Facing loss in Sector Funds - What to do?

One boarder wrote :
I invested Rs.10,000/- each in DSP ML Tiger Fund (G), JM Basic Fund (D) and Reliance Diversified Power Sector Fund (D) in mid-Feb this year. I also invested Rs.15000/- in ICICI Pru Infra fund in Mid-Jan. My investment is showing approx 25% loss. Is my selection of funds OK? I can stay invested for another 2-3 years. Please advise!! Thanks Saumya.

Srikanth Shankar Matrubai replied :

Dear Saumya,
I am sorry to say, your choice of Funds is not right. I am not saying it is bad, but the point is all of your investments are into Sector or Theme Funds and these are the first ones to be hit hardest in these of Bearish Sentiments.

In hindsight, all your funds are very good but they should form only a part of overall portfolio and occupy a max of 20% of your investible amount and by themselves form the whole portfolio.
There is even duplicaiton of sectors in DSPML Tiger, JM Basic and ICICI Pru Infra. These funds hold almost similar portfolios varying only in %age of their holdings.
Even though, you can stay invested for 2-3 years, you are better off switching from at 3 of the above funds to Good Diversified Equity Funds which can give better returns.
Switch from JM Basic Fund to HSBC Equity Fund

Switch from Reliance Diversified Power Sector Fund to Reliance growth Fund

Switch from ICICI Infra Fund to HDFC Top 200 Fund. If you wan to remain in ICICI Fund House, then switch to ICICI Focussed Equity Fund.

In future, avoid Sector/Theme funds and go for Diversified Funds and try to invest through sips.

best of luck,
Regards,
Srikanth

Quiz Results

Dear all,
The quiz for this month has closed now. The response was comparatively better than last month. Last month 4 persons participated and this time, 19 persons participated.
Thank you.

Among 19 answer, 10 were correct. The question I had asked was :

Which was the first Private Mutual Fund to start operations in India?

And the options were
Reliance Mutual Fund
Birla Mutual Fund
HDFC Mutual Fund

Kothari Pioneer Mutual Fund

And the correct answer is KOTHARI PIONEER MUTUAL FUND.

This fund was later taken over by Templeton and is now known as Franklin Templeton Mutual Fund.

Congratulations to all those whose answer were correct. And for those whose answer were not correct, here is one more quiz. I hope you will enjoy answering the same.
Best of luck.

Investing for Child

It is always desirable to start investing for your child's carrer, security as early as possible. And what better investment avenue is there, other than Mutual funds?

Mutual Funds give better returns, provide greater transcerpancy, flexiblity, tax benefits, etc.

When you are investing for your child, obviously it is safe to assume that the investment is for Long Term.

In that case, I do not find logic in going for Balanced Funds like SBI Balanced Fund or HDFC Prudence Fund. These Funds are very good but they should form only a part of your portfolio and not occupy the entire folio itself.

When investing for long term, always preferably go Diversified Equity Funds. These tend to generate a higher returns than any other Asset Class and there is enough evidence to prove this.

In such a case, I would like you to look at some Large Cap Funds, like
Birla Sunlife Frontline Equity Fund
DSPML Top 100 Fund
HDFC Top 200 Fund
HSBC Equity Fund


You can also consider investing in DWS Tax Saving Fund. This not only saves taxes for you, but also give you Free Life Insurance as a bonus. And the Funds performance is also very good. Upto 5 times of your investment amount is given as Insurance.

Among Child Specific Funds, HDFC Children's Gift Plan (Investment Plan) should also suit you.
And also ICICI Child Care Plan should also be thought of.
Both HDFC and ICICI offer Free Personal Accidental Insurance as an additonal benefit. ICICI also Free Scholarships for Deserving Students.

Take your time. It is the matter of investing for your child.

Always consult your Financial Advisor before investing.
BEst of luck.
Regards,
Srikanth

GoodFundAdvisor: Avoid Sector Funds

http://www.moneycontrol.com/india/messageboardblog/16/32/message_thread/2163210/2850542#m2850542

Investment Advise

When the price of gold comes down - people buy more gold. When it goes up they do not sell. They expect it to go up in the long term. When it comes to equity/mutual funds - when sensex comes down - they stop investing. When it goes up they start investing.This is because they always think for the short term when it comes to equity.

If they follow the same strategy as the one that they follow for gold - they will make more money.

Yes, people buy more gold when it falls, but when it comes to Equities, they not only stop buying, in fact contemplate selling at a loss!!

WHAT AN IRONY!!!

When people buy Gold or for that matter, Real Estate, they buy with an intention of holding at least 5 years (that's the thumb rule), and in the interim, if the value of the Gold or Land, they are not at all bothered, and why should they, they have bought with the intention of investing for long term, isn't is?

Now, when it comes to equities, it stumps me as to why they suddenly lose their focus and conviction on the stock/fund, and try to get out of the same at the first opportunity.

They need to educated. Warren Buffet said, 'Buy a Stock, as if the Stock Markets are going to be closed for 5 years'. If we all follow the same approach, then I do not think investors will face grief and reap the benefits of High Yields from the Stock Market.

Think over it........

Best of luck,
Regards,
Srikanth

Buy Call

Buy Call on Gujarat NRE Coke

With coal prices going through the roof, it was a foregone conclusion that Gujarat NRE Coke would post a superlative performance for first quarter ended 30^th June 2008, it was only a question of “how superlative”.

YoY, exuberant would be more like it. On a whopping 154% rise in net sales, the company’s EBIDTA rose over two times, the PBT of the company rose 2.26 times and PAT was up by a whopping 2.20 times at Rs.94.40 crore. But the margins indicate that there is some pressure. OPM was down from 42.10% to 34.68% and NPM was down from 28.76% to 25%.

QoQ, the performance was mixed. Though net sales was down marginally by 0.8%, it managed to reduce its operating costs by 14.38% and this helped the EBITDA which was up 23%. It reduced its interest outgo by 13% and depreciation rose 31%. PBT rose 28%. Its taxation for the quarter was down 22% and this further helped boost the net profit, which was up 47%. Unlike YoY, the QoQ margins showed an improvement. OPM was up from 27.85% and NPM from 16.87%, which is quite substantial.

The company currently manufactures one million tonne of coke from its three existing facilities in Gujarat and Karnataka. An additional 0.25 mt capacity is being commissioned at Dharwad, which is expected to go on stream by March 2009. It plans to set up a one million tonne coke manufacturing facility at Nellore in Andhra Pradesh, at a capex of Rs.450 crore, to be financed mostly from internal accruals and is expected to be commissioned by 2010. It has dropped its rights issue plan.

It has also lined up Rs.600 crore worth of power projects. It has installed 30 MW wind power capacity and installation of another 30 MW at Rs.170 crore is to be completed by September 2008. The company is also installing 60 MW waste heat recovery power plants at its coke plants, costing Rs.300 crore. Once all these go on stream, the total power generation capacity is expected to be 147.5 MW.

