Sunday, December 11, 2011

Infrastructure Bonds ARE Back in Action!!

 The additional tax benefit provider (sec 80CCF) in form of Infrastructure bonds…let us see how they fare and which company bond to invest.



A spate of Infra Bonds have hit the markets in the recent weeks and much more are expected.
After IDFC and L&T, IFCI has now come out with a Infrastructure Bond which allows deduction under section 80ccf.

Compared to other two bond issues, IFCI definitely scores better because of its higher interest yield.

IFCI which had already come with 1st Tranche has come out again, albeit with a much higher interest rate now.

Compared to other two bond issues, IFCI definitely scores better because of its higher interest yield.


With this Bonds, you get an additional 20000 Tax Benefit over and above the 1 lakh under Sec80c.

The Bonds will be listed on BSE after the mandatory lock in of 5 years, thus giving you the required liquidity.

And, thankfully, no TDS will be deducted.

These Infra bonds typically have a lock in of 5 years and later on are listed on Stock markets wherein you can sell.

Moreover, all the Bond issuers also give the option of buyback facility.

You can make use of the same depending on the Interest rate scenarios at that time.

I strongly urge to make maximum use of this facility and take advantage of this benefit.

On an investment of Rs.20k, an individual in the Top Tax Bracket of 30% can make a saving of Rs.6000 and also earn an interest of 9% to 9.09% which, however, for the Highest Bracket Tax Payer, the effective yield works out to more than 13%…..

If you have observed last year, interest rate on the bonds kept on increasing for every issue, but this is unlikely to happen this year as the Interest rates are at their peak and the RBI has already indicated that the interest rates could be moderated.

This will ensure that the coming issues will be priced at similar rate of interest rates or in fact, even lower.

Better to lock in the higher interest rates with the IFCI Infastructure Bond.


Those Tax payers who have exhausted their Exemption for Investments of Rs.1 lakhs in Sec 80c, 80ccc, 80ccd can look at these Infra Bonds.



With interest rates at the peak, this is the right time to invest in these bonds rather than waiting for further issues wherein the interest could be lesser.

Invest now. The earlier the better.

Regards,
Srikanth Matrubai

P.S.
For form downloads, visit the following link and put my code as 82593
http://www.rrfinance.com/Bond_Pdf/Infrastructureissues1.aspx

 

Also visit
http://equityadvise.blogspot.com

Tuesday, October 18, 2011

TATA RETIREMENT SAVINGS FUND


Modelled to cater to your retirement needs.


With rising inflation especially Medical Inflation, and the fact that there is no Social Security by the Govt of India, it is necessary to be adequately prepared when it comes to Retirement Planning.

With this in mind, Tata Mutual Fund has come out with Tata Retirement Savings Fund.  The Fund  aims to provide a financial-planning tool for long-term financial security based on retirement-planning goals.


INVESTMENT STRATEGY :

The strategy of the fund will be predominantely Large Caps with a mix of mid-cap firm, however, the focus will mainly be on big caps.

This retirement-specific mutual fund scheme has an "Auto-Switch" facility. The fund is designed to meet the investment needs of investors in different age brackets. It offers three options to investors—'Progressive Plan', 'Moderate Plan' and 'Conservative Plan'—with varied percentage of equity and debt assets.

The "Auto-Switch" feature is supposed to do away with the hassles of adjusting the equity-debt proportion of the portfolio with increasing age. The fund is assuming that the investor depends on his "advisor" for switching assets between equity and debt with increasing age. The facility of "auto-switch" does the necessary asset allocation automatically—as the investor crosses into a different age bracket.

The progressive plan is for investors below 45 years of age, with 85-100 per cent of funds allocation in the equity assets. Once the investor turns 45 he/she would be automatically switched to the moderate plan, where the equity allocation will come down to 65-85 per cent.



Thereafter, at the age of 60, investors will be shifted to the conservative plan, where fund allocations in debt assets will reach as high as 100 per cent. In short, a single scheme will turn out to be a debt scheme after being an equity scheme



Exit load: It carries a 5 per cent exit load if redeemed within one year, 4 per cent if redeemed between 1 and 2 years, 3 per cent if redeemed between 2 and 3 years, 2 per cent if redeemed between 3 and 4 years, 1 percent if redeemed after 5 years from the date of allotment.

The Age Limits are not compulsory and can be flexibly used by an investor as he pleases.


COMMENTS & REVIEWS :
It is imperative that Planning for a comfortable and Financially sound Retirement is a Must.
Every investor should be careful and savvy to plan for Retirement. He should take the help of his Financial Advisor in preparing a Solid Retirement Plan.

For those who are short of time or who do not have a Financial Advisor to look after their investments, then this Fund is a "MUST HAVE" and is a good alternative to passive investors.

Similar products in the market like the Templeton India Pension Plan & UTI Retirement Benefit Fund invest upto 40% in equities and though relatively safe may not be able to generate Alpha returns which the TATA RETIREMENT SAVINGS FUND is capable of.

And it is a well know fact that Equities yield higher returns compared with any other investment class.




NOTE :

THE FUND HAS A HUGE EXIT LOAD OF 5% PROGRESSIVELY REDUCING....TO DISCOURAGE EARLY  WITHDRAWAL FROM THE FUND.

