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Thursday, September 30, 2010

What are risks in debt mutual fund Investment?

 

 

 


Interest Rate Risk: When interest rates rise, bond prices fall. So if the fund manager has his portfolio stacked with lower interest rate paper, the prices of his holdings will fall resulting in a lower NAV. On the other hand, if interest rates fall then the price of his holdings rise and so does his NAV.

 

The longer a bond's maturity, the greater the interest rates risk. A bond fund with a longer average maturity will see its net asset value (NAV) react more dramatically to changes in interest rates as the prices of the underlying bonds in the portfolio increase or decline.

 

Credit Risk: Bonds carry the risk of default, meaning that the issuer is unable to make further interest or principal payments. They are rated by individual credit rating agencies to help describe the credit worthiness of the issuer. Higher the credit rating, lower the risk and lower the returns. Lower the credit rating, higher the risk and higher the return.

 

Liquidity Risk: If the credit rating gets downgraded or the current interest rates are much higher than the coupon rate, then the bond would face liquidity issues because finding a buyer would no longer be easy. Liquidity risk describes the danger when one has to sell a bond in the secondary market but is unable to find a buyer.

Dos and Don’ts while investing and choosing an investment firm or broking house


Effective management of money is just as important as earning it. Following a good investment plan is critical for avoiding cash flow problems in the future. However, with a number of criteria such as investment horizon, liquidity  needs, risk profile etc. being taken into consideration, investment can turn out to be a complex process. Add to that the need for constant monitoring and rebalancing and the task becomes extremely perplexing and time consuming. Hence the need for a professional investment manager.

With thousands of investment experts vying for your money, the task of choosing your manager can be just as complex as managing money itself. Using the following criteria to filter out your options can make your job a lot easier.

1) Experience -A firm which has created wealth for its clients in various economic cycles, market situations and investment scenarios is likely to be able to adapt easily and provide the correct solution accordingly.

2) Basket of products -Investment management is a complex process which requires a range of products for the purpose of diversification and hedging. Ensure that your investment firm can act as a one stop shop for all your investment needs, not just in the present, but also in the future, and is able to provide you with every asset class available in the market.

3) Research Capabilities Check how strong the company's research team is and how accurate their calls have been in the past. Extensive research based on fundamentals is essential to be able to identify trends and patterns in the market and thereby give the correct calls for the future.

4) Fund Management Team -The past experience and qualifications of the company's fund manager is a credible yardstick of their competence and the returns they can generate for you. It is also desirable that the fund manager holds such a position that makes it unlikely for him to be dissociated from the company.

5)Past performance -The past performance of the company's in house products and advisory is one of the most common and effective ways of judging their quality and credibility. Understand the calculation methodology followed to ensure that the data presented has not been manipulated.

6) Investment Philosophy -An investment manager needs to have a clear outlook and sound mandate in place, in the absence of which, he could be cluelessly allocating funds to random assets. Understand the philosophy and strategy the manager intends to follow and check if his aggression, agenda and management style is in synch with yours.

7) Transparency -The frequency and mode a company follows in reporting the status of your investments is the key to being transparent. Ensure that the company can give regular feedback on your portfolio via meetings with the relationship manager, hard copy reports and mechanisms like online portfolio tracking.

8) Customization -Each person has a different risk appetite, investment horizon and liquidity needs. It is hence essential that you approach a firm which gives you a tailor made solution rather than a generalized one, to fulfill all your investment needs.

9)Geographic Presence -A company's branch, franchisee and sub broker network should be considered to ensure that they can provide you with continued service in case you are to change your city of residence.

10) Fees charged -Pay attention to the various payment options, the duration, frequency and mode of payment rather than emphasizing only on the amount of fee charged. Be wary of organizations that seek a share of the profits made (if any) but are not ready to share losses.

11) Operational Strength -With the focus being on sales, the need for adequate sales support is often overlooked. This leads to inefficiency in investment management and reporting, regardless of the fund managers capabilities. Question the relationship manager or an existing client, regarding the quality of service provided and efficiency of the process flow being followed.

12) Current AUM -Being a small fish in an ocean may lead to the client being tangential to the company's growth, and  hence, deterioration in service and investment solution provided. Identify a firm where your investible corpus is of consequence and can justify the scale of operations the company follows.

13) Legal Compliance -Documents and agreements presented to you should be iron clad leaving no room for ambiguity and speculation. This is to ensure that all charges levied are as per mutual consent and redemptions can be carried out smoothly without leaving a bitter taste in your mouth.

14) Target Clientele Companies often channelise all their energies and efforts in catering to a particular customer segment. Being a part of this segment is in the clients interest as it would ensure the desired service level and attention.

15) Differential Treatment -Often, contrasting recommendations are given to institutional and retail clients. The presence of such a Chinese wall can be detrimental to client interests and hence should be done away with.

While people do question the need and credibility of investment managers, their capability at creating wealth in the long term is unchallenged. Being patient and realistic with your expectations is critical to having a good investment experience. With India being seen as the centre of the financial world, a scrupulous experts advice can go a long way in creating wealth.

As they say, giving you the right treatment is the doctors job…..but going to the right doctor, is yours.

Happy Investing. Investment is the commitment of money or capital to purchase financial instruments or other assets in order to gain profitable returns in the form of interest, income, or appreciation of the value of the instrument.

Want a low-down on investment? Consult an investment expert to make the most of your money. However, there are a few things to look at before you zero-in on the best one for you

Personal Finance: Understanding Credit Card rules to escape from the debt trap

Swipe-now-pay-later attitude could land credit card holders in a soup if they don't understand the charges levied by card issuers


   Credit crad gives you the ease to shop anywhere and everywhere with minimal hassle. It helps you buy big and lets you pay later, with a one-month grace period. But not understanding the terms and conditions in a credit card — like the interest and other charges levied by card companies — could leave you gasping under a mountain of debt. Often, a cardholder is struck by the realisation only when the monthly credit card statement reflects the hefty charges. For every card holder, it is imperative to study the 'Most Important Terms and Conditions' (MITC) listed on the card issuers' websites carefully. Here are some key clauses you need to be aware of, in order to avoid rude shocks later.