The company has also lined up investments tuning over $500 million (of which it has already invested $300 million) in developing its two coal mines in Australia, which is expected to take its total coal production capacity to 7 million tonnes by 2012-13. This investment is also being funded through internal accruals. Goes on to show, how much money the company managed to make due to soaring coal prices. And it’s gratifying to know that instead of sitting on these gains, it is ploughing back the gains and distributing to shareholders also. It has recommended a bonus issue in the ratio of 2 shares for every five held. This is the sixth bonus since 1995-96.

The average net realisation of the company has gone up from Rs 8,600 a tonne to Rs 19,100 a tonne during Q1. From $450 a tonne in April, spot coke prices reached $600 a tonne in June and is now ruling at $700. The company sells 60% of its production on spot basis.

Clearly, the prospect for coal remains highly bullish in the current fiscal too. One can consider buying this stock at every decline for good long term gains.

Timing the Market?

One boarder wrote a lengthy letter proclaiming that "Timing your Buying and Selling would make you a millionaire".
I was shocked. Is it so easy?. If it was so, no one would do any work. They would come to the stock market and earn millions. so, I had to respond.
And, this is my response


I appreciate the effort you have put in your message to explain the people about timing the market.
But, tell me dear, how many will get the timing right?. Even a genius will not have 100% record. Even a 50% record is doubtful.
For timing the buying at the lowest levels, and selling at the highest levels, is next to impossible. It is not possible even for you Mr.Goldchest, otherwise you would not be writing 5 Star Rated Messages here.
For timing the market, you should keep your eyes and ears open to what is happening at all levels, local, national and international.

For instance, at present, it is very clear that the international economic and political situation is pretty unstable because of the huge speculation in oil futures by sovereign funds, hedge funds and pensions. petroleum prices at the international levels are bound to go up leading to more increase in oil prices and dampening of the markets across the world.

But, there could be some good news which would take the wind out of the all bad news and make the BULLs back in favour.
Neither I nor U or anyone else. Just a year ago, the great subprime crisis was come to notice all of us during these same months of July-August. From then on our markets made a one way northward journey. Peaking every 1000 points now & then within 10-15-20 days & breaking all prev. records but at the same time, all so called experts were busy in calling the great indian decouple story. That out country is no longer dependent of FII or global cues or any other thing like that. Now after the crash, every one is talking about some more downfall from current levels. So what do you do?

Being in Mutual fund industry, I may be baised towards Systematic Investmatic Plan, but there is no other method of investing in the Equity Markets, which can deliver you above average returns. Regarding benefit of investing thru SIP, my dear friend SIPs r more beneficial in a downward market than in a upward market as SIP invested on every new fall 'll bring ur purchase price down.

Of course, there are various methods of earning high returns and the methods keep increasing day by day. Our job is to ensure, that the high returns we are looking should not be at the cost of capital itself

If Predictions were correct, all of us should have SOLD our Invesments in 1st week of January 2008. In that case nobody would have BOUGHT any Stock anticipating BIG FALL.

Please DO REMEMBER that SELLER is selling because he feels that Stock will not Go up Further. At the SAME TIME BUYER feels that Stock is likely to go up.

Stock Price MOVEMENT is result of COLLECTIVE Psycological Behaviour of THOUSANDS of Investors(SELLERS & BUYERS).

If you are buying at 10000 Levels Expecting Gains, Seller is selling because he feels Enough loss he has suffered & there is no Profit Expected.

Sorry, if I am wrong. I solicit your response.
Best of luck,
Regards,
Srikanth

Best Long Term Buy - Webel SL Energy

Webel SL Energy is a pioneer and leading producer in Solar Photovoltaic Cells and modules using mono-crystalline Silicon Wafers. Webel SL Energy is jointly promoted by SL Industries, West Bengal Electronics Industries Development Corporation and Helios Tech of Italy.
Webel SL Energy has presently a paid up capital of 7.74 crores. The promoters SL Industries also picked up 107000 shares as conversion from warrants at 350 per share in February 2008. While MFs hold about 5%, FIIs and FCBs hold nearly 26% in the company.

In October 2007, Merrill Lynch had picked up FCCBs worth $16.8 million in the company paying a premium of Rs.540 per share!!
The money collected through these and GDRs issued last year is to be utilised to raise the capacity from the current 10MW to 42MW per annum.
Webel SL is also forming a JV with Micro Power of Singapore for sourcing of silicon ingots and setting up a slicing plant for the manufacture of silicon wafers, the main ingredient for Solar Cells.
Silicon costs are zooming putting pressure on margins, however, with this jv becoming operational, costs would reduce by half.

Webel exports almost 95% of its production to countries like US, Germany and Japan. Rupee Volatility is non issue due to companies natural hedge in form of imports of raw material fo silicon.
While Wind Energy margins are about 0.6%, the same for Solar Energy is as attractively high as 10%.
With High Crude prices, kyoto protocal, Govt. Subsidies, the demand for Solar Energy can only go up.

"What the World consumes in 1 year of Solar Energy can be produced by just 1 hour of Solar heat"
Webel is targeting 100MW by April 2010 from its existing 10MW capacity. This is being done by settinp up of an SEZ zone of Falta, Kolkatta.

One brokerage had a forecast of EPS of 24 for FY09 and an EPS of 50 for FY10. Even if we take a conservative EPS of 30 for FY10, a PE of 15 will give the stock a price of 450, which is double from what it quoting now.
This is one stock which is capable of repeating the sucess of Bharti Airtel, Pantaloon and Suzlon for those who stay invested for a minimum of 3 years.
BESt of luck ,
Regards,
Srikanth
Also visit goodfundadvisor dot blogspot dot com

Investment Advise for 2-3 Years

One Boarder Mr.Milind Parmar wrote :
""Hello Experts,
I am a new investor and need your help for making a good portfolio.
I have below funds in my basket so far.
1)UTI Infra. (G)
2)UTI Lifestyle
3)UTI Eqt. Tax saving (D)
I want to invest 50K in near future and need your help in it. My age is 24 and I am looking for long term investment(2-3 years).Also I have read much about SIP and want to try it but not sure how to distribute investment among funds.
Appreciate your help!""

Srikanth Shankar Matrubai replied ::

"Dear Milind,
I feel like laughing. 2-3 years is long term?!!!!. That's what the Bull Market has made Indian Investors.
Sorry, for me, Milind, 2-3 years is not long term. Even 5 years is strictly not Long term. But may be given consideration as Long Term.
For your horizon of 2-3 years, it will be difficult to suggest anything out of hat, maybe Large Cap Funds like HDFC Top 200 Fund, Birla Sunlife Frontline Equity Fund will do.

But if you are ready to hold for 5 years or more than
DWS Investment Opportunities Fund
Reliance Growth Fund
Sundaram Select Focus Fund
DSPL Equity Fund
would make good choice.
Considering your age, I would say, 5 years should not be any problem for you, even a 10 year horizon would be a wise thing to do.

I recommend you visit my blog goodfundadvisor dot blogspot dot com for better understanding of the mutual funds investments.
Regarding your existing investments, sadly, all your investments in one Fund House, UTI. UTI Mutual Fund is among the Top Fund Houses in the country, but sadly, expect for UTI Infra, their funds are struggling to perform in Bear Market.
UTI Infra can be held, if you are bear the volatility associated with the sector and stay on for atleast 3 years.
UTI Lifestyle is a Close-ended Fund. Its Launch was held with great fanfare tomtoming the fact that Anoop Bhaskar would be managing the Fund. But, in line with the market conditions, the Fund's performance too has been insipid. Hold the fund till it becomes open ended and then take a call.