THE FUND OFFERS ONLY "GROWTH" OPTIONS SINCE THE FUND AIM IS TO BUILD A HUGE CORPUS FOR YOUR RETIREMENT.



VERDICT :

Definitely better option compared to other options like the PPF, Insurance, etc which are available in the market right now.
I think if you do not have a Financial Advisor, you can go for the Fund.
Otherwise, your Financial Advisor should be able to create a Much better and more Diversified Retirement Portfolio for you.


Go for the Auto Switch Option, but keep a hawk eye on the performance and switch yourself before the "Auto Switch" if your Financial Advisor says so.

Final Verdict, the combo of Diversified Funds + Term Insurance + Real Estate + Gold  is the Best formula for your Retirement Planning

HAPPY RETIREMENT,

SRIKANTH MATRUBAI



Also visit
http://equityadvise.blogspot.com

Sunday, October 9, 2011

AN ANALYSIS OF L&T MIP - WEALTH BUILDER FUND NFO


Now, let us analyses whether this Fund is indeed capable of Building Wealth.



For Starters, note this fund isa Monthly Income Plan with the tweak being that the Fund is ready to invest upto 30% in Equities unlike other MIPs who restrict the same to about 10-15%.

N Sivaraman, president and whole-time director at L&T Finance Holdings, said, “In this present challenging environment, where the risk of rising interest rates has increased and global markets seem to be volatile, we believe that the product could offer risk-adjusted returns and can serve as an alternative under fixed-income products.”


The fund expects short-term rates to remain stable going forward as bank certificate of deposits issuances may not be high as in the previous financial year. Interest rates are not expected to remain high on a sustained basis, therefore, investment at the present levels may provide opportunities when the cycle reverses.

On fund allocation towards equitie, the Fund Manager Sanjay Gupta said, “Indian growth seems to be relatively strong in relation to the global and developed market growth. At present, the Indian economy is most likely to be at the end of a rate tightening cycle, which may be a favourable environment to invest in equities.”

Benign commodity prices and cooling of oil prices internationally may boost the Indian economy,

COMMENTS & REVIEW :
tHE fUND IS Nothing but actually a Debt Oriented Mutual Fund with a exposure to Equities to provide additional “return kicker”.
Conservative Investors looking for a bit extra return the traditional Fixed Deposits can look at the fund.

If youÂ’re looking for ultra risk-free return, this is not it.

Limit your time horizon of investment to about 2 years and take a Fresh Call at that time.

Who should Invest in MIP’s ?

1. Investors looking for regular Income
2. Conservative investors looking for better returns
3. Investors who want to park a big sum of money with a 2 year time frame….

My suggestion :
1. Choose dividend option

SPECIAL COMMENTS :
Investors are requested to note that with Fund onwards, “Transaction Charge” could be collected depending on the choice of your Distributor.
So, get clear picture from your Advisor/Distributor whether your investment will be subject to this Transaction Charge.

I am NOT Opting OUT of the Transaction Charge, (that is, I am NOT chargingÂ….as I am a Advisor and not a Agent)….  

Also visit
http://equityadvise.blogspot.com

Wednesday, October 5, 2011

Make a health promise

Hi
Now, you can make a Health Promise for your loved ones online and help them live a healthier and more wholesome life! To know more, log on to http://gotaf.socialtwist.com/redirect?l=26kzu I have already taken health promise. Have you?

Saturday, September 3, 2011

FREE LIFE INSURANCE BY MUTUAL FUNDS.....AN ANALYSIS


Many AMCs are offering Free Life Insurance Cover with SIP investments.
Should you take the offer???


Srikanth Matrubai analyses....

I have always advised against mixing Investments with Insurance.
But,
but,
there is a combo bundled product wherein Free Life Insurance cover is given by Mutual Funds like Birla, Reliance and Kotak.
Let us analyse whether they are worth being looked into......
Let us look at each AMC separately and see what they are offering.



Birla Century Sip gives you a cover which will be equivalent to your market value of the units you have or 100 times your monthly sip whichever is less.

Under the Century SIP option, if the investor makes monthly SIP instalments, the insurance cover for the first year will be 10 times the SIP amount and in the second year it will go up to 50 times and 100 times from third year onwards, subject to a minimum SIP instalment of Rs 1000 and maximum cover of Rs 20 lakh per investor.   Among the Birla Funds you can consider Birla Sunlife Frontline Equity Fund, Birla sunlife Dividend Yield Fund and Birla Sunlife Equity Fund.





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 K50 FUND.


Reliance Mutual Funds is also offering Free Life Insurance Cover through SIP Insure.
In Reliance SIP Insure, Reliance will pay the unpaid instalments of the future SIPs in the event of the death of the investor during the sip tenure.

Among Reliance Funds, you can consider RELIANCE GROWTH FUND AND RELIANCE EQUITY OPPORTUNITIES FUND.

Kotak and Reliance Mutual Fund offer similar type of Life Insurance. The difference between the two being that in Kotak, the nominee has to be compulsorily your kid, whereas in Reliance, it could be anybody.
Also, in Kotak, the unpaid installments is paid to the nominee....

