Wednesday, December 30, 2009


Qatar's leading English Daily THE PENINSULA published my view on Debt Funds. The Newspaper carried a article on how the Indian Investors dumped most of their equity investments and how most investors were looking at the debt investments.
Further, the article wrote about which debt funds should be looked for investments and published my opinion on them.
This is what it had to say :
'Considering the falling interest rates, one would be better off investing in long term debt funds rather than short term as these would not yield much, says fund advisor Srikanth Shankar Matrubai. In his estimation, some good debt funds for an NRI to invest in would be ICICI Prudential Income Opportunities Fund, Birla Sunlife Income Plus, Canara Robecco Income(Growth) Fund and HDFC Income Plan. Then there is TATA Capital NCD which is giving attractive Rate of 12 per cent. "

One of my NRI client based in Qatar brought this to my notice.
Click on the link below to read the article.


Srikanth Matrubai

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Thursday, December 24, 2009



Mr. Brahmananda wrote :
Thank you for your informative blog. It has been very useful to small investors like me.
please evaluate and guide my portfolio.
At present I am investing in
bank R/Ds 15,000p/m,
Mutual Fund investments
Reliance Regularsavings Equity 1,500/m;
Sundaram Select focus 1,500/m;
Kotak Opprtunities 2,000/m;
Reliance Diversified Power Sector fund 5,000/m
BirlaMidcap Fund 5,000/m,

I have 3yrs old daughter and I like to invest 5,000/m into gold, should i go for Gold ETF or Postoffice gold purchase and my investment horizon is 10-15yrs and after that to consolidate all investments.
I have term insurance for 35L;
Critical Illness 10L;
Mediclaim 5L(Family floater);
my annual takehome salary is 8-9L and
I have a own house and no major liabilites as of now.
Please guide me.
Is my investments are suffice and whether I am in right track?

Dear Brahmananda,
Thankfully, you have got your own house and have no major liabilities. This is a major plus point in favour of your finances.
I wonder why you need to invest 15000 per month (nearly 50% of your investment amount) in Bank RD where the interest rate barely covers the Inflation and leaves you with very little actual gains. Since, you have no major liabilities, you can afford to be a bit balanced, if not aggressive. Your investment in Bank RD is too defensive. You can as well consider investing in Balanced Funds or even Diversified Equity Funds, especially since your investment horizon is 10-15 years.
I feel you need to add another Rs.10 Lakhs to your Insurance Cover and increase your overall Cover to about 45Lakhs. You can consider taking a Top-up to your existing Term Insurance.

You need to make only some minor adjustments in your portfolio for a better returns. Otherwise your Fund selection is quite good.
Reliance Regular Saving Equity - 1500pm - continue
sundaram Select Focus - 1500pm - Continue
Kotak Opportunities - 2000pm - Switch to Kotak K30 Fund
Reliance Diversified Power Sector Fund - 5000pm - Stop immediately and invest 2000pm in Reliance Growth Fund
and the balance 3000pm in HDFC Prudence Fund
Birla Midcap Fund - 5000pm - Stop immediately and split the 5000 and invest 2000pm in Birla sunlife Equtiy Fund and 3000pm in DSPBR Top 100 Equity Fund

so, your Mutual Fund Sip investment will be like this

Reliance Regular Saving Fund(Equity) - 1500pm
Sundaram Select Focus Fund - 1500pm
Kotak K30 Fund - 2000pm
Reliance Growth Fund - 2000pm
HDFC Prudence fund - 3000pm
Birla Sunlife Equity Fund - 2000pm
DSPBR Top 100 Equity Fund - 3000pm

This Portfolio has the right mix of Large Cap and Diversified Equity funds with a Balanced Fund to complete the picture.

Investing in Gold is never a good idea. Buy Gold only when you want to use and not for investment purposes. And with your investment horizon of 10-15years, Gold may not serve the purposes. You may as well consider investing in a Good Diversified Fund. Except for the last two years, most of the time Gold has managed to deliver returns on par with Inflation. However, you may take a small exposure to Gold through Gold ETFs or better still through UTI Wealth Builder Fund - series II. This Fund invests in a mix of asset of Equity and Gold in the ratio of 65:35 in favour of Equities. If your mindset is aggressive you can take a small exposure to Gold Mining Funds like the DSPBR World Gold and AIG World Gold Fund, which, beware, more volative than Gold ETFs.

