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Friday, October 31, 2008

Portfolio advise needed

Mr.Raghu wrote ;
Hi


I would like to thank you for providing wonderful guidence for us. Your goodfundadvisor.blogspot.com has helped me to choose the best funds.


i am 32 yr old and my investment plan is 5-10 yrs.

my portfulio is 1000 rs SIP in the following funds.


DSP Top 100 Equity
DSP Balanced
Reliance RSF Equity
Sundaram Select Focus
Fidelity Equity
Templeton Equity Income


iam also putting money requied for short time in DWS money plus dividend fund on time to time.


i can put another 3000 rs as sip in equity. in which of these funds i should increase sip or should i add any other fund missing from my portfolio


Dear Raghu,
First of all, thank you for your nice words.
You have a good mix of funds in your portfolio. Your portfolio need very little tinkering. You can reconsider your sip in Reliance Regular Savings Fund-Equity Fund because of its slight overexposure to mid-caps and small caps. It sure had a terrific run in the past one year or so, but I would be more comfortable with Reliance Growth Or a Reliance Vision fund rather this fund.
You can also consider adding DSPML/Reliance Natural Resources fund to your portfolio. Going forward, most fund managers are of a view that natural resources should be a outperformer.
Best of luck,
Srikanth Shankar Matrubai

loss in existing sips, what to do?

Rajeev Bora wrote :

Substantial Loss in existing SIPs (over last one year) –portfolio
as in following funds– may please advise for future course of action.

Birla Sun Life Frontline Equity-D
DSPML T.I.G.E.R. Reg-D
HDFC Top 200-D
Kotak Opportunities-D
Magnum Contra-D
Magnum Multiplier Plus-G
Reliance Diversified Power Sector Retail-G
Reliance Diversified Power Sector Retail-G
Reliance Growth-D
Reliance Natural Resources Retail-G
Reliance NRI Equity-G
Reliance Regular Savings Equity
Sundaram BNP Paribas Select Focus Reg-D

Tata Indo Global Infrastructure-D
Tata Infrastructure-D
Tata Infrastructure-G

Please advise....
Rajeev Bora



SRIKANTH SHANKAR MATRUBAI replied :
Dear rajeev,
My sympathies lie with you. This Market Meltdown has not spared anyone and you are no exception. Most of your investments are into good funds and need very little tinkering.
While I would advise you to completely switch from Reliance Diversified Power Sector Fund into Reliance Vision Fund, even at a loss, as Reliance Vision has better prospects than Reliance Diversified Power Fund.
You also have two other Infrastructure Fund in Tata Infrastructure Fund and Tata Indo Global Infrastructure Fund. You need to again switch over here from Tata Infrastructure fund to Tata Pure Equity fund, which has a very Good Track Record.
However, all your other funds are very good and do continue your sip in these, you are sure to not only get back your investment but also make decent profits in about 3 years time.
If possible, add Franklin Templeton PE Ration Fund of Funds, which is my latest recommendation to ALL clients. This Fund automatically increases/decreases exposure to Equity/Debt depending on PE Ratio of the Sensex and would compliment your portfolio.
Best of luck,
Srikanth Shankar Matrubai

Tuesday, October 28, 2008

Current Market Scenario

Current State of Markets – An Opportunity

Historic times

Indeed, we are witnessing historic and abnormal times with ‘Once in a generation’ events unfolding in the Western financial world. Western countries are facing a ‘structural’ problem, and not a ‘cyclical’ problem. Uncertainty, confusion and fear are rampant.

It’s an Advanced Economies problem, not Indian

At the root of the Western financial crisis, is the overstretched U.S consumer who has lived beyond his means. Added to it, was poor lending standards by banks and a heavily leveraged financial system. The entire edifice of trust and confidence in financial markets has now broken down. Lending standards will tighten and their banking system will have to deleverage as most banks are short on capital. This will surely lead to a slowdown in economic growth and maybe a recession in the U.S and Europe. In all this, it is important to note that it is a Western problem and not an Indian one.