However, Reliance does not offer the cover for its Tax Saving Scheme.The drawback with both of them,is that the Insurance actually reduces going forward and becomes NIL when your sip ends!.

Principal Personal Tax Saver and Principal Tax Saving Fund offer Personal Accident Insurance Cover upto 150 times the number of units you purchase.

HDFC too offer Personal Accident Insurance Cover,  the coverage will be equivalant to 10 times of the cost of outstanding units maximum upto Rs. 10 lac and this is offered only for its HDFC CHILDREN'S GIFT PLAN.

Earlier,  DWS was offering a simple and uncomplicated Term Insurance cover of 5 times your Investment as Life Insurance, subject to a maximum of 5 lakhs. However, this has been stopped for reasons best known to them.



SHOULD YOU TAKE THE OFFER??



MY ANSWER IS ……

YES....HERE'S WHY.....


While skceptics will always find loopholes in any product as with these products, I personally feel that if you want to invest for long term, why not use this added benefit.


When you invest in this combo,

1. Long Term Investment Benefit will be ensured.

2. No Matter what, your Targeted Amount will be reached.

3. As some so called experts (one CFP has even written a lenghty article titled "DO NOT INVEST IN MUTUAL FUND SIP".....Lol.....Excellent Attention grabbing Headline,)
these funds have 2% exit load....I do not see anything wrong in them.

When you are ready to pay 2-5% charges every year in ULIPs (and some hidden too), then giving 2.25% (max) AMC charges should not stop you in investing in such a excellent product.

Moreover, most importantly, in Schemes like Birla Century SIP, you can stop your sip after 3 years and still can continue to enjoy the Insurance Cover.





Take Dividend Payout :

If you feel that you are forced to stick to one fund throught just for the sake of insurance, I Suggest you to  take the Dividend Payout option and invest the proceeds in Balanced Funds..and also STOP further sips after 3 years.

Exit load is charged to prevent investors from premature withdrawal....and encourage long term investment.
The Same ‘Expert”(?) said that in event of death, nominee will redeem and has to bear 2% exit load:, well, I am sure no nominee will crib about 2% when he is getting the Insurance amount as well as the fund value.

Regarding exiting paying 2% exit charge on withdrawal after bad performance, again, 2% should not come in way of coming out of a dud fund....and moreover, why invest in such a fund in the first place???



Caveat :

These Mutual Funds have the right to modify the terms of Insurance, especially after the most unethical modification done by DWS Mutual Fund, read (http://goodfundsadvisor.blogspot.com/2010/03/dws-mutual-funds-ethical-kill.html)

If other AMCs do follow this unethical move by DWS, (which is most unlikely),  then you are in for a shocker...

Also, liquidity becomes an issue when you go for these Free Insurance offered by Mutual Funds.

Note :
In Birla, the Insurance Coverage will gradually Increase^^^^^^^^^
but in Reliance and Kotak, the Insurance Coverage will gradually decrease.
Ideally, one can take a sip in 1 Birla and 1 Reliance/Kotak, this way your Insurance Coverage will be more or less the same throughout.
Experts like Dhirendra Kumar, Suresh Sadagopan, Veer Sardesai have endorsed that these products make for good investment.

So, investors, the Combo product gives you Insurance Cover in an absolutely cheap way and be seriously looked especially if you are investing in Reliance/Birla/Kotak funds.

And, yes, your Primary Motive should an investment and the Fund should qualify for that, the Insurance Bait should be taken only as a Value addition and should not be the sole criteria for investing in these funds.

PLEASE DO NOT TAKE THIS AS A REPLACEMENT AS FOR REGULAR TERM INSURANCE OR ULIP.





Best of luck,
Srikanth Matrubai





Also visit
http://equityadvise.blogspot.com

Tuesday, August 30, 2011

SBI GOLD FUND - INVEST

SBI has come with SBI Gold Fund.
You can invest if you are under exposed to Gold.

SBI has launched SBI Gold Fund – its FoF that feeds into its gold ETF.
The SBI Gold Fund is very similar to Reliance Gold Savings Fund and hence
the working of the fund is known to most of you, my clients.
If you have not yet understood its working…please read…
http://goodfundsadvisor.blogspot.com/2011/02/reliance-gold-savings-fund.html

This fund will be investing in the gold exchange traded fund (ETF) as an
underlying. So this method is very convenient to those investors who are
not very comfortable with buying the gold ETF through the stock
exchanges.
SBI Gold  fund will enjoy the same tax benefits as any exchange traded gold
ETF.
There will no limits on investment.

GOLD PRICE OUTLOOK :
Gold has been a star performer for the past 4 years.
Being seen as a safe haven across universe, Gold has been chased by all
types of investors. The recent Economic upheavel across the World has
pushed up the Gold prices and there is no reason why Gold should not do
well.
Gold, as we know, has been a star performer for the past couple of years.
Gold is a counter cyclical in nature and hence an ideal asset tool in
diversification.
Gold should be looked at as a diversification, as a hedge in your portfolio.
Even if everything else goes wrong, this is one asset that would do well,
particularly in times of uncertainty. So it should be looked at from an asset
allocation or diversification point of view, rather than taking a view on the
price where it is trading today.