Best of luck,
Srikanth Matrubai

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Tuesday, December 22, 2009



Following the footsteps of the successful fund launch of Religare PSU Equity Fund, Sundaram too has joined the PSU bandwagon and has launched the Sundaram PSU Opportunities Fund, which seeks to invest in PSU companies across the market cap and sectors.
The fund has identified wealth creation triggers in the form of disinvestment process, growth, valuation re-rating and high-dividend payouts. Sundaram PSU fund will overlap its other Funds like the Energy Fund and Financial Opportunities Fund.

The Sundaram PSU Opportunities Fund was launched on November 25 and is schuduled to close on December 24, 2009.

As usual, the minimum lumpsum investment is Rs.5000, but, as with every Sundaram Scheme, this Fund's Minimum SIP instalment amount is Rs.250/-.

1)With a Stable Govt in place, one can expect quite a huge disinvestment programme which should keep the PSU stocks in limelight and this fund along with Religare PSU Equity Fund will be in good position to capture any upside.

2)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.
3)In the Last Year's Big Bear Crash, PSUs were the Least Affected thus giving a sort of comfort to investors.
4) PSUs are trading at a average discount of 40% discount to the Private Sector, even a 50% re-rating would immensely boost the stock prices of the PSUs and thus, the Sundaram PSU Opportunities Fund too.

Negatives :
1) The Fund is a thematic fund catering to the limited universe of public sector companies.

While most analysts would blindly recommend Sundaram PSU Fund over Religare PSU Fund., I would take a contra view and say AVOID SUNDARAM PSU FUND AND INVEST IN RELIGARE PSU EQUITY FUND.
Here are the key reasons for the same :
1. Equities Outside PSUs :
While Sundaram has the mandate to invest upto 35% outside the PSU basket, Religare does not. While this may ensure diversification, this also means that the PSU THEME IS DILUTED IN SUNDARAM PSU FUND.
2. Overseas Investments :
Sundaram again can invest upto 35% in Overseas which is laughable considering that this is a Public Sector Fund. Religare will be 100% investing in India which ensures NO CURRENCY RISK, NO COUNTRY RISK, NO GEO-POLITICAL RISK.
3. Exposure to Banks in Benchmark :
Sundaram has CNX PSE as its Benchmark which has NIL Exposure to Banks, where as Religare has BSE PSU as its Benchmark which has around 20% exposure to Banks. It is shocking how Sundaram tripped on this. BANKING AS A SECTOR IS IGNORED IN SUNDARAM PSU FUND.

Religare has already invested its Assets. More buying in the PSU Stocks by the new Funds like Sundaram PSU Fund and SBI PSU Fund (which is in the process of being launched) will benefit Religare PSU Equity Fund which is already fully invested. The Scope for Value Unlocking of Public Sector Undertakings is huge and Religare and Sundaram both are poised to take advantage of these.

If you are convinced about the PSU story, then you know which fund is a better proxy to play on the theme.

Best of luck,

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Friday, December 18, 2009



A HouseWife Mrs.SA wrote :
Dear Sir,
You are doing a great job with your blog. I have learnt a lot from your blog. Even though I am afraid of Equities, your writing has given me confidence to invest in Mutual Funds, to be begin with.

I'm a home maker & can save Rs.500/- every month. I want to invest this amount
systematically every month for next one year & want good return after 5 years.
Now my question is which option is the best for my investment. I don't
want to take high risk.

Thanking You,


Dear Soma Madam,
I have stopped giving FREE advise both online and offline. I am charging a minimum of Rs.1000 for each advise. But I am making an exception in your case because of your status as a Housewife and also because of your small investment amount.
But note this is a one off exercise. Next time, you will have to pay me for any advise.

My Advise :
Being a Housewife with very little invesible amount and also with your low Risk taking ability, you are better off investing in Large Cap Funds and/or Balanced funds.
I feel 500 is too little. But something is better than nothing. Even with this 500, I will try to get you not only Good Low Risk Funds, but also good diversification.
My advise would be to split your 500 into 3 parts and invest as under :
250 * 1 in Sundaram Select Focus Fund
150 * 1 in Reliance Regular Savings Fund ( Balanced )
100 * 1 in SBI Magnum Balanced Fund

This way, 50% of your investment is going into Balanced Fund and the rest 50% into Large Cap Fund and you are getting into 3 different AMCs.
I encourage you to continue to use the SIP way as this is the BEST way to invest and also make maximum returns on your investment.