Cash Withdrawal

While your credit card can be used to withdraw cash from the automated teller machines, or ATMs, if required, it is best to save this option for emergencies. This is because cash withdrawal typically attracts an upfront charge — of close to 2.5% of the amount withdrawn. Moreover, unlike cards swiped at point-of-sale (POS) terminals where the amount becomes due after the expiry of the credit or grace period allowed to the card holder, in this case, the payment is due from the date of withdrawal. The rate of interest (termed finance charges in credit card parlance) to be paid on the amount could be in the range of 39-45% per annum.

 

Some banks also levy further charges if the withdrawal is made via teller counters at their branches.

Overlimit Charges

If you fail to keep track of your credit limit and end up overdrawing, you would be liable to pay the relevant charges. Typically, it is 2.5% of the overdrawn amount, subject to a minimum of Rs 500. Also, you would do well to remember that your credit limit is inclusive of any charges or late payment penalties payable by you.

Outstation Cheque Charges

All banks have a cheque collection policy that also covers terms related to outstation cheques. If you choose this mode to make your payment, you may be charged close to 1% of the cheque value or 50 for every instrument. Some banks, however, do waive these charges. You need go through your issuer's MITC to understand the applicable charge structure.

EMI Processing Charges

Several times, at the discretion of the credit card companies, cardholders with outstanding dues are allowed to convert the lump-sum repayment due into installment-based payments. The card issuer may promise to charge the existing rate of interest, but you need to watch out for the processing charges that could be built in, pushing up the entire amount payable.

Right Of Lien

If you have availed of a credit card from the bank where you maintain an account, the funds lying in the latter could be used towards repayment of your card dues. This could be applicable to the add-on credit card holder as well. Several card issuers' terms and conditions stipulate that in the event of nonpayment of dues by the card holder, they reserve the right to set-off the amount against any account with credit balance maintained by the individual.

 

Higher EPF rate and its challenges for MFs, other savings schemes

THE interest rate on the employees' provident fund (EPF) has been raised to 9.5 per cent for the present financial year. This is good news for all those who have money invested into EPF, as the new rate represents a rise from the returns witnessed in the past few years.

There is also some indirect impact that this rate hike will have on the individual and their efforts while making other investments. This is one aspect that assumes added importance as several people might miss out on the details here.

Restriction and impact: The higher rate of return of 9.5 per cent is applicable for the existing investors of the EPF. This system comprises a compulsory contribution that is made each month by the employer and the employee to the provident fund based upon a specified percentage of the salary earned.

The interest is earned on the entire amount present in the fund that includes the present year's contributions plus the accumulated amount comprising past contributions and the interest earned on it.

There is a downside to the entire process, since this is accessible only for employees it keeps out others including professionals or those who are self employed from getting the benefits. On their part, the EPF investors have to understand two important points. The first is that the contribution is

meant to build a corpus for retirement and the second is that the rates are announced each year. So, there is no surety about the figure being maintained over a period of time and hence, they need to take things as they come.
 
Comparison:
 
The raising of the rate of return to 9.5 per cent has increased the visibility of the EPF in the minds of investors. The rate has become a reference point for their investments.

Most of the small savings option that are present in the market are earning a return

of around 8 per cent, while other debt avenues such as bank fixed deposits are even lower. The raising of the return here also means a challenge for other areas like monthly income plans of mutual funds and the new pension scheme because investors will scrutinise their performance closely.
While there might not be direct movement of money from one area to the other because of investment restrictions there can be some other implications. So, for example, when this kind of higher rate is known then there are bound to be questions as to why other routes are not earning a higher rate of return. This can also lead to blurring of the risk reward situation because options like monthly income plans of mutual funds and some options in the new pension scheme might end up with higher or similar returns but there is an added risk element due to the presence of equity in the portfolio. If the risk element is ignored, then there can be severe repercussions in case of tough times.
 
Restriction:
 
Individual investors might also feel a bit frustrated because even when they see high returns in front of their eyes they might not be able to access it. First, it is only employees who will be benefiting directly from the move of the higher rates.

Those who are not employees or salaried would not have an option of investing here. The alternative is to go towards something like the public provident fund but the rate here is 8 per cent or to the new pension scheme where anyone can invest.

Another point that salaried individuals also need to know before they calculate their gains from the fund is that one should not consider the comparison on a year-to-year basis. This change is necessary because this is a long-term investment meant for the purpose of retirement and hence, a short-term rise in performance might not make much of an impact. The other thing is that they must also realise that the amounts that they put here will not be accessible easily till retirement.
So, they should consider the long-term implication of the benefits.

Taxable nature:
 
The most important point as far as the individual is concerned is the net return that they get in their hands. This is the figure that they end up with after all the deductions on account of taxation. This is one area where the provident fund scores because the return earned here is tax-free. This is a very important point because it raises the post tax rate of return for the individual, which is going to be very difficult to match in other areas.

Other areas such as pension funds and long-term debt options have a return that is taxable. So, for someone who is falling in the higher tax bracket, they could find themselves ending up with a lower return on the net scale. This can be a depressing though because the returns are being eaten up by taxation is never preferable. This is the reason why the individual should be looking at the various options also from the net tax angle as it will ensure that there is a higher amount coming in for them.


Special situations mutual funds apt for risk-taking MF investors

 

 

WHEN Tata Motors was trying to turn around Jaguar & Land Rover, the Indian company's stock was trading very near to its book value 18 months ago. Months down the line, the strategy seemed to have paid off for the company as well as for investors, who understood the situation then.

Special situations like these often throw up interesting opportunities, which can be capitalised by mutual fund investors.

Known for the special situations theme, Birla Special Situations Fund, Fidelity India Special Situations Fund and HSBC Unique Opportunities Fund offer passive investors an option to bet on such special situations.

Be it M&A or foraying into a new business area or demerger or share buyback, special situation funds screen situations like these to make the most of the opportunities. Mahesh Patil, head of equity (domestic) at Birla Sun Life Mutual Fund, talked of a special situation opportunity in Crompton Greaves. Crompton had strong cash flow and decided to invest a marginal portion of it in its sister concern, Avantha Power, at book value. However, the market perceived it to be negative and hammered the stock. They had invested cash to the extent of Rs 10 per share, but the stock price had fallen by over Rs 20 on the day of the announcement. Our comfort of investment was in valuations at which the company had invested and prospects of the business.

Globally, special situations funds are a big hit with high net worth individuals and institutional investors. The risk with these funds is that all situations may not be profit making. In recent times, we have had situations where subsidiary companies have got listed and this has resulted in value destruction for the parent company, Patil pointed out.

