Saturday, June 27, 2009

SHALL I CONTINUE MY FIXED DEPOSIT INVESTMENT????

Continuation of FD / investing in MF

Anusridi wrote : "Dear Matrubhai,

One of my Bank FD which was giving 8.75% of interest has matured recently and if I continue for another one year I will get now 8.25% . I request your kind advise in this regard whether continue as Bank FD or put in LICMF floating rate fund (G)/Can Rebecco Gilt PGS(G)/Can Rebecco Income (G) LICMF liquid fund (G). Earlier I have given you u my portfolio that I am having MFS about 4L which are now about 2L due recession.
Please advise (within 2-3 days if possible).

With best wishes,
anusridi "

SRIKANTH SHANKAR MATRUBAI replied :


Dear Anusridi,


Bank FDs are safe, but in terms of returns, they are always low on my ranking.

The Debt Market is expected to see sharp volatility in the coming days. With the Inflation going into negative terrority, the yield curve would see a steep fall due to abundant liquidity in the system and the demand for short maturity assets. Rate cuts in the Credit policy should help improve the market sentiments, a sharp rally in the bonds is ruled out due to the bulging Fiscal Deficit.
For Short Term Investment, Liquid Funds is the way to go, for a slightly longer term investors, say upto 12 months, Gilt Funds and Active Income Funds should be advisable.

If you have decided to stay invested for 1 year, you can go for Income Funds like HDFC Income Fund or better still, invest in Corporate FDs like CNBC TV18, which offer 11% return for a 1 year FD.
Corporate FDs too are a good tool of investment and give better returns than traditional Bank FDs. And yes, they are quite secure too.

As for advice on your portfolio, You better send me your holdings for me to guide you. But, still, it should be noted, you are better off staying invested right now rather than selling at a loss.
Best of luck,
Srikanth Shankar Matrubai


Also visit

http://equityadvise.blogspot.com

Friday, June 26, 2009

RELIANCE INFRA NFO - TAKE A SMALL SIP


Reliance Infrastructure NFO - A Small Exposure is recommended

Srikanth Shankar Matrubai

Reliance Mutual Fund, India's Biggest AMC in terms of Assets Under Management, has launched its 18th Equity Fund, Reliance Infrastructure Fund.
Investment Objective
The Fund seeks to generate Long Term Capital Appreciation by investing predominantly in Infrastructure and its related Sectors. The Fund has the option of investing upto 35% of its Corpus in Debt and Money Market Securities.
Fund Manager :
The Fund will be managed by Sunil singhania, who has been with Reliance Mutual Fund for more than 5 years now. He has sucessfully managed funds like Reliance Growth, Reliance Equity, Reliance Diversified Power Sector, Reliance Banking Fund among others.
Benchmark : BSE100
Minimum Application Amount : 5000 and in multiples of Rs.1
Minimum Application Amount : Rs.100 and in multiples of Rs.1


Infrastructure Sector looks Attractive :
With the Second Highest GDP Growth rate in the World and a consistent growth rate of 8%, India Infrastructure is poised for a Gaint Leap.
Rising Disposable Income leads to demand for closing the Infrastructure Gap.
The New UPA Government has made all the right noises and moves to kickstart Infrastructure projects. A Dramatic increase in Public Private Participation (PPP) is expected due to favourable policies by the New Govt. All this, along with easy liquidity is sure to result in significant Inflows into the Infrastructue Sector.


Recommendation :
INVEST.
I am never in favour of any Sector specific fund. But with its excellent performance in related Sector Fund, Reliance Diversified Power Sector Fund,( where the Fund Manager, Mr.Sunil Singhania has shown his nimble-footedness by responding quickly to near term events even while holding to Blue Chips with Long Term Outperformance Promise, ) inspires confidence in the Fund.
The Primary point in FAVOUR of the Fund is that the Fund has the mandate to invest not just in Infrastructure Sector but also in Sub Sectors related to Infrastructure like Power, Telecom, Roads, Railways, Ports, etc. This covers more than 50% of its Benchmark, BSE 100. Reliance Infrastructure Fund is not a Hard-Core Infrastructure Fund.
Also the fact that valuations are attractive in the Infrastructure sector, inspite of recent spurt and investing in a phased manner during the construction period of the portfolio would be beneficial.
Do invest moderately and through sips.
Most importantly, do not forget to regularly track the fund and make appropriate changes, if required.