UTI Equity Tax Saving has given a 'ok' kind of return and could be held on to.

However, avoid fresh investments in any of the above funds, and looking at future scenario of the Markets, it would be prudent and advisable if you would switch from UTI Infra and UTI Equity Tax Saving (if lock-in is over), to a Large Cap Fund from UTI like UTI Leadership Fund or better still switch to UTI INDEX SELECT EQUITY FUND which has a better track record and hold better promise.

best of luck,
regards,
Srikanth

Response to "AVOID SECTOR FUNDS"

GOLD level boarder in Moneycontrol Messageboard Mr.WADIA was kind enough to reply to my article on AVOID SECTOR FUNDS. This is how his message went:::::

Dear Srikanth,
I must congratulate you in compiling a very useful and timely post for all fellow investors. Keep up the good work.
Even the thematic funds have lost substantially in 2008
Just look at some of the mighty infrastructure funds who generated between 60 and 90% returns in 2007 and what has happened to them in 2008.
The year to date returns of some of the funds have dropped between 35 and 57%
DSPML Tiger -44% (YTD June 08)
ICICI Infra -37% (YTD June 08)
JM HI FI -57% (YTD June 08)
UTI Infra -42% (YTD June 08)
Ths is the risk one takes when opting for sector /thematic funds.
Regards,
Wadia

Avoid Sector Funds

Dear all,
It is been a regular pleading from almost all experts in moneycontrol mmb to avoid Sector Funds. We have been requesting you to avoid Sector Funds.

Sector funds require investors who understand the cycles and dynamics. These are not buy and hold kind of funds. Fund managers also have to be very and need to book profits when the sector's valuation is around its peak.

If a Sector hits a Bubble (like the Tech Sector in 2001) then even after 5 years, the stocks in that particular sector will struggle to reach the levels they had reached in Peak. They tend to follow a cycle and if you as an investor want to exit and find the NAV has crashed, you will find that even the Broader market picture is rosy, the Sector Picture may continue to be hazy and struggle to give even average returns.

Sector Funds also tend to have a Very Small Corpus and the Fund Manager will have difficulty in Bearish Times to maintain his AUM and buy stocks to average out.

In fact, to illustrate this point, there is no better example than UTI Mutual Fund. This Fund House launched a Whole set of Sector Funds in Booming Market Conditions. And, now as they are struggling to stem the rot, UTI has announced that they are going to merge UTI Software Fund with Services Industries Fund.

And they are also changing the mandate of Auto Fund by adding the Logistics Sector into the Fund. The Auto Fund AUM is a paltry 31 crores.

If you remember, last year UTI did the same with its Petro Fund by renaming as UTI Energy Fund. But the results continue to be poor.

It just shows that even the AMC people have realised the folly of having Sector Funds and have now resorted to the gimmicks of renaming them and adding additional Sectors.

But inspite of all this, I suggest you, nay request you to AVOID Sector Funds and go for Diversified Equity Funds.

If you are brave and willing to ride out the volatility associated with Sector Funds, then be quick to make a fast exit on the first signs of Downtrend in the Sector.

Of course, there are some sectors which are looking bright for investments now, go ahead and invest in them, but be ready for a volatile ride.
Visit goodfundadvisor dot blogspot dot com
Best of luck,
Regards,
Srikanth

Oil Fund Coming Soon

Soon Indian investors will have an investment vehicle where one can profit from rising oil prices. Benchmark Mutual Fund has filed an offer document with SEBI for first fund based on oil prices -- Oil Benchmark Exchange Traded Scheme (Oil BeES), an open ended exchange Listed scheme.

The fund aims to provide returns close to the returns provided by crude oil by investing in units of overseas mutual fund schemes and FTFs investing in securities and instruments linked to crude oil whose returns are linked to crude Oil. The fund can have upto 10 per cent of its assets in debt and money market instruments.

United States Oil (USO), an oil ETF is up 50.03% over the past 6-months and up 114.45% over the past 1-year in dollar terms as on June 30, 2008. This fund reflect the performance of the spot price of West Texas Intermediate (WTI) light, sweet crude oil and invests in futures contracts for WTI light, sweet crude oil, other types of crude oil, heating oil, gasoline, natural gas and other petroleum based-fuels that are traded on exchanges.

Oil BeES benchmark will be international prices of crude oil price in rupees terms. The minimum investment in the fund can be Rs 10000. In the initial offer period the fund will charge an entry load of 2.25 per cent. Subsequently, investors can buy an ETF like a share through a broker on the market. Hence, all investors must have a demat account to buy this fund.

SBI Gold fund

In the past few months, the funds that have turned in the best performances have been the gold funds. Gold ETFs haven’t disappointed their investors, and in a bearish market, have proved to be the best mode of investment. Predictably, the Gold ETF funds have had a good time too, witnessing major increases in their AUM. And to get a piece of this pie, SBI Mutual Fund has filed an offer document to launch its Gold Exchange Traded Scheme (GETS).

This will be an open-ended exchange traded scheme which will invest at least 90 per cent of its assets in physical gold and gold related securities and the rest in debt and money market instruments. The fund will have two plans, Plan A and Plan B. Plan A, the retail plan of the fund will have an annual recurring expense of 2.5 per cent and has a low minimum investment of Rs 5000 with a reducing entry load based on the amount of investment during the initial offer period. For investments of up to Rs 1 lakh, it will be 1.5 per cent, for amounts above Rs 1 lakh up to Rs 5 Lakh the same will be 1 per cent, for Rs 5 lakh up to Rs 50 lakh it will be 0.75 per cent and above Rs 50 lakh to Rs. 1 crore will be 0.5 per cent.

Plan B, the institutional plan of the fund will have a lower annual recurring expense of 1.5 per cent and a minimum investment of Rs 1 crore. The investment in the plan will be without any load during the initial offer period.

The fund’s performance will be benchmarked to the gold price on the London Bullion Market Association (LBMA).

The SBI Gold ETF will be the sixth such fund in India given the rigid structure stipulated by regulators for running such a fund. The first Gold ETF was launched by Benchmark in Februay 2007. Gold ETFs are up 50 per cent over the past 1-year and up 20 per cent over the past six-months. Together, the five existing Gold ETFs have Rs 582 crore under management as on June 30, 2008. Interestingly, two other funds, DSPML World Gold Fund and AIG World Gold, which both invest in stocks of gold mining and related companies together had nearly Rs 2400 crore under management as on June 30.

Investors can buy an ETF like a usual fund during the initial public offer and subsequently like a share through a broker on the market. Hence, all investors must have a demat account to buy this fund.

Invest in DSPML World Gold Fund rather than Gold ETFs.

Best of luck.

Want to invest in Gold Fund

there r 2 types of gold funds working in india now.

1. Gold ETFs - These r exchange traded funds where the underlying asset is 24 carat pure gold in physical form. these funds 'll try to mimic the returns as generated by physical gold. Benchmark, UTI, Reliance, Kotak, Quantum to name a few who r offering these funds.

