OVERVIEW OF NPS
• Pension Fund Regulatory and Development Authority (PFRDA) was established by Government of India on 10th October, 2003 (Ministry of Finance Notification No: F.No.5/7/2003- ECB & PR).
• New Pension System was initially developed for Central Government's new recruits (mandatory except armed forces) with effect from 1st January, 2004. The monthly contribution is 10% of the salary and DA to be paid by the employee and matched by the Central Government.
• New Pension System (NPS) was extended to all Citizens from 1st May 2009. The new pension system is voluntary for Individuals (who are not Government employees) .
• There is no contribution from the Government in respect of Individuals.
• The contributions and returns thereon would be deposited in a non-withdrawable pension account (TIER-I).
• NPS uses the existing network of bank branches/ post offices etc to collect contributions. PFRDA issued a list of more than 4500 branches of banks and post offices etc covering all over India.
• No headache in transfer of accumulations in case of change of employment and/or location.
• It offers a basket of investment choices and Pension Fund managers.
• Pension Fund Managers are: SBI Pension Funds Pvt Ltd, ICICI Prudential Pension Fund Management Company Ltd, IDFC Pensin Fund Management Comapny Ltd, Kotak Mahindra Pension Fund Ltd, Reliance Capital Pension Fund Ltd.
• In addition to the above pension account, each individual can have a voluntary TIER-II withdrawable account (optional). These assets would be managed in the same manner as the pension i.e. TIER-1 A/c. The accumulations in this account can be withdrawn anytime without assigning any reason.
• Policy holder can normally exit at or after age 60 years from the pension system.
• At exit, the individual would be required to invest at least 40 percent of pension wealth to purchase an annuity. The individual would receive a lump-sum of the remaining pension wealth, which he/she would be free to utilize in any manner.
• Individuals would have the flexibility to leave the pension system prior to age 60. However, in this case, the mandatory annuitisation would be 80% of the pension wealth.
• In case of retirement of Government employees, the annuity should provide for pension for the lifetime of the employee and his dependent parents and his spouse.
• There will be one or more central record keeping agency (CRA), several pension fund managers (PFMs) to choose from which will offer different categories of schemes.
• The participating entities (PFMs, CRA etc.) would give out easily understood information about past performance & regular NAVs, so that the individual would able to make informed choices about which scheme to choose.
Next Post:
New Pesion System: Part II- Detalied information about NPS
Saturday, September 25, 2010
Tuesday, August 31, 2010
LIC Market Plus-1 (Table No. 191) Withdrawn by LIC
• This is a Unit Linked Deferred Pension Plan which is a mix of Insurance, Investment and Retirement benefit (Pension). Insurance is optional.
• Four types of investment Funds (Bond Fund, Secured Fund, Balanced Fund and Growth Fund). Premiums paid after allocation charge will purchase units of the Fund type chosen.
Benefits:
o Death Benefit: Fund Value + Insured Amount (if taken) + Accident Benefit (if taken). Policyholder’s Fund Value shall be payable either in a lump sum or as pension.
o Accident benefit and Critical Illness Benefit only opted when insurance is opted
o Benefit on Vesting: may opt to commute up to one-third of fund value and rest compulsorily be utilized to purchase annuity option for pension.
Surrender Charges: Nil
o If surrendered within first 3 years, the monetary value of fund calculated and that amount will be payable at the completion of 3 policy anniversary.
o In case of death of life assured after surrender but before completion of 3 years from date of commencement of policy, the calculated surrender value will be after completion of 3 years to the nominee.
Recommendation:
This is ULIP based Pension Plan by LIC which was launched in Mid 2008. The fund has performed well since inception with CAGR of 15% approx. The Sensex (when the plan was launched) was at approx 14000-15000 with downward trend. Initially, the fund collected in this plan were invested at lower price and hence performed well. Also, the new ULIP Regulation will be affected from 1st September 2010. As per the regulations, all ULIP pension/annuity products has to offer a minimum guaranteed return of 4.5% per annum or as specified by IRDA from time to time. The return of the fund may be around 8% for long term. LIC will have to change some features of the plan and make it to as per new regulation or to close the plan. The Plan withdrawn by LIC with effect from August 31st, 2010.
Eligibility Conditions and Other Restrictions:
Particulars Without Life Cover With Life Cover
Min Entry: Age 18 years 18 years
Max Entry Age: Regular Prem.: 75 years 65 years
Single Prem.: 80 years 65 years
Min/ Max Vesting Age: 40 years/ 85 Years 40 years/ 75 Years
Min Deferment Term Regular Prem.: 10 years Regular prem.: 10 years
Single Prem.: 5 years Single Prem.: 5 years
Sum Assured (Only in case of With life cover plan)
Min: Regular Premium: Rs. 30,000 Single Premium: upto Prem.
Max: Regular Premium: 10 times if more than 40 years of age (5 times if critical illness rider opted for)
Min. Premium Regular premium: For both with life cover and without life cover
o Single premium: Rs 30,000/-
o Regular premium:
Rs 5,000/- for 20 years & above
Rs 10,000/- for 15-19 years
Rs 15,000/- for 10-14 years
Single premium: Rs 30,000/-
o Payment of Premiums Yearly, half-yearly or quarterly or monthly (through ECS mode only) for regular premium.
o Top-up additional premium in multiples of Rs.1,000 without any limit at anytime during the term of policy
Incr. / Decr. of risk covers:
No increase of covers will be allowed under the plan. Can decrease in covers.