Why invest in SBI Gold Fund??

There are 6 reasons for you to invest in a Gold Saving Fund and SBI Gold
Fund in particular…
1.
In Gold ETF space, SBI Gold has been a outperformer because the Fund has
been fully invested and has minimal tracking error.
2. The SIP option gives you the advantage of buying Gold in as small
quantity of Rs.100/- which is not possible with a Gold ETF.
3. Yes, being a Fof, there is no Compulsion of Demat Account.
4. Excellent way to accumulate Gold without being concerned about the
Secuirty, Purity, making charges, etc.
5. Taxation laws enable you to take the benefit of Long Term Capital Gains
after just period of one year of its holding which is not so in case of Physical
Gold.
6. The Biggest plus point for the Gold Saving Fund according to me, going
forward, Gold is going to be more and more volatile, hence will benefit SIP
investors immensely.
SIP in SBI Gold Fund NFO is likely to generate higher Returns than GOLD
ETF, with the assumption that Gold Prices may continue to be VOLATILE by
5-10% . Investor will be invest in this Fund during Declines in Gold
Prices(via SIP of course). This is likely to Reduce the Cost of Purchase of GOLD UNITS in Fund
of Funds.

Gold recent sharp rise will see it going periodic price correction which will
help SIP investors average their cost.
For someone, who has no exposure to Gold at all, this Fund is an excellent
way to get an exposure and set his Asset Allocation right.
If you are investing through Sips, YES go for SBI Gold Fund…otherwise it is a
Strong NO!!!
Best of luck,
Srikanth Matrubai

Also visit
http://equityadvise.blogspot.com

Tuesday, August 23, 2011

FUND FOR INVESTMENT HORIZON FOR 25 YEARS...

Hi Sir,

I have an ongoing sip in HDFC Top 200 fund.
I am thinking of going for a sip in IDFC Premier Equity Fund and DSP Top 100 Equity Fund.
I am 30 years old. My horizon is 25 years.
I want to have a Huge Retirement Kitty.

Please give me your valuable suggestion.
Regards,
Sreenath






SRIKANTH SHANKAR MATRUBAI replies :


Hi, Sreenath,

It is always better if you have a amount in your mind when you start planning.

The best way for this is to calculate your Retirement Corpus

You can find the retirement calculator in many financial websites.

I had written a rather long article on retirement and you can find the same here...


http://goodfundadvisor.hubpages.com/hub/BEST-FUND-FOR-RETIREMENT

The fact that you are investing through sips itself shows that you are on the right path.

However, your choice of funds need to be changed.

HDFC top 200 can be continued.
In Mid cap, go for IDFC Premier Equity Fund.
But, I do not see any reason for another Large Cap fund when you already have a sip in Hdfc top 200 fund.
I suggest you rather go for a Diversified Equity Fund like the Fidelity Equity Fund or the DSP BR Equity Fund.
More so, since your horizon is 25 years...quite a good time to ride over the volatility.
My personal favourite would be the Pramerica Dynamic Fund.
Also please take care to switch your equity gains steadily into balance funds and then further to debt funds as you near your goal.
Another caveat....
do not stick with 1 fund throughout....keep an eagle eye over developments like the Change in Fund Manager, Change in Investment Mandate, Continuous slip up in performance....
If such thing is noticed, do not hesitate to switch from the fund and consider moving to a better promising fund.

Best of luck,
Regards,
Srikanth Matrubai


Also visit http://equityadvise.blogspot.com

Wednesday, August 17, 2011

SUNIL SINGHANIA SHARES HIS THOUGHTS....

 Had an opportunity to have a chit chat with Sunil Singhania, the soft spoken Head of Equities, Reliance Mutual Fund.

He was positive about the markets going forward.

He said "the recent sell off will now encourage fence sitters to get into the markets now, especially the Long Term Money may not get such cheap valuations."
"The repeat of 2008 market crash is unlikely. Things were different then...the situation is much much better now. There is absolutely no need to panic and I would rather look at this sell off as a BUYING OPPORTUNITY"
On Economy he revealed "India growing at 7% compared to 8% last year is a slowdown, but India normally takes 3 forward steps and 1 backward step, and I would say that the 1 backward step has been taken and the future looks only rosier and India is a good bet for Global investors.
Inflation is showing definite signs of cooling off which should ensure that Interest Rate hike is done away with"

On Reliance Banking Fund : "Banks tend to grow 150% more than the GDP and the fact that the Indian economy is under banked, the Sector is very attractive. The interest too is near its peak, if not peaked already, the Reliance Banking Fund is the Fund for not just the Aggressive investors even for the average investor, especially if he is investing through SIPs".

On Reliance Pharma Fund : "Pharma as a sector has done tremondously well in the past. While valuations are looking stretched, you should remember that growing health consciousness and India as a Medical destination getting attention will hold the Pharma sector in focus".

On Reliance Infra Fund : "yes, the fund has disappointed many investors. But the peaking of interest rates angurs well for the sector. And moreover, if you have observed, many companies have been shedding excess baggage by way of diluting stake and in some cases, selling off the unrelated business which increases their focus on their Primary business. We are looking at companies which have a sustainable business model and the revenue is visible and we strongly believe that this Fund has a huge potential above average return to Long Term investors".

