranks in our
FAIR rating!
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Disclaimer: Mutual Fund Investments are subject to market risks.
Please read all scheme related documents carefully before
investing.
Deposits from ‘Top rated Companies’
Company Name Rating 1 Year 2 Year 3 year
HDFC LIMITED FAAAA 9.4% 9.5% 9.25%
ICICI HOME FINANCE COMPANY LIMITED MAAA 8.25% 8.75% 8.75%
LIC HOUSING FINANACE LTD FAAA 7.0% 7.4% 7.65%
MAHINDRA AND MAHINDRA FAA 8.25% 9.75% 10.25%
SHRIRAM TRANSPORT FINANCE CO.LTD TAA 9.25% 9.75% N.A
DHFL AA+ 10.25% 10.25% 10.25%
UNITECH LIMITED - 11.0% 11.5% 12.0%
For more information log on to www.daiwafunds.in
-
Disclaimer: Mutual Fund Investments are subject to market risks.
Please read all scheme related documents carefully before
investing.
https://www.fundsindia.com/content/jsp/corporate/FI-VideoChannel.do
Shriram City Union Finance Ltd.
NCD Issue
Key Features of Shriram City Finance NCD:
1. Public Issue of Secured NCDs aggregating upto Rs. 37,500
Lakhs with an option to retain over subscrip-
tion of Rs. 37,500 lakhs ,aggregating to a total of Rs. 75,000
Lakhs.
2. NCDs can be held in demat mode only.
3. Face value: Rs.1000.
4. Minimum Application amount: 10 NCDs i.e. Rs.10,000/-.
5. Issue open date: 11 August 2011.
6. Issue closing date: 27th Aug 2011.There is option of early
closure of extension of end date.
7. Interest Rates for Retail investors:
8. Interest will be payable annually and there is no cumulative
option. Interest will paid on 1st April of each
year from year 2012.
9. Credit Rating: CRISIL “AA-” and CARE AA upto amount of Rs.
75,000 Lakhs. Both indicates low credit
risk and timely repayment of interest and principal by
company.
10. Tax benefits: As always interest received is taxable and
this is not a tax saving issue.
Coming soon to www.FundsIndia.com
Options 1 2
Tenure 60 Months 36 Months
Interest Rate for Reserved Category 12.10% payable p.a 11.85%
payable p.a.
Interest Rate for Un-reserved Category 11.85% payable p.a 11.60%
payable p.a.
www.fundsindia.com/taxfiling
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Disclaimer: Mutual Fund Investments are subject to market risks.
Please read all scheme related documents carefully before
investing.
Asset allocation is the best strategy
BY ARINDAM GHOSH
For most of us, investing is simply about picking stocks that
are expected to yield high returns in the future or park-ing our
hard-earned money in safe instruments e.g. a bank deposit that
offers a fixed rate of interest. Well, not ex-actly. In today’s
world wherein a multitude of global and domestic factors influence
the state of our finances, invest-ing requires a far more
calculated approach beginning with the fundamental principle: Asset
Allocation.
Asset allocation is the relative percentage of different asset
classes (group of similar investments) in your portfolio which
determines how much returns potential/ risk component your
portfolio has.
It ensures that your investment portfolio comprises several
mutually exclusive asset classes instead of a concentrated pie of
similar and therefore highly correlated instruments. This
correlation is the very reason why you should pursue an asset
allocation strategy while crafting your investment portfolio.
To put things in perspective, asset allocation pursues reduction
in portfolio risks without substantially affecting over-all returns
or enhancing returns without substantially adding to those
risks.
Let’s look at an example to understand this more clearly.
Consider a portfolio investing in stocks and commodities. This
portfolio is likely to experience less volatility than a portfolio
that comprises only stocks, without compromising on the level of
returns. As is evident from the chart, with an asset allocation mix
of 70 per cent investments in stocks (BSE Sensex) and 30 per cent
in commodities, one can achieve the desired trade-off between
optimal returns and investment risk.
Structuring one’s portfolio begins with a simple process called
‘Know Thy Self’ or an understanding of one’s level of expectations
in terms of return on investment as well as gauging one’s ability
to tolerate loss of capital.
Needless to say, both the factors go hand in hand i.e. if one
expects high returns from an investment, s/he should be willing to
accept higher risk if the chosen investment vehicle fails to
perform. The graph appended below compares the risk and potential
return of some of the popular asset classes.
Once the returns expectation and the underlying risk has been
gauged, one needs to arrive at the point of balance. After this,
adding the right asset classes to the portfolio is a relatively
easy task.
Having developed your portfolio with the correct asset
allocation mix, you need to regularly review and rebalance it. This
is because, over a period of time, different asset classes generate
varying returns which automatically changes the structure of the
portfolio. One may be required to sell certain asset classes that
have risen in value, thereby add-ing to one’s investment gains and
also to maintain the original level of asset allocation.
On completion of a desired financial goal or if one wishes to
change one’s financial goal mid-way, the exercise must be revisited
from the beginning.
In sum, as asset classes evolve and investing assumes complex
proportions it must be ensured that one’s investment portfolio is
based on a unique asset allocation matrix that truly takes care of
the returns expectation as well as risk appetite.
— Author is the CEO, Mirae Asset Global Investments (India)
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Disclaimer: Mutual Fund Investments are subject to market risks.
Please read all scheme related documents carefully before
investing.
Faster Is Not Always Smarter
BY DHIRENDRA KUMAR
Here’s a headline that caught my eye last week: “JP Morgan
supercomputer offers risk
analysis in near real-time”. It seems that JP Morgan has gotten
a custom-designed su-
percomputer built that can model the risk on its entire global
portfolio in just 12 sec-
onds. Before this, the machines in their earlier setup (no
slouches, one can assume)
would take about eight hours to do the job.
A little bit of background googling tells me that till a short
while back, this is the kind of
project that you would expect only the governments of a handful
of countries under-
take, using them for weather modeling or nuclear reactor design
or similarly ‘heavy’
tasks. You wouldn’t have expect to see a business undertake such
a project.
The article also said that the bank is now looking to use the
technology in other areas of its business, such as high
frequency trading. High frequency trading, (sometimes called
high speed trading) is now said to make up more than
70 per cent of the trading on the US stock markets. The general
impression is that by deploying ultra-fast computers
with ultra-smart software written by ultra-clever geeks, big US
banks are basically just printing money at the expense
of smaller traders.
No, I don’t know whether this is actually true. But the problem
is that this idea of big Wall Street banks making out
like robbers by high frequency trading has taken an increasingly
powerful hold on the imagination of short-term
traders. This has given rise to a curious concept—that the
faster you trade, the better it is. You’ll see this actually
be-
ing discussed on Internet forums. The logic is (apparently)
simple—if high frequency trading is good, then frequency
(or speed) of trade must be positively correlated to
success.
Ergo, since a million trades a day is smarter than half a
million trades a day, then five trades a day must be smarter
than five trades a month and buy-and-hold for years must be
downright stupid.
However, it doesn’t work like this. What million dollar
computers are doing in Wall Street banks have nothing to do
with the basics of investing as you and I have to follow. That’s
a different world and has nothing to do with how ordi-
nary mortals should invest in equities.
— Syndicated from Value Research Online
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Guindy, Chennai 600032
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