Partial Withdrawal: No partial withdrawal of units
Exclusions:
If Life Assured commits suicide at any time within one year, the LIC will not entertain any claim by virtue of the policy except to the extent of the Fund Value of the units held in the Policyholder’s Unit Account on death
Different Charges:
1. Premium Allocation Charge:
Single premium policies: 3.3% of the single premium
Regular premium policies:
Premium Band (per annum) % of Premium Paid
First Year Thereafter
5,000 to 75,000 16.50% 2.50%
75,001 to 1,50,000 15.75% 2.50%
1,50,001 to 3,00,000 15.00% 2.50%
3,00,001 to 5,00,000 14.25% 2.50%
5,00,001 and above 13.50% 2.50%
2. Policy Administration charge:
Rs. 60/- per month during the first policy year and Rs. 20/- per month thereafter
3. Fund Management Charge
0.50% p.a. of Unit Fund for “Bond” Fund
0.60% p.a. of Unit Fund for “Secured” Fund
0.70% p.a. of Unit Fund for “Balanced” Fund
0.80% p.a. of Unit Fund for “Growth” Fund
4. Surrender Charge – Nil
5. Accident Benefit charge
Rs. 50/ Lac Accident Benefit Sum Assured per policy year.
6. Presently NAV moving around Rs14.
• Four types of investment Funds (Bond Fund, Secured Fund, Balanced Fund and Growth Fund). Premiums paid after allocation charge will purchase units of the Fund type chosen.
Benefits:
o Death Benefit: Fund Value + Insured Amount (if taken) + Accident Benefit (if taken). Policyholder’s Fund Value shall be payable either in a lump sum or as pension.
o Accident benefit and Critical Illness Benefit only opted when insurance is opted
o Benefit on Vesting: may opt to commute up to one-third of fund value and rest compulsorily be utilized to purchase annuity option for pension.
Surrender Charges: Nil
o If surrendered within first 3 years, the monetary value of fund calculated and that amount will be payable at the completion of 3 policy anniversary.
o In case of death of life assured after surrender but before completion of 3 years from date of commencement of policy, the calculated surrender value will be after completion of 3 years to the nominee.
Recommendation:
This is ULIP based Pension Plan by LIC which was launched in Mid 2008. The fund has performed well since inception with CAGR of 15% approx. The Sensex (when the plan was launched) was at approx 14000-15000 with downward trend. Initially, the fund collected in this plan were invested at lower price and hence performed well. Also, the new ULIP Regulation will be affected from 1st September 2010. As per the regulations, all ULIP pension/annuity products has to offer a minimum guaranteed return of 4.5% per annum or as specified by IRDA from time to time. The return of the fund may be around 8% for long term. LIC will have to change some features of the plan and make it to as per new regulation or to close the plan. The Plan withdrawn by LIC with effect from August 31st, 2010.
Eligibility Conditions and Other Restrictions:
Particulars Without Life Cover With Life Cover
Min Entry: Age 18 years 18 years
Max Entry Age: Regular Prem.: 75 years 65 years
Single Prem.: 80 years 65 years
Min/ Max Vesting Age: 40 years/ 85 Years 40 years/ 75 Years
Min Deferment Term Regular Prem.: 10 years Regular prem.: 10 years
Single Prem.: 5 years Single Prem.: 5 years
Sum Assured (Only in case of With life cover plan)
Min: Regular Premium: Rs. 30,000 Single Premium: upto Prem.
Max: Regular Premium: 10 times if more than 40 years of age (5 times if critical illness rider opted for)
Min. Premium Regular premium: For both with life cover and without life cover
o Single premium: Rs 30,000/-
o Regular premium:
Rs 5,000/- for 20 years & above
Rs 10,000/- for 15-19 years
Rs 15,000/- for 10-14 years
Single premium: Rs 30,000/-
o Payment of Premiums Yearly, half-yearly or quarterly or monthly (through ECS mode only) for regular premium.
o Top-up additional premium in multiples of Rs.1,000 without any limit at anytime during the term of policy
Incr. / Decr. of risk covers:
No increase of covers will be allowed under the plan. Can decrease in covers.
Partial Withdrawal: No partial withdrawal of units
Exclusions:
If Life Assured commits suicide at any time within one year, the LIC will not entertain any claim by virtue of the policy except to the extent of the Fund Value of the units held in the Policyholder’s Unit Account on death
Different Charges:
1. Premium Allocation Charge:
Single premium policies: 3.3% of the single premium
Regular premium policies:
Premium Band (per annum) % of Premium Paid
First Year Thereafter
5,000 to 75,000 16.50% 2.50%
75,001 to 1,50,000 15.75% 2.50%
1,50,001 to 3,00,000 15.00% 2.50%
3,00,001 to 5,00,000 14.25% 2.50%
5,00,001 and above 13.50% 2.50%
2. Policy Administration charge:
Rs. 60/- per month during the first policy year and Rs. 20/- per month thereafter
3. Fund Management Charge
0.50% p.a. of Unit Fund for “Bond” Fund
0.60% p.a. of Unit Fund for “Secured” Fund
0.70% p.a. of Unit Fund for “Balanced” Fund
0.80% p.a. of Unit Fund for “Growth” Fund
4. Surrender Charge – Nil
5. Accident Benefit charge
Rs. 50/ Lac Accident Benefit Sum Assured per policy year.
6. Presently NAV moving around Rs14.
Thursday, July 29, 2010
China's Exchange Rate and the Wage Explosion - By RONALD MCKINNON
(Mr. McKinnon is a professor at Stanford University and a senior fellow at the Stanford Institution for Economic Policy Research)
Recent Chinese labor strikes—particularly in the heartland of manufactured exports in Guangdong and the Pearl River Delta—have taken most observers by surprise. Labor shortages in and around Shanghai and the Beijing area are also widespread. Many local governments, particularly on the developed eastern seaboard, have increased minimum wages by 15% to 20% this year.
A wage explosion fed by labor militancy is obviously disconcerting to Beijing. But in the long term China's wage increases should reflect its remarkably high productivity growth in manufacturing. Higher wage growth would have two great advantages for China and for the rest of the world. First, Chinese wages would become closer to those in the more mature industrial countries, thus reducing protectionist pressures against imports from China. Second, higher wage settlements would reverse labor's declining share in China's national income. With a shift away from business profits—which have become exorbitantly high in the last several years—to greater household disposable income, consumption would naturally rise and reduce China's trade surplus.