On Reliance Gold Fund : "Gold was in a different orbit for the past 2-3 years and would find extremely difficult to replicate the same kind of returns. Look at Gold more as a hedge and a defensive bet rather than as an investment avenue which will fetch you huge returns"

Finally, when asked for 1 single advise he would like to give investors, he said : “Do not let the short term movements affect your long term asset allocation. Stay invested in weak markets, you will make loads of money’..

Regards,
Srikanth Matrubai

Also visit http://equityadvise.blogspot.com

Wednesday, June 22, 2011

ASSOCHAM MEET

Recently, ASSOCHAM arranged a Conferance on Investor Education.
The Conferance was held at the Bharat Hotels' THE GRAND ASHOK. (now the LALIT ).
The conferance was attended by Shri. Salman Kurshid, besides other dignitaries.
some clips from that meet.









Also visit http://equityadvise.blogspot.com

Friday, May 20, 2011

THE FUND EVERY INVESTOR SHOULD HAVE




HDFC PRUDENCE FUND - THE BALANCED FUND THAT WORKS LIKE EQUITY FUND


WANT EQUITY RETURNS WITHOUT THE ACCOMPANYING VOLATILITY AND HEADACHE?????

Then, the answer is .... without any second thoughts....
HDFC PRUDENCE FUND!!!!!

This seed of thought was sown in my mind when one of clients, Munnawar Ali, asked this question.

Munnawar Ali wrote: "Sir, Can you suggest any one fund which should be the 'ONE' every investor should have. I am a new investor to the Equity field itself. Which fund would suggest me.?"


Srikanth Matrubai answered : "It's good Munnawar,  that you have chosen the Mutual Fund route to take exposure to the Equities.

Equities are the BEST asset class in the long term. While pinpointing any one single fund is very difficult, especially as not only the Markets are dynamic, even the changes in Fund attributes, Fund Manager, would all have bearing on the performance of a Fund.

Still, I would stick my neck out and, without any second thoughts, say if any investor has to a Fund compulsorily in his portfolio,it has to be HDFC PRUDENCE FUND.


HDFC PRUDENCE FUND was lauched on February 1, 1994 and is one of the oldest Balanced in India.
The Fund is managed by Mr.Prashant Jain.

HDFC PRUDENCE FUND is a Balanced Fund with a mandate to invest between 40-75% in equity and the balance in Debt instruments.
The Fund tends to be fully invested in Equity over all periods of time with a passive style of investment touching its peak of 75% most of time.

WORKING OF BALANCED FUND :
Due to their mandate, Balanced Funds have to maintain Asset Allocation in ratio of ,say, 70:30(Equity/Debt). This automatically ensures that whenever the Equity outperforms, the ratio raises in favour of Equity and the Fund Manager has to sell
Equity to maintain the Balance.
Likewise, when Equity markets tank, the equity ratio declines and Debt raises, and thus the Fund Manager has to sell Debt and more Equity to maintain the Balance.
This automatically ensures that the Fund Manager, invariably, is selling at higher rates and buying at lower rates.
This Asset Allocation automatically ensures superior returns over Long Term over even Pure Equity Funds.



FUND INVESTMENT PROFILE :
The Equity investment has tended to veer towards mid caps.
However, in Debt, it is quite aggressive on the lookout to take advantage of any volatility in Debt Market. It has of late started to invest more in Triple A instruments which gives more protection.


HDFC PRUDENCE FUND has been a boringly top quartile performer since a long long time. It has given Equity type returns and inspite of being a Balanced Fund, has fared better than majority of Pure Equity Funds over all all types of Market Conditions.

Its Mid cap bais in equity is offset by Debt investment and hence the volatility is not so much as to cause concern.

The returns of HDFC Prudence has been way ahead of its peers like Birla Sunlife 95, DSPBR Balanced Fund, etc.

In fact, the returns compares favourably with even Diversified Equity Funds, despite HDFC PRUDENCE FUND being a Balanced fund.



NEGATIVES :
Its huge huge Asset Size of 5800 crores could be a problem. But Prashant Jain, the Fund Manager, has shown his ability to manage such huge Asset Size even with the other funds he manages (HDFC Equity manages 8400 crores, HDFC Top 200 manages 9600 crores).


RECOMMENDATION :
HDFC PRUDENCE FUND  is a "must" in any investor's core portfolio.
HDFC Prudence Fund will provide good hedge against sharp equity falls.
If any investor wants to invest in only ONE Mutual Fund, then THIS is the Fund, the HDFC PRUDENCE FUND.

Best of luck,
Srikanth Matrubai


Also visit http://equityadvise.blogspot.com

Sunday, May 15, 2011

SUNDARAM EQUITY PLUS FUND - A REVIEW AND ANALYSIS

MORE STABLE, LESS RISKY



Aiming to get the best of Gold and Equity, Sundaram Equity Plus Fund follows successful UTI Wealth Builder Series II Fund.

UTI Wealth Builder Series II has been very successful. It has beaten its Benchmark both in Positive and Negative times.
It has risen more and fallen less.

