Friday, May 29, 2009

My Blog ranked as World's No.3!!!!!!!



I recently received a Mail from www.etfdb.com, a US based etf site which has ranked my Blog http://http://goodfundsadvisor.blogspot.com among the Top 50 50 Buy and Hold Investing Blogs and mine has been ranked at NO.3.
This is what the email said :

“From: Jimmy Atkinson
To: sharesher@indiatimes.com
Sent: Thu, 14 May 2009 21:59:42 +0530 (IST)
Subject: Good Funds Advisor Named a Top 50 Buy and Hold Investing Blog





Hi



Just in case you
have not yet noticed, Good Funds Advisor was named a top 50 buy and hold investing
blog at ETF Database earlier this week. I thought you and your readers might
want to check out the rest of the list. Let me know if you have any feedback, or
feel free to leave a comment directly on the blog post. http://etfdb.com/2009/top-50-buy-and-hold-investing-blogs/




Thanks!
Jimmy
Atkinson

ETF
Database

http://http://etfdb.com
I dedicate this success to YOU. Yes, you dear readers, who keep visiting my blog and come up with interesting suggestion.
So, guys check out my blog http://http://goodfundsadvisor.blogspot.com and tell me how can I further improve my blog and make it No.1.
Thanks to you all
Srikanth Shankar Matrubai



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

Sunday, May 10, 2009

ICICI TARGET RETURN FUND - INVEST

A Rare NFO which is Good

ICICI has come with a New Fund Offer named ICICI Prudential Target Returns Fund, a Open Ended Diversified Fund. The objective of the Fund is to Generate Capital Appreciation by investing in Equity/Equity Related instruments of BSE100 and, Providing investors with options to withdraw their investment automatically based On Triggers as when and when achieved.

The Fund offers Investors a Option to Switch out their Capital Appreciation or Entire Investment when the Fund reaches a Particular Target, preset at either at 12%, 20%, 50% or 100%. This will help the Investor to Book his profit and protect any Downward Fall.
A Back Testing carried by the AMC shows that a Trigger @ 20% moved into even a Normal Savings Account would have given a Return of 14.92 on a Rs.10Nav., whereas Not using the Trigger would have left your NAV at 10.04 inspite of the NAV having Touched a High of 21.
(This Simulation is based on a Value of Rs.10 invested on 01 Jan 2006 till March 2009).


COMMENTS:
These scheme will give comfort to first-time investors, who usually come when markets are at peak and then lose out money when they fall. These scheme will book profits regularly in a discipline manner. Profit booking in a disciplined manner is essential. Investors tend to become greedy when they see appreciation and become fearful during correction and this Fund will elimate such Greed. The Trend seen in the last two years clearly shows that a bit of Active approach is essential even in Mutual Fund investments and this Fund addresses this need.

POSITIVES :
1)The Trigger Mechanism will automatically ensure Rebalancing.
2)With Triggers, Returns are locked at regular returns and Value is preserved in the event of a Subsequent fall.
3)The fund intends to invest in Large Caps which is a comforting factor.
4)The Fund is being launched after the Stock Market have seen a Big Correction and is Attractively Valued, thus the probability of the Fund achieving its 'Targets' is rather high.


NEGATIVE :
1) The biggest negative of the Fund is that due the Mandate, the Fund Manager is forced to Sell out Stocks as soon the the Stated Target is achieved and may well miss Higher Returns if held.
2) There is no Guarantee that the Fund will meet its 'Trigger Target' if the Markets were to stay Range Bound to Negative.
3) In the Event of a Bull Run similar to 2 years back, than there is a risk of losing the Benefits of compounding Returns.


RECOMMENDATION :
The Fund should do well and one can invest going by the Fact that the Fund will be investing in Large Caps and the Markets too look attractive over the Next two years at least. The Fund may not give Huge Gains but does promise to protect your gains in the event of a market crash.
Invest with the Option of 20% Trigger Target and Switch to ICICI Liquid Plan - dividend Reinvestment Option.

One can consider investing in this Fund


Best of luck,

Srikanth Shankar Matrubai

http://www.credit-land.com

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

Shall I switch from Equity to Debt??

Equity or Debt????

Mr.NB asked : "I have around 20 lacs (original cost Rs. 34 lacs) in various equity mutual funds. Around 20 different funds. Given the current market conditions where equity funds are not doing well, would it make sense to cut losses and move the portfolio to bond or gilt funds?
This will be with an objective to at least grow the portfolio rather than leave it in equity funds and see further losses in future, as month over month we are seeing lower NAVs.
What is the community`s opinion on the same, even after considering that the switch will cost around 2.5% entry load.