But, collateral damage in the short term

In this age of global financial linkages and uncertainty of unparalled proportions, ‘collateral’ damage could not have been avoided. What Indian markets have seen is the impact of these financial linkages and a ‘ripple’ effect. Large FII outflows in India primarily reflect ‘Position Liquidation’ and not selling due to serious concerns on long term fundamentals of India. Position Liquidation has been mainly caused by (1) general factors such as fear, lowering exposure to equities as an asset class and (2) firm specific factors such as redemptions, closure, reducing leverage. It is important to note, however, that the fall in Indian markets is in line with the rest of the World.

India is structurally strong

Indian banking system is structurally sound. Indian banks are strong, well regulated and prudent in their lending standards. Indian banks are some of the best capitalised banks in the World with an average capital adequacy of 13% and leverage of 14 times. Compare this, with a capital adequacy of less than 10% and leverage of 20-30 times for Western banks. Further 25% of Indian banks deposit base is statutorily invested in SLR securities – i.e. government securities, unlike anywhere in the World. This is over and above a CRR of 6.5% with the RBI. Indian banks have no exposure to U.S Sub prime.

India is a high savings economy and Indian households are underleveraged. India is a domestic economy, unlike most other Emerging and Asian economies which are dependent on exports to the Western world for their growth. India’s demographics, with one of the youngest populations in the World, will allow high growth rates for a long time to come.

It is interesting to see that, so far, Indian economy and its markets have continued to function uninterrupted and without the requirement of any regulatory changes or governmental intervention. This is not the case with most markets in the World where we have seen bailouts, government intervention in the banking system in terms of guarantees, banning of short sales, halting of trading etc. India has effectively continued to function as a free market economy.

India’s fundamentals are improving

A global recession, as it is building up to be, will net-net be beneficial to India. Two of the biggest concerns on India have been high crude oil prices, which makes government’s finances vulnerable, and high inflation. Crude oil prices have already corrected 50% from the peak of US$145/bbl and other commodity prices have also crashed by 40-50%. A global recession can lead to a further correction in commodity prices. Being a net importing country, India is a big beneficiary of this.

No doubt a global slowdown will also slow our Growth rate. But what is important to note is that India still will continue to grow at around 7% p.a., a high growth rate in itself and will also continue to be the second fastest growing economy in the World. More importantly, our Growth Gap over the rest of the World will be maintained. Chart 1 & 2 below compare the actual and forecast GDP growth in 2007 and 2009 respectively as per the World Economic Outlook report issued by the IMF in October 2008.

Source : IMF

India has enough policy ammunition to support growth going forward, as the recent rapid action by the RBI in cutting CRR and Repo rate shows. With a global slowdown, inflation and interest rates can now start falling and in turn support growth.

Market at very attractive levels

Equity markets always, ultimately, reflect the fundamentals and growth of the economy and corporate profits. We expect that a 15-20% p.a. corporate profit growth over the next 3 years is easily achievable, especially given the possibility of lower inflation and lower interest rates going forward. Valuations have also now corrected steeply. Indian markets are at 10x P/E on one year forward earnings, compared with the last 15 years average of around 15x. Remember, India has been never been as strong in the last 15 years as it is now.

Expect more divergence

Unlike earlier, we have a different economy and market now, where within the overall growth there will be large differentials in growth between sectors and also between companies within the same sector. In a global slowdown backdrop, there will be gainers and losers. This will also get reflected in stock performances. Stock selection has now become that much more crucial.

Waiting for the FIIs?

Isn’t everyone waiting for FII inflows to start back in? True, FII inflows are crucial. But there are not going to be any warning bells before flow improve. The biggest surety for flows to come back in the market is strong fundamentals. Liquidity always, ultimately, flows towards an attractive asset class. It is fundamentals that drive liquidity and not the other way round.

In the past 25 years, whenever there was a crisis, money flowed away from emerging markets and back into the Western financial system due to ‘risk aversion’. But, this was always in the context of a structurally strong U.S and Western world. Things have changed now. Once the global financial crisis settles down, we think we can see renewed interest in the structural stories of Asia and India in particular. The entire concept of ‘Risk Aversion’ we think will get redefined over the coming few years.