A comparison of returns shows gains notched up by special situations funds (which manage around Rs 1,600 crore of assets) could fall far short of plain vanilla equity diversified funds with just one special fund managing to beat the 30 per cent return given by at least 100 diversified funds.

Special situations funds provide the necessary diversification compared with direct equity investments. The performance of special situations funds being dependent on stock calls, it's important to monitor the skill of the fund manger, how the fund has done vis-à-vis its benchmark index (mostly BSE 200) and the kind of stocks it has picked.

Typically, during heightened economic activity, such funds would do well. Reverse is also true. So the fund manager's performance has to be seen over an entire economic cycle.

Past data indicates that these funds have tended to perform in line with any other diversified equity fund in terms of portfolio holdings and risk adjusted returns and do not provide any compelling reason to have these funds in one's portfolio.

However, with Indian companies increasingly looking at mergers and acquisitions, domestically and internationally, and using other corporate actions to unlock value, it will be interesting to watch the performance and portfolio differentiation that these funds have to offer in future.

Financial advisers say one should use the SIP route to invest in thematic funds. Anil Rego, CEO of Right Horizons, felt risk-taking investors should avoid lumpsum investment.

"Around 5 per cent of equity exposure to special situations funds will do no harm to your portfolio. But hold it for long term," Rego advised.

 

Wednesday, September 29, 2010

Mutual Fund Review: DWS Alpha Equity

 

After a top quartile performance for three years, the fund found itself in the bottom quartile in 2009. But investors should not be in a hurry to write it off.

Fund manager Aniket Inamdar maintains a compact portfolio and limits his mid- and small-cap exposure to around 25 per cent of the portfolio.

With the number of stocks ranging from 20 to 31, one can expect concentrated stock bets. The top 10 holdings of the fund account for around 57 per cent of the portfolio. Though allocation to a single stock has exceeded nine per cent on many occasions, it is only in the large-cap bets.

The fund appears to follow a mixed strategy. While a few of the large-caps have been held since inception, a fifth of its portfolio comprises stocks held for five months or less. Inamdar says he doesn't churn the portfolio a lot; it is the range-bound market that has resulted in a higher than normal turnover ratio.

Despite the blip in performance last year, the fund has established a decent track record that makes it a worthy pick in this space. Its five-year annualised return of 22 per cent is higher than that of the category average (18 per cent) and the benchmark (18 per cent), as on August 31.


Essential Mutual funds Terms

 

Mutual funds (MFs) are possibly one of the simplest market-linked investment products when it comes to meeting financial goals, whether it's your short-term needs or the long-term financial plans. However, to make the best of what they have to offer, you should understand some basic terms related to MFs. We take a look at five such important terms:

Unit

Holding a unit in a mutual fund scheme is akin to owning one share of a company. A holder of such units in any of the MF schemes is called a unit-holder. When you invest a certain amount in an MF scheme, you are allotted a certain number of units, the value of which determines the worth of
your investment.

Net AssetT Value (NAV)

 

NAV is a dynamic ratio. The market value of a scheme's portfolio changes day- to-day, just as prices of shares move up or down

Just as a share or bond is bought and sold at a specific price, each mutual fund unit is bought and sold at its NAV. A scheme's NAV is its net assets (market value of the securities it owns minus whatever it owes) divided by the number of units it has issued. If, for example, you were to invest Rs 10,000 in a scheme when its NAV is Rs 10, you will be allotted 1,000 units (10,000/10). However, NAV of a mutual fund is a dynamic concept. The market value of a scheme's portfolio changes day to day, just as prices of shares and bonds move up or down. The number of units outstanding also changes as new investors come into the scheme and existing ones leave. If the NAV of your scheme rises from Rs 10 to Rs 11 over a period of time, your scheme is said to have generated a return of 10 per cent. The same principle applies to falling NAV. So, if your scheme's NAV falls from Rs 10 to Rs 9, it is said to have lost 10 per cent. The NAV of any scheme tells us how much each unit is worth at any point in time and is, therefore, the simplest measure of how a scheme is performing.

Load

Load refers to the charge or the cost which your investment in a mutual fund scheme is subjected to. At present, there is no entry cost for mutual funds, with the entire investment—including SIP transactions—deployed by the asset management company (AMC) on your behalf. This applies to both investments made directly by you or through a distributor. However, an exit load does apply and it varies with different types of funds. Usually, equity funds come with 1 per cent load for exiting before one year of holding the investment. After a year, it is nil.

Recurring Expenses

There is a recurring expense that keeps getting adjusted from your fund value on a regular basis. This is what your fund charges you for managing your money. Fund managers have to be paid a fee, as do the other constituents involved in managing your money. All this entails costs, which your scheme recovers from you, within limits.

Every year, a fund charges some amount to your scheme's NAV, reducing your returns by that much. While rules allow equity schemes to charge a maximum of 2.50 per cent of the corpus as expenses every year, for debt schemes, the maximum limit is 2.25 per cent.

Redemption

You can sell your units, partly or fully, back to your fund whenever you want. While it's a sale from your point of view, in mutual fund parlance, it is called 'repurchase' or 'redemption'. Your mutual fund will pay you the scheme's NAV prevailing on that date minus the exit load, if applicable, and directly credit your nominated bank account in three days or send you the money through a cheque.

 


Mutual Fund Review: UTI Master Value Fund

 

 

UTI Master Value Fund is an equity fund and had average assets under management of `564.44 crore in August 2010. The fund was rated Credit Rating Information Services of India (Crisil) Mutual Fund Rank 1, under the small &midcap categories, for the last three quarters up to June 2010. The fund also features in the top 10 percentile of the Consistent Crisil Mutual Fund Ranking for June 2010.

Performance The fund, managed by Anoop Bhaskar, has steadily improved performance in the last three years. A month-on-month comparison of its performance visà-vis the benchmark index reveals outperformance close to 60 per cent of the times. An improvement in performance saw the fund moving to the top 10 percentile of Crisil's Mutual Fund Rankings. The ability of the fund to capitalise on the recent rally in the equity markets is evident from its net asset value (NAV) growth, which has beaten the Bombay Stock Exchange (BSE) 200 by a wide margin.

In the last 12 months, the fund's NAV has risen 54 per cent, compared with the benchmark index's 22 per cent growth. During the period, the peer set of small and midcap equity funds rose 43 per cent.