With you all the best.
Srikanth Shankar Matrubai,

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Wednesday, December 16, 2009



DSP BlackRock World Mining Fund
After two sucessful Fund of Funds, in DSPBR World Gold Fund and DSPBR World Energy Fund, DSP BlackRock has come out with its 3rd Fund of Funds DSP BlackRock World Mining Fund.
The fund will invest in the BlackRock Global Funds’ World Mining Fund, which has a corpus of about Rs 51,000 crore and invests in mi

ning companies across the world, with operations in precio

us metals, coal, iron ore and copper among others.
The BGF World Mining Fund has been in existence for a period of more than 12 years and has a great performance track record.

The fund has outperformed its benchmark HSBC Global Mining Index over one and five-year periods. The Fund has given a return of 17.8%

CAGR compared to its Benchmark return of 12.7%.

The Fund has been awarded the maximum AAA ratings from both Standard & Poor’s and OBSR.


After the 2007 highs and the subsequent crash, commmodity prices are stablising and moving up steadily. Supply constraints and the Weak Dollar will make Commodities costlier and the Fund should benefit from this strong prices in commodities.

The Fund will give you both Sector diversification as well as Geographical diversification.
An investor interested in a concentrated portfolio of commodities and the mining sector in the medium to long term should consider investing in this fund.

Risks :

There is an exchange risk. If the rupee depreciates, it adds to the return of the fund since the investment is in a non-rupee asset. Likewise, if the rupee appreciates it would potentially reduce the return of this fund.
There is a Sector Risk with this Fund as the Fund will be fully exposed to the fortunes of the Mining Sector.

Suggestion :
The Fund has given excellent returns and has had a great trackrecord. Invest with a medium to long term view and do not have more than 5% exposure, depending on your risk appetite.

Note, the NFO does not have a SIP. If you want to invest through SIP, you have to wait for the Fund to reopen for regular purchase.

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Tuesday, December 15, 2009


Fidelity has launched a New Fund Offer with a attractive name, Fidelity India Value Fund.
The fund will invest in Indian and international equities with a higher focus on undervalued securities to deliver long term capital appreciation. The Fidelity India Value Fund's new fund offer (NFO) will close on December 15, 2009.

Fidelity has built a strong reputation for giving more prominence to Fundamentals of Stocks it buys and thus has been a steady performer rather than being spectacular.

Value Funds tend to take a long time to give reasonable returns and Fidelity as a Fund House itself, is quite defensive in nature.
It is surprising that Fidelity has come with a Such a Fund at all. What do the other Fund Managers do??? Don't they see
'value' in the stocks they buy?.
And what these 'Contra' Funds do????., They too find 'value' and do Contra buying.

Indian Economy is in a Strong Growth Phase and Value Investing will work more in mature markets and thus Growth Funds will give more returns than Value Funds.

Go for Fidelity Equity Fund and avoid this NFO for now. If you are really keen on 'Value investing' go for existing funds like ICICI Discovery Fund, Birla Sunlife Dividend Yield Fund, UTI Dividend Yield Fund.

For your information, even their flagship, Fidelity Equity Fund, though consistent, has lagged behind its peers over 1 year, 3 year period.
Thus, This Fund is purely for a fan of Fidelity.

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Monday, December 7, 2009


The latest entrant to the Mutual Fund Industry is Axis Mutual fund which is promoted by Axis Bank.
It has launched Axis Equity Fund.
Axis Equity Fund is a plain vanilla Diversified Equity Fund and will be managed by Chandresh Nigam who was earlier with ICICI Prudential Mutual fund. The Fund is open for subscription from November 11 to December 8.
Axis Equity Fund would follow a bottom-up approach to choose its basket of 35-40 scrips, entirely comprising midcaps and large caps.

Axis Mutual Fund's maiden offering Axis Equity Fund New Fund Offer can be given a miss.

Not only the Fund is new, even the Fund House is new and yet to prove its worth.