Don’t time the markets

At Lotus India, we strongly recommend investors not to attempt market timing and engage in bottom fishing. The truth is that no one can time the markets. The ideal thing to do is to invest with a longer term horizon when the fundamentals and valuation are attractive. Whether markets correct further from here or not is not relevant. When you look back three years later, it will not matter whether one invested at 10,000 index or 8,500 index or 12,000 index.

Lotus India’s Philosophy and Strategy

At Lotus India, we have always emphasized on a balance between ‘risk’ and ‘return’, for delivering a consistent and dependable performance. Our investment process and team work are geared towards disciplined stock selection.

We continue to maintain the normal level of cash balances i.e. 5-10% in our portfolios. We believe that playing with cash levels is a risky strategy. Response to emerging situations has to come through suitable changes in stock selection and portfolio construction strategies in a fully invested portfolio.

During the past couple of months we have reviewed our portfolio and we are investing mainly in the following kinds of companies:

· companies which are already fully funded in terms of their growth plans

· companies which have pricing power

· companies where expectations are realistic and are there no exagerations

· companies where valuations have corrected significantly without a significant change in business fundamentals.

We are overweight the Banking, Oil Marketing, Telecom, Engineering, FMCG and Media sectors. We are underweight IT services, Metals, Real Estate and Pharma sectors. In the last 2 months we have increased allocation to our theme ‘Beneficiaries of Global slowdown’ in comparison with our other themes of ‘Consumerism’ and ‘Investment’.

Advice for investors

At Lotus India, we look upon the current state in the Indian equity markets as a serious opportunity for disciplined equity investors. This surely will turn out to be an exceptional opportunity for investing in Indian equities.

A few simple rules to follow

  • Have confidence in the India growth story
  • Look upon the current times as an opportunity
  • Do not time the markets
  • Invest for the long term – at least 2-3 years

regards,

Tridib Pathak

Chief Investment Officer - Equity

Lotus India Asset Management Co Pvt Ltd

(A JV between Fullerton Fund Management Group and Sabre Capital Worldwide)

Letter from Grandpa

Read this, it is very interesting.
An open letter from Grandpa

LATELY, I have been thinking a lot about the Lehman crisis . Spending money that they didn't have and going beyond their means is one of the main reasons for their situation today. In fact that is the cause for the current economic crisis in the US.
When I see all this happening, I can only remember the good old days. Then, karz was bad. People looked down upon those who took loans. Parents would not give their daughter's hand in marriage to a man with loans.
But of course, the times have changed now. Everyone I know has a loan. The buzz word is EMI (equated monthly installment). Today, you can buy everything on EMI - a house, a television, an i-Pod. In fact I know of someone who just bought a fancy BMW 3 series on EMI, instead of buying a cheaper car outright with cash. I mostly prefer to take public transport, but then I am an old man with old thoughts!
Anyway, coming back to what caused the crisis. Imagine having Rs 2 lakh in your bank account, no regular income, yet buying a house worth Rs 65 lakh, in the hope of selling it for a higher price. Even if the price of the house fell by just 5 per cent (that is Rs 3 lakh), you will go bankrupt. This is what Lehman Brothers did; with around USD 20 billion they went and bought assets worth over USD 600 billion. Isn't it suicidal and simply foolish?
I am sure things would have been different, had I been the head of Lehman brothers. But who wants an old conservative man like me to head a complex financial institution.

But there are a few lessons that we can learn:

1. Live a balanced life and avoid overspending.

Tip: As soon as you get your monthly salary, set aside a fixed amount, usually 35 per cent, for insurance, savings and investments. You can then spend the rest.
2. Not all loans are bad. Loans that are 'need based' (home loans, education loans) can always find a place in your finances against those that are largely 'want based' (personal loans, car loans).