The high returns can be attributed to the fund manager's ability to identify undervalued stocks, especially during the bear phase. High allocation to small and midcap stocks during the period made a significant contribution.

Also, over a longer period, the fund has posted above average returns, with its NAV appreciating more than 14 times since inception. An investment of `1,000 in the fund would have grown to `14,233 as against 7,964 for an investment in the BSE 200 index.

On a risk-adjusted basis, the performance of the fund is better than both its peers and the benchmark index. Over a threeyear period, the fund has a Sharpe Ratio (return per unit of risk) of 1.01 vis-à-vis the ratios of 0.59 for its peers and 0.22 for BSE 200.

Portfolio diversification The fund's portfolio is diversified with high exposure to small and midcap stocks. Exposure to stocks from the S&P CNX Nifty has never exceeded 22 per cent in the last three years. During the period, the average exposure to stocks from BSE midcap and BSE small cap indices was 33 per cent and 36 per cent, respectively.

The inherent risk in the fund's portfolio, on account of exposures to small and midcap stocks, is mitigated by the high level of diversification. The fund held 74 stocks in August 2010, with top 10 holdings comprising only a quarter of the overall portfolio. In the last three years ended August 2010, the fund held an average of 51 stocks. Diversification shields the portfolio from the poor performance of some stocks.

Sector trends Industrial products, consumer non-durables, pharmaceuticals and banking account for a large part of the portfolio with cumulative average exposure of 44 per cent over a three-year period.

Pharma and banking were among the top contributors to the overall gains of the fund. The positive trend in the fund's NAVs has been primarily driven by exposure to Reliance Energy, Lupin and Clariant Chemicals.

 

Banking service codes mandated by RBI

 

Bank customers can get themselves heard and their grievances settled if they know the banking service codes mandated by RBI


   BANKING surely has come a long way. You don't have to visit the musty branches and brave serpentine queues anymore. The ATM can take care of most of your needs. If at all you need to visit a branch, smiling faces with pleasant manners would welcome you warmly.


   However, the facade drops the moment you have a serious issue — like an erroneous transaction or wrong entry — with the bank. No technology, no courtesy can save you from the Kafkaesque nightmare. Suddenly, the bureaucratic maze would make sure that you run from one counter to the other or follow up the matter with countless phone calls to find a solution.


   That need not be the case. A little bit of awareness about the service level of banks mandated by the Reserve Bank of India can help you take the bank to task. If there is a violation of the code of commitment (available on the websites of the banks and the Banking Codes and Standards Board of India) by the bank, you can take up the matter with the bank's nodal officer. Here are a few common problems faced by bank customers and how you can find a solution to it.

Failure To Regularise Loan Accounts    

In most cases, banks settle a loan through a compromise if there is a default in repayment for a considerable period. However, if a loan is repaid under a compromise settlement, with a part of the amount being waived off, many banks report it as 'writtenoff' instead of loan account 'closed' while submitting data to credit information companies like CIBIL. They do it despite their code of commitment to customers clearly stating that if the account of a borrower is regularised after having been in default, the information would be passed on to the credit information company in the subsequent monthly report. This is a serious issue as it has the potential to adversely affect the person's credit rating for future loan applications. There have been flooded with such complaints. We advise the aggrieved borrowers to write to the bank's nodal officer for correcting the situation. If the issue remains unresolved at this level for a period of 30 days, they can consider approaching the Banking Ombudsman.

Erroneous Atm Transaction    

ATMs aren't god, even they can commit mistakes. One of the common grouse against these magnificent machines which almost always give you the right amount is about failed transactions. Often customers find that failed withdrawals are often debited from their account. In accordance with the directive from the Reserve Bank of India, banks are required to reverse any erroneous debit made to an individual's account due to failed ATM transaction within 12 days of receiving a complaint from the account holder. If the bank fails to reverse the entry, it will have to offer compensation of Rs 100 per day to the customer. The amount is to be credited to the individual's account on the date of re-credit, even if he/she has not made a claim for the compensation.

Delay In Crediting    

The code of commitment also lays out the penal interest payable by the bank if there is a delay in executing transactions on payment platforms such as RTGS, NEFT, ECS and so on. The central bank has also recently prescribed penalties to be shelled out by banks for any delay in credits pertaining to payments made through the electronic platforms. In the case of NECS or ECS-Credit, the bank is expected to pay a penal interest at the prevailing RBI LAF Repo Rate plus two per cent, starting from the due date of credit till the date of actual credit. The same rate also applies to NEFT transactions. On delays in return of the funds transfer instruction, the destination bank has to refund the amount along with the interest till the date of refund.


   Besides this, every bank has a cheque collection policy in place. One significant provision is the penalty payable by the bank in the event of a delay in collecting outstation cheques. Account holders would do well to go through their bank's policy in this regard.

Uncouth Recovery Agents    

Banks have found an easy way to tackle serial defaulters. Antisocial elements who would act as recovery agents for banks make life hell for people with untimely visits and abusive phone calls. The sad part is that even genuine customer can be target of these characters. Following widespread complaints from borrowers, the RBI had taken measures to regulate the conduct of recovery agents. The code of commitment states the bank will not initiate the recovery proceedings without informing the borrower in writing. In addition, the agents are supposed to contact the customer at a place of his or her choice and are duty bound to interact in a 'civil manner'. Also, the recovery agent can make calls or visits only between 7 am and 7 pm. If the recovery agent does not adhere to these norms or fails to maintain the decorum, you can bring it to the bank's notice.


   Finally, arm yourself with a careful reading of the BCSBI code of commitment to customers as it will help you understand your rights as a customer and ensure that you get a fair deal from your bank.

 

Infrastructure bonds and tax benefit

The yield from these bonds is more thanks to the tax benefit. How these bonds work for an investor


   In the Budget for 2010, the Finance Minister had mentioned floating of infrastructure bonds. The objective was to promote infrastructure investments in the country. Infrastructure requires huge investments. The gestation period is long and returns take a long time to come.


   The Finance Minister had offered tax benefits to individuals on investments up to Rs 20,000 in infrastructure bonds under Section 80CCF. This is over and above the current limit of Rs 1 lakh under Section 80C. The Central Board of Direct Taxes (CBDT) has now notified New Infrastructure Bonds. An individual or a Hindu Undivided Family (HUF) can invest in these new infrastructure bonds up to Rs 20,000 in a financial year. Non-banking financial companies (NBFCs) classified as infrastructure companies by the Reserve Bank of India (RBI) will be allowed to issue these bonds, called long-term infrastructure bonds.