Monday, July 19, 2010
ING ADAPT- Review
ING ADAPT is a Discretionary PMS.
A: ACTIVE
D: DYNAMIC
A: ASSET
PT: PORTFOLIO
Objective of the Portfolio:
To generate long term capital appreciation by investing in multiple asset classes, according to the risk band specified for each of the investment options.
MAIN FEATURES:
• Assets allocation in
o Equity- direct into equity/ mutual funds including ETFs
o Debt- Mutual Funds including ETFs
o Gold- ETFs
o Cash- Mutusl funds including ETFs
o Global Products- Global Feeder Funds domiciled in India
• Investment Options
o Very Conservative
o Conservative
o Moderate and
o Aggressive
• Only Dynamic Asset Allocation facility, Not static for any investment option.
• The asset allocation will be rebalanced monthly.
• No Benchmark for the fund.
• Disciplined investment procedures.
• Monthly Downside return: This is maximum monthly negative return (if any) expected by the fund manager.
o Very Conservative: -1.5%
o Conservative: -3.25%
o Moderate: -5%
o Aggressive: -7%
Analysis & Recommendation:
The features highlighted like dynamic asset allocation (not static assets allocation) is now offered by many PMSs. However, the PMS offered by ING has some unique features. ING ADAPT will invest in Gold and Cash ETFs along with other instruments make this fund unique. The Portfolio manager has clearly defined downside risk. The Portfolio will be managed by robust process to avoid human error which is already tested in their earlier products. ING ADAPT says that the fund is even suitable for first time investor. In my view if you have a balanced investment portfolio (like separate investment in PPF, FDs, And Mutual fund etc) you may go for it.
A: ACTIVE
D: DYNAMIC
A: ASSET
PT: PORTFOLIO
Objective of the Portfolio:
To generate long term capital appreciation by investing in multiple asset classes, according to the risk band specified for each of the investment options.
MAIN FEATURES:
• Assets allocation in
o Equity- direct into equity/ mutual funds including ETFs
o Debt- Mutual Funds including ETFs
o Gold- ETFs
o Cash- Mutusl funds including ETFs
o Global Products- Global Feeder Funds domiciled in India
• Investment Options
o Very Conservative
o Conservative
o Moderate and
o Aggressive
• Only Dynamic Asset Allocation facility, Not static for any investment option.
• The asset allocation will be rebalanced monthly.
• No Benchmark for the fund.
• Disciplined investment procedures.
• Monthly Downside return: This is maximum monthly negative return (if any) expected by the fund manager.
o Very Conservative: -1.5%
o Conservative: -3.25%
o Moderate: -5%
o Aggressive: -7%
Analysis & Recommendation:
The features highlighted like dynamic asset allocation (not static assets allocation) is now offered by many PMSs. However, the PMS offered by ING has some unique features. ING ADAPT will invest in Gold and Cash ETFs along with other instruments make this fund unique. The Portfolio manager has clearly defined downside risk. The Portfolio will be managed by robust process to avoid human error which is already tested in their earlier products. ING ADAPT says that the fund is even suitable for first time investor. In my view if you have a balanced investment portfolio (like separate investment in PPF, FDs, And Mutual fund etc) you may go for it.
Tuesday, July 13, 2010
What is Portfolio Management Services (PMS)?
PORTFOLIO:
As per SEBI Definition,
A collection of securities owned by an individual or an institution (such as a mutual fund) that may include stocks, bonds and money market securities.
In another words,
Portfolio (Investment Portfolio) is a collection of investments held by an Individual/ Institution. The collection of investments may be a combination of stocks, bonds and mutual funds, ETFs (Exchange Traded Funs like gold funds) etc.
PORTFOLIO MANAGER:
As per SEBI Definition,
A portfolio manager is a body corporate who, pursuant to a contract or arrangement with a client, advises or directs or undertakes on behalf of the client, the management or administration of a portfolio of securities or the funds of the client.
A portfolio manager may be a body corporate or an individual who manages the portfolio of the client as per agreement with the investor i.e. manages the portfolio of the investor with the objective set by the investor.
There are two types of portfolio manager:
• Discretionary Portfolio Manager: one who individually and independently manages the funds of each client in accordance with the objective of the client.
• Non Discretionary Portfolio Manager: one who advices the client and manages the funds in accordance with the directions of the client.
PORTFOLIO MANAGEMENT SERVICES (PMS):
Portfolio management is defined as the management of a portfolio to enhance the value of the underlying investment to meet specified investment goals of the investor. Fund manager consider appropriate risk-reward level i.e. the return is set as per risk (high/ medium/low) appetite of the investor. It involves a proper investment decision with regards to what to buy and when to sell. This also involves proper money management.
The service provided by body corporate or an individual to manage individuals/ institutions/ fund portfolio as per agreement is called PMS.
The service provider is supposed to have professional experience/ expertise in portfolio management/ investment services and is responsible to take appropriate action to implementing investment strategy and managing the day-to-day activity.
By hiring PMS, an investor actually hires experience/ expertise to manage portfolio. It enables investors to promote and protect their investments that help them to generate higher returns.
As per SEBI Definition,
A collection of securities owned by an individual or an institution (such as a mutual fund) that may include stocks, bonds and money market securities.
In another words,
Portfolio (Investment Portfolio) is a collection of investments held by an Individual/ Institution. The collection of investments may be a combination of stocks, bonds and mutual funds, ETFs (Exchange Traded Funs like gold funds) etc.
PORTFOLIO MANAGER:
As per SEBI Definition,
A portfolio manager is a body corporate who, pursuant to a contract or arrangement with a client, advises or directs or undertakes on behalf of the client, the management or administration of a portfolio of securities or the funds of the client.
A portfolio manager may be a body corporate or an individual who manages the portfolio of the client as per agreement with the investor i.e. manages the portfolio of the investor with the objective set by the investor.
