Axis MF adds 1.56 lakh folios in seven months while equity schemes lose 2.87 lakh folios

  Axis MF has added 1.56 lakh folios since November 2009 while JPMorgan, ING Investments and HSBC MF have seen their folios dwindling Equity funds have lost 2.87 lakh investor accounts between November 2009 and May 2010 when the mutual fund (MF) industry witnessed the launch of 10 new equity funds in the same period.

 

Reliance Mutual Fund has lost the most accounts in its equity schemes. Its folios decreased from 63.89 lakh in November 2009 to 61.06 lakh in May 2010, a decline of 2.83 lakh folios. Similarly, L&T MF, Franklin Templeton and Tata MF have seen their aggregate equity folios dropping by 3.27 lakh in the same period. Folios are numbers designated to the investor accounts. Each investor can have multiple accounts. The 37 fund houses lost around 2.87 lakh folios in equity schemes from November 2009 to May 2010.

The 30-share Bombay Stock Exchange (BSE) Sensex has remained flat between November 2009-May 2010. According to the data available on the Association of Mutual Funds in India (AMFI) website, 19 fund houses have lost an average 8% of their folios since November 2009.

Axis MF had 491 folios in November 2009, which increased to 1,56,971 folios at the end of May 2010.

Among the larger fund houses, HDFC Asset Management Co Ltd, UTI Asset Management Company Ltd and Birla Sun Life Asset Management Co Ltd together added 6.53 lakh investor accounts since November 2009. Tata Asset Management Ltd, SBI Funds Management Pvt Ltd, Reliance Capital Asset Management Ltd, LIC Mutual Fund Asset Management Co Ltd, ICICI Prudential and Franklin Templeton together lost 5.81 lakh investor accounts in the same period. The 37 fund houses added just 49,153 folios between November 2009 and May 2010.

Source:Moneylife

How does a Daily SIP work?

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The Systematic Investment Plan is ideal for investors who have a regular flow of money (such as employees). A simple instruction to the fund house and the bank will help them invest regularly at a given time and stay away from the volatility of the stock market. When you invest a fixed amount, such as Rs 5000 a month, you buy fewer units when the share prices are high and more units when the share prices are low. How do you avoid or minimise the effects of an extremely volatile stock market? Given the choice between the asset classes, and the yo-yoing of almost every fund, do you dare to invest in it at all? What if there was a middle path? The Systematic Investment Plan is ideal for investors who have a regular flow of money (such as employees). A simple instruction to the fund house and the bank will help them invest regularly at a given time and stay away from the volatility of the stock market. When you invest a fixed amount, such as Rs 5000 a month, you buy fewer units when the share prices are high and more units when the share prices are low.

The reinvention of the Systematic Investment Plan (SIP) has been a boon for investors with a low risk appetite. Rupee cost averaging and compounding are added advantages. But what exactly is a Daily SIP? And how does it benefit you, the customer? Simply, a Daily SIP collects a small sum from an individual on a daily basis and invests it in the market. It operates like any mutual fund, where the disbursement and handling of the money is the fund manager’s prerogative. Rupee cost averaging occurs when the market goes down, and more units of the scheme can be purchased because of a lower net asset value. However, most companies have SIP schemes that allow you to invest on different dates of the month. Daily SIPs are expected to minimise risk and generate greater risk-adjusted returns while increasing participation.

Daily SIPs: Advantages

Affordability, volatility and convenience are the most obvious advantages of investing in a Daily SIP. With a Daily SIP, your investment is staggered. Instead of a lump-sum amount, you invest a pre-specified amount in a scheme at pre-specified intervals at the then prevailing NAV. Consistent monetary contributions average out the crests and troughs of any market, in the long term. It also captures the daily levels of market volatility. In case of a monthly SIP, you still can lose out if the markets are up on the chosen day of the month. The daily SIP, however, eliminates this flaw and lets you benefit out of equity market volatility. If you’re looking at a lump-sum investment, then going in for a daily SIP would allow you to take advantage of the market volatility, by splitting the lump sum amount in to daily instalments over a relatively short time frame. The Daily SIP is ideal for small time savers, since the threshold investment level is low. Once you start with a Daily SIP, you invest at the appointed time and that makes you a disciplined investor. With Daily SIPs, you capitalise on the periodic dips in the market and accumulate a greater number of units at lower levels-and over time, reduce your average unit cost. You avoid the lure and trap of trying to predict the market.