Can we expect the same from Sundaram Equity Plus Fund.... well that depends on how well the Equity portion is managed as the Gold investment does not need the skill of the Fund Manager expect in the extent of exposure towards Gold.
The Sundaram Equity Plus Fund aims to invest around 65% in Equity and 35% in Gold ETFs.

Gold, as we know, has been a star performer for the past couple of years. Gold is a counter cyclical in nature and hence an ideal asset tool in diversification.
But, going forward, Gold is not expected to repeat its Extraordinary performance and hence this fund could struggle to give Alphe returns.






Now, since the Fund Manager has indicated that he will be tilted towards Large Caps, and with balance in Gold ETFs, the Fund will not be volatile and may at best give you Par returns. If you want Alpha returns, then this fund is NOT for you.



Tax Advantage :
Since more than 65% is intended to be invested in Equities, there will be No Long Term Capital Gains Tax.





RECOMMENDATION :
Sundaram Equity Plus Fund is suitable for conservative investors who are looking to hedge their equity portfolio with Gold.

Sundaram Mutual Fund fans can sure go for this fund, others are better off by separating their investment and themselves investing in a Diversified Equity Fund and taking a SIP in Reliance Gold Savings fund which in turn invests in Gold ETFs.

Also read....
http://goodfundsadvisor.blogspot.com/2011/04/invest-in-gold-best-way.html





Alternatively, investors can consider investing in
UTI Wealth Builder Fund Series II
Axis Triple Advantage Fund
Canara Robecco Indigo Fund


Best of luck,
Srikanth Matrubai


Also visit http://equityadvise.blogspot.com

Saturday, April 30, 2011

ING FINANCIAL PLANNING FUND - A REVIEW

WANT INSTANT DIVERSIFICATION, THEN LOOK AT ING OPTIMIX FINANCIAL PLANNING FUND







ING has come out with a New Fund Offer ING Optimix Financial Planning Fund which is a Fund of Funds and aims to invest in mutual funds of AMCs other than ING.
This, according to ING people, is to help investors simplify their investment.
While on the face of it, the Fund offer and plans look confusing, the concept is good though not new.
The Fund aims to invest in carefully selected BEST OF BREED Funds from differennt AMCs  and get the best returns for your investment.
The Fund will invest in Four Different Asset Classes - Liquid Funds, Debt Funds, Equity Funds and Gold ETFs.
And, yes, the Fund will also aim to give its investors flexibility to choose from four Convenient Plans catering to Different Risk Tolerance levels.







While this isn't the first multi-manager FoF from the AMC, it is unique given its strategy of investing across the equity, debt and gold asset classes. In contrast, FoFs from other fund houses typically invest in funds from their AMC only. Besides, this is the first FoF that has an option to add exposure to gold ETFs.






MY ANALYSIS :
PROS:
1. With hundreds of funds to choose from, this Fund ensures that your job is simplified. And monitoring/switching too is not your headache as the Fund Manager will do the same as and when required.
2. Since this fund will not invest in inhouse schemes of ING, you can be sure of having his investment into the Best of Funds as the selection of funds is done purely on merit.

CONS:

1. The entire performance is based on the funds selected and how they fare.  Wrong selection of funds or delay in identifying laggard funds could affect the overall returns of the fund.
2. Similar products from the same Fund House, like the ING Optimix Multi Manager Equity Option has been very disappointing in their performance till now.
3. Additional Costs due to its Fund of funds approach.


RECOMMENDATION :
As with every fund, this fund too has its pros and cons, Passive Investors and First time investors wanting an exposure to equities, this is a Great Fund to take exposure in.
Others, your Fund Advisor could well do a better job.
Investors would however do better to 'PAY FOR QUALITY ADVISE" and invest in Different Funds of different AMCs based on their Asset Allocation, Risk Aversion which a Qualified Financial Advisor would be in a much better position to advise.

Best of luck,
Srikanth Matrubai

Also visit http://equityadvise.blogspot.com

Thursday, April 21, 2011

INVEST IN GOLD THE BEST WAY.....

While there are many ways to invest in Gold, the Mutual Fund route is the best due to transparency, low cost, liquidity, tax benefits and more.

The Ever rising Gold and Silver prices has triggered a rush to invest in these commodities and let us see which is the best way to make maximum returns through the mutual fund route.
Before that, it would be worthwhile to note what experts have to say on the future Gold outlook.

While everyone knows about the Gold ETFs like Reliance Gold Fund, Gold Bees, etc.(Gold ETFs are funds which track the value of Gold by investing in Physical Gold),  not many investors seem to be aware the difference that two Gold Funds have.
These two funds, namely AIG World Gold Fund and DSPBR World Gold Fund are actually Fund of Funds which invest in Gold Mining Companies Worldwide








The DSPBR World Gold Fund invests in the units of Black Rock world gold Fund whereas AIG World Gold fund invests in Falcon Gold Equity  Fund.
The point to be noted here is, that Gold Experts are unanimous in their opinion that the mines in South Africa are saturated and over a period of two-five years, may lose their dominance due to high cost of production.
This point makes it clear that for a LONG term investor, AIG World Gold Fund may give better returns than DSPML World Gold Fund.
Note, the Falcon Gold Equity Fund has been awarded THE BEST FUND for the THIRD Consecutive year at the Lipper Fund Awards 2011.
Another very good way to get a Gold Exposure is through Reliance Gold Savings Fund.
For more details on this you can click here………
http://goodfundsadvisor.blogspot.com/2011/02/reliance-gold-savings-fund.html

The price correlation between the Gold prices and the NAVs of the AIG/DSP World Gold Fund is not direct and tend to vary.
This is because these Funds invests in Equities of Gold Mining Funds and tend to have a time lag between the Gold price variation and Stock price variation.
These stocks normally rise than Gold price rise and fall steeper than Gold price fall.
But, regarding their Gold Fund, the performance is linked to Falcon Gold Equity Fund which in turn invests in equities of Gold Mining companies.