My Holdings are in the following

Birla SL Frontline Equity
DSP ML Technology dot com
Franklin India Blue Chip
Franklin India Flexi Cap
Franklin India High Growth Cos
Franklin India Prima
HDFC Long Term Advantage
HSBC Dynamic
ICICI Pru Indo Asia Equity
ICICI Pru Infrastructure
ICICI Pru Services Ind
Reliance Equity Advantage
Reliance Banking
Reliance Growth
Reliance Natural Resource
Reliance Vision
SBI Magnum Tax Gain
Sundaram BNP Paribas Select Focus
Templeton India Growth

What do you suggest?

Regards

NB


SRIKANTH SHANKAR MATRUBAI replied :
Dear NB,

By transferring all ur portfolio from Eq. to Debt or Gilt funds, u r making a costly mistake. Already ur portfolio is down by almost 40% & by transferring ur entire portfolio to debt & gilt funds, it `ll take several years to just return back to ur original portfolio size. Forget about making positive value.

So it`s advisable to prune down ur MF holdings from 20 to to a more respectable & manageable level of 10-12 funds.
You have lost Approx.12 Lacs by Investing in EQUITY Mutual Funds.

The BEST way to Recover the losses is to REMAIN Invested in Equity Mutual Funds.

However if you are Interested to Recover the LOSSES early & want to try to recover the LOSSES by Asset Allocation or TIMING the Market, you may go ahead with your PLAN VERY CAREFULLY & slowly.

It is Expected that Efficiently Managed Income/Bond Funds will give 15-20% Returns
in 2009.HOWEVER one should SWITCH OUT from
INCOME BOND FUNDS after or even before 1 year. BOND Funds can also INCURR LOSSES & are Dependent on Interest Rates.

Please study carefully all your EXISTING Investments in Equity Funds & also
proposed BOND / Income Funds.

SWITCH POOR PERFORMING EQUITY FUNDS to Better Performing Income Fnds one by one.

If Equity Markets go down substantially, again Switch back to Better Performing Equity Funds.

You need not give much Importance to ENTRY / EXIT Load.
Please Switch Following Funds to BOND Funds / Income Funds one by one & Start Monthly STP in Same Fund House Spread across 1 year.

Switch DSPML Technology dot com to DSPBR GSF Longer Duration & STP to DSPBR Top 100 Equity fund.

Switch Franklin India Flexicap & Franklin India PRIMA to Templeton IGSF Long Term & STP to Franklin PRIMA PLUS Equity fund.

Switch ICICI PRU Service Industries to ICICI PRU Income Fund & STP to ICICI PRU Focussed Equity Fund.

Switch Reliance VISION to Reliance INCOME Fund & STP to Reliance Regular Savings Fund - equity.

You may Retain other Funds & monitor the Performance Regularly.

In second Phase you may Switch Following Funds if Necessary

Franklin India High Growth Cos
HSBC Dynamic
ICICI Pru Indo Asia Equity
Reliance Banking
Reliance Growth
Reliance Natural Resource
Templeton India Growth

Best of luck,
Srikanth Shankar Matrubai



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

Friday, May 8, 2009

NEW PENSION SCHEME - AN ANALYSIS

WHO CAN INVEST?
Scheme is open to all Indian citizens aged between 18 years and 55 years.

WHERE TO INVEST??
You can invest from any of the 285 Point of Service across India, run by 22 Point of Presence Providers(POP) including SBI, its 7 Associate Banks, ICICI Bank, LIC, Reliance Capital, etc. Once registered, the Central Regulatory Authority(CRA) will give you a Permanent Retirement Account Number (PRAN) along with Telephone and Internet Passwords.

HOW DOES THE NPS WORK??
Just like a Depository maintains Demat Accounts, likewise your Records are maintained by the Depositories.
Six Different Pension Fund Managers would invest the Amount Invested by the Commonn People into Different Asset Classes classifed as
Equity (E)
Government Securities (G)
Debt Instruments (C)


The Six Fund Managers are
ICICI Prudential pension Management\
IDFC Pension Fund Management
Kotak Mahindra Pension Fund
Reliance Capital Pension Fund,
SBI Pension Fund
UTI Retirement solutions
Depending on the efficiency of the Fund Manager, these Contributions would Grow and accumulate over the years.
You do need to mention the Fund Manager of your Choice, without this, your Application is liable to be rejected.
The Default Investment is called the Auto Choice Lifestyle Fund.
For a investor below 35 years of age, 50% of investment amount will go into E(Equity), one-fifth into asset class G(Govt Securities), and the rest into asset class C(Debt Instruments). From the age of 36, the default proportion going to equities decrease annually and investment percentage in government securities will increase such that by the age of 60, these investments will gradually be adjusted so that only 10% remains in equities, another 10% in corporate bonds and 80% in government bonds.