There are two types of portfolio manager:
• Discretionary Portfolio Manager: one who individually and independently manages the funds of each client in accordance with the objective of the client.
• Non Discretionary Portfolio Manager: one who advices the client and manages the funds in accordance with the directions of the client.
PORTFOLIO MANAGEMENT SERVICES (PMS):
Portfolio management is defined as the management of a portfolio to enhance the value of the underlying investment to meet specified investment goals of the investor. Fund manager consider appropriate risk-reward level i.e. the return is set as per risk (high/ medium/low) appetite of the investor. It involves a proper investment decision with regards to what to buy and when to sell. This also involves proper money management.
The service provided by body corporate or an individual to manage individuals/ institutions/ fund portfolio as per agreement is called PMS.
The service provider is supposed to have professional experience/ expertise in portfolio management/ investment services and is responsible to take appropriate action to implementing investment strategy and managing the day-to-day activity.
By hiring PMS, an investor actually hires experience/ expertise to manage portfolio. It enables investors to promote and protect their investments that help them to generate higher returns.
Saturday, July 3, 2010
Special Domestic Term Deposit Rate Offered by Dhanlaxmi Bank
Presently when interest rates on term deposit are not high, Dhanlakshim Bank has come out with an interesting rate of 7.75%p.a. for 400 day (upto Rs 50 Lacs). This is a highest interest rate offered by any bank for such low deposit duration.
Highest Rates offered by Banks: Domestic Term Deposits (Investment below Rs 15 Lacs)
Bank Interest Rate(p.a.) Investment Duration
State Bank of India 7.50 % 8 to 10 years
Bank of Baroda 7.00 % 2 Years & Above
State Bank of Travancore 7.75 % 8 to 10 years
ICICI BANK 7.75 % 5-10 Years
HDFC BANK 7.50 % 3 Years & Above
Karnataka Bank 7.50 % 3 Years & Above
Federal Bank 7.75 % 5-10 Years
Special Offers:
State Bank of Travancore 7.50 % 400 days
Dhanlaxmi Bank 7.75 % 400 days
Highest Rates offered by Banks: Domestic Term Deposits (Investment below Rs 15 Lacs)
Bank Interest Rate(p.a.) Investment Duration
State Bank of India 7.50 % 8 to 10 years
Bank of Baroda 7.00 % 2 Years & Above
State Bank of Travancore 7.75 % 8 to 10 years
ICICI BANK 7.75 % 5-10 Years
HDFC BANK 7.50 % 3 Years & Above
Karnataka Bank 7.50 % 3 Years & Above
Federal Bank 7.75 % 5-10 Years
Special Offers:
State Bank of Travancore 7.50 % 400 days
Dhanlaxmi Bank 7.75 % 400 days
Saturday, June 26, 2010
SBI PSU FUND
MUTUAL FUND: An open ended diversified equity fund.
Fund Objective:
Long Term growth opportunities in capital along with the liquidity through an active management of investment in a diversified basket of equity/ debt/ Money market instruments of domestic public sector undertakings.
Investment Strategy:
Invest in stocks of PSUs through primary as well as secondary market, private placement/ QIP, Preferential allotments etc.
Recommendation:
Why Only in PSUs? Invest in PSUs will make this fund safe with lower risk but at the same time return may be at average level as PSUs are not aggressive expect some sectors like Banks. Even presently disinvestment is not getting proper response. This may be a good fund but recommended not to subscribe presently.
FUND BRIEF:
Face Value: Rs. 10
Launch Date: NFO Closed on 14.06.2010
Net Assets: Not Available (New Fund, NFO Closed Recently and fund will re-open in next 1 month)
Fund Plan/ Option: Regular. SIP Available Option: Growth and Dividend
Minimum Amount: Regular: Rs 5,000. For SIP monthly: N.A.
Entry Load: Nil
Exit Load: For Regular Plan: 1% in 1st 3 Years For SIP: 1% in 1st 3 Years
Annual Recurring Expenses(Charges): 2.5%P.A. Of Weekly Average Net Assets
Assets Allocation: Min-Max
Equity and Related 65%-100%
Debt and Money market Securities 0%-35%
Benchmark: BSE PSU INDEX
PEER PERFORMANCE:1. Religare PSU Equity:
Launched in October 2009. Trailing return of Religare PSU Fund: As on 18 Jun 2010
Period Fund Performance Category Performance
Year to Date 1.55 % 3.29 %
1-Month 2.05 % 2.2 %
3-Month 4.6 % 2.68 %
Category: Equity Diversified
2.UTI PSU Fund
Launched in March 2004 and merged in 2007 with UTI Top 100 Fund. Return in year 2006 and 2007 were negative.
Monday, June 21, 2010
TATA EQUITY PE FUND
MUTUAL FUND: Open Ended Diversified Equity Fund
Investment Theme:
Investing 70% of the total assets in stocks having a trailing P/E ratio less than that of the BSE Sensex at the time of investment.
Others:· Automatic Dividend Trigger Option : Fund will declare dividend automatically when NAV appreciate 5% (Option A) and 10% (Option B) (maximum one dividend per quarter).
· Fund has been performing very well in long term as compared to category (Equity Diversified) and benchmark. However, the short term performance is below average.
· The Fund Manager Mr Sachin Relekar has chosen traditional fund portfolio with main focus on Energy, Finance and Technology sectors. Hindalco, ONGC and Bharti Airtel from BSE Sensex are among top 15 stocks in the fund portfolio. His diverse portfolio won’t see much aggression with individual stock bets.
· The fund is sitting on a cash of almost Rs 70 Crore. As per fund manager, this is not cash call but gives them the flexibility to pick stocks in distress.
· Currently Portfolio PE 17.11 is undervalued and may go up with any upward movement in the market. Also, 13% approx net asset in form of cash & equivalent will provide opportunity in case of any correction in the market.
