Thursday, January 22, 2009

Negative Returns in Liquid Fund??????


Dear All,
Recently, Business Standard carried a article where it claimed that a Liquid Fund from Edelweiss Mutual Fund has posted a Negative NAV. I was stumped, how can this happen?. It was next to impossible.
Thankfully, Edelweiss People responded with a email clarifying things. This is how their email went :

From: EdelweissMF
Sent: Wednesday, October 15, 2008 11:43 AM
Subject: IMPORTANT: Clarification on today's article in Business Standard
Importance: High

Dear Sir / Madam,

With reference to the article on "Edelweiss Liquid Plus Fund Dividend Fortnightly " having seen negative returns in Business Standard today, please note that this data is factually totally incorrect and incomplete. While the source of data is valueresearch and from a factual point of view, the NAVs mentioned are right, the interpretation of data by the journalist is absolutely wrong and irrelevant. The journalist has first of all compared returns of the dividend option (instead of growth as is the industry norm). Moreover, he has incorrectly presented this incomplete data. The reason why there is a fall in the NAV is because of a declaration of dividend on Monday, the 13th of October on the Friday NAV. Obviously if a dividend has been declared in any scheme, the NAV will fall to the extent of the dividend declared and that is exactly what has happened in this case.

Please not that there has not been even a single day of negative returns in either the Edelweiss Liquid Fund or the Edelweiss Liquid Plus Fund till date.

Enclosed are the returns as on October 13th 2008 of both Edelweiss Liquid Fund and Edelweiss Liquid Plus Fund:

SIMPLE ANNUALIZED RETURNS FOR EDELWEISS LIQUID FUND


Scheme Name

NAV (13-Oct-08)

1 Week

2 Weeks

1 Month

Since Inception

Edelweiss Liquid Fund - IP - Growth

10.1109

11.7329

12.9828

11.9325

11.9054

Edelweiss Liquid Fund - Ret - Growth

10.1108

11.4223

12.7747

11.8958

11.8947

Edelweiss Liquid Fund - Super IP - Growth

10.1109

11.4739

12.9568

11.9202

11.9054

Crisil Liquid Fund Index


5.1966

7.854

8.1131














ABSOLUTE RETURNS FOR EDELWEISS LIQUID PLUS FUND


Scheme Name

NAV (13-Oct-08)

1 Week

2 Weeks

1 Month

Since Inception

Edelweiss Liquid Plus Fund - IP - Growth

10.1065

0.2152

0.4253

0.957

1.065

Edelweiss Liquid Plus Fund - Ret - Growth

10.1062

0.2152

0.4253

0.953

1.062







Indices






Crisil Liquid Fund Index


0.0854

0.2797

0.6446








Source: www.mutualfundsindia.com

Returns are computed of the growth options of the respective schemes. Past performance may or may not be sustained in future. Such information is not necessary indicative of future results and may not necessarily provide a basis for comparison with other investments.

Both Edelweiss Liquid and Liquid Plus Funds continue to outperform their benchmark across various time frames.

We look forward to your continued patronage of our funds.

Warm regards,

Marketing@EdelweissMF

And, wonder of wonders, Business Standard carried the Clarification the next day.
Thank God for small mercies.
Srikanth Shankar Matrubai

Also visit http://equityadvise.blogspot.com for an indepth Equity Analysis

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