   The minimum application amount for these bonds is Rs 5,000 and multiples thereof for each option. The bonds will be of 10-year tenure. The minimum lockin period for an investor will be five years. After five years, the investor may exit either through the secondary market or through a buy-back facility, specified by the issuer in the issue document at the time of issue. PAN is a must to apply for these bonds.


   These infrastructure bonds are not tax-free. Interest on these bonds is taxable in the hands of the investor. However, no tax is deducted at source from the interest.


   A demat account is mandatory to apply. Any application without a demat account number will be rejected. Submitting an attested PAN card copy of the first holder is also compulsory while applying.


   The interest received on these bonds will be treated as 'income from other source' and will form a part of the total income of the assessee of the financial year in which they are received.


   Only resident Indian individuals and HUF can invest in these bonds. A minor is not eligible to apply for subscription to these bonds.


   An application can be made in joint names with a maximum of three applicants. In this case, the demat account should also be held in the joint names and the order of applicant should be the same as appearing in the demat account.


   The maximum benefit to an investor will be Rs 20,000 under Section 80CCF of the Income Tax Act. The allotment will be made for the sum applied. However, the benefit under Section 80CCF can be availed only for a maximum sum of Rs 20,000. While the application can be made in joint names, the tax benefit can be availed only by the first applicant.


   The interest will be credited to the respective bank registered with the demat account through ECS on the due date for interest payment. These bonds may be mortgaged or pledged to avail a loan after the lock-in period.

 

Tuesday, September 28, 2010

Investment Strategy: A Value-Averaging Investment Plan (VIP) For Equities

Value-Averaging Investment Plan (VIP) Can Give Better Returns Compared To Sip Over A Market Cycle

For most disciplined investors systematic investment plan (SIP) now forms the best way to put their money in equities. An investor keeps putting in a fixed sum at regular intervals, and in turn, he benefits from cost averaging without worrying about stock market fluctuations.

Investors prefer SIP as no one can time the market. Therefore, it also saves them from speculating the market rise and fall in the future. However, wouldn't it be nice if we could invest more when the market is low and less when markets have risen? Value averaging investment plan, or VIP, is the answer. This method of investing goes a step further from SIP.

The difference:

 

In the backdrop of being more active than an SIP, VIP endeavours to provide better returns. SIPs average out your cost by buying a fixed amount at regular intervals. VIP invests more money in the chosen funds, the market slumps or the net asset value (NAV) of the fund drops. And, invests lesser amount when the markets rise.

This means, you don't put a constant amount each month. Rather, the fund house will only take the amount depending on the movement of the equities.

The fund house takes this call based on multiple statistical, mathematical trend patterns fed into a computer, which identifies whether it is a bull or bear pattern and makes the decision on the amount that the investor needs to put at a given time.

VIP is a goal-oriented product. The investor needs to specify the corpus that he needs. The intermediate investments are done to achieve this defined corpus.

VIP would underperform an SIP when markets are rising, as there is lower sum invested when markets are inching up. In SIP, a fixed amount would keep getting invested. However, over a market cycle, VIP would outperform SIP since a person consistently deploys higher funds at every dip.

This is apparent if you compare the performance for someone who started an SIP and a VIP in January 2006, when the market was at 9,919 levels and then revived around October 2009 when market touched 15,896-level (See table: SIP vs VIP).

Operation:

The mechanism of VIP is more complicated when compared to an SIP.

An example should make this clear: say, a person states that he wants to invest so that the monthly investment amount is Rs 1,000. So, he starts VIP with Rs 1,000 in the first month. In the second month, say, the fund value falls to Rs 900 due to market slump. In this case, the investor would contribute Rs 1,100. This will ensure that you meet the target corpus at the end of the tenure.

Over the next month, if markets rise and the fund value move to Rs 2,000, then the next contribution would scale down to Rs 800 only.

For simplicity, we assumed the investment based on the deficit between the market value and the amount invested. In practice, the VIP assumes a specified return on investments. In VIP, you adjust or vary the amount invested to meet a prescribed target value of the portfolio.

Using this mechanism, a person can build his financial goal and be sure of attaining it, irrespective of returns from the market. If you want your portfolio to grow by 15 per cent year-on-year, you contribute in such a manner as to reach this percentage each month.

Existing schemes:

 

Among some of popular fund houses, which provide the VIP mode of investments is Benchmark Asset Management Company. It was is the first company to launch VIP in the country for an exchange-traded fund that tracks the S&P CNX 500. The product assumes 15 per cent returns each year and the minimum investment amount must be Rs 2,000.

Reliance has launched a similar initiative called Smart Steps. Under the scheme, investors deposit money in select Reliance debt funds and variable amounts are transferred to various equity schemes based on a logical model to maximise returns. HDFC flex STP is another plan that works towards varying the deployment as per market trends.

Those who have SIP and understand the nuances of stock markets, should look at VIP. Varying the amount of investment with market movement can help investors who want to use the volatility optimally.

An investor needs to be ready for varying amounts being deducted from the bank account at regular intervals. However, you can overcome this by investing a lumpsum in a fund house's debt schemes and asking for a transfer in the chosen scheme.

Reconfigure investments to reap benefits in DTC

 

 

Investing for tax benefits under the new Direct Taxes Code (DTC) will be different in several ways from what taxpayers are familiar with right now. This will require some reconfiguration in the nature of investments for the investor and they need to be ready to tackle the changes that will come about once the new DTC is implemented from financial year 2012-13.One area of interest for most taxpayers is the manner in which they can extract the maximum tax benefit.


Here is a look at the situation and also how it changes from the existing position.
Basic deduction: At present, there is a deduction of Rs 1 lakh that is available for an individual when they make investments under specified areas such as provident fund, public provident fund, national savings certificates, equity linked savings scheme and insurance premium, among others. This benefit is available under Section 80C of the Income Tax Act. This has been replaced by a new Section 68 under the DTC where there is a deduction of Rs 1 lakh from the gross total income of the sum that will be deposited in approved fund.

The important thing is to see what an approved fund is, as this will determine the areas where the benefit will be available. Approved fund includes a provident fund, superannuation fund, pension fund, gratuity fund or any other fund that has been approved by various authorities for this benefit.