Recommendation:
The Investment theme of the fund, automatic dividend option and robust long term performance made this fund attractive. We may invest in this fund with long term investment horizon (more than 1 year) in mind.
ASSETS ALLOCATION:
Type Standard Min-Max Current Position
Equity and Related 70%-100% 87%
LOAD:Entry Load: NIL
Exit Load: For Regular Plan: 1% below 1 Year For SIP: 1% below 2 Year
RECURRING EXPENSE (Charges): 2.5%P.A. Of Weekly Average Net Assets
Top 10 Investments:
Fund Objective:
To provide reasonable and regular income along with possible capital appreciation to its unit holder.Investment Theme:
Investing 70% of the total assets in stocks having a trailing P/E ratio less than that of the BSE Sensex at the time of investment.
Others:
· Fund has been performing very well in long term as compared to category (Equity Diversified) and benchmark. However, the short term performance is below average.
· The Fund Manager Mr Sachin Relekar has chosen traditional fund portfolio with main focus on Energy, Finance and Technology sectors. Hindalco, ONGC and Bharti Airtel from BSE Sensex are among top 15 stocks in the fund portfolio. His diverse portfolio won’t see much aggression with individual stock bets.
· The fund is sitting on a cash of almost Rs 70 Crore. As per fund manager, this is not cash call but gives them the flexibility to pick stocks in distress.
· Currently Portfolio PE 17.11 is undervalued and may go up with any upward movement in the market. Also, 13% approx net asset in form of cash & equivalent will provide opportunity in case of any correction in the market.
Recommendation:
The Investment theme of the fund, automatic dividend option and robust long term performance made this fund attractive. We may invest in this fund with long term investment horizon (more than 1 year) in mind.
FUND BRIEF:
FACE VALUE: Rs. 10
LAUNCH DATE: Jun, 2004
NET ASSETS: Rs 540 Crore (31/05/10)FUND PLAN & OPTION: Pan: Regular Plan. SIP available. Option: Growth and DividendMINIMUM AMOUNT: Regular: Rs 5,000. For SIP monthly: Rs 500 for 12 months.RISK/ REWARD: Grade: Average Risk with above average returns.
FACE VALUE: Rs. 10
LAUNCH DATE: Jun, 2004
NET ASSETS: Rs 540 Crore (31/05/10)FUND PLAN & OPTION: Pan: Regular Plan. SIP available. Option: Growth and DividendMINIMUM AMOUNT: Regular: Rs 5,000. For SIP monthly: Rs 500 for 12 months.RISK/ REWARD: Grade: Average Risk with above average returns.
NAV DETAILS: Growth Option Dividend Option
LATEST NAV: Rs.44.46 (14/06/10) Rs.39.40 (14/06/10)
52-Week High: Rs.45.46 (18/01/10) Rs.43.17 (15/01/10)
52-Week Low: Rs.28.99 (13/07/09) Rs.27.60 (13/07/09)
LATEST NAV: Rs.44.46 (14/06/10) Rs.39.40 (14/06/10)
52-Week High: Rs.45.46 (18/01/10) Rs.43.17 (15/01/10)
52-Week Low: Rs.28.99 (13/07/09) Rs.27.60 (13/07/09)
ASSETS ALLOCATION:
Type Standard Min-Max Current Position
Equity and Related 70%-100% 87%
(Fund PE Less Than Sensex PE, at investment)
Equity and Related 0%-30%
Debt incl. Money Market etc 0%-20% 0%
Cash in Hand etc. -- 13%
Equity and Related 0%-30%
Debt incl. Money Market etc 0%-20% 0%
Cash in Hand etc. -- 13%
LOAD:Entry Load: NIL
Exit Load: For Regular Plan: 1% below 1 Year For SIP: 1% below 2 Year
BETA: 1.02
SHARPE RATIO: 0.41
BENCHMARK: BSE SENSEXSHARPE RATIO: 0.41
RECURRING EXPENSE (Charges): 2.5%P.A. Of Weekly Average Net Assets
FUND PERFORMANCE: Trailing Return as of 14.06.2010
Period Fund Category Nifty Sensex
Year-to-Date 1.97 % 2.5 % -0.06 % -0.73 %
1-Week 1.64 % 2.61 % 3.25 % 3.32 %
1-Month 0.55 % 1.19 % 2.05 % 2.02 %
3-Month 2.83 % 2.96 % 1.18 % 1 %
1 Year 42.13 % 27.17 % 13.4 % 13.78%
2 Year 15.04 % 10.41 % 7.27 % 6.84 %
3 Year 15.4 % 8.08 % 7.62 % 6.87 %
5 Year 24.37 % 20.28 % 19.73 % 20.37 %
Note: Return less than 1-year are absolute and over 1 year is annualized.
Period Fund Category Nifty Sensex
Year-to-Date 1.97 % 2.5 % -0.06 % -0.73 %
1-Week 1.64 % 2.61 % 3.25 % 3.32 %
1-Month 0.55 % 1.19 % 2.05 % 2.02 %
3-Month 2.83 % 2.96 % 1.18 % 1 %
1 Year 42.13 % 27.17 % 13.4 % 13.78%
2 Year 15.04 % 10.41 % 7.27 % 6.84 %
3 Year 15.4 % 8.08 % 7.62 % 6.87 %
5 Year 24.37 % 20.28 % 19.73 % 20.37 %
Note: Return less than 1-year are absolute and over 1 year is annualized.
FUND PORTFOLIO DETALS:
Only 4 stocks are from NSE Nifty (top 50 companies). Portfolio consists of mainly Mid Cap stocks.
