Canara Robeco IndiGo Fund –Review

Canara Robeco Indigo Fund is an Open Ended Scheme launched by the Canara Robeco AMC.

Fund Specifics:

 

Instruments	Indicative Allocations (% of total assets)
	Minimum	Maximum
Indian Debt and Money Market Instruments	65	90
Gold ETFs	10	35

Exposure by the Scheme in Securitised Debt shall not exceed 25% of the Net Assets of the Scheme at the time of investment. Gross Notional Exposure by the Scheme in fixed income derivative instruments for the purpose of hedging and portfolio rebalancing shall not exceed 30% of the Net Assets of the Scheme at the time of investment. Total of investments in debt securities (including securitized debt), money market instruments, Gold ETFs and gross notional exposure in derivatives shall not exceed 100% of the net assets of the Scheme.

Fund Manager		Mr. Ritesh Jain
Minimum Application Amount		Initial Purchase – 5,000 and multiples of Re.1 thereafter Subsequent Purchase – 1000 and multiples of Re. 1 thereafter
Benchmark		CRISIL Short Term Bond Fund Index + Price of Gold (neutral allocation: 65:35)
Facilities Offered		Systematic Investment Plan (SIP) – Minimum instalment amount – 2,000 and 1,000 respectively for quarterly and monthly frequency respectively and in multiples of Re 1 thereafter
Investment Option(s)		Growth Quarterly Dividend Payout Quarterly Dividend Re-investment
Entry Load		Lump sum / SIP Nil
Exit Load / Switch – Over Load		Lump sum / SIP 1% if redeemed / switched – out within 1 year from the date of allotment NIL if redeemed / switched – out after 1 year from the date of allotment

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

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

SEBI seeks to regulate fund investment in & disclosure of derivatives

SEBI has sought clarity and limits on MF exposure to derivatives and has outlined a uniform detailed format for computing derivatives in their half-yearly portfolios

Market watchdog Securities and Exchange Board of India (SEBI) has sought views from mutual funds on the proposed circular which tweaks certain clauses of its earlier orders in order to bring more transparency and clarity in disclosure of MFs’ investment in derivatives in their portfolio statements. The draft circular was sent to all the chief general managers and investment managers of fund houses on 25 March 2010. Moneylife possesses a copy of the draft circular sent to all asset management companies (AMCs). If approved by fund houses, the earlier format prescribed by SEBI in its circular dated 24 November 2000 will be discussed, and modified to include the new format.

The latest circular limits the gross cumulative exposure of MFs through debt, equity and derivatives positions to 100% and option premium paid to 20% of the net assets of the scheme. It cannot exceed the prescribed limits.

Exposure in derivatives due to hedging may not be included in the above prescribed limit, only if such exposure reduces losses. Cash or cash equivalents with residual maturity of less than 91 days will not be included in this limit. Further hedging cannot be done for existing derivatives positions; if done, then it will be included in the above mentioned limit. The derivatives instrument used to hedge has to have the same underlying security as the existing position being hedged. The quantity of underlying security associated with the derivatives position taken for hedging purposes should not exceed the quantity of the existing position against which hedge has been taken. Exposure due to derivative positions taken for hedging in excess of the underlying position against which the hedging position has been taken will also be included in the 100% gross exposure limit.

MFs can enter into plain vanilla interest rate swaps for hedging and the value of the notional principal must not exceed the value of respective existing assets being hedged by the scheme.

The circular also outlines certain modifications pertaining to derivatives position computing. Currently the manner of half-yearly portfolio derivatives disclosure is not uniform across the industry as the SEBI (MF) Regulations, 1996, do not specifically prescribe a format for such disclosures.
SEBI has also asked MFs to separately disclose the hedging positions through swaps as two notional positions in the underlying security with relevant maturities.
“For example, an interest rate swap under which a mutual fund is receiving floating rate interest and paying fixed rate will be treated as a long position in a floating rate instrument of maturity equivalent to the period until the next interest fixing and a short position in a fixed rate instrument of maturity equivalent to the residual life of the swap,” states the draft circular. MFs will also not write options or purchase instruments with embedded written options. Further, while listing net assets, the margin amounts paid should be reported separately under cash or bank balances.
Following the recommendations of the Secondary Market Advisory Committee, SEBI’s circular dated 14 September 2005 permitted MFs to participate in the derivatives market at par with foreign institutional investors (FIIs) in respect to position limits in index futures, index options, stock options and stock futures contracts. The SEBI circular dated 19 September 2002 included disclosures related to equity and debt schemes. 

Source:http://moneylife.in/article/81/5125.html

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.

SEBI says new ULIPs must seek regulatory nod

MUMBAI (Reuters) – The Securities and Exchange Board of India (SEBI) on Tuesday barred the launch of new unit linked insurance plans (Ulips) by 14 life insurance firms until they seek permission from the capital markets regulator.

The order will not apply to existing Ulips, SEBI said in a notice posted on its website.

Late last Friday, SEBI barred 14 life insurance companies from selling ULIPs without its approval, saying they needed to register with the regulator.

On Monday, SEBI and the insurance regulator agreed to maintain the current status on ULIPs after intervention from the Finance Ministry.

SEBI and the Insurance Regulatory Development Authority (IRDA) have locked horns on who should regulate Ulips, given the product combines insurance and investments.

ULIPs are similar to mutual funds with an added life cover.

(Reporting by Nishant Kumar; editing by Malini Menon)