Caveat :
Sector Funds tend to be very volatile. In case of a Downturn in Infrastructure Sector, the risk of holding onto this Fund is higher than holding on to a Equity Diversified Fund. This Fund, thus, is recommended for those who can understand the Infrasturcture Sector very well and have a appetite for volatility. For those who can't, there are plenty of other investment opportunities.
Remember, Infrastructure Sector looks highly attractive and you need to have at least 1 Infrastructure fund in your portfolio to add that extra spice to your portfolio. Maybe not Reliance Infra, but One Infrastructure Fund is recommended especially for those with a good risk appepite.

Best of luck,
srikanth shankar Matrubai


Also visit

http://equityadvise.blogspot.com

Monday, June 22, 2009

MY CONSULTATION CHARGES

Dear all,

Patients pay their doctors for advice and then buy the medicines from the chemist. ARN holders(also called as Independent Financial Advisors, IFAs) are viewed as doctors and therefore being asked to seek a fee from their clients for advice rendered.

I am now charging FEES both for Online and Offline Advice.
My Charge is right now a reasonable Rs.1000.

By the way, it is good for you too.
When a person pays for advice, he is serious about it and will demand good service which will keep you on your toes. I have more responsibility when I am charging a client for advice and service. I have to excel in both.

Charging a fee also enables me to approach my relatives and friends without the worry that personal relationship would be strained.

Do also remember, that IFAs also do a lot of services like redenring Account Statements, follow up services, apart from, Of course, giving Quality Investment Advice.
Clients need to understand that paying a fee puts greater onus on the advisor, as there will be consistency as well as the development of a relationship. Surely in bear markets, it is easier for them to recognise this, as they have been badly hurt, made emotional decisions about investing, and now feel the need for unbiased advice even more.

Remember, that there are too many schemes with mirror portfolios and identical investment objectives. The choice is difficult. Figuring out which is the right one for you is a herculean task.
Trying to save a paltry consultation charges and Compromising on a "Good" Scheme will only make you look like a fool, a few years down the line.
Or instead, relying on MY Proven Research, where even the US based etfdb has acknowledged as my blog being in the Top 50 Investment Blog in the World, is the first Wise thing to do.

Here is the link http://http://goodfundsadvisor.blogspot.com2009/05/my-blog-ranked-as-worlds-no3.html


The Choice is yours.

As the World's Greatest invest Warren Buffet has said : "Price is what you pay. Value is what you Get".


HOW TO PAY :
Pay through Demand Draft or Cheque For Rs.1000/ payable to "SRIKANTH SHANKAR MATRUBAI" payable at Bangalore.
You can remit to my SB Account at ICICI Bank 029701527711 also.

Regards,
Srikanth
9972520155

Also visit

http://equityadvise.blogspot.com

Monday, June 15, 2009

Insurance for my 6 month old baby

Never mix investment with insurance

Mr.Sanjay Lala wrote :

my son is of 6 months and i need such a insurance plan so that after 15 & 20 years i could get good amount for his future career. Please suggest me some good plans.
Sanjay..

SRIKANTH SHANKAR MATRUBAI wrote :

Dear Sanjaylala,
I have always advised against mixing Investments with Insurance. Insurance is not Investment.
Insurance have high costs associated with their products and they bleed you dry immediately after you pay the first premium. And the worst part is, that since you have already incurred the maximum loss by the payment of your first premium, they do not care if you chose to discontinue, they have already squeezed you dry.
A Diversified Mutual Fund is not only costs cheap but also very transperant, easy to understand but also give you more or less the same returns than the Insurance, in fact, more often than not ,they give you MORE returns than Insurance.
First cover your Life with Adequate Term Insurance. Then invest in Good Diversified Mutual funds. About 2-3 years before you require the amount, slowly start switching from Equity Funds to Debt Funds and Arbitrage Funds to protect volatility.
I suggest the following funds for Long Term Investment. These funds should give Good Returns.
1. Birla Sunlife Frontline Equity Fund
2. DSPBR Top 100 Fund
3. Fidelity Equity Fund
4. HDFC Top 200 fund
5. Sundaram Select Focus Fund


Do invest in them regularly through sips and you can be sure to get Returns better than any Insurance Plan can give you.