MINIMUM CONTRIBUTION :
Minimum Contribution per annum is 6000 and you can contribute even as low as 500, at least 4 times a year. You can invest through Cash, Cheque or DD at the POP.
There is no upper ceiling for your annual contribution but Tax Benefits is capped at 1 lakh under Sec80C. The Investor HAS to invest at least once every quarter. In case of default, you will have to pay Rs.100per annum and also need to pay the required minimum amount to reactivate your Account.
Also during this period of your non-payment, your Corpus will keep getting reduced because the NPS will keep charging its Expenses against your Units. The Account will be closed as and when the Value of your Account falls to Zero.


WHERE IS MY MONEY INVESTED???
You have got the Right to decide where your money is invested. Please note, that you cannot invest more than 50% in Equity and Fund Managers cannot in invidual stocks but only in Index Funds.



RETURNS :
On Completion of 60 years, the investor's accumulated amount gets transformed into a lumpsum towards buying Annuity for a steady stream of payments for the rest of the Investor's life. The Insurance Companies, who come into the picture now, with their expertise will compute as to how long the investor could survive and offer flexible investment and payment options on annuities.
If the subscriber exits the scheme before the age of 60, s/he may keep one fifth of the accumulated saving and invest the rest in annuities offered by insurance companies.
A person who exits NPS when his age is between 60 and 70 has to use 40% of the corpus to buy an annuity and can take the rest of the money out in one go or in instalments. If a subscriber dies, the nominee has the option to receive the entire pension wealth as a lump sum.

LAST YEAR THE NPS GAVE A RETURN OF 14.82% WHILE HANDLING THE CORPUS OF CIVIL SERVICE PENSIONS.


TAX ANGLE :
At present, the NPS is to be Taxed at the time of Withdrawal. The Pension Fund Regulator has taken up the issue with the Finance Ministry to address the anamoly and the decision is expected when the New Govt is formed.


NEGATIVES :
1) Though the Fund Management is ridiculously low at a miniscule 0.0009% per annum, the Cost of Opening an Account(Rs.50), Annual Maintenance Charge(Rs.350) and a Per Transaction Charge of Rs.10 actually makes the NPS COSTLIER than a Regular Mutual Fund with a 500 monthly sip. The cost works out to around Rs.350 as fixed cost on every Rs.2000 he contributes. Unless the Govt steps in to correct this, NPS would be a failure with the small savers.
2) No Tax Concession on Withdrawals.
3) No premature Withdrawals allowed expect for Critical Illness, building/buying a house; Even at sixty, you can only withdraw as cash 60 per cent of the corpus, the rest must be used to buy an annuity.
4) You need to compulsorily buy Immediate Annuity with 80% of the Money accumulated, if you want to Withdraw before you are 60.

POSITIVES :
1) The Investor has the option of shifting from One fund Manager to another by instructing his POP to do so. This facility is available between May 1 and May 15 every year.
2) Even relocating to another city will not affect your investment as the PRAN remains the same.
3) The Monthly/Quarterly Contribution towards the NPS will be partly routed towards Equity which will automatically ensure Rupee cost Averaging and ensure High Returns and thus ensure "higher than inflation" returns.
4) Investment upto Rs.1 lakh is Tax Deductible under Sec80c.
5) For Investors with slightly larger amounts and investing 4 times a year, the charges are attractively low. The NPS wins hands down on this matter.

CONCLUSION :
This is the Best thing to have happened to the Indian Investors who have not had much of a choice regarding Pension earlier. The benefits of Compounded Returns that the NPS offers will be immense. If the NPS is promoted in the right way, it will be no less than a Revolution.
The Tax on Withdrawal, for me, is a blunder and will be rectified by the Govt sooner rather than later.
The Interim Withdrawal too may be allowed in future, which will make this product that much more attractive.
The best option would be to go for the LifeCycle Fund.
The Low Charges and Automatic Rupee Cost Averaging makes NPS a Better Option than the Pension Plans offered by Insurance Companies.

Go for it.


Best of luck,
Srikanth shankar Matrubai




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

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