2. Gold Eq. funds - These r funds where underlying asset is shares of gold mining cos. listed worldwide. these funds 'll give the returns as generated by underlying shares of mining cos. DSP Gold fund & AIG gold fund r example. Normally these indian funds 'll invest in parent funds of their respective owner (DSP & AIG in this case) where the underlying asset is shares of these mining cos.

On taxation front both these funds 'll be treated as debt funds & taxed accordingly.

Regarding GETFs, as i already told it 'll mimic the return (net of charges & expenses) of physical gold.

Regarding Gold Eq. funds, although not assure, u may expect anywhere from 12 to 30% subject to performance of underlying mining cos.

Regarding The two Gold Mutual Funds that are available now for investment, i.e, DSPML World Gold Fund and AIG World Gold Fund, please that these companies invest in stocks of Gold Mining Co., and thus have a high Alpha with regard to Gold price movement. They tend to have higher volatility compared to Actual movement of Gold price.
The advantage is, they are in existence for more than 10 years and have a good track record and there is no reason to believe they will not continue to give good returns in future also.
Among the two, DSP/AIG, let me clarify, DSPML holds more stock of South African Mines and AIG holds more stock of Canadian Mines. As you already may be knowing, South African Mines have reached peak of the production capacities and struggling to maintain costs and thus Profit Margins which is not the case of Canadian Mines.
DSPML World Gold Fund will have a good performance for next 6 months to 1 year, Later on, its performance depends on its ability to take correct calls on its holding in South African Mines. AIG World Gold Fund will not have any such tough decisions to make.

So, if your investment horizon is 10 years, you can safely go for AIG World Gold Fund.

If you have a amount in mind for investing in gold, then my suggestion is Invest 75% of your investment amount for Gold in Gold Funds and balance 25% in Gold ETFs.
Best of luck,
Regards,
Srikanth

Silver Funds coming soon!!!

Dear all,
It is with great pleasure that I am reproducing the following article I read in Business Standard.

"""Even as investor appetite for equity funds seems to have dried up, the market for exchange-traded funds is getting interesting if Benchmark asset management company's (AMC's) slew of product filings with markets regulator Securities and Exchange Board of India (Sebi) is any indicator.

Benchmark AMC has filed an offer document with Sebi for a silver exchange-listed fund, the first ever in India. The fund would invest in units of overseas mutual fund schemes, including exchange-traded funds investing in silver or securities/instruments linked to silver and exchange-traded notes whose returns are linked to silver.

The fund can't invest directly in silver since Sebi's (Custodian of Securities) Regulations do not provide for custodial services in respect of silver and silver-related instruments. In fact, it was this fact that had delayed the introduction of gold ETFs in India.

Benchmark AMC's scheme is called silver BeES and each unit issued under the scheme will be equal to price of 100 grams of silver. The entry load for the fund will be 2.25 per cent during the new fund offering (NFO).

Currently, the ETF market in India is limited to gold. "Normally, those who track gold track silver too. Moreover, silver is an industrial commodity and is more volatile than gold. Consequently, traders would like to take a call on silver, if they are not into the ETF market yet," said Rajan Mehta, executive director of Benchmark mutual fund.

Silver is voluminous and, therefore, more difficult to store. So, traders would prefer to hold units in the dematerialised form.

Analysts said that the costs for storing silver are higher than those for gold. Also, Sebi's guidelines do not allow ETFs that directly invest in silver. The most widely-traded silver ETFs in the world today are Barclays silver ETF (also called iShares Silver Trust), traded on AMEX, and PowerShares DB Silver fund. Silver tracks gold in terms of returns and prices but is slightly more volatile than the yellow metal.

"Even gold ETFs have not picked up in India in a big way. However, the gold ETF is fairly liquid and can be traded on the exchange. With this product, the liquidity will be lower. Investors would rather put their money in the silver contract on MCX," said Ashok Mittal, country head-commodities for Karvy Comtrade, the commodity division of domestic broking house Karvy Stockbroking.

Currently, five AMCs have launched gold ETFs in India — Reliance AMC, Kotak Mahindra AMC, Benchmark AMC, UTI AMC and Quantum AMC.

Mehta said that the focus of the fund house would continue to be on index and quantitative funds. Benchmark AMC has already got Sebi approval for its quantitative fund, India Value and Momentum Quant Fund, that will invest in securities based on a quantitative stock selection model provided by Citigroup First Investment Management."""

I am sure you will be as thrilled as I was when I first read the newsitem :::

I am eagerly looking forward to the launch of this Silver Exchange Traded Fund.
so, very soon, we will yet another option for our investment and a good diversification tool.

Regards,
Srikanth

Mutual funds v/s Insurance

Hi,
Ask any Financial Advisor, 100 times out of 100, he would say Insurance is not an investment and would ask you to rather invest in Mutual Funds.

Insurance charge you heavily, leave you very little room to get out of their scheme, always give you lesser return than Mutual Funds.

Mutual Funds, on the other hand, expenses have a ceiling of 2.5 percent. They are very Transperent in their dealing, holdings, allow easy exit and give BETTER return than Insurance.

But, still Mutual Funds are lagging far far behind than Insurance counterparts in terms of Assets Under Management. Why is this so?

SEBI, has not been of much help either. While SEBI has made PAN compulsory for Mutual Funds, it has left Insurance including ULIP untouched whereas Both have similar range of investment mandate and target similar set of investors.

Read more about this in accurateadvisors dot blogspot com and goodfundadvisor dot blogspot com

More awareness is needed for higher penetration by Mutual Funds. While Insurance Industry, who launch similar range of products (ULIP, etc) with similar structure, for the same set of investors have celebrities like Sachin endorsing their products, Mutual Funds are barred by SEBI from getting celebrites to Advertise their Schemes.

Why this discrimination? SEBI should look into the matter urgently and after serious introspection, implement changes creating a Level Field for both Insurance and Mutual Funds.

Finally, do you know......... Only 3% of Indian Household savings are invested in Mutual funds whereas 90% of Australian Savings go into Mutual Funds!!!!


Think over it.....

Regards,
Srikanth

Switch from UTI Infra to ICICI Infra

I have some units of UTI Infrastructure fund.Shall i change to ICICI Infrastructure fund which is performing better?

Dear Vinod,
I am surprised by your question. You had already asked this question in different format and were already answered by experts like Wadia and Ashalanshu, Still you are again asking. Is it because you dont have faith in them or you were not convinced by their answer?

Anyway, whatever it is, Here is my take on your question.

At the outset, I dont think you should switch a fund just because another fund in the same segment is performing better. You have to give time for a fund to prove itself, say atleast 8 to 10 quarters and only then take a decision.
UTI Infrastructure had a great past and slipped lately in line with all Infrastructure funds. ICICI Infrastructure Fund too had a great past and in line with the market, faltering a bit now. You need to take a long term call and if so, I feel you are better investing or rather switching to a Diversified Fund, say UTI Leadership Fund from the same fund house or Reliance Growth fund/HDFC Top 200 Fund.
Think twice before taking a decision either way.
Best of luck.
Regards,
Srikanth Shankar Matrubai

Where to invest 10000 monthly?