You can also look at Mutual funds which offer Free Life Insurance Cover

1. DWS Tax Saving Fund offer 5 times your investment as Life Insurance Cover and can be considered for investments.

2. Birla Mutual Fund also offers Life Insurnace cover through its Birla Century Sip and among the Birla Funds you can consider Birla Sunlife Frontline Equity Fund, Birla sunlife Freedom Fund and Birla Sunlife Equity Fund

3. Kotak Mutual Fund also offers Life Insurance Cover wherein in case of death of Parent, the fund will invest the Balance Sips in the name of the Child. Among Kotak Funds you can consider KOTAK K30 FUND.

4. Reliance Mutual Funds is also offering Free Life Insurance Cover through SIP Insure. Among Reliance Funds, you can consider RELIANCE GROWTH FUND AND RELIANCE REGULAR SAVINGS FUND - EQUITY.

Best of luck,
Srikanth Shankar Matrubai




http://www.credit-land.com

Also visit

http://equityadvise.blogspot.com

Thursday, June 11, 2009

SBI Magnum Comma Fund - Not for the Light Hearted

High Risk-High Reward



Sushant asked :
Is it proper to average out or sell a non performing MF?
I have Magnum Comma fund which is underperformer. Is it advisable to sell it or average out by pumpimg some more money?




SRIKANTH SHANKAR MATRUBAI replied :

Dear sushant

You should avoid Averaging Underperforming Fund. There is no point in averaging a underperformer. SBI Magnum Comma Fund has been a underperformer for quite some time now and the future does not look very rosy.
SBI Magnam Comma fund is a Sector Fund which invests in the stocks of Companies engaged in Commodity Business. COMMA is an acronym for Commodities in Oil, Metals, Materials and Agriculture.
SBI Magnum Comma Fund's 1 year returns has been -6.5%, compared with the Nifty return of a Positive 4.62%.
Never fall in love with any fund. Keep searching for Funds which show promise and have been performing consistently. You should consider switch this underperfoming Fund to Better Performing Fund( say SBI CONTRA Fund). Then you can Continue Adding in this Fund by SIP or on Declines.

Sector Funds tend to be very cyclical. Commodities are expected to do well in any Economic upturn and SBI Magnum Comma fund should be able to take advantage of this uptick, if any. But volatility is expected and this Fund is for a High Risk taker. This Fund is thus for those who are willing to take on higher risk for higher rewards.
I feel you are better off investing in Good Diversified Funds like
Birla Sunlife Frontline Equity Fund
DSPBR Top 100 Fund
Fidelity Equity fund
HDFC Top 200 Fund
Sundaram Select Focus Fund

Preferably invest through SIPS.

Best of luck,
Srikanth Shankar Matrubai
Also visit http://equityadvise.blogspot.com for an indepth Equity Analysis

Wednesday, June 3, 2009

RELIANCE DIVERSIFIED POWER SECTOR FUND - HOLD

04 June 2009
Srikanth Shankar Matrubai

With the Indian nuclear story emerging and the current Peak Power deficiet of India still in double digits, Power Sector is bound to show Impressive growth in the coming years.
The Fund's performance compared to its Benchmark has been nothing short of spectacular.
But the biggest strong point AGAINST the Power Stocks is, the Tariff is regulated by the Govt of India and also there is a limit on how much you can earn. So, while the potential is huge, the profit margin is limited thus limiting your profit too.