Ratios Fund Sensex Nifty Nifty Mid-Cap
Portfolio P/B Ratio: 3.47 3.30 3.70 2.44
Portfolio P/E Ratio: 17.11 20.64 21.77 17.39
Ratios Fund Sensex Nifty Nifty Mid-Cap
Portfolio P/B Ratio: 3.47 3.30 3.70 2.44
Portfolio P/E Ratio: 17.11 20.64 21.77 17.39
Top 10 Investments:
Polaris Software Lab 4.60 %
Axis Bank 4.38 %
ONGC 4.26 %
Tata Chemicals 3.44 %
Hindalco Inds. 3.21 %
Cadila Healthcare 3.07 %
Balrampur Chini Mills 2.77 %
Voltas 2.41 %
HPCL 2.31 %
Patni Computer Systems 2.31 %
Sector Wise Asset Allocation:
Energy 16.9 %
Financial 12.4 %
Technology 11.7 %
Services 7.3 %
Metals 6.4 %
Health Care 6.3 %
FMCG 5.8 %
Diversified 4.6 %
Automobile 4.0 %
Engineering 3.6 %
Chemicals 3.4 %
Communication 2.9 %
Construction 1.7 %
Cash & Equivalent 12.9 %
Total 100.0 %
Axis Bank 4.38 %
ONGC 4.26 %
Tata Chemicals 3.44 %
Hindalco Inds. 3.21 %
Cadila Healthcare 3.07 %
Balrampur Chini Mills 2.77 %
Voltas 2.41 %
HPCL 2.31 %
Patni Computer Systems 2.31 %
Sector Wise Asset Allocation:
Energy 16.9 %
Financial 12.4 %
Technology 11.7 %
Services 7.3 %
Metals 6.4 %
Health Care 6.3 %
FMCG 5.8 %
Diversified 4.6 %
Automobile 4.0 %
Engineering 3.6 %
Chemicals 3.4 %
Communication 2.9 %
Construction 1.7 %
Cash & Equivalent 12.9 %
Total 100.0 %
Thursday, June 17, 2010
BIRLA SUN LIFE INDIA REFORMS FUND
MUTUAL FUND: An Open Ended Diversified Equity Fund (Mutual Fund)
Investment Theme:
o New Fund would seek to invest in companies that are expected to benefit from the government reforms program.
o 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.
o Investments will be pursued in selected sectors based on the Investment team's analysis of business cycles, regulatory reforms, competitive advantage etc.
o 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.
o The scheme will invest across sectors without any market cap or sectoral bias.
o The scheme shall also undertake Securities lending and Borrowing within the framework as permitted by SEBI.
Recommendation:o ‘Birla Sun Life India Reforms fund’ is a thematic fund and the fund manager has assumed that the existing Diversified Equity Funds has not been taking benefit from the reform.
o The choice of stocks would be limited if fund Focus on the fundamentals of the business, the industry structure, the quality of management, sensitivity to economic factors, the financial strength of the company.
o We may expect overlap of portfolios between this new fund and other existing diversified equity funds.
o It is better to invest in existing good performer Mutual Funds in the current market. We may wait for this new fund to build a track record first.
FUND BRIEF:FACE VALUE: Rs. 10
FUND PLAN: Plan: Regular. SIP available. Option: Growth/ Dividend
FUND OPTION: Growth and Dividend. (Dividend-Payout/ Reinvestment)
RECURRING EXPENSES: 2.5% P.A. of Weekly Average Net Asset
MINIMUM INVESTMENT: Regular: Rs 5,000. SIP monthly: Rs 1000 for 6 months.
ASSETS ALLOCATION:
Type Standard Min-Max
Equity and Related: 65%-100%
Debt/ Money Market etc: 0%-35%
LOAD:
Entry Load: NIL
Exit Load: For Regular Plan: 1% of fund value below 1 Year
For SIP: 1% of fund value below 2 Year
Investment Theme:
o New Fund would seek to invest in companies that are expected to benefit from the government reforms program.
o 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.
o Investments will be pursued in selected sectors based on the Investment team's analysis of business cycles, regulatory reforms, competitive advantage etc.
o 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.
o The scheme will invest across sectors without any market cap or sectoral bias.
o The scheme shall also undertake Securities lending and Borrowing within the framework as permitted by SEBI.
Recommendation:o ‘Birla Sun Life India Reforms fund’ is a thematic fund and the fund manager has assumed that the existing Diversified Equity Funds has not been taking benefit from the reform.
o The choice of stocks would be limited if fund Focus on the fundamentals of the business, the industry structure, the quality of management, sensitivity to economic factors, the financial strength of the company.
o We may expect overlap of portfolios between this new fund and other existing diversified equity funds.
o It is better to invest in existing good performer Mutual Funds in the current market. We may wait for this new fund to build a track record first.
FUND BRIEF:FACE VALUE: Rs. 10
FUND PLAN: Plan: Regular. SIP available. Option: Growth/ Dividend
FUND OPTION: Growth and Dividend. (Dividend-Payout/ Reinvestment)
RECURRING EXPENSES: 2.5% P.A. of Weekly Average Net Asset
MINIMUM INVESTMENT: Regular: Rs 5,000. SIP monthly: Rs 1000 for 6 months.
ASSETS ALLOCATION:
Type Standard Min-Max
Equity and Related: 65%-100%
Debt/ Money Market etc: 0%-35%
LOAD:
Entry Load: NIL
Exit Load: For Regular Plan: 1% of fund value below 1 Year
For SIP: 1% of fund value below 2 Year
Emerging India Fund
FUND FACTS:• Emerging India Fund (EIF) is an India-focused, sector agnostic Venture Capital Fund.• "IDBI Trusteeship Services Limited" is the trustee of Emerging India Fund.
• Emerging India is managed by ICICI Investment Management Company Limited (IIMCL), a 100% subsidiary of ICICI Bank.
• ICICI Group has nationwide presence across the financial spectrum. The parent company ‘ICICI Bank’ is recognized as top bank for innovations in SME Banking by International Financial Corporation.
• ICICI Group has committed to invest 10% of the total fund corpus (maximum of USD 15 million).