The difference between the DSP Black Rock World Gold Fund and the AIG World Gold Fund is this.
AIG World Gold Fund typically invests in Gold Mining Companies based in Canada and prefers mid caps.
DSP World Gold Fund typically invests in Gold Mining Companies based in South Africa and prefers Large Caps.


So, obviously, a SIP investor would make more money in AIG World Gold Fund as its NAV is more volatile.
Finally, to sum up,
My vote for the BEST way to make gains through Gold investing is through a SIP investment in Reliance Gold Savings Fund.
Best of luck,
Srikanth Matrubai

Friday, March 18, 2011

GOOD TIME TO BUY SILVER

Strong reason to buy Silver.





Silver has been a blockbuster for more than a year now. It has doubled in comparison to its more illustrious cousin, Gold.

My personal feeling that Silver will continue to outperform Gold and I have my reasons for the same.


11 important Reasons why Silver trade will out perform Gold

1) Shift in Monetary reserve policy to Gold & silver from Dollars

2) Commodities are in a secular long term bull market, More so Gold, Silver
Individuals, Central banks & governments across the globe are shifting their reserves in to tangible assets like Gold & Silver

3) Silver production deficit for straight 15 years now!
From last 15 years silver usage in Electronic & Electrical industry has hot up many fold & still the supplies are no where near demand

4) Gold demand almost near to its supply – Silver down from 2 billion ounces to 367 million ounces / annum
2 billion ounces in 1990 & still the same in 2010 – Silver 2 billion ounces in 1990 & 367 million ounces in 2010 in-spite of silver being mined 8 times more than gold !

5) Silver is severely under valued
Historically silver is greatly undervalued compared to gold, silver prices have not kept rising to their historic high’s of 52$/oZ even when adjusted against inflation for several decades now

6) Gold silver ratio is unrealistic & is set to rise
Current Gold silver ratio is @ 1/45 which experts like UBS, Berkshire Hathway, and David Morgan Etc believe in the next decade the ratio will come down to between 1/16-1/10 of the gold prices

7) Silvers real value is far more than what it really is today
Purchasing power of dollar through 1913-2010 has almost gone down 95% as a result dollar denominated ratio for gold & silver has disproportionately grown hence the rise in Gold & silver prices, but silver is far too behind even @ of $ 29/oZ

8) Silver yet to reach its peak price: Silver’s historic high was $ 52 / oZ during 1980, if this price were to be adjusted against inflation over these 30 years; silver price should be $ 153/ oZ ! @ $ 29 current market price, prices of silver has a long way to go!!

9) 51 country heads across Europe & South American counties have agreed to
Make silver as their Money: Economic crisis across Europe & USA has made several
Country heads Opt for time tested real money reserves in the form of Gold & Silver

10) Ratio of silver recycling is far too less compared to Gold: Digital technology is
Creating unprecedented demand for silver which cannot be recycled, almost all digital
Technology products use silver as one of the main component.


11) China factor: China is discreetly converting its several 100 billions of dollars
In to Gold & Silver & nearly 50% of silver is consumed by its industries





While there are very few opportunities to invest in Silver through mutual funds.

For Gold you have gold ETFs and also Funds like Reliance Gold Savings Fund, etc, but for silver there is virtually no option.



Birla Precious Metal Fund is one option where you can get a Silver Exposure.

More options are sure to come, especially in the wake of the sizzling rise in Silver price.



Regards,

Srikanth Matrubai





Also visit

http://equityadvise.blogspot.com

Sunday, February 27, 2011

RELIANCE GOLD SAVINGS FUND

NEW WINE IN NEW BOTTLE

Investing through SIP is advisable. Avoid LUMPSUM.





 Reliance has come out with a New Fund Offer, Reliance Gold Savings Fund.
Should you invest??. Let us check it out...



Reliance Gold Savings Fund is a Fund of Funds., meaning your money in this Fund will actually be invested in another fund, namely Reliance Gold Exchange Traded Fund. And, this Fund in turn invests in Gold.

An Exchange Traded Fund (ETF) cant be invested through Sip., and so is Reliance Gold ETF., and here's where Reliance Gold Savings Fund steps in.
You can invest as little as Rs.100 per month!!!


Positives :
No Demat Account.
Can invest as little as Rs.100 per month.
Long Term Capital Gains after holding period of 1 year compared to 3 years holding period in Physical Gold.
Very Liquid compared to Physical Gold.