There is no change in the monetary limit (Rs 1 lakh) for the deduction, but what is important to note is that the number of options that are available for the purpose of completing the required investments has come down drastically. There are a lot of areas that include post office options as well as things such as senior citizen savings scheme and even investments in equity linked savings scheme, which will no longer be present.


Infrastructure bonds: (Section 80CCF)

In the present financial year, there is an additional deduction that is available for infrastructure bonds which is an extra amount of Rs 20,000 above the Rs 1 lakh limit.


There is no mention of any benefit for investments in infrastructure bonds and, hence, investors should not expect it to remain as a tax saving option.
What this means is that there is a short time period for which this benefit will be available and the investors would do well to keep that in mind while making their in vestments. It also implies that the taxpayers should ensure that this benefit is taken while it is available.

Additional benefit:

The new DTC has a different system that has been set in motion for the purpose for claiming additional benefits. Unlike the present system where each individual section has a specific amount that has been allotted specifically for it, there are a few sections and type of expenses that are clubbed together and provides for an additional deduction.

Life Insurance (Section 70):

 

The amount that is paid for the life cover of a person would be an eligible deduction but with a difference. At present, all the policies that are issued by an insurance company are covered by the benefit. This makes the scope of the insurance premium payment very wide.


Under the DTC, only those policies where the premium paid is less than 5 per cent of the sum assured of the policy will get the benefit of deduction of the premium. What this effectively means is that only term policies will be covered for the purpose of the benefit. This will require taxpayers to seriously look at taking an insurance cover for the purpose of insurance and not just to save taxes or make investments.


Tuition fees (Section 72):

An amount that is paid for the purpose of tuition fees for two children will also be covered under the benefit.


The tuition fee has to be paid to a school, college, university or other educational institution within India and this has to be for full time education which includes play school or pre school. Right now, the benefit of deduction of the tuition fee is covered under Section 80C, but this has now been moved away to this second cluster.


Medical insurance (Section 71):

 

The medical insurance premium paid will also be eligible for the benefit under this particular limit. This is a distinction from the system that is prevalent where there is a separate section for this deduction and there is Rs 15,000 for individuals and Rs 20,000 if the person is a senior citizen. Now this separate limit will not be present but the individual will have to claim it within the overall limit. Different people will have flexibility to ensure that they are able to get a deduction for the amount that they have spent.

Mutual Fund Review: IDFC Premier Equity

 

 

There is a definite and growing buzz around IDFC Premier Equity, given its stellar show since 2007. The subprime crisis may have dealt a blow, but the revival has been much faster than the brief slide

 

IDFC Premier Equity is well recognised in the mutual fund industry as a mid-cap fund. The underlying philosophy of this fund is to invest in small- and mediumsized companies which have a good longterm potential, and hold on to these stocks until they evidently emerge as large-caps of the equity market. This has given IDFC Premier Equity an edge over many of its midand small-cap peers. No wonder then, that this mid-cap fund has successfully grown from less than 200-crore assets under management (AUM) in early 2007 to more than 1,700 crore AUM today. While the valuation of its equity portfolio definitely has an important role in boosting its AUM, IDFC Premier Equity does appear to have stirred up investor interest, given its powerpacked performance since 2007.

PERFORMANCE:

Launched in September 2005, IDFC Premier Equity had a slow start. IT underperformed its benchmark index, the BSE 500, as well as the Sensex and the Nifty by high margins until Kenneth Andrade took over the management of this fund in February 2007. The fund's performance has changed ever since. Led by a fantastic rally on the bourses, IDFC Premier Equity notched up a whopping 110% gains in 2007 against BSE 500's 63% returns that year. Many then argued that the fund's high mid-cap exposure played an important role in arresting its performance in 2007, the year that witnessed many midand small-sized companies getting carried away by the market momentum.


   But if that were the case, then the fund's ability to curtail its fall in the following meltdown year of 2008 came as another surprising shot to calm its critics. While the fund's net asset value did decline ruthlessly by about 53%, this decline was much lower than what was anticipated from such a mid-cap oriented fund. BSE 500 declined by nearly 58% that year.


   Though the fall was hard, the recovery was faster. 2009 saw the fund regain its pace as it rewarded its investors by delivering nearly 102% returns against BSE 500's 90% returns then. Continuing its pace even in the current calendar year, IDFC Premier Equity has so far delivered about 35% gains since January this year against BSE 500's 13% gains in this period. This fund has enriched its investors by about 255% since its launch. In a nutshell, every 1,000 invested into this fund at the time of its launch, is worth 3,550 today.

PORTFOLIO:

Predominantly into midcaps, IDFC Premier Equity's portfolio does have a little exposure to large-cap stocks, prominent among them being Asian Paints and GlaxoSmithKline Consumer Healthcare which the fund has been holding for over a year now. Most of its current stock holdings are at least an year old, in line with its philosophy of holding onto its investments till they emerge to be-come the prospective large-caps. A prominent example of this philoso-phy is the fund's investment in page industries nearly three years ago. The stock of the makers and marketers of Jockey brand in India has trebled in values since then.


   Other profitable investments made by the fund include stocks of Coromandel International, Shriram Transport Finance, Emami and Bata India. Each of these stocks have been a part of the fund's portfolio for over two years now.


   IDFC Premier Equity is thus an investor's fund and not a trader's fund, with only a little churning in the portfolio. While a low turnover does provide a sort of stability to the portfolio, many investors, especially those with high risk appetite, may not well agree on this practice, as a mid-cap fund is expected to tap various opportunities in the market from time to time.


   IDFC Premier Equity commands a relatively low beta of 0.93 which implies that for every 1% rise or fall in the market, the fund will rise or fall by about 0.93%.

OUR VIEW:

IDFC Premier Equity has, over a period of time, proved itself to be one of the finest midcap funds of the industry. Not only has this fund performed stupendously in the rallies, but has also steered through the tides in the market downturn. Investors can definitely look at appropriating some percentage of their investments in IDFC Premier Equity, but with a long-term investment objective only.

 

PF Interest Rate Increased to 9.5%

 

 

 

 

The government on Wednesday said that it has increased the interest rate offered in the employees' provident fund by 1 percentage point to 9.5 per cent for the financial year 2010-11.


The move will benefit nearly 4.71 crore employees in public and private sectors.


