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)

NFO : Fidelity India Value Fund

The Fidelity India Value Fund will invest in predominantly undervalued stocks in India, but if the fund managers identify attractive opportunities overseas, they will consider investing in them, up to the permitted limit. For an information advantage, the fund managers will rely on our proprietary research. And in true Fidelity tradition, they will pick stocks ‘bottom-up’ – entirely for their core strengths and underpinned by comprehensive, first-hand research. Invest a lump sump or start a SIP now. Either way, you could add value to your portfolio. And your future.

Key Benefits
A fund that focuses on fundamentals – the business and not the popularity or position of its stock in the market place – in order to assess the underlying worth of a company and its potential to deliver value for its investors.
Long term wealth creation – helps investors to benefit from valuation anomalies driven by market sentiments.
Information advantage to identify Value opportunities across markets is made possible by the depth and scope of Fidelity’s global research network of 9001 investment professionals who cover 95%2 of world market capitalisation.
A style diversifier with a portfolio construction that spans sectors and market caps.

Fund objective :To generate long-term capital appreciation from a diversified portfolio of predominantly equity and equity related securities, in the Indian markets with higher focus on undervalued securities. The Scheme could also additionally invest in Foreign Securities in international markets.
NFO opening date :November 16, 2009
NFO closing date: December 15, 2009
Fund Manager :Nitin Bajaj and Subramanian Balakrishnan (for investment in foreign securities)
Benchmark Index: BSE – 200 Index
Scheme reopens on Not later than January 14, 2010
Plans Offered -
Options Growth and Dividend options available. The Dividend option offers payout or reinvestment facilities.
Minimum Initial Application amount For opening a folio: Rs. 5,000; For SIP: Rs. 5,000 (minimum single investment Rs. 500, minimum 6 cheques)
Entry load NIL
Exit Load Within 1 year from the date of allotment or Purchase applying First in First Out basis – 1.00%
SIP availability Yes

Click Here to invest directly online.

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.

Sebi scraps entry load for MFs, cuts fees of intermediaries

The Securities and Exchange Board of India has rationalised disclosure norms for rights issues. The market regulator has allowed investors to choose commission payable to mutual fund distributors and has cut fees for financial intermediaries by 50%. It has also approved the concept of anchor investor. CNBC-TV18 was the first to report these changes on June 16.

The Sebi board which met today approved the concept of anchor investor, which are long-term strategic investors. An anchor investor has to be a qualified institutional buyer and can subscribe up to 30% of the institutional quota. The promoter group cannot be an anchor investor. There will also be a 30-day lock-in period for anchor investors.

On rights issue:

The Sebi board has also rationalised disclosure norms for rights issues. Henceforth, there will be no preferential issue for superior voting rights. Also, no listed company can issue shares with superior rights.

On mutual fund schemes:

Mutual fund investors have a reason to cheer. There will be no entry load on any mutual fund schemes from now on. Distributors will now have to disclose commission for schemes. In a landmark move, mutual fund investors will now decide on the commission payable to distributors.

Fee cut for intermediaries:

The board has decided to rationalise the fees charged by intermediaries. It plans to cut fees for financial intermediaries by 50%. Broker fees for debt deals have been cut to Rs 2.5 per Rs 1 crore of turnover.

On initial public offerings: From here on, companies planning an initial public offering will have to list on at least one national exchange.