Friday, October 30, 2009


Tata Indo-Global Infrastructure Fund has had a disastarous start and has ince inception given a Negative Return of Minus 13%. It has trailed its Benchmark both over a 1year Period and since its launch.
The Tata Indo Global Infrastructure Fund is a three year close ended equity scheme which will be automatically converted to an open ended scheme upon maturity.
The Fund invests between 65%-85% in Domestic Companies and between 15%-35% in Foreign Securities.

To reassure investors of this Fund, The Tata Mutual Fund recently sent this Letter to all its investors : -

Dear Investor,

At the outset, we wish to thank you for investing in the Tata Indo Global infrastructure Fund. As you are aware, the investment objective of Tata Indo Global Infrastructure Fund is to generate long term capital appreciation by investing predominantly in equity and equity related instruments of companies engaged in infrastructure and infrastructure related sectors globally.

Stocks of infrastructure companies have underperformed significantly over the past few months due to a changing macroeconomic environment as well as the freeze on decisions on new projects due to the election code of conduct prior to the general elections. This led to some underperformance of the entire infrastructure sector. In the initial phase, Tata Indo Global Infrastructure Fund invested gradually in a rising market as it reached the peak. Hence the performance of the fund looks moderate.

One needs to judge the performance of this fund in light of one of the worst global economic meltdowns in recent history. India has been among the fortunate few countries which did not have to bear the full brunt of the meltdown. While leading economies of the world saw their economies shrink, the Indian economy merely witnessed a slow down.

Again in the economic recovery, the Indian economy would be among the first off the blocks. We have already started to see some of this play out. In this context if one were to study the performance of the Tata Indo Global Infrastructure Fund, it would get evident that the Indian portion of the scheme has outperformed the international portion.

It is getting evident from all the talks on �green shoots� that we are on the cusp of a global economic recovery as well. Therefore it is important for investors to wait as other global economies recover. As such the infrastructure sector holds tremendous potential not only in India but globally as well. Once global economies stabilize you would experience the benefits of diversification as well.

Thus the infrastructure story, and especially that of the Tata Indo-Global Infrastructure Fund (TIGIF), continues to look optimistic and one is advised to ride over the turbulent period by displaying patience and staying power.

Tata Mutual Fund.

While Infrastructure story still continues to remain attractive., the timing of the Fund was what made the Fund such a disaster.
Being a Close Ended Fund, it is better to stay invested. Moreover, the Infra story looks to see 'greener' day ahead.
Stay invested for now and take a call when the Fund becomes Open-ended.

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Tuesday, October 27, 2009



One can consider investing in the Religare PSU Equity Fund.

Religare Mutual Fund has come out with a New Fund Offer named Religare PSU Equity fund.
Religare AMC post its acquisition of Lotus AMC in Dec 2009, has seen its AUM grow 4 fold to Rs. 14,700 crores, over a 10 month period.

Fund Facts :
The fund seeks to invest in Companies where the Central / State Government(s) has majority shareholding or management control or has powers to appoint majority of directors.
Fund Manager Mr. Pradeep Kumar
Benchmark BSE PSU Index
The fund will invest 65 per cent of its assets in companies in the BSE PSU index and the remaining 35 per cent in other PSU companies. The fund will also participate in forthcoming IPOs of Government companies. In addition, the Fund mandate has been carefully thought through and provides the flexibility to hold up to 20% of the companies even after the Government exits or becomes a minority shareholder, past examples being Hindustan Zinc and Maruti.
The fund will adopt a bottom up & top down approach to create a diversified portfolio of stocks. The fund will have no capitalization bias and will be style neutral.
Religare PSU Equity New Fund Offer opened on Tuesday September 29th 2009 and will close on October 28 2009.

Valuation wise PSU Companies are available at a discount of approx 25% to Sensex, giving adequate comfort in terms of safety.
Govt's disinvestment programme will be a good booster for PSU companies. The disinvestment will also improve the free float which will in turn improve their weightage in Nifty, forcing Funds across the World with India exposure to increase exposure to PSUs and giving their Stocks a boost.
Lesser Govt intervention is helping manage the PSUs more professionally thus attacting more FII interest.
All these measure are expected to re-rate PSUs on par with Private Companies in terms of PE, if not more thus giving Above Average Gains.

As you would have already guessed, my recommendation is INVEST. Most PSUs are BIG companies and are Leaders in their industries, in fact, many are virtual Monopolies. Thus this Fund will be like a Large Cap Fund. This Fund will is recommended for Long Term Investors.
In the Last Year's Big Bear Crash, PSUs were the Least Affected thus giving a sort of comfort to investors. This Fund being a Proxy to PSUs and a proxy to the India Growth Story and thus, should make it to every Investor's Portfolio.

BSE PSU Index has delivered 20% CAGR in the last 10 years and has outperformed the Sensex by 8%.

Invest in small lump-sums instead of SIPs if you can track the sector and are prepared to book profits occasionally.

Best of luck,

Srikanth Matrubai

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Monday, October 19, 2009



S Chatterjee asking for MF Help wrote :
Hello Sir,

I need some suggestion and advice regarding MF'S. Before I
introduce myself, just a note of thanks for you!!