The Fund is no different from the over 200 Diversified Equity Funds and does not merit attention. Let the Fund prove its worth before you commit your hard earned money to the fund.

Put your money to better use by investing in existing schemes which have proven their worth.

Best of luck,

Srikanth Matrubai
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Sunday, December 6, 2009



You are sure to be bombarded with ads of Tax Schemes in the coming days as the 'Tax Season' draws near. ULIPs & ELSS will be the prominent ones who will be eyeing your wallet.
My advise, Go for Mutual Funds ELSS. Among all Tax Saving instruments, ELSS stands out. Not only your Investments into the ELSS is tax free, but also the dividends you earn and also the returns at maturity are also tax free.

It is proven beyond doubt that among all the Tax Saving Instruments, Equity Linked Savings Scheme, popularly known as ELSS, the returns from ELSS have been the highest.

What is ELSS?
ELSS is the acronym for Equity Linked Savings Scheme. It is basically a diversified equity scheme, which has a 3-year lock-in period. They are linked to Stock Market Returns, hence though volatile, the returns tend to be higher than traditional Tax Savings Scheme.

Why ELSS :
1. Investors in ELSS under Dividend Payout Option have the advantage of getting Tax Free gains even during the lock-in period of 3 years.
2. Lowest Lock-in period of just 3 years, comparing favourably with maturity period of NSC (6yrs) and PPF (15 years).
3. Minimum investment is only Rs.500., very low entry barrier.
4. Investors in ELSS have the advantage of investing through Systematic Investment Plan.
5. Some ELSS schemes offer Free Life Insurance Cover and also Personal Accident Death Cover and even Critical Illness cover!!!
6. Historically, provided better returns than both NSC, PPF and ULIPs.
7. Profits earned after the Lock-in Period is Competely Tax-Free.
8. Upto Rs.1Lakh is eligible for deductions under Section 80c compared to Rs.70000 in PPF.
9. Due to its 3 year lock-in period, the Fund Manager has the freedom to invest in Fundamentally Strong Shares with huge future potential and can afford to 'wait' to unlock the value. Thus, it has been observed that ELSS schemes do beat (in terms of returns) even Diversified Mutual Funds more often than not.

Why NOT other Tax Saving Instruments :
1. ULIPs or LIC Premium :
These Instruments are designed to provide you Cover, which invest only a PART of your invested amount. Moreover the Entry load in some of these can be as high as 40%., where as in ELSS , it is NIL!!!!!
2. PPF and NSC :
Not only the Lock-in period is high, but also the returns are very less, hitting you hard and sometimes not even covering Inflation.
3. Five Year Bank Fixed Deposits :
Very Low Returns, Low Liquidity and Interest IS Taxed on Maturity.

Birla Sun Life Tax Relief and HSBC Tax Saver Equity are offering free critical illness cover, while DWS Tax Saving is giving free life insurance.
The Reliance Tax Saver and Kotak Tax Saver scheme comes with a free life insurance cover.
Taurus Tax Shield and Principal Personal Tax Saver and Prinicipal Tax Saving Fund offer Personal Accident Death Cover.

Apart from the ELSS Funds, there are Pension Funds namely, Templeton India Pension Plan and UTI Retirement Benefit Unit Plan, which invest a minimum of 60 per cent of their assets in fixed income instruments.

Systematic Investment Plan

Best way to invest in ELSS is through Systematic Investment Plan(SIP). With SIP you can invest a small amount every month for a specific time period. With SIP investor can take advantage of fluctuations in the stock market. So investor will get more units when the market is down and get less units when the market is up. For eg if you are investing Rs 1000 every month and you will get 100 units for when Net Asset Value (NAV) is 10 and will get 50 units when NAV is 20. So investing a fixed sum regularly helps to cover the market fluctuations by rupee costs averaging.
SIPs are a tried and tested method of minimizing risk and yet enjoying good returns,by regular,periodic investment,over a long horizon.

SIPs along with the tax benefit that can be availed of by investing in ELSS,makes this investment option very attractive.Instead of simply putting in a chunk of Rs 1 lakh at the end of each fiscal year, if you develop a healthy saving habit,you could invest a fixed amount every month and benefit from the advantages of both SIPs and the tax rebate.
When you invest in ELSS, through the SIP route, you enjoy the multiple benefits of better market-linked returns in the long run, rupee cost averaging and a tax break. So, happy investing!