A word of caution

Usually, a fund charges 2.25% of invested amount as the ‘entry load’. However, in some cases this amount may get reduced. You should also keep in mind the contribution after taking into account the cash flows available. Check if there are any incremental transaction charges attached to each investment. Especially in the case of auto-debit, there may be a fee for every transaction. You need to remain invested in a Daily SIP for at least 3 years to reap the benefits, and monitoring this on a daily basis can be annoying. If you should fail to pay the SIP amount on any particular working day, your investment will not default but your return will be adjusted against the failure of payment for that day.

Source : Bank Bazaar

Related articles

• Find out: Top systematic investment plans to invest in (moneycontrol.com)
• Systematic Investment Plan – FAB (slideshare.net)

SEBI asks for better disclosure of mutual fund performance

SEBI has proposed wide-ranging changes in the way fund performance is currently presented. But it is not clear whether investors will know how to use it and whether they will Market regulator Securities and Exchange Board of India (SEBI) has proposed a new set of quantitative measures for disclosing an equity scheme’s performance. SEBI has proposed that fund returns will be calculated and disclosed in an annualised manner by using both capital gains (change in NAV over a period of time) and the dividend paid out per unit. The returns are proposed to be compared to a popular index such as Nifty and Sensex apart from the scheme’s own chosen benchmark. This will give a clearer picture of comparison between absolute returns of a scheme, benchmark returns and the market indices (Nifty or Sensex), especially since index funds are proving to be a better bet than many actively-managed funds. SEBI wants risk-adjusted return to be disclosed as well. The volatility of benchmarks and the schemes is also proposed to be disclosed which will provide a comparison between risk of the scheme, benchmark and the market. Funds may be asked to disclose the beta of a scheme to show the volatility of portfolio and that of the Nifty or Sensex. Expense ratio will also be a part of disclosure as expenses have a direct bearing on the fund performance. SEBI also wants portfolio turnover ratio disclosed. A higher turnover indicates that the fund manager is churning the portfolio very often. Reacting to the SEBI proposals, Ajit Dayal, director, Quantum Mutual Fund told Moneylife: “It’s very good that SEBI is trying to standardise performance which has become a racket in the industry where people are using performance numbers to fool investors. Unfortunately over 15 years of existence, many of the large fund houses in the industry have chosen not to bother about their investors and worry more about the assets that they can gather.” However, another CEO of an asset management company felt that while all this information is completely useful, it is impractical to expect the investors to understand them and act upon them. “This information is useful for financial planners and advisors. And they already have access to this data. To put all this sophisticated information in the public domain is simply overkill.” “It’s great that there is more transparency from what has largely been a most unfriendly stance towards the investor industry. But it does not take away the fact that risk is different for different investors,” added Mr Dayal.

Review — Birla Sun Life India Reforms Fund

   India’s economic reforms have always helped boost growth in respective sectors. The Green Revolution that started in the 50’s and 60’s in India is one such example of how the overall economy and the companies related to the sector benefited from the reforms rolled out at different points of time.

The support provided to the Information Technology sector in the 90s is another example of growth and how it triggered off a tremendous domino effect which is responsible for the stellar growth of many companies related to this sector. The positive cycle of reforms has not only helped the economy prosper but has improved the lifestyle of individuals within our society. Today another golden opportunity is knocking at your door with a new set of reforms on the anvil.

The Fund manager intends to closely follow various reforms and policy initiatives planned by the government from time to time and invests your money in companies that are likely to gain from such reforms.

 

 

 

Scheme Objective : The investment objective is to generate growth and capital appreciation by building a portfolio of companies that are expected to benefit from the economic reforms, PSU divestment and increased government spending in sectors such as Telecom, Power, Education, Roads, Railways, Healthcare etc.

Nature of the Scheme : Open Ended

Asset Allocation :

Equities and Equity related instruments* – 65-100%

Debt securities and Money Market Instruments(Including securitized debt) – 0-35%

*The scheme may also invest upto 35% of its net assets in ADRs/GDRs issued by Indian companies, which in the judgment of the Asset Management Company are eligible for investment as part of the scheme’s portfolio and is consistent with the investment strategy, subject to a limit based on net assets of the Mutual Fund in accordance with the SEBI guidelines issued from time to time

Investment Strategy :

This scheme seeks to generate income by predominantly investing in equity and equity linked instruments.