Sector Funds tend to be very volatile and this Fund, though recommended, should not form a part of your Core Portfolio. Your Core Portfolio's focus should be Diversified Equity Funds. Every Fund Manager will invest part of corpus in Good Performing Sectors. And if he sees Power Sector as promising, he will invest in them too. And your exposure to Power Sector is there through that fund, so why invest separately in a Sector Specific fund.
Being Highly Volatile, This Fund needs to constantly monitored and nimble investors who can enter and exit at right time. Surely, a Fund manager is at a much better position to do this tedious job of entering and exiting Sectors constantly.


RECOMMENDATION :
The Power Sector is definitely attractive and Reliance Diversified Power Sector Fund should be obvious choice among the Sector Funds. Its performance too has been quite good for a Sector Fund, obviously because of its slightly diversified holdings.
Sector Funds should form only a small minuscule percentage of your overall holding. You are always better off investing in a Diversified Equity Fund which will definitely have stocks from power Sector, if they are attractive and hold promise. The Fund's Huge Corpus too is a turn off.
Aggressive investors and those who can judge the Sector can continue to hold their investments in the fund, add further through sips and on dips though in moderate quantity.

Best of luck,

Srikanth Shankar Matrubai

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

Monday, June 1, 2009

BIRLA FREEDOM FUND - Go for it

Equity returns minus the volatility

BIRLA SUNLIFE FREEDOM FUND
Focus is on Delivering Low Volatility Equity Returns


BACKGROUND :
Equity Market Linked Returns tend to be very volatile and bumpy, yet its Long Term Returns are too attractive to ignore it. For investors, Greed and Fear play a huge role in determing their returns. Fear prevents from Buying at lower levels and Greed prevents from Booking Profit at High/Unreasonable levels.

This dilemma is what Birla sunlife Freedom Fund tries to solve.


FEATURES :
Birla Sunlife Freedom Fund aims to
1) Buy, Hold and Sell Equity from time to time.
2) Follow a Rule Based Investment Process and thus increase/decrease equity exposure according to Market behaviour.
3) Will focus on investing in Sectors based on Lead Economic Indicators.
4) The fund will invest in Equity upto maximum limit of 75% and the balance in Actively managed Debt.


Birla Sunlife Freedom Fund will take a call on its Net Equity Exposure based on Value, Momentum and Volatility.
Value : Is the markets priced correctly ; is the PE cheap or attractive??
Momentum : Sentiment and Direction of the Market
Volatility : Level of the Uncertainty in the Market
Stock Selection will be based on identification of Sectors set for Take off and expected to do well.
Back Testing Results of the Fund compared with Nifty has shown the Fund giving a return of 17.85% CAGR compared with the Nifty CAGR return of 14.17%. The Testing is for the Period from Jan 01, 1999 to April 15, 2009.

POSITIVES :
1) Emotional Decisions are replaced by Systematic Strategy
2) Flexibility to Reduce Equity Exposure through Index Shorts would protect downside and thus give potentially higher returns though with Higher volatility.
3) Treated as an Equity Fund for Tax Purposes.
4) Fund's focus to invest in Companies with Low PEs will trim negative returns in a Falling Market.

NEGATIVES :
1) Over Long Term, due to its Balanced Nature and flexible nature of reducing equity exposure to zero, this Fund WILL give lesser returns than Conventional Equity Funds.


FUND DETAILS :
Minimum Investment : Rs.5000
Benchmark : Crisil Balanced Fund Index
SIP/STP available


RECOMMENDATION :
The Fund has the capability to Generate Equity Returns minus the accompanying Volatility. Back Testing of the Model too gives sufficient comfort. 25% investment in Debt too gives cushion and the provision to short the Index Futures should take out the 'Risk' out of the Fund.
In the recent Downturn, the Fund had a fall of just 12% compared to its peer of 26.7%.
Over a Five Year Period too, the Company's return of 17.68% does provide comfort.

INVEST.
But do keep an eye and review the performance of the fund after 1 year or so.
Also visit http://equityadvise.blogspot.com for an indepth Equity Analysis

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