3. Borrow only if repayment is financially comfortable.
A thumb rule: Keep EMIs within 30 per cent of your monthly income

In that respect, there is one American who I really respect – Warren Buffet. He has lived in the same ordinary house for over three decades, drives his own medium sized car and leads an extremely regular 'middle class' life. If that's all it takes for the richest person on earth to be happy, why do all of us need to take extra stress just so that we can get things which aren't even essential?

India still has a lot of growth ahead and the future holds immense opportunities for us. Let us make the most of it and save and invest it wisely instead of wasting our precious little on things we don't need.


HDFC Mutual Fund people sent me this interesting letter.
regards,
Srikanth shankar Matrubai

Monday, October 27, 2008

FDs or Mutual funds?

Purvesh asked :
Hi is investing in FDs or mutual funds a better idea in current market conditions a goof idea, if MF then which funds are safe to invest

SRIKANTH SHANKAR MATRUBAI replied :
Hi, purvesh,
If your outlook is short term of say below 6 months, then FDs are the best option for you, anything above 6 months, definetely you should consider Stock Markets seriously.
The ongoing volatility clearly shows that the stock selection, entry exit points are best left to experts, and who better than Mutual Fund Managers to manage our money. If you look at the recent history, almost all Funds are sitting on cash of above 30%, and in some cases, even 40%, which clearly shows that they had a feeling of this meltdown.
Of course, the meltdown was so savage that even the most intelligent Fund Manager would have been stumped.
But, still, my vote is go for Mutual funds through SIPs. Invest in good Diversified funds with Good track record. some of them you can consider for investing are
Birla sunlife Equity fund
DSP Equity fund
DWS Alpha Equity Fund
Fidelity Equity Fund
HDFC Prudence Fund
HDFC top 200 Fund
Kotak K 30 fund
Reliance Growth Fund
Sundaram Select Focus fund

Best of luck,
Srikanth Shankar Matrubai

Markets Bottoming Out

My letter Published in Financial Chronicle on 27 October, 2008

BOTTOMING OUT

sir,
Stock Markets are the best asset class to invest in but at the right time, in the right amount and in the right direction of the market. Investments in the markets are also a great learning experience, which should always be taken in the right spirit. Though the market still looks volatile, I think it is the right time to buy equities.
Peter Lynch, the famous Fidelity Fund manager, says the secret of getting rich in stocks is to do your homework and know what you are holding. Far from being scared, you should take this opportunity to get yourself some great stocks, which are available at dirt-cheap valuations.
Buy now, then sit back and enjoy your Diwali or whatever. Don't look at the stocks for next six months, whatever happens.
Srikanth Shankar Matrubai

Saturday, October 25, 2008

Lesson learnt by me in this Market Crash

The five year Big Bull run made everyone that there will always be sunshine. We tended to ignore warning signs and just brushed them aside as an aberration. I was no exception. Have I lost money?. Yes and no. Yes, because I am stuck with an asset which at a given point of time would fetch a lower valuation. NO, because, the loss is only notional.
I have seen two Bear Runs. First, post the Harshad Mehta Scam in 1992-93, next the Technology Meltdown in 2001. I learnt two Different Lessons in these Bear Runs.
In the first Meltdown, I learnt that "Never Invest All your Money at one go, it may the peak you are investing". In that Meltdown, where I burnt my finger as speculator, I qualified to become myself as an Investor. Lesson Learnt : Invest regularly at periodic intervals.
In the second Meltdown, I learnt that "Never Overexposure yourself to One Particular Sector". Lesson Learnt : Do not put all your eggs in 1 Basket. And the Biggest lesson which I learnt from this Bear phase is that I sold Good Stocks to protect my Huge losses in my Bad Stocks. So, ultimately, I was left with Dud Stocks and devoid of Blue Chips. And it took nearly 3 years to get my portfolio on the right track.
And in this present Meltdown, I have learnt not one but Two Big lesson, First, Book Profits Periodically.
Second, Spread Your Investment across Asset Classes including Debt.
I have taken these losses as tuition fees that I have paid to learn from the Markets.
The Biggest Reason why investors lost heavily in this market was due to the prolonged Bull run of 5 years, which made people invest without doing any research due to stocks going up almost every other day.
For me, the market is like an ocean. Anything you throw into the ocean always come back. Whatever you throw into the market will ultimately come back, provided you follow the market discipline.