Reforms in the context of the scheme refers to a set of economic and financial sector policy initiatives that lay down progressive framework for trade and investment for businesses in India. Such reforms could be in the form of liberalisation / deregulation, public sector disinvestments / privatisation, special government incentives/investment support to key thrust areas like infrastructure/power/education, employment generation, etc. The process of reforms in essence is directed towards achieving inclusive and long term growth of the nation.We believe that the process of reforms in India is slow but irreversible. As reforms unfold, they would offer significant business and investment opportunities for sustained period. The scheme would seek to invest in companies that are expected to benefit from the government reforms program. These companies would encompass, but not be limited to, engineering, real estate & construction, power, telecom, infrastructure, financial services, Fertilizers, agrochemicals, irrigation, education and select commodity sectors. Investments will be pursued in selected sectors based on the Investment team’s analysis of business cycles, regulatory reforms, competitive advantage etc. Selective stock picking will be done from these sectors. The fund manager in selecting scrips will focus on the fundamentals of the business, the industry structure, the quality of management, sensitivity to economic factors, the financial strength of the company and the key earnings drivers. The scheme will invest across sectors without any market cap or sectoral bias.The scheme shall also undertake Securities Lending and Borrowing within the framework as permitted by SEBI.

Fund Manager : Mr. Ankit Sancheti

Investment Plans / Options : Dividend and Growth Plan.

Dividend Plan shall have Payout and Reinvestment option.

Default Plan/Option – Dividend Reinvestment

Minimum Subscription Amount : Minimum of Rs. 5,000/- and in multiples of Re. 1/- thereafter

Minimum Additional Amount : Minimum of Rs. 1,000/- and in multiples of Re. 1/- thereafter

Entry Load* : Nil

Exit Load : For units Redeemed / Switched out within 1 year from the date of allotment, an exit load of 1% is payable and for units Redeemed / Switched out after 1 year from the date of allotment, no exit load is payable.

Benchmark : S&P CNX 500

Investor Risk Profile : Medium to High

Dividend Policy : The Scheme may declare dividends at the discretion of the Trustee, subject to the availability of distributable surplus.

SIP / STP : Available

IDFC Premier Equity Plan A:An outstanding outperformer

There’s no arguing with the numbers. In its history, IDFC Premier Equity Plan A has underperformed the category average in just two quarters (out of 14).

In 2007, it trounced the competition with a return of 110 per cent (category average: 64%). In the bear phase running from January 8, 2008 to March 9, 2009, it shed 54 per cent (category average: -64%). Its 3-year trailing returns of 30.45 per cent (July 31, 2009) places it streets ahead of the competition.

Hats off to fund manager Kenneth Andrade who boldly rides his bets. Little wonder that allocation to Services touched 44.74 per cent (May 2007) or FMCG accounted for 21.66 per cent (March 2009). Neither does he shirk from taking contrarian stands; his bias towards Services ever since inception and his restraint from going heavy on Energy, despite the sector gaining impressively, are cases in point.

In 2007 he did not jump into Metals. Ironically, the BSE Metal index delivered 121.47 per cent that year and yet the fund returned 46 per cent higher than the category average.

But Andrade is unsure if he should be branded a contrarian. “This fund attempts to capture shifts in the business environment with regard to new business opportunities, technologies and trends. We try to position ourselves ahead of the chain. It may or may not pay off but we must have sufficient reason to believe in what we are investing in,” he says.

With a focus on small companies, Andrade has an interest in keeping the fund size small. Hence it was shut for fresh investments during periods in 2006 and 2007. He maintains a tight portfolio spread across 26 stocks (1 year average) whose allocations don’t cross 7 per cent, barring Shree Renuka Sugars.

Ever since Andrade took over the fund in February 2007, he has maintained a high debt allocation which peaked at 25.53 per cent (June 2008) while cash holding was at 12.24 per cent (May 2008). Due to these high allocations he missed out on the latest rally to some extent with a return of 91 per cent, as against the category average of 104 per cent (March 9 – July 31, 2009). “The companies in this segment are not very liquid. We don’t want to be caught on the wrong foot, so have to ensure ample liquidity for redemptions, so that we do not disturb the entire portfolio,” he says. In a nutshell, a compelling pick.