Hi,

I want to invest Rs 10000 per month through SIP in the following 5 mutual funds (Rs 2000 in each fund) for 5 years.
1. Sundaram select focus
2. Kotak 30
3. HSBC Equity
4. Birla Sunlife frontline equity
5. Magnum Contra

Please advise.

Thank you
Venkat


Srikanth's reply ::::



You should consider spliting your investment of 2000 into 500 or 1000 and invest in different dates to take advantage of volatility in the fund value.
Your fund selection seems good at face value. But it could be improved upon. I will analysis each one and this is what I feel

1. Sundaram Select Focus : INVEST. Good Fund with a good track record.

2. Kotak 30 : RECONSIDER. Although has been a consistent performer, as your choice of funds lacks a Opportunity Fund, you can consider investing in Kotak Opportunities Fund or DWS Investment Opportunities fund rather than Kotak 30.

3. HSBC Equity : INVEST. Again a good performer over a long period of time.

4. Birla Sunlife Frontline Equity : INVEST. A all time favourite of mine. Definitely a must in every portfolio.

5. Magnum Contra : RECONSIDER. Although Most Mutual Fund experts would blindly, without battling an eyelid would recommend an investment in this fund, I beg to differ and would suggest you rather consider HDFC top 200 or HDFC Prudence. Or if you are thinking of a Contra, you can as well consider JM Contra.
Magnum Contra may have given a great performance in the past. But I doubt whether will it have the same success in the future. For one, the change of Fund Manager. Second, the stocks in the portfolio of the fund suggest that rather than a Contra Fund, it is more of a Diversified Fund, where there is already a exposure taken by you in form of HSBC Equity and other Funds.

You can also consider investing, though in small quantities, in the following funds;
DSPML World Gold Fund
Templeton India Equity Income Fund
Sundaram Rural India Fund.


It would have more helpful in suggesting you funds, if you had given details of your age, investment horizon, etc.
Best of luck.

Regards,

Srikanth Shankar Matrubai

Invest in ELSS or Diversified Equity Funds?

My age is 33. i have tax liability near about 1 lakh. which scheme is best suite in my profile? ELSS or Eqt Div. ? pls suggest. Prev fin year I have invested 20,000/- in DSP ML tax saver G . Is fund is Ok?
Thanks, Sugata.

Srikanth's reply :

Dear Sugata,
Upto your tax liability you better invest in ELSS, whatever extra you are capable of investing, you should consider investing in Diversified Equity Funds.
Do not invest any amount over and above the treshold of 1 lakh in ELSS because in ELSS you will be stuck with the fund for 3 years, and will be not be able to switch out in case of a critical change in the performance of the fund.
With age on your side, you can safely consider investing in Diversified Equity Funds. Some of them could be
Birla Sunlife Equity Fund
DSPML Top 100 Fund
DSPML World Gold Fund
Templeton Equity India Income Fund
HDFC Prudence Fund
HDFC Top 200 Fund
Reliance Growth Fund
Reliance Vision fund
Sundaram Rural India Fund
DWS Alpha Fund.

Regarding your investing in DSPML Tax Saver Fund, its performance has been good in its relatively short history. If you want to invest some more amount in ELSS, you can consider
DWS Tax SAving fund
Birla Sunlife Tax Relief 96
HDFC Tax Saver
Lotus India Tax Plan
Principal Personal Tax Saver
Sundaram Tax Saver
Preferably invest through systematic Investment Plan and avoid Lumpsum Investing.
Best of luck.
Regards,
Srikanth Shankar Matrubai

Investment Advise for sip investment

Hi, I have started these SIPs 9 months back. My portfolio value is down by 25% till now. Please advise if I need to stop any of these SIPs / switch to other funds to reduce losses.

1 SIP Rs 4500 per Month - DSP ML Opportunities Fund - Growth
1 SIP Rs 6000 per Month - HDFC Equity Fund - Growth
1 SIP Rs 3000 per Month - Sundaram BNP Paribas Select Mid Cap - Growth
1 SIP Rs 4500 per Month - HDFC Prudence Fund - Growth
1 SIP Rs 3000 per Month - Fidelity Equity Fund - Growth

Thanks
Chakri


Srikanth's reply :
"Dear Chakri,
I feel you are not following the advice of Mutual Fund Experts like Ranjan, etc and that's the reason your portfolio is down by 25%. Not to say that yours is the only portfolio that is down, but I just to emphasis the fact that Ranjan Sir had suggested to you way back in 06 May 2008 to split your 6000 in HDFC Prudence Fund into two sips of 3000 in HDFC Prudence and HDFC Top 200 Fund, but you still have continued with the same funds with the same amounts.
He had also suggested you to invest in DSPML Top 100 Fund, Reliance Growth, Birla Midcap fund and also DSPML Tiger Fund.
He had suggested you to discontinue the sip in HDFC Equity Fund.
But now, looking at your query, it seems that you have completely ignored him and asking complaining in this forum, that your portfolio is down by 25% and asking for advise.
Of course, there will be advise, but will you follow them and incorporate the changes suggested?. I hope you will.
Please do so, it is for your good that the changes are being suggested.
As mentioned by pc sharma, performance of funds selected by you is below average.
Your current outgo in sip is 21000, My suggestion is that you split your 21000 into 7 sips of 3000 each and invest in the following funds, you will definitely earn above average of market returns.
1. Birla sunlife Equity Fund
2. DSPML Top 100 Fund
3. DWS Investment Opportunity Fund
4. Fidelity Equity fund
5. HDFC Prudence Fund
6. Templeton India Equity Income Fund
7. Reliance Growth fund
I hope that Dear Chakri, you will follow at least some of the advise given here, and will not come back again after 3 months with the same query!!!
Best of luck.

Investment Advise on Franklin Bluechip fund

One investor Mr.Khilji asked, "In March-2008, I filled up form to start 1K SIP in Franklin India Bluechip Fund (G), but due to some technical problem from HDFC Bank side, it was stopped. But, this month, they sorted out the problem and restarted my SIP in this fund. Please suggest, should I continue or stop SIP in this fund?"

Srikanth replied
" Dear Khilji, if u check its performance on past i year (which include a steep bull phase from july 07 to dec 07 & after that same bear phase from jan 08 to july 08) it is ranked 77 out of 172 funds in diversified fund category with -13.94% return over the period. For past 2 year performance it is ranked 74 out of 157 with not so impressive 14.49% return for the period.
The performance of Franklin Bluechip fund has been pathetic.

In fact, I have been bearish on this fund and stop recommending since nearly 2 years now. Not only this fund, but almost all the funds from the Franklin Stable have been laggards. Except for Templeton India Equity Fund, almost all their funds have been lagging behind their peers.
You are lucky that this technical problem happened from HDFC Bank side. You should thank your stars.
You can rather consider investing in other Large Cap Funds which have been giving consistently superior performance like DSPML Top 100 Fund, HDFC Top 200 Fund and invest in the same.
Best of luck.

Buy Blue Chips NOW

“The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails.”