I may sound naive, but I don't think I've lost anything. That is I have lost money on paper, which I had bought long long time age, and I am sure they will be back up sooner rather than later. The stock market going down doesn't mean the end of the world. The compaines I hold still continue to rake in profits.

But, yes, my faith to be completely invested in equities has been ripped to shreds, as the even the bluest of blue chips have got hammered. So, while I have not changed my current holdings, I will be looking to change my future asset allocation with a provision for debts and a bit of cash reserves to go with.
But, thankfully, I am not even 40 yet, so retirement is still a long way. I am sleeping peacefully, for I know I do not need this money for another 15 years at least.

My advice would also be on the same lines. It is always wise to have a properly diversified investment strategy based on your risk tolerance and as you age, you should become more conservative and shed your aggressiveness and shift towards debt and Large Cap Mutual funds.
I also plan to diversify further by investing in some International Funds.
I also plan to invest through SIPs to take advantage of NAV volatility (and indirectly time the market!) and restrain myself from making Lumpsum Investment.
I also plan to diversify further by investing in Other Asset Classes too like Gold, Silver and commodity funds by committing a small percentage.
I have decided not to borrow funds for investing. (this lesson I learnt in 1992-93 bear run).
I have decided to avoid ULIPs.
I intend to invest only for Long Term.
Best of luck,
Srikanth Shankar matrubai

Doing same mistakes again and again??

When sensex was around 18000-21000 levels people were thinking ( many individuals actually entered the stock market) of investing at that time because the picture was very very prudent. People believe in India`s growth story. Now as the market have corrected more than 50% people also think that sensex would tank more & there would be panic all around. Indian people are making the same mistake again & again.Buying at highs & selling at lows. If you are selling your shares at this levels then you are again doing the same mistake. I know many friends investing by scrapping their FD`s at the levels of 18000-21000 of sensex & the same friends selling their shares at 10000 sub levels & putting their money into FD`s at 10000 levels. This is big mistake. Another mistake is very good amount of people have taken personal loans from banks & started trading into stocks. Well i don`t know how many of them actually earned money but i know quite a few of them ending in huge losses. This means that stock market is not a day`s game. You have to be patient when it comes to investing. Someone rightly had said that Stock market is the best place to invest when there is uncertainity all around. So start investing friends in smaller quantities. Don`t come under talks of those fools who are telling that our economy will collapse because of this. India has 35% of savings rate one of the highest in the world. There is no need to worry. Our future is bright if you have the patience for 1-2 yrs. of investing.
Think over it....
Best of luck,
Srikanth Shankar Matrubai,
Bangalore

WHY MARKETS ARE TANKING........

WHY THE MARKETS ARE TANKING....
The fall in the Indian Equity Market is due to systemic global risk that is common to entire market and not specific to Indian Market.
The big Foreign institutions are liquidating because they borrowed a lot of money and made investments whose value depended on home prices and credit. American Home prices have fallen dramatically, and credit is hard to get now, so the value of their investments is down. That causes the people who lent them money to immediately demand more collateral or repayment.
Either way, those big investors who borrowed all that money must sell something to come up with the cash... and fast. Unfortunately, the housing-related investments they bought aren`t popular right now and can`t be sold quickly. So the large institutions are selling anything they can sell quickly. Stocks are liquid and sell quickly, so investors are calling up their brokers and telling them to sell everything right away.

That`s why stocks have been falling so much. It`s like a giant bankruptcy sale. Or perhaps, to be a little more accurate, it`s a giant sale that represents a mass attempt to prevent bankruptcy.