Negatives :
Being a Fund of Funds, charges could be higher. Gold ETF charges 0.75% whereas Reliance Gold Savings Fund could charge upto 1.5%.
Equity has and will continue to outperform Gold in the Long Run.

RECOMMENDATIONS:
While "experts" are shouting about Higher Expenses, one should not forget that the Expense is fixed at 1.5% by SEBI and moreover, your SIP investment would be working at Rupee Cost averaging and will actually help you gain more than Gold Returns. (Just like a equity sip would give you more returns than a Lumpsum investment).

Prudent Asset Allocation will tell you that you should have a 5-10% Gold exposure depending on your profile and based on this, you should decide how much you should invest in Reliance Gold Savings Fund (or whether you should invest at all).



People in India tend to invest in Gold not as an investment, but more for creating a corpus for their children's marriage, for them, this Fund is God send.
I would still stick my neck out and say that Equity is the Best Asset to Invest, especially if your Time frame is more than 5 years.


If you want to have a Gold Exposure, then investing through SIPs in Reliance Gold Savings Fund is the BEST way to do it.




Also visit
http://equityadvise.blogspot.com

Saturday, February 26, 2011

IDFC INFRASTRUCTURE FUND - OLD WINE IN OLD BOTTLE!!

 There is nothing new on offer in the NFO of IDFC Infrastructure Fund.



IDFC has surprisingly launched an Infrastructure fund when the entire sector is avoided like plague by Fund Managers and Investor alike.

Do the IDFC people found something that many have not been able to???
Well, only time will tell the answer.


But, their guts has to be appreciated to have bought out such a Theme Fund in these difficult times.

I met Mr.Kenneth Andrade recently and he explained, "Infrastructure stocks are valued attractively and Cash Flow visibility is very strong and Investors will flock to these very same stocks sooner rather than later. We want to be there earlier than others and give alpha returns to our investors".


Mr.Kenneth Andrade reasoned that the Infrastructure Stocks were over-hyped during the 2008 highs and and under-performing due to over skepticism and is overdoing by investors on both fronts.
He expects Infra stocks to bounce sharply and lead the Next rally, especially now that many of these infra projects are getting executed and should be monetized sooner.



Infrastructure Sector as a whole has been going tough times and the future does not look too bright with high inflation and hardening interest times.

COMMENTS AND RECOMMENDATIONS: 


A Sector Fund is a strict no-no, especially if you are investing in Lump-sum.
One bad policy decision, and lo, the entire sector looks down and out and you will be left holding a drowning boat.

And yes, there are more than a dozen infrastructure funds in the market today and there is no particular reason for you to pick this Fund over the others unless you have a leaning towards IDFC brand name or you love Mr.Kenneth Andrade.



However, to this Funds benefit, I must add here that Infrastructure Stocks constitute more than 50% of the Nifty, which makes this Fund more diversified than a pure play Theme/Sector Fund.

But,
but,
but,

I would still say...


Go for Diversified Funds as there is nothing that prevents a Fund Manager in investing in Infrastructure sector if he finds the sector attractively valued.


ONE FINAL THOUGHT.....

By the way, I had this thought, that probably the AMC guys at IDFC thought they could piggyride on the IDFC Bond Ad wave which has been doing the rounds for more than 6 months now and would be easy to suck in gullible investors.

Maybe it also is that IDFC people are following the classic saying 'Buy when others are selling"!!  and launching Infra fund when other AMCs are wary of talking about their Infra funds performance.
Best of luck,
Srikanth Matrubai







Also visit http://equityadvise.blogspot.com

Monday, February 14, 2011

INVESTOR AWARENESS SEMINAR


Srikanth Matrubai recently arranged a Investor Awareness Seminar at KSCA Chinnaswamy Stadium.

The Presentation was by Srikanth Matrubai and NJ South Zone Mr.Tushar Bhajantri.

The Meet was primarily targetted towards newcomers to the Investment World and was aimed to dispel myths regarding Mutual Fund Investment.

To begin with, Srikanth Matrubai spoke on the importance of saving and ensuring returns being above Inflation Rate at the Least.

He also emphasised the virtues of "Systematic Investment Plan" and extolled the investors to invest through SIP to 'SLEEP IN PEACE'.

He warned investors not to fall in the mode of 'INVEST AND FORGET".
Regular review of a Portfolio is a must, even if the Fund has a 5 star rating.

Click here…





Thereafter, Mr.Tushar took over and created a lasting impact with his interactive question and answer session. He emphasised that 'investors should have a Definite Goal and think only about Long Term".

To see the video click here…….


This was followed by an interactive session on mutual funds, insurance, savings and other avenues.

The Experts, besides Mr.Srikanth Matrubai and Mr.Tushar, included representatives from Birla Mutual Fund, DSP Black Rock Fund, Religare Mutual Fund, Axis Mutual fund, Escorts Mutual fund, HDFC Mutual Fund, L&T Mutual Fund, DWS Mutual fund, etc.

The Event was a grand success with a Full House of over 75 attendees.



In between, in his true witty style, Srikanth Matrubai held a Quiz contest on general investment matters like Inflation, etc  and "Prizes" were given to winners. 

After the meet, investors enjoyed the Dinner.

Video link…



Also visit
http://equityadvise.blogspot.com

Translate