Intelligent churners

DSPBR EQUITY

Consistency is the virtue of this fund. Though benchmarked against the Nifty, it’s not a pure large-cap holding. In the past, it had actively changed its complexion from being a large-cap to a mid-cap holding, depending on market conditions. In its long history, the large-cap allocation has wavered from 89 per cent to 39 per cent. But, ever since Shah took over in 2006, he aims for a 50 per cent large-cap tilt. The outcome is a rigorously diversified offering. Allocation to the top three sectors remains below the category average. Gone are the days when the portfolio held just 22 stocks, with the top 10 holdings accounting for nearly 75 per cent. Under Shah’s management, single-stock allocation has never crossed five per cent, barring a few large-caps. Out of the 87 stocks in its portfolio, 50 have an allocation of less than one per cent. Shah actively churns his portfolio. Shah handled the market rally in 2007 and the market crash in 2008 very well. But, when the market began to rise from March 9, 2009, onwards, he was caught unaware. It took him a while to lower cash allocation and neither did he go heavy on construction, metals or financials, which boomed during that time. As a result, the fund lagged. “With a defensive portfolio, we could not catch the market turnaround; hence we underperformed from March to June. Then we repositioned our portfolio to look at growth.” It worked. In 2009, he outperformed the category average yet again. The charm of this multi-cap player lies in the fact that it has impressed in all market conditions.

RELIANCE REGULAR SAVINGS EQUITY

In its short history, this one has made its mark. Its annual and trailing returns are amazing. Omprakash took over in November 2007 and wasted no time in changing the complexion of the portfolio. The fund has excelled since. Exposure to construction shot up to 28 per cent, with almost 21 per cent cornered by Pratibha Industries and Madhucon Projects. Exposure to engineering was yanked up (18.5 per cent), while financial services lost its prime slot (dropped to 6.69 per cent) and auto was dumped. That quarter (December 2007), he delivered 54.66 per cent (category average, 25.7 per cent). When the market collapsed in 2008, thankfully the fund did not plummet abysmally. But, even its high cash allocations could not cushion the fall. The fund manager attempts to capitalise on valuation differentials between mid- and large-cap stocks, which at times can result in aggressive churning. This fund started off as a large-cap fund but resembled a pure mid-cap offering by the end of 2007. Since January 2009, it took on a distinct large-cap tilt, which it maintains till date. Had Omprakash opted for a greater mid-cap exposure, he might have delivered even higher than 102 per cent (2009). Right now, he is adopting a more cautious approach, a wait-and-watch strategy to see how interest rates pan out and how inflation is dealt with. As assets have risen, so have the number of stocks. And, while you may see strong sector bets, he plays it safe with individual stocks.

UTI DIVIDEND YIELD

This fund has successfully navigated through good and bad times. The mandate demands an investment of at least 65 per cent of the portfolio in equity shares that have a high dividend yield at the time of investment. A look at the track record makes one wonder whether the fund manager follows this principle diligently. Its impressive performance in 2007 was because Kulkarni hopped on to the energy and metals bandwagon by re-entering Tata Power and adding RIL, SAIL and Tata Steel. That year, the BSE Power, BSE Oil & Gas, and BSE Metals all delivered handsomely. The objective is best suited to those who want decent returns with good downside protection. Its fall in 2008 was less than that of the Sensex, as well as the category averages of the multi-cap and dividend yield categories. Of course, allocation to debt and cash also contributed to cushioning the fall. Come 2009 and the fund faltered, because Kulkarni began to seriously up the equity allocation only from June 2009 onwards. But, what has always worked for this fund is smart bottom-up stock picking and sector allocation. By doing that, Kulkarni managed to marginally outperform the Sensex and the other two categories in 2009 as well. She gives credit to “ good stock picking in IT, consumer, engineering and metal sectors”. The intrinsic nature of this portfolio is to pick up good dividend yield stocks, which bring support on the downside. However, using a multi-cap strategy, she has put to rest the notion that dividend yield funds can only impress during market downturns.

NFO : DSP BlackRock World Energy Fund – Regular Plan (D)

Scheme Objective : DSP BlackRock World Energy Fund, is an open ended Fund of Funds Scheme investing in international funds. The primary investment objective of the Scheme is to seek capital appreciation by investing predominantly in the units of BlackRock Global Funds – World Energy Fund (BGF – WEF) and BlackRock Global Funds – New Energy Fund (BGF – NEF).

Mutual Fund Family: DSP BlackRock Investment Managers Limited

Open Date: 10-Jul-2009

Close Date: 31-Jul-2009

Fund Class: Hybrid

Fund Type: Open-Ended

Investment plan: Growth

Fund Manager: Vinit Sambre
Entry Load: 2.25 %

Exit Load: 1.00 %

Comment: Entry Load 2.25% for Investment amount < Rs 5 crore. Exit Load 1% if redeemed within 6 months and 0.50% if redeemed after 6 months but before 12 months from the date of allotment.