The winds of political change have been blowing for some time. Large corporate bodies are quick to make necessary adjustments. It was no surprise that Reliance Chairman Mukesh Ambani chose to visit New Delhi and meet important government functionaries to express his point of view on the issue of windfall tax. In a choppy market, Reliance managed to recover sharply.

Market participants too have to adjust to the changing winds. It is better to take a longer term view because by the time you try to make quick adjustments, the direction of the wind may change. Some buying may be seen in mid cap counters. HUL could be among the safer stocks for the time being.

I understand a handful of people may be active on select counters. Some buying is also happening on the hopes that if the government sails through with a confidence vote, the markets will give a thumbs’ up and see some short term spurt. These are high risk events.

For long term, the trend is clearly positive.

I personally feel that this is the Best time you will get to accumulate Future Blue Chips at such tempting prices. So, enjoy the volatility as long as it lasts and Accumulate.
My choice of scrips for Long Term:
Fortis Healthcare
GMR Infrastructure
Himatsingka Seide
Reliance Petro
L&T
ABB
Mundra Port
Aditya Birla Nuvo
Biocon
NTPC
Thermax
Jain Irrigation
Tata Chemicals
Tech Mahindra
Sterlite
Karnataka Bank
Unitech
Crompton Greaves
Dishman Pharma
Dabur
This is just a sample list. More can be added. And some may even be replaced over a period of time. But the crux of the matter is, these are a MUST HAVE in every portfolio.
Best of luck.

Mutual Funds with Free Insurance

There are at least 5 AMCs which Insurance cover. You can choose them depending on your convenience and outlook.
Birla sunlife offers Free Life Insurance through Birla Century Sip for all its schemes including Tax Saving Schemes. The offer is only through sip. It offers upto 100 times your monthly investment amount. Their Fund performance also has been good. The maximum Insurance coverage is 20 lakhs.
DWS offers Free Life Insurance through their DWS Tax Saving Fund. They offer 5 times your investment. The best thing about DWS is, you can buy at your conveinience. You will get a maximum insurance of 5 lakhs. DWS scheme covers upto 60 years of age.
Kotak and Reliance Mutual Fund offer similar type of Life Insurance. Though the difference is that Kotak offers only for your children whereas Reliance doesnt restrict anyone. 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 through their HDFC Children\`s Gift Fund.
Among all the above, I feel DWS is the best option for a Lumpsum Investor as well a Sip investor.
Birla Century Sip is also a good option though the problem is that the scheme closes on Aug 14.
Do invest in at least two of the above.
BEst of luck.

Investment Advise

Mr.Suresh asked for an advise on his portfolio
"Hi,

I am investing thru\\` SIP in the following funds(div-reinvest) around 500-1000 per month.
-Sundaram Select Focus
-Reliance Vision/ Growth
-Birla -Frontline
-DSPML-Tiger
-HDFC top 200
-SBI Magnum Contra

As the markets are down I want to invest further around RS2000 every month, kindly suggest some good funds.

Thanks

Suresh"


Srikanth Shankar Matrubai replied :
"Dear Suresh,
Congratulations! Your portfolio is excellent. Well done. Keep it up.

You seem to have chosen your portfolio very carefully.
For your further investment of 2000 monthly, after careful analysis, I found that your portfolio does not have a good International Fund, maybe you could add the same by investing either in Templeton India Equity Income Fund or Fidelity International Opportunities Fund.
You could also consider adding DSPML World Gold Fund for stability and better returns than Gold. This Fund invests in stocks of Gold Mining Companies Worldwide and these stocks typically give double returns than Direct Gold.
Maybe, you could also have a Balanced Fund to your portfolio like HDFC Prudence and SBI Magnum Balanced Fund.
Best of luck. "

Buy Reliance petroleum

I am not into much of Stock Trading and rather prefer Mutual Fund route. But Reliance Petroleum is one of the few stocks, which I am particularly Bullish on, of course for Long Term.

During the course of my Mutual Fund Business, I manage to meet most of the Fund Managers on a regular basis. And whenever, I get a chance, I do ask them about their opinion on Reliance Petroleum., and the standard answer I get is 'Buy and Forget. It is a Future Blue Chip'.
It seems that Fund Managers are in love with the scrip. That's when I decided to study the stock and my conclusion on the Reliance Petroleum is ::::
Reliance Petroleum offers the BEST investment opportunity in the Indian Stock Market for now. It will be very soon commissioning World Class Refinery with Lowest Capital Cost and will be earning a Premium of more than US$8/bbl over Singapore Cracking margins.
It will have very early Payback period becoz of its Strong Margins and Tax Concessions.
Due to quantity of light crude diminishing, it is the medium and heavy crude that will be more available and for this the Refineries will need to have the capacity to process the same, and Reliance Petroleum has it. Because of this factor and Tightnening Environment norms, around 97 Refineries have shut shop.
Also Jamnagar has capacity to handle ULCC which will result in benefit of atleast 20 to 30 cents to Relinace Petroleum.
Most importantly, Reliance petroleum is commissioning its project at a perfect time with Crude above 125$ and in Bullish zone.
Worldwide, Refineries tend to trade around of PE of 10 on their 2 years earning. If we take that into account, then RPL with its expected conservative EPS of 21 in FY10, should be quoting at least near 200 now.
So, go right ahead, Buy and hold for Good returns.

Brigade AGM

Dear,
I had been to the AGM. There were demand for Bonus shares from almost all the shareholders present. But the management rejected the same. They did not even consider our suggestions. It was one of the worst Agms that I have attended by way of management.
There was no food. In fact, there was not even coffee. It was very badly managed AGM.
Probably the management expected around 50 persons or so, looking at their food. But more than 300 people turned up.
The management seemed to have no care for the share holders. The meeting itself was held at 15km away from City Centre at an unearthly hour of 4pm. and to top it all, there was no refreshments.
Disgusting.

Mirae Asset Global Commodity Stock Fund

Mirae Asset has come out with a New Fund Offering (NFO) named Mirae Asset Global Commodity fund. The timing of the fund is excellent, for the commodities are in Bullish Period of a Booming Cycle. But is the cycle going to last?.
I for one, have got my doubts, Commodity boom started in 2001 around, and commodities usually last anywhere between 8 to 12 years. So, according to me, the Boom may last a maximum of 4 to 5 years. So, you can invest in the fund, but have to time your exit well. So, the Best way of investing in the fund would to go for Dividend Payout option.

Investment is recommended, especially for those who already own sizeable chuck of Diversified Funds, to provide cushion and enhance their asset allocation.
Mirae Asset have got a good name and have performed well in South Korea. But will they succedd in India?. That has to be seen. The Fund Manager, Gopal Agarwal too is quite experienced. He used to manage SBI Magnum Comma Fund when he was in SBI Mutual Fund. That should help the fund. Also, In India there are very few Pure Play Commodity Stocks available.
When I met Mr.Gopal Agarwal, the Fund Manager, during the launch of the fund in Bangalore, he seemed to be very very optimistic about the Commodity Cycle and the success of the fund. Good luck to him.
In net, my recommendation, Invest in the fund, Go for Dividend Payout option and be prepared for a volatile ride., for commodity stocks, in turn commodity funds are very volatile by nature.
Best of luck.