INVESTMENT STRATEGY:
Fund may focus on following sectors: Healthcare, Education, Consumer led Industries, Infrastructure, Power Projects, Logistics, IT & ITES and Outsourcing. Fund will invest in any sector/ corporate as per Growth Drivers Recognized. The Growth indicators are:
• Increasing Consumer Power creating demand for new business.
• Govt.’s focus on Infrastructure, creating opportunities for ancillary infrastructure players. • Emerging Sectors like Logistics, IT and Outsourcing.
GROUP’S PAST PE FUND EXPERIENCE:
ICICI Venture (subsidiary of ICICI Bank) is one of the largest and most successful private equity firms in India with funds under management to the tune of USD 2 billion through India Advantage Fund. ICICI Venture has exposure in almost every sector.
The investment Portfolio of India Advantage Fund includes Samtel Color, TV Today(Aaj Tak), Karvy Stock Broking Ltd, Pantaloon Retails, Welspun India, Centurion Bank of Punjab, Nagarjuna Construction, Naukri.com etc.
FUND ANALYSIS:
Presently PE Funds are focusing on sectors like infrastructure, HealthCare, Education etc. Recently Reliance Private Equity Fund I has invested Rs 120 Crore in Pathways World School.
EIF is promoted by ICICI Group, which has vast experience in project financing/ SMEs financing, is the main advantage of the fund. 10% to 15% of the total fund will be contributed by ICICI Group which shows the seriouness of the group to build faith in the prospective capital contributors. The moderate to high return is expected.The fund can be subscribed.RISK INVOLVE: VC Fund Invest in rapidly growing companies that require a lot of capital or start-up companies. Hold more risk.
FUND DETAILS:
Fund Size: Initial: USD 100 Million
Green Shoe- USD 50 Million
Target Return: 25% IRR per annum
Hurdle Rate: 10% per annum
Min Invest.: Individual=Rs 50 Lac, Domestic Institutional Investors= Rs 5 Crore
Draw Down: 20% at the time of agreement and rest on call.
Management Fee: 2% p.a. of capital commitment/ effective corpus.
Upfront Cost: Upto 2% of the aggregate committed
CARRY: 20% with catch up
Investment Horizon: 7Years
Extension- 1+1 years
Commitment Period: 3 Years from date of final closing
MANAGEMENT TEAM:
Fund will be managed by ICICI Investment Management Company Limited (IIMCL). Mr Vikas Agarwal, Chief investment Officer having 15 years of experience is heading the investment team of 8 experts.
LEGAL COUNSEL: Amarchand & Mangaldas and Suresh A. Shroff & Company
Saturday, May 22, 2010
Only Date Can Be Altered in Cheques.
No changes / corrections should be carried out on the cheques (other than for date, if required) effective from July1, 2010.
- For any change in the payee’s name, amount in figures or amount in words, etc., fresh cheque should be used by customers.
- This would help banks to identify and control fraudulent alterations.
Banks can return cheques which have any alteration in the:
- Payee Name
- Amount in numbers
- Amount in words
The only alteration which is allowed is the alteration in the date.
Source: RBI Circular - DPSS.CO.CHD.No. 1832/01.07.05/2009-10 dated 22nd February2010 regarding "Prohibiting alterations / corrections on cheques.
Friday, May 21, 2010
Aditya Birla Real Estate Fund
This is a Venture Capital Fund
FUND DETAILS:Fund Size: Initial: Rs 750 Crs., Green Shoe Option: Upto Rs 250 Crs
Target Return: Not Available
Hurdle Rate: 10% IRR per annum
Min Investment: Individual: Rs 25 Lakh; Corporate/ Insti. Investor: Rs. 10 Crs
Draw Down: 20% (Notice period is 15 Days)
Management Fee: 3%, One time charge, 2% p.a. of total commitment amount.
CARRY: 80:20 ratio (Investor : Investment Manager)
Investment Horizon: 6Years Extension- 1+1 years
Investment Tenure: 3 Years from date of final closing
TAXATION: Fund Income would be in the nature of dividends, interest income and capital gains at the time of the sale of investment. Interest income arising from portfolio companies or on short-term investments by fund would be taxed at the maximum marginal rate.
Tax Counsel- KPMG India Pvt Ltd
INVESTMENT MANAGER:Fund will be managed by Birla Sun Life Asset Mgt. Company Ltd
Advisory Team:
1. Mr Shashi Kumar, Head Real Estate having 20 years of experience.
2. Mr Jagannath Shetty, CFO having 20 Years of Experience.
3. Mr Shekhar Rangaraj, Head Business Development, more than 20 Years of experience.
LEGAL COUNSEL: Nishith Desai Associates
CUSTODIAN: Deutsche Bank AG
· Aditya Birla Real Estate Fund is registered with SEBI as Venture Capital Fund. Fund will be managed by Birla Sun Life Asset Mgt. Company Ltd.
· Fund plans to make investments in unlisted (some times in listed also) real estate firms through equity, equity-related and debt instruments.
· Fund will focus on residential projects and will mainly look at deals at project level, but may also look at investments at an enterprise level in privately held companies.
· Aditya Birla Group is regarded for its corporate governance & experience in infrastructure sector in India.
· Aditya Birla Group’s Aditya Birla Private Equity- Fund I successfully raised Rs 675 Crore from domestic market at the time of First Closure recently.
INVESTMENT STRATEGY:· The fund proposed to invest in realty and realty related business in west & south India.
· Main Focus on Residential Realty.
· Investment at “Land Cost” Stage with well performer developers.
· Single Project Exposure should not increase 25%. Single Group Exposure should not increase 40%. Similarly they have set limit for Single City, Metro Exposure etc.
OTHER SIMILAR FUNDS:
· HDFC Property Fund- HDFC India Real Estate Fund (HI-REF)
· DHFL Venture Capital Fund - promoted by Dewan Housing
· Kotak Mahindra Realty Fund
· Kshitij Venture Capital Fund - a group venture of Pantaloon Retail India Ltd
· India Advantage Fund- promoted by ICICI Bank
GROUP’S PRIOR EXPERIENCE IN PRIVATE EQUITY:
Aditya Birla Private Equity- Fund I Portfolio:
· Anupam Industries Ltd, Rs 50 Crs in February, (a Gujarat-based makers of material handling equipment).