I have been reading your blogs on mutual funds and other personal finance related queries off late. Let me tell you, you are doing a
very good job and there are hundreds of people who are benefitted.
Keep it up!!

I am 24 years old and I have joined my first job in Dec, 08 in an IT major. My annual Package is 2, 90,000/-. In this financial year I would
be taxable and hence want to invest in ELSS.

My previous investment details are as follows-

Sundaram BNP Paribas Tax Saver (Mar,09)-10000/-

SBI Magnum Tax Gain (Mar,09)-10000/-

Fidelity Tax Advantage (Mar,09)-5000/-

N.S.C (Mar,09)-25000/-

I had made all these investments (lump sum) for my mother's
Tax Savings purposes for 2008-2009 and have chosen the Dividend Payout option
for the 3 MF’s.

We also have a LIC money back (20 years) policy called Jeevan Surabhi done in Mar, 08 (which I
think was a bad investment but we were at a loss at that point of time after my
father’s demise in Feb, 08) in which we have to pay an annual premium of
6,350/- and we had invested 60,000/- in Principal
Personal Tax Saver Fund in Mar, 08 but as the stock markets have crashed,
its down. But I am not too bothered about it as it is locked for 3 years and I am
optimistic of the markets reviving.

I would also like to add that we have nearly 15, 00,000/- in
Bank FD's at 11.5% p.a and my mother draws a pension of 7000/- p.m.

My plan of investments is as follows-

I plan to invest via the SIP route (I read about
it everywhere and I think it’s a good way of making small investments every
month for tax saving purposes).

I want to invest for more than 3-5 years and in
any case ELSS has a lock-in of 3 years.

I am not
interested in LIC schemes at this point to time. I plan to have a pure term
insurance started after I get married (3 years later) for a period of
25 years or more (if possible).

I also plan to have a PPF.

I plan to have a 65:35 ratio towards Market Linked
Schemes and Fixed Returns Schemes.. And hence plan to invest 5500/- every month
via SIP.

Actually,my job is good,but i am also thinking of higher studies,MBA if i can get into some top grade B-schools.

This is also one reason why I wasn't too keen on Insurance right now.
Can u through some light on Ulips(I have no idea). I guess a Term insurance would be the right way forward.
What should ideally be my S.A ?

Regarding ELSS now,isnt HDFC Tax Saver inclined towards Mid-Cap Market?? Will it be a good idea to invest there considering elections and current volatility?
Tell me one thing,since i have already invested some money in most of those,should a good investor look at investing is BIRLA or DWS or HDFC (as i have no investments there) ? Or should he look at the performance and where the fund manager is investing the money.The second option seems correct to me.
Can you just give me a little
idea of the break-up i should have of the amount of SIP investment,if i were to invest 8000/- p.m.

After so many Questions that you would probably love to answer,one question that you would hate. Here it goes-
Can i expect 15-20% returns over 3-5 years Period from now on ?? (I know MF's are market dependent,i know there can be another Satyam,i know the recession can continue,but since you are an Expert and have a vast experience since 1991,i just need your views.)
Kindly suggest me some good Tax Saving Mutual Funds and also
let me know what you think of my plan and please give any suggestions/advice without hesitation. Please feel free to ask me any further questions which would be helpful in providing guidance and advice.

Looking forward for your opinion and help from which i can learn a lot !!

Thanks and Regards,
S. Chatterjee


Dear Suman,
First of all, thank you very much for your kind words on my blog.
It is always a pleasure to advise such interested and intelligent investors like you who have done their homework. I commend on your Previous Investments and your future plan of investments.
Yes, you are right, SIP is the best way of investing in the market as it automatically 'times' the Market.
I do not find any logic in not going for Insurance just because you want to do Higher Studies. Insurance does not stop you for studying!!! It is always better to have oneself adequately Insured and I am not so sure of you waiting to get married and then getting insured. The earlier you insure yourself the Cheaper it works out for you.
ULIPs are not a good avenue for investment, especially for educated investors like you. ULIPs are very costly as the Premium Allocation is high and there are lot of Hidden Charges. ULIPs work best only if your Investment Horizon is above 15 years. Mutual Funds are the best. Instead fo ULIPs go for a Pure Term Insurance and invest the Differencial Premium Saved in Mutual Funds, you will get MORE returns than what the ULIPs give you.
For your age and your family dependents, the Ideal Sum Assured should be between 15 - 20 Lakhs. A 30 Lakh SA should be More than Sufficient.

Yes, PPF is a good investment. It helps you build a Decent corpus while giving you Tax Benefits. And its Forced Lock-in will ensure that you will 'allow' the money to compound and give better returns.
However, your plan of having a 65:35 ratio towards Market Linked and Fixed Returns needs to reworked. Either way, you are having a Decent job and do not need any Monthly Income and moreover, your young age should allow the freedom to increase the ratio in favour of Equities to be in the region of at least 80%.
You can, however, consider including Balanced Funds in the 80% Equity Ratio.