Announcing the hike, Union labour minister Mallikarjun Kharge, said, "We have decided to give 9.5 per cent rate of interest to subscribers during the current financial year on their contributions. For over four crore subscribers this is a big gift from EPFO Trustees."


With this hike in interest rate, EPFO deposits become more attractive than bank fixed deposits, which at present are offering interest in the range of 7-7.5 per cent.


The decision would put an additional burden of Rs 1,600 crore on the EPFO, the minister said, adding that it would be met from the surplus of over Rs 1,731 crore in the interest suspense account.

House property tax regime set to change under DTC

 

INDIANS typically consider house property as an important source of investment for long-term returns. However, with the Direct Taxes Code (DTC), 2010, proposing significant changes in the way house property income would be subject to tax, it becomes imperative for investors to take note of the changes and plan their investment decisions accordingly.

RENTAL INCOME

The income from letting out a house property will be computed under the head — income from house property. The income from house property will be computed as gross rent less the deductions specified under DTC. Gross rent is the amount of rent received or receivable for the financial year. One can claim deductions for the amount of tax paid to the local authority, a sum equal to 20% of the gross rent in respect of repair and maintenance of such property, and the amount of any interest paid on loan taken for the purposes of acquisition, construction, repair or renovation of such property; or the interest paid on the loan taken for the purposes of repayment of the loan. There is no restriction on the amount of interest that could be claimed as deduction in case of a let-out property. Further, any interest in respect of the period prior to the financial year in which the house property has been acquired or constructed can be claimed as deduction in five equal instalments, beginning from the financial year in which the property has been acquired or constructed. If the house property is owned by two or more persons with "definite and ascertainable" shares, then their income from such house property shall be computed separately in accordance with respective shares.

SELF-OCCUPIED HOUSE

The provisions for the self-occupied house are broadly similar to those under the current tax law. Thus, in case of a selfoccupied property, a deduction can be claimed up to 1.5 lakh for the interest paid on a loan taken for the purposes of acquisition, construction, repair or renovation of a house property in the year which such property is acquired or constructed. It is important to note that certain conditions must be satisfied to claim this deduction, which include that the house property should be owned by the person and not let-out during the financial year.

DEEMED TO BE LET-OUT PROPERTY

The DTC has done away with the concept of deemed to be let-out property. If an individual owns more than one house, the income from them will not be taxed. Under the current tax law, only one house is considered as self-occupied and other houses are considered deemed to be let-out and taxed accordingly. It is important to note that any interest paid on the housing loan for such properties will not be eligible for deduction.

REPAYMENT OF PRINCIPAL

Currently, a person can claim a deduction up to 1 lakh on the repayment of the principal amount of the housing loan. However, no such deduction will be available under the DTC.

 


Monday, September 27, 2010

Time to shuffle portfolio as markets trade at highs and tending volatile

 

Here are some strategies for investors in these conditions


   The domestic stock markets have been through a good rally over the last couple of months. The markets are trading close to their 30-month highs, propelled by good foreign institutional investor (FII) inflows. The markets are trading at crucial levels. There are no strong triggers at the domestic level and the global sentiments are on the weaker side.


   Investors should look at reducing their exposure to equity and equity-based instruments, and stay in debt or cash to invest at lower levels when the markets correct.


   Here are some strategies for investors in the current market conditions:

Book profits regularly    

One basic strategy to maximise yield is to book profits at regular intervals. Analysts suggest investors should maintain profit and loss targets on investments and keep track of the triggers constantly. However, many investors don't have the time to follow the market developments constantly and lose track. Therefore, it is advisable to keep booking profits regularly whenever the prices move significantly.
   Smaller milestones can be set in steps of 10 to 20 percent price movements. Regular selling and booking profits enables an investor to average out his opportunities and use them in a systematic manner.

Analyse signals    

Analysing market news and company results is another way to identify exit signals. It is recommended to reduce exposure in companies that performed below market expectations during the recent quarterly results, especially if the market is trading at highs. These companies have a higher tendency to fall in case of a market correction.

Go for blue-chip    

Since the markets are at a high, it's recommended to reduce exposure to highrisk stocks (mid-cap or small-cap). Those looking at remaining invested in equity should stick to blue-chip and large-cap companies. Usually, blue-chip companies have a lesser downside potential in comparison to their small-cap peers during market correction phases.

Look for sell signals    

Identifying a sell signal in a stock needs understanding of the markets. However, investors can take a decision based on the quarterly results, analysts' recommendations or market reviews.

Allocate to debt    

It is advisable to move a certain percentage of your equity portfolio into cash or debt as the market is at a high. There are many options that can used to diversify and invest the proceeds withdrawn from equity.


Some debt options:

Bank deposits    

The basic features of a bank deposit are safety of the investor's principal amount, easy liquidation of deposits and accumulation of regular interest. The interest rates on bank fixed deposits are on a rise after the Reserve Bank of India's (RBI's) decision to tighten the monetary policy. Those looking at parking their excess funds for a short term can look at depositing them in a fixed deposit.
   Also, investments in savings bank accounts have become more attractive after the RBI's mandate to calculate interest rates on a daily balance basis.

Liquid funds    

These instruments are good options for short-term investment needs. They can be liquidated quickly, and hence come in handy for those looking for an option to park their cash while waiting for opportunities to invest. The money in liquid funds is as liquid as in savings bank deposits, but yields slightly higher returns.


   Therefore, if an investor is parking a big amount of money for a short term, he can look at investing it in a liquid or liquid plus fund.

Gold    

Investments in gold have given good returns since the last few years. As global concerns are rising, the outlook on gold is quite good for the short to medium terms. Investors can look at investments in gold through gold exchange-traded funds (ETF) or through gold coins.


   Gold ETFs are like mutual funds whose value depends on the price of gold. Usually, each unit of gold ETF represents one or half a gram of gold as the underlying asset. The units of gold ETFs are tradable in the markets and easy to maintain.

 


Debt, equity mix need of the hour to counter volatility and take advantage

 


   Till recently, investors always had a fancy for a particular asset and never explored options offered by other products. A real estate investor, for instance, never looked beyond property for his longterm needs as he was sure of its performance. Similarly, risk-averse investors banked on fixed deposits for both their short and long-term needs. The objective in most cases was accumulation as returns were secondary.