AIG Infrastructure And Economic Fund

Hi,
I happened to go through the AIG Factsheet of June 2008. When I saw the portfolio of AIG Infrastructure and Economic Reform Fund, I was shocked to say the least.
According to the Factsheet, the single largest holding of the AIG Infrastructure and Economic Reform Fund was neither a Infrastructure Stock nor a Economic Reform associated Stock, but GLAXO PHARMA!!!!
I fail to understand the logic of the Fund Manager in buying this stock Under this fund. If the Fund Manager is so bullish on the stock, let him buy the said stock, but not as to make this Stock the Largest Holding in the Fund!
How will the Glaxo Pharma benefit from Infrastructure or any Economic Reform?.
I think the Investors in the Fund deserve an explanation by the Fund Manager immediately.

Will Gold fall due to falling Crude?

Well earlier Gold used to depend a lot on Local demand., and thus we had lower rates in lean season and Higher rates in Marriage Season. But the situation has changed completely. Indian demand is not the only criteria.
You will be shocked to know that last year the largest buyer of Gold was NOT India. Yes it was not India.
Believe it or not. It was the Middle East Countries combined. These Gulf countries have started investing in Gold as safe haven for their profits made from High Crude Prices to park in. Earlier the Gulf used to park their funds in US and other Western Countries. But now they have become smart and especially after 9/11 World Trade Centre Bombing, when the US froze their assets for some time, they have realised that their money is not safe anymore in US and started looking at alternative avenues.
That is why, you are seeing lot of Money poured by them in our Country through PE route.
And to further diversify their asset allocation, they have started buying and storing Gold aggresively. Gold Experts are of the opinion that Gold Reserves may last for 15 - 18 years or so at the maximum. And this reason is enough for people to store Gold and is one of the Biggest Bullish Factor for the Gold.
In fact, Gold Reserves are depleting fast. Last year's Gold production was lowest since 1937 and it will only get worse.
So, Gold , like Crude, will see dwindling supply and ever growing Demand.
So, I feel you are better off to stay invested in DSPML World Gold Fund or AIG World Gold Fund. If you have not yet invested, you sure are missing one of the Biggest Bull Runs on Gold.
Go and invest now.
Best of luck.

Will Gold fall due to falling Crude?

Well earlier Gold used to depend a lot on Local demand., and thus we had lower rates in lean season and Higher rates in Marriage Season. But the situation has changed completely. Indian demand is not the only criteria.
You will be shocked to know that last year the largest buyer of Gold was NOT India. Yes it was not India.
Believe it or not. It was the Middle East Countries combined. These Gulf countries have started investing in Gold as safe haven for their profits made from High Crude Prices to park in. Earlier the Gulf used to park their funds in US and other Western Countries. But now they have become smart and especially after 9/11 World Trade Centre Bombing, when the US froze their assets for some time, they have realised that their money is not safe anymore in US and started looking at alternative avenues.
That is why, you are seeing lot of Money poured by them in our Country through PE route.
And to further diversify their asset allocation, they have started buying and storing Gold aggresively. Gold Experts are of the opinion that Gold Reserves may last for 15 - 18 years or so at the maximum. And this reason is enough for people to store Gold and is one of the Biggest Bullish Factor for the Gold.
In fact, Gold Reserves are depleting fast. Last year's Gold production was lowest since 1937 and it will only get worse.
So, Gold , like Crude, will see dwindling supply and ever growing Demand.
So, I feel you are better off to stay invested in DSPML World Gold Fund or AIG World Gold Fund. If you have not yet invested, you sure are missing one of the Biggest Bull Runs on Gold.
Go and invest now.
Best of luck.

Future of Gold Rates.......

It is always a pleasure to answer on my favourite subjects.
Regarding the price of Gold in near future., I for one do not think that Gold will fall because Crude is falling. The relation of Gold with regard to Crude has in the recent past, deviated.
In fact, I had an interaction with Mr.Gopal Agarwal, when he was in Bangalore during the launch of Mirae Asset Global Commodity fund, where he was of the view that relation of Gold v/s Crude has evaporated and he seems to feel that Gold as a commodity is entirely different and cannot be compared to other commodities. Mr.Gopal Agarwal was bearish on Gold for long term and said short term it could be a market performer, at best.
However, I also had an interaction with officials of DSPML and AIG, and both had similar views that Gold is ripe for a BIG BOUNCE and they expect it to cross $1200 very soon.
One thing you should note here is that a Fund Manager is never bearish. He is always bullish, especially on the stocks/commodity he owns. That could explain the bullishness of DSP and AIG.
I personally that Gold should definitely form a part of your portfolio but should not occupy a major chunk of your portfolio.
Best of luck.

I have only 1000 to spare. Where to invest?

Lots of my clients and many people I meet happen to be people with poor background and have very little money to spare. They keep asking me, "Mr.Srikanth, I have got only 1000 per month to spare, Where shall I invest"
My answer to them is very simple, I hope you too will learn something from this "
1000per month is very little. Can you try to increase the amount?.
However, there is an option. I have a good suggestion. Invest as per my following recommendations:
1. 100pm in Reliance Growth Fund
2. 100pm in Reliance Vision Fund
3. 100pm in Reliance Natural Resources Fund
4. 100pm in Reliance Regular Savings Fund - Balanced Option
5. 100pm in Lotus India Agile Fund
6. 500pm in Birla Sunlife Frontline Equity Fund.

So, here you have 6 different funds and 3 different Fund Houses.
Reliance Mutual Fund and Lotus Mutual Fund allow you to invest as low as 100 per month. Take full advantage of this and invest in their best funds.
Go ahead. All the Best. If possible try to invest higher amount.
Best of luck.

DSPML World Gold Fund or AIG World Gold Fund

Dear Anoorit,
As you know from my previous messages, DSPML has been a favourite of mine since its launch. And it has repaid my faith by being an outperformer.
The same goes for AIG World Gold Fund also. It too has been my
favourite.
Both the funds act as Feeder Funds and invest in funds run by their parent Funds. Both invest in Gold Mining companies worldwide and have more or less similar portfolios.
But there is a difference between the two.
Yes, there is.
Even though both invest in Gold Mining companies and have similar portfolios and have given similar returns in the past, there are two BIG difference between the two.
1. DSPML World Gold Fund tends to invest in Large Caps and Blue Chips and therefore less volatile.
Whereas AIG world Gold Fund prefers Mid caps and is thus more volatile
2. DSPML World Gold Fund has more 60% exposure to South African Mines and very little exposure to Canadian Companies
Whereas AIG World Gold Fund has a bias towards Canadian companies.
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 will give better returns than DSPML World Gold Fund.
I hope this will make your decision easier.
BEst of luck.

Best ELSS

Dear all,
I tend to feel that whatever the market condition is, the best ELSS or the Tax Saving Fund to invest should be the one which is not biased towards any sector or theme. So, obviously, the choice would considerably narrow down and among them my favourite would be
1. Birla Sunlife Tax Relief 96 Fund
2. DSPML Tax Saver Fund
3. DWS Tax Saving Fund\
4. Principal Personal Tax Saver
5. Sundaram Tax Saver
I am right now not in favour of SBI Magnum Tax Gain 93, which is everyone's favourite, mainly because of its bloated fund size.
My favourite in recent past has been DWS Tax Saving Fund, not only because of good performance since its inception but also because it offers Free Life Insurance upto 5 times your investment.
Go for it.
Best of luck.