· Bombay Stock Exchange (BSE), Rs 21 Crs
FUND ANALYSIS AND RECOMMENDATION:Due to economic slow down, the price of properties has dropped significantly. Now the world economies are on recovery path. The people who deferred their purchases are now actively scouting for homes in both low and high cost segment. The builders have also well responded- Tata homes has sold recently premier class flats for more than Rs 4 Crs per unit after selling low cost nano homes in Mumbai suburb.
This fund will invest in west and south India like Mumbai, Pune, Hyderabad, and Bengaluru cities where either the demand is slightly more than supply or at least equal. Also, the fund will enter at Land Cost Stage and as per news in the market will probably exit after booking of the project but before final construction and hand over to the customer. The Fund has not disclosed its Target Return but expected to perform well.
On the basis of above discussion and Aditya Birla Group’s past experience in PE, Investor may invest in this Fund. However, the investment commitment size should not be too high as investment in the Venture Capital Fund hold more risk.FUND FACTS:· AUDITORS: S.R. Batliboi & Co.
FUND DETAILS:Fund Size: Initial: Rs 750 Crs., Green Shoe Option: Upto Rs 250 Crs
Target Return: Not Available
Hurdle Rate: 10% IRR per annum
Min Investment: Individual: Rs 25 Lakh; Corporate/ Insti. Investor: Rs. 10 Crs
Draw Down: 20% (Notice period is 15 Days)
Management Fee: 3%, One time charge, 2% p.a. of total commitment amount.
CARRY: 80:20 ratio (Investor : Investment Manager)
Investment Horizon: 6Years Extension- 1+1 years
Investment Tenure: 3 Years from date of final closing
TAXATION: Fund Income would be in the nature of dividends, interest income and capital gains at the time of the sale of investment. Interest income arising from portfolio companies or on short-term investments by fund would be taxed at the maximum marginal rate.
Tax Counsel- KPMG India Pvt Ltd
INVESTMENT MANAGER:Fund will be managed by Birla Sun Life Asset Mgt. Company Ltd
Advisory Team:
1. Mr Shashi Kumar, Head Real Estate having 20 years of experience.
2. Mr Jagannath Shetty, CFO having 20 Years of Experience.
3. Mr Shekhar Rangaraj, Head Business Development, more than 20 Years of experience.
LEGAL COUNSEL: Nishith Desai Associates
CUSTODIAN: Deutsche Bank AG
· Aditya Birla Real Estate Fund is registered with SEBI as Venture Capital Fund. Fund will be managed by Birla Sun Life Asset Mgt. Company Ltd.
· Fund plans to make investments in unlisted (some times in listed also) real estate firms through equity, equity-related and debt instruments.
· Fund will focus on residential projects and will mainly look at deals at project level, but may also look at investments at an enterprise level in privately held companies.
· Aditya Birla Group is regarded for its corporate governance & experience in infrastructure sector in India.
· Aditya Birla Group’s Aditya Birla Private Equity- Fund I successfully raised Rs 675 Crore from domestic market at the time of First Closure recently.
INVESTMENT STRATEGY:· The fund proposed to invest in realty and realty related business in west & south India.
· Main Focus on Residential Realty.
· Investment at “Land Cost” Stage with well performer developers.
· Single Project Exposure should not increase 25%. Single Group Exposure should not increase 40%. Similarly they have set limit for Single City, Metro Exposure etc.
OTHER SIMILAR FUNDS:
· HDFC Property Fund- HDFC India Real Estate Fund (HI-REF)
· DHFL Venture Capital Fund - promoted by Dewan Housing
· Kotak Mahindra Realty Fund
· Kshitij Venture Capital Fund - a group venture of Pantaloon Retail India Ltd
· India Advantage Fund- promoted by ICICI Bank
GROUP’S PRIOR EXPERIENCE IN PRIVATE EQUITY:
Aditya Birla Private Equity- Fund I Portfolio:
· Anupam Industries Ltd, Rs 50 Crs in February, (a Gujarat-based makers of material handling equipment).
· Bombay Stock Exchange (BSE), Rs 21 Crs
FUND ANALYSIS AND RECOMMENDATION:Due to economic slow down, the price of properties has dropped significantly. Now the world economies are on recovery path. The people who deferred their purchases are now actively scouting for homes in both low and high cost segment. The builders have also well responded- Tata homes has sold recently premier class flats for more than Rs 4 Crs per unit after selling low cost nano homes in Mumbai suburb.
This fund will invest in west and south India like Mumbai, Pune, Hyderabad, and Bengaluru cities where either the demand is slightly more than supply or at least equal. Also, the fund will enter at Land Cost Stage and as per news in the market will probably exit after booking of the project but before final construction and hand over to the customer. The Fund has not disclosed its Target Return but expected to perform well.
On the basis of above discussion and Aditya Birla Group’s past experience in PE, Investor may invest in this Fund. However, the investment commitment size should not be too high as investment in the Venture Capital Fund hold more risk.FUND FACTS:· AUDITORS: S.R. Batliboi & Co.
Tuesday, May 18, 2010
Know The Products Before Investing.
Why investors should understand the products before investing?
“Simply to protect their hard earned money”.
After earlier world economy slowdown (in which mostly Indian Software Industry was effected) in year 2002, the Indian Economy has been growing with a significant growth rate.
The saving and awareness about investing those saving to maximize return were increased significantly since then. In year 2003 onward the Mutual Funds, Insurance companies were started aggressively selling their products. The excess savings, to save taxes, awareness and need/ desire to improve their financial health were forced the common man to invest in these products even without knowledge. Now almost every common investor feels cheated.
So, at first understand the product before investing. At least ask the risk involve in the product.
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