Not only have overindebted investors been selling, many others are selling simply because... everyone else is selling. They`re even selling gold by the truckload.
This is not going to stop for sometime, but surely it cant continue losing 1000 points a day, as another 9 days like that we will be zero.So just stay calm and let this tsuanmi pass. it will clear, sky is not falling, some people want to project it that way for their own self interest. for some people at 3200 reliance was a buy at 990 it is a sell, tell me what has happened to Reliance in this 10 months? Long term investors should not panic in this real panicky situation and hang on and slowly buy quality stocks in the next coming 12 months. and surely sensex which appears going to 2900 levels from where this bull run started will be at 30000 in 3 0r 4 years.and then at 30000 all will exclaim it is buy time. watch out stay calm.People who look at downside of things are more successful than those who look only at upsides.Never act in HASTE.
Best of luck,
Srikanth Shankar Matrubai,
Bangalore

Has the Markets Bottomed Out???

HAS THE MARKET BOTTOMED OUT?

You`re going to think I`m crazy for writing this, but right now, there is less risk in stocks than at any time in our lives. Do not take my word just like that, take it from what the greatest investor in history, Warren Buffet, said only yesterday "It's time to BUY". Warren Buffet has not made such an enthusiastic statement in public in the last 34 years.
Stock markets are the best asset class to invest in but at the right time, right amount and right direction of the market. Investments in the markets are also a great learning experience which should always be taken in the right spirit.
When you understand the businesses you`re holding(the stocks you are holding), what they`re worth, and what kind of future they have, you can sleep soundly at night, no matter what the share prices do in the short term. Peter Lynch, the famous Fidelity fund manager, says the secret to getting rich in stocks is not getting scared out of them. The secret to not getting scared out of stocks is to do your homework and know what you`re holding.
Companies like Reliance and L&T are cash generating machines. They have great businesses. Hang on to these good businesses, they are worth far more than they are being traded these days. They are traded at ridiculous valuations.
Far from being scared, you should take this opportunity to Get yourself some Great Stocks which are available at dirt-cheap valuations.
Buy now, then sit back and enjoy your coffee, tea or whatever. Don`t look at the stocks for the next six months, whatever happens. This way your next Diwali is going to be fabulous, like you have never had earlier.
Best of luck,
Srikanth Shankar Matrubai,
Bangalore

Wednesday, October 22, 2008

Templeton India Equity-SIP: Advice needed

SURESH wrote
Hi,

I am investing thru`SIP (for 12 months) Rs1000/pm in TEMPLETON INDIA EQUITY INCOME FUND DIVIDEND PLAN since Jan`08 but off late I have noticed that rating for this fund has gone down to 3* in money control and in value research on line it is unrated,kindly advice whether I can continue till Jan`09 or cancel and go for better MF.

Need your valuable advice.

Rgds
Suresh

SRIKANTH SHANKAR MATRUBAI advised
Dear Suresh,
Templeton India Equity Income Fund invests largely in International funds of High Yielding Dividend Stocks. This ia a good diversification and before the market termoil, the fund was doing exceeding well. Its performance lately has been lacklustre due to meltdown in stocks worldwide. Still, it has outperformed even in this downfall. And, more importantly, its recent underperformance has also been due to the Strong Dollar. As you may be aware, Dollar is expected to correct very sharply to sub 40 levels which would give a BIG boost to the NAV of the fund. As such, not only can you stay invested in the fund but also can continue the same when the time for renewal comes up.
However, it would have been better if you had given your full portfolio for a much deeper analysis.
Best of luck,
Srikanth Shankar Matrubai

Thursday, October 16, 2008

Good Funds in these Crisis Times....

One blogger Mr.Kumar, queried :
"
Sir,


Your blog has really helped me gain a fair amount of knowledge about mutual funds.


In this time of crisis, please let me know which MFs are good to buy. After buying them, I can wait for a minimum of 3 years. I am new to MFs, about 7-8 months ago bought SBI's Tax gain and Tax advantage, each 25k worth, one time investment, both not doing well, and recently about 2 months ago bought 5k worth of Reliance Natural Resources growth fund units. I can invest/save about 10k per month. Please advise me as to which funds I can invest in at the moment. Thank you.
G S Kumar


SRIKANTH SHANKAR MATRUBAI advised :