Windfall Tax?

Just for the sake of extracting support from SP, I DON"T think the Govt will impose Windfall Tax on Pvt Oil cos like Cairn or RIL. Even though the SP support is cruical for the Govt to survive, two level headed persons in the UPA Govt namely the Prime Minister Dr.Manmohan Singh and the Finance Minister Mr.Chidambaram will use all their skill to scuttle such moves, it at all it comes up. Probably, in my analysis, the SP wants something different, but just to put pressure on the Govt, they are demanding (or rather suggesting) something. I do not see the Windfall Tax happening because it will have a chain effect, and will horrors of horrors oil refining business will suddenly look most dull business to do. And what will happen to the oil price (forget crude), the refining companies will find ways to extract their pound of profit in some other way, which will not make oil more costly and add fuel to the insurance fire.
Don't worry, be happy.

Is it the right time to Invest?

Now this is the most common question asked now. There were less people asking this question when the sensex was over 20,000. This is sad.

Equity is for the long term. Investment in equity/ equity funds depend only on 2 things -

1) Your asset allocation

2) Your age

3) Your horizon.

Once you have made an asset allocation according to your age & risk appetite -
you should start investing in equity/equity funds. So any time is right time. Please do not look at the sensex level. If the sensex is lower, it is better for you and there is a more compelling reason to start investing. Ideally you should invest only via SIP.
When you are entering a fund - you should not look at the NAV of the fund. You should look at only the performance of the fund in the last 3 to 5 years.
Similarly, do not look at the sensex levels. With inflation over 11% - equity is your best chance to beat it. If you are young - you can afford to be more aggressive.

One more thing I would like to add here is;;; ...
While investing, never ever invest Borrowed Money, Always invest your own money and most importantly your spare money.
In fact, for some who crib that they have practically no saving and even 1000 saving is difficult, my answer is, would you have not adjusted the 1000 if you had to give as interest on a loan taken?
And don't forget that there is even 100 sip available with Reliance Mutual Fund and Lotus Mutual Fund.
I don't think any other investment will allow you such flexibility.
Go for Mutual funds and see your money prosper.
Best of luck.

Which is the Good ELSS?

One investor was is doubt as which is the Good ELSS to invest right now.
My reply was :
Do not go for Magnum Tax Gain. Its fund corpus is bloated., and it may struggle to give even Benchmark returns.
You can definitely consider investing in DWS Tax Saving Fund. It gives free Life Insurance 5 times your investment (5 lakhs maximum). Not just for the insurance factor, but also because it has been a top performer since inception. and more importantly, all the funds from the DWS stable have been performing well, which is a comforting factor.
You can also consider investing in Birla Sunlife Tax Relief 96 which too has been a consistent performer and a good track record over two bear phases.
Best of luck.

Investment Advise

I received a Query from an investor named Santosh Sarangi about his investment.
"Hi Dude,
I came to know that you are an independent MF adviser.
I would appriciate if you can help me retune my investment portfolio.I have
some basic questions on MF investments.
I want to know what is the thumb rule of investing in MF.
Sometimes the fund continues to do well for couple of years, then started
performing bad , once the fund manager leaves the company , or for some
other reason. Should one always start looking best performing fund of the
same fund house and try to switch at regular interval? If yes what is that
regular interval?

I have following portfolio, please share your views what to hold, what to
sell and what to switch over?
If I have to switch over/redeem is it the right time or should I wait till
market recovers and come to a good state.

FUND NAME Purchased Date & Amt Current Value
--------------------------------------------------------------------------
Birla India Gennext NFO (May 2005) - Rs 10000/-
Rs.16968/-
Birla Long term Adv fund NFO (Sep -06)-10000/-
Rs.10590/-
Fidelity Sp situation NFO (May-06)-10000/-
Rs.13390/-
Franklin India oppor Nov 06 -12189
- Rs.13288/-
HDFC equity(G) - SIP (18 installments till Mar 08) Rs 18000/-
Rs.17919/-
HDFC Longterm Adv(D) -ELSS-SIP(6 install till Nov 05) 34000/-, Rs.38718/-
HDFC Prudence(G) May 07-Rs 23910
Rs.25358/-
HDFC top 200(G) May 07-Rs 13361
Rs.15299/-
IDFC Enterprise equity(D) NFO (May 05) 20000/-
Rs.23522/-
Reliance growth(G) May 07 -30000/
Rs.35479/-
Reliance Tax saver (D) Sep 05 -25000/-
Rs.30525/-
SBI Magnum Global (G) SIP (till Jun 2008) 14000/
Rs.11789/-
Sundaram Midcap(D) - SIP (till Mar 2008) 67496
Rs.62114/-
Templeton India Equity(D) NFO(May 06) -10000/
Rs.13184/-
Reliance vision(G) -SIP(from-Jan 2008,till Dec-2009) 10000/- ,
Rs.8100/- (loss around 20%)
please share your open and wise advice.
Many Thanks in advance...

--
With best regards,
Santosh."


Srikanth Srikanth Matrubai replied
"
Hi Santosh,
At the outset, sorry for the delay in replying.
I love your questions. There is no thumb rule to investing in MF, as such. But, But, there is a thumb rule for investing in Equities. And the rule says, that your Equity Investment Exposure must be 100 minus your age. i.e, if your age is presently is 40, that means 100-40., 60% should be your equity exposure. This will ensure that as you age, your equity exposure keeps coming down, and you will be saved from the high volatility in your earnings and , though a little less, your earning will have a steady face.
Regarding your second question, I am never for investing in fund, just because of a Fund Manager, that's the reason, I prefer funds which are run by Fund Houses which are not dependent on Star Fund Managers like DSPML, Fidelity, etc.
You could read more about this in detail in my blog www.accurateadvisors.blogspot.com or my other blog www.goodfundadvisor.blogspot.com
One should never invest in a fund just because it had a great past. You should see its investment objective and take approriate decision, after reviewing its performance every 6 months or so.
The same argument goes for switching as well. Keep reviewing its performance and then approriate decision. Of course, give the fund some time to perform and then decide.
Now, regarding your portfolio, I feel you are better booking profits and completely exiting from
Birla India Gennext Fund, IDFC Enterprise Equity, SBI Magnum Global and Franklin India Opportunities Fund.

You can also consider switching the following:-
Birla Long Term Advantage Fund TO Birla Sunlife Frontline Equity Fund
Fidelity Special Situation Fund TO Fidelity International Opportunities Fund

All other investment are good and maybe if you could add a DSPML World Gold Fund or AIG World Gold Fund, that would give your portfolio a more Balanced Look.
Best of luck."

Welcome

Hi, everybody
I have started this new blog since I feel this name i.e, "goodfundadvisor" suits me more rather than "accurateadvisors" because I may not always be accurate but I will always have "good" intentions about your investments.
Thanking you