Yes, HDFC Tax Saver is a Mid-Cap Oriented fund. but for your age, I am sure your Investment Horizon is more than 5 years at least, and with that in mind, I had recommended the HDFC Tax Saver Fund. And if you have noted the performance of this Fund, it has been a steady and consistent performer and should continue to remain so.

There is no need to invest in a Fund, just because you do not own them. Do not be a 'Collector' of Funds. Performance is what ultimately matters.
For your ELSS investments, you can consider investing in the following Funds, which should give you, good returns.
You can split your 8000pm investment into the following funds :
Birla Sunlife Tax Relief 96 fund - 1000pm(invest through Birla Century Sip)
DWS Tax Saving Fund - 1000pm (500*2sips)
Fidelity Tax Advantage Fund - 1000pm(500*2)
HDFC Tax Saver - 1000pm (500*2)
Prinicipal Personal Tax Saver - 1000(500*2)
Sundaram Tax Saver - 1000(500*2)

Non-ELSS :
HDFC Top 200 Fund - 1000pm
Mirae Asset India Opportunities Fund - 1000pm

Here I have given 6000pm into ELSS considering your Tax Outgo, though 8000pm would not be sufficient to cover the 1 lakh treshold under 80C. You can consider increasing the investment amount in any of the funds, or Better Still, invest the 24000p.a. into Term Insurance of say 8000per Annum and the balance 16000 or so into the PPF.

Note :
I have suggested DWS Tax Saving Fund not only because it offers Free Life Insurance Cover but because its Good Performance during the recent Market Meltdown and during the subsequent bounce.

Go for Dividend Payout or Growth option, but NEVER for Dividend Reinvestment option, as your Dividend Reinvestment will be further locked in for 3 more years.
Also consider investing in DWS Tax Saving Fund which offers Free Life Insurance cover of upto 5 times your investment. The Fund's performance has not been great but it has not been bad either. The Fund House has had a good Track Record which is a comforting factor.
After the Mandatory Lock in, review your investments and consider switching to a Balanced Fund for your "Conservative" Mind's Comfort.
Regarding the Return Expectation of 15-20%, it is entirely within possible limits and not unreasonable, especially after the Massive correction in the Markets by more than 50% in 2008.

The Indian Association of Investment Professionals (IAIP) recently conducted a survey of 530 financial professionals in India, majority of whom were employed in brokerages and mutual funds. They were asked their views on a number of diverse and interesting financial issues. What was interesting was that half of them (but certainly not all), felt that equities would be the best asset class to give the highest returns by 2010. And around 40 per cent felt that the Sensex would trade between 10,000 and 12,500 by the end of March 2010.(This survey was done when the Markets were trading at 8000 levels). What is believed to really give a boost to Indian equities was a mix of global (resolution of the financial crisis) and local (elections) triggers. And expecting 15% is not unreasonable.

Best of luck,
Srikanth Matrubai,

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Monday, October 12, 2009



Mirae Asset Global Investments has come out with a New Fund Offer, Mirae Asset China Advantage Fund. This is a Fund of Fund scheme which will invest 80% in Mirae Asset China Sector Leader Equity Fund through a Feeder Fund named Mirae Asset Global Discovery Fund (MAGDF) operating in Luxembourg and balance 20% in DIRECT CHINESE STOCKS.

The Feeder Fund MAGDF is incorporated in Luxembourg to avoid Double Taxation.

Many financial experts have expressed doubts on Chinese numbers authentiacity. The Fund Manager Gopal Agarwal admits, "yes, there are doubts raised, but you should note that Reputed International agencies like the UN, IMF have endorsed these figures and we have no doubt that China is on the way to become a Global Economic Gaint. Our Fund, Mirae Asset China Advantage Fund is poised to take advantage of this growth and reward our investors".

I asked him why the fund has underperformed its Benchmark in the last 1 year. Mr.Gopal Agarwal said : "Actually, in Dollar terms, our Funds has outperformed its Benchmark, but because of massive depreciation in Koreon Won, this underperformance is reflected. We do not expect a repeat of this".

1. China is on a High Growth trajectory and the macro risk associated with the Country is very low.
2. Provides Good Diversification and meet investor's asset allocation.
3. Mirae Asset Global Investments (HK), the investment manager to Mirae Asset China Sector Leader Fund, has a dedicated research team focusing on investing in the Chinese markets and currently manages over USD 8 billion** (approx Rs. 38400 crores) as on August’09 and has been in China since 2001.

1. Investors in this Fund will have to bear with Currency Risk.
2. Being a Fund of Funds, there is a possibility of more expenses compared with a regular Diversified Fund.
3. The Fund will be treated as a Debt Fund due to its investment in Foreign Stocks.

Chinese Markets are quoting below their average at a PE of 12, whereas the average PE for the last 6 years has been 18. Moreover, the Chinese Corporate Growth is expected between 18-24 and shows that Chinese stocks are quoting at less than Fair Value. The Fund is timed right to take advantage of this.
The Fund is a good diversification provider.
Mirae Asset India's Funds have given good returns, especially their flagship fund, Mirae Asset India Opportunities Fund.
Invest with a 2-3 year perspective.

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