Dear G,
Your present investments are not doing well in line with the market. So, there is no point in worrying about them. You seem to have invested during the peak of the markets and hence the decline. Out of your 3 existing funds, two, namely, SBI Tax Gain and Reliance Natural Resources Fund are good and can be held on. However, SBI Tax Advantage is not a good investment, moreover, it is a 10 year Close ended Fund. You have very little option, expect to hold on this fund also.
While 3 years is a good enough time for a fund to deliver above average market returns, it would be wise if you spread your investment into 5 fund with 2000 each. Go for different dates.
My pick of funds for you are :
1. Birla sunlife equity Fund
2. DSP Top 100 Fund
3. Fidelity Equity fund
4. HDFC Prudence Fund
5. Sundaram Select Focus fund
You can split your sips into 1000 each (500 in Fidelity and Sundaram) and invest on different dates to take maximum advantage of NAV Volatility and earn that extra. \
Best of luck,
Srikanth Shankar Matrubai

Negative Returns in Liquid Fund??????

Dear All,
Recently, Business Standard carried a article where it claimed that a Liquid Fund from Edelweiss Mutual Fund has posted a Negative NAV. I was stumped, how can this happen?. It was next to impossible.
Thankfully, Edelweiss People responded with a email clarifying things. This is how their email went :

From: EdelweissMF
Sent: Wednesday, October 15, 2008 11:43 AM
Subject: IMPORTANT: Clarification on today's article in Business Standard
Importance: High

Dear Sir / Madam,

With reference to the article on "Edelweiss Liquid Plus Fund Dividend Fortnightly " having seen negative returns in Business Standard today, please note that this data is factually totally incorrect and incomplete. While the source of data is valueresearch and from a factual point of view, the NAVs mentioned are right, the interpretation of data by the journalist is absolutely wrong and irrelevant. The journalist has first of all compared returns of the dividend option (instead of growth as is the industry norm). Moreover, he has incorrectly presented this incomplete data. The reason why there is a fall in the NAV is because of a declaration of dividend on Monday, the 13th of October on the Friday NAV. Obviously if a dividend has been declared in any scheme, the NAV will fall to the extent of the dividend declared and that is exactly what has happened in this case.

Please not that there has not been even a single day of negative returns in either the Edelweiss Liquid Fund or the Edelweiss Liquid Plus Fund till date.

Enclosed are the returns as on October 13th 2008 of both Edelweiss Liquid Fund and Edelweiss Liquid Plus Fund:

SIMPLE ANNUALIZED RETURNS FOR EDELWEISS LIQUID FUND

Scheme Name

NAV (13-Oct-08)

1 Week

2 Weeks

1 Month

Since Inception

Edelweiss Liquid Fund - IP - Growth

10.1109

11.7329

12.9828

11.9325

11.9054

Edelweiss Liquid Fund - Ret - Growth

10.1108

11.4223

12.7747

11.8958

11.8947

Edelweiss Liquid Fund - Super IP - Growth

10.1109

11.4739

12.9568

11.9202

11.9054

Crisil Liquid Fund Index

5.1966

7.854

8.1131

ABSOLUTE RETURNS FOR EDELWEISS LIQUID PLUS FUND

Scheme Name

NAV (13-Oct-08)

1 Week

2 Weeks

1 Month

Since Inception

Edelweiss Liquid Plus Fund - IP - Growth

10.1065

0.2152

0.4253

0.957

1.065

Edelweiss Liquid Plus Fund - Ret - Growth

10.1062

0.2152

0.4253

0.953

1.062

Indices

Crisil Liquid Fund Index

0.0854

0.2797

0.6446

Source: www.mutualfundsindia.com

Returns are computed of the growth options of the respective schemes. Past performance may or may not be sustained in future. Such information is not necessary indicative of future results and may not necessarily provide a basis for comparison with other investments.

Both Edelweiss Liquid and Liquid Plus Funds continue to outperform their benchmark across various time frames.

We look forward to your continued patronage of our funds.

Warm regards,

Marketing@EdelweissMF

And, wonder of wonders, Business Standard carried the Clarification the next day.
Thank God for small mercies.
Srikanth Shankar Matrubai