ELSS give you the two-in-one advantage of saving tax and wealth-building. So, do not wait for the "March" last minute rush to save taxes and make a hasty decision.

Tax Exemption twice in 6 years!!!
You can withdraw your Tax Saver Funds at the end of the 3 years and when you reinvest the same, you get Tax Exemption TWICE in six years compared to just once in the case of NSC.

Almost all equity-linked saving schemes have two fund options — growth and dividend. Unlike a growth plan, an investor gets annual payouts from the dividend schemes before the final redemption of units.

The trick here is to invest in the dividend plan of an ELSS. For instance, if one invests Rs 1 lakh in an ELSS, one saves a tax outgo of Rs 33,990 (at the highest tax rate of 33.99 per cent) under section 80C.
Now consider this. An ELSS has announced a dividend of 50 per cent. The net asset value (NAV) per unit of the scheme is Rs 50. Suppose one invests Rs 1 lakh in the fund before the record date for the dividend. After the record date, the investor will get a dividend of Rs 10,000 at the rate of Rs 5 per unit for 2,000 units that have been bought. Therefore, effectively the individual invests Rs 90,000 (Rs 1,00,000 minus Rs 10,000) and saves Rs 33,990 in tax outgo.

In other words, on an investment of Rs 1,00,000 in the dividend plan of the ELSS, one gets a post-tax return of Rs 43,990 (Rs 33,990 plus Rs 10,000), or 43.99 per cent.

Religare Tax Plan
Birla Sunlife Tax Relief 96 Fund
Sundaram Tax Saver
HDFC Tax Saver
Franklin India Tax Shield
CanRobecco Equity Tax Saver
Fidelity Tax Advantage
SBI Magnum Tax Gain

For more details on My Pick of the Best ELSS Funds, look out for my next article.

Best of luck,
Srikanth Matrubai

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Thursday, December 3, 2009

Rs.100 SIP in SBI Magnum Contra

Mr.A asked :
Dear sir,

Thank you for your great advices.
Your blog is doing a great service to the Mutual Fund Investor Community.
Recently SBI Magnum Contra MF allows inverstor to invest in this fund through SIP of Rs. 100. Is it okay if I start investment Rs. 250 per month for next 10 years in this fund? If I opt for SIP of Rs. 100 or below Rs. 500, I will have to continue SIP to Magnum Contra for next 5 years. It is mandate from AMC. So I have no way to change my stand after one year if I invest Rs. 100 per month in Magnum Contra. I can reduce SIP tenure from 10 years to 5 years at best.

Dear A,
Yes, you are right. SBI has recently has launched a Micro SIP called Chota SIP for as low as Rs.100 per month and the investment period of SBI Chota SIP would be minimum of 5 years. Currently SBI Chota SIP allows to invest in SBI Mutual Fund’s Magnum Balanced Fund, MMPS 93, MSFU Contra Fund, and SBI Blue Chip Fund and later on this plan would be extended to other schemes as well.
There is nothing wrong in planning for SIP for a 10 year period but not in one fund. You might find later on say after a year or so that the performance of this fund is lagging compared to others and might want to invest through SIP in another fund. Initiate SIP for one year and review after that. If satisfied, u can go for a further one year SIP. In my view u should opt 3 SIPs of 100 Rs. each on 3 different dates in a month for ur investment in SBI Contra fund. The split SIP `ll provide better averaged cost to u. Note, that for a SIP of Rs.100, you need to invest for a minimum of 5 years. Also, there is no need for you to submit your PAN Details, just your ID proof is enough.

Do not let the name mislead you, SBI Magnum Contra is more of a Diversified Fund and is a good investment for a time horizon of 5 years or more.
Inspite of frequent changes in the Management Team of the Fund, the performance of SBI Contra has been impressive. The Fund has consistently beaten its Benchmark and Category Average handsomely.

You can consider investing in the Fund.

Even though the AMC states that you will have to invest for 5 years minimum, it is your will and wish to stop the sip anytime if you feel that the Fund`s performance is not upto your expectations. However, for redemption, admissible exit loads will be applicable. Do review the performance of all your funds every year or so.
Best of luck,
Srikanth Matrubai

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