   In recent years, the trend has undergone tremendous change thanks to the emergence of new options. More importantly, the current investor has the ability to take risk as he is not completely dependent on his savings for short and medium-term needs. The high disposable incomes and a steady rise in the ability to earn more have done the trick. As a result, investors too have begun to look at a combination of products to maximise returns. Smart investors aren't depending on one product to make their money grow any more.


   Interestingly, this has also resulted in churn from one asset to another and there is an increased coordination between two or more assets. A classic example is the simultaneous use of debt and equity. Today, even a die-hard equity investor has begun to allocate a portion of his funds to debt due to a number of reasons. While the primary objective is risk management through asset allocation, another factor is to take advantage of the opportunity offered by equity at regular intervals. From recent market volatility, the investor has begun to realise that he needs to have enough liquidity to take advantage of market downtrends.


   In this background, stock market investors can use a combination of products to be liquid to buy into dips. For direct stock investors the introduction of mutual fund investments through the trading platform is a boon. Till recently, mutual fund products were not integrated with the stock portfolio and hence any redemption amount had to be ploughed back to the trading account. Now that they can be traded on NSE platform, investors can use cash equivalent products like liquid funds and short-term funds to park their cash and use them according to market conditions.


   The challenge for many is fixing the amount to be maintained in liquid form. While the corpus depends on the individual needs and financial stability, from a trading perspective, it is not a bad idea to hold as much as 10 percent in pure debt form. Now that the interest rates too are on the rise, even short-term debt products manage to give some good returns. For instance, the annualised yield on a liquid plus plan is inching towards the five percent level and for shortterm funds it has been in the range of 7-8 percent. However, one should avoid fixed maturity plans as they are not flexible like open-ended debt funds.


   Many investors are comfortable with fixed deposits for their debt allocation and it is not such a bad idea to be in this product in the current environment. The deposit rates on short-term products have gone up to 6-6.5 percent and the rise in rates has been more pronounced in this category than in long-term ones. Again, don't take a very long term view if deposits are chosen for liquidity management. One should be clear about long and short term needs of funds as the choice of product purely depends on this crucial factor.


   Another product that allows good management of market volatility is dynamic PE products. As the name indicates, they manage allocation towards equity through a strict tab on PE multiples and hence, lower the PE, higher would be the allocation towards equity. This product, at present, is being used sparingly by the investor community but that is likely to change as they are forced to deal with increased volatility in the markets.

 

Jewellery Insurance: Accurate valuation is the key

Under householder's policy, the sum insured of the jewellery covered is based on its market value at the time of taking the policy

Last week, Tata AIG General Insurance launched ajewellery and valuables insurance cover for high net worth individuals — a first of its kind. While both public and private general insurance companies have jewellery insurance covers, they are a part of the householder's policy.

The annual premium for a cover of `1 crore will be one per cent of the sum assured. It could vary depending on the risk evaluation of the jewellery. This product will offer an all-risk cover — loss reimbursement, repair and restoration, preservation and storage assistance.

When you take a householder's policy and get your jewellery covered under it, the sum insured of the jewellery is based on its market value at the time of taking the policy. An accurate valuation report given by the government-approved valuers is, therefore, very important.

As part of householder's policy

In the home insurance policy offered by ICICI Lombard, the value of jewellery covered is limited to 25 per cent of the total value of the insured contents. So, if your total contents covered are valued at `10 lakh, only `2.5 lakh worth of jewellery can be covered.

However, This percentage can sometimes be negotiated after referring the case to the underwriter of the insurance company. Here, your jewellery is insured against any damage or loss caused due to fire, natural calamities or burglary. However, the cover is applicable only if the loss or damage take place within your residential premises covered by the home insurance.

Premium

A home insurance policy covering the contents of the house is valid for a year. And the premium payable is typically calculated per lakh of the sum insured. It could be `300 per lakh for covering contents, including jewellery against burglary and theft, or almost `1,000 per lakh for an all-risk cover.

The premium could at times be calculated as a percentage of the total sum insured. It could range between 0.3-0.5 per cent of the sum insured. So, for a sum insured of `1lakh, the premium payable will be `300-500.

Claim settlement

Once you have taken an insurance cover for your jewellery, you must keep a few points in mind with regard to claim settlements.

Scenario 1: Assume your jewellery gets stolen. You had got it insured for `1lakh based on avaluation done two years earlier. Even if the market value of your jewellery today is `1.5 lakh, you can claim only `1 lakh. To avoid such a situation, you have the option of over-insuring your jewellery in anticipation of escalation of value.

But, say you over-insure your jewellery for `1.5 lakh. And, you lose it before it has attained that value. In this case, you will receive as compensation the market value of the jewellery, and not the sum insured.

Scenario 2: One of your jewellery pieces gets damaged. The sum insured was `50,000.

Say, the insurance company pays you `10,000 for repairing the damage. The sum insured will now get reduced to `40,000. However, when you receive the compensation cheque, you may get the amount adjusted against an additional premium. This will ensure that your jewellery is valued correctly

NFO Review: Baroda Pioneer PSU Equity Fund

 

INVESTORS, who are looking for an opportunity to own pubic sector undertakings (PSUs) due to their long-term growth prospects and strong balance sheets, can look at investing in Baroda Pioneer PSU Equity Mutual Fund.


   Baroda Pioneer PSU Equity Fund is similar to SBI PSU Equity Fund and Religare PSU Equity Fund. The fund aims to provide investors with opportunities for long-term growth in capital through an active management of investments in a diversified basket of PSUs. The scheme will invest 65% to 100% of assets in equity and equity-related securities covered under the universe of PSUs including derivatives with medium-tohigh risk profile. It will further allocate up to 0% to 35% of assets in debt and money market instruments with a lowto-medium risk profile. The scheme's will be benchmarked against BSE's PSU Index. The fund manager will invest in shares of PSUs across sectors and market capitalisations, with not more than 10% in any single company. The total portfolio will consist of around 30-35 PSU stocks.

The Big Opportunity:

Many PSU companies are leaders in their sectors and in many cases have a virtual monopoly in their line of business. Most PSU companies exist in sectors, core to India's growth story. A lot of PSUs have clean balance sheets which are virtually debtfree. They also have huge cash on their books, which could come in handy for funding expansion. Investors prefer PSUs due to good corporate governance, higher dividend payment and yields.

Risks:

Investing in PSU space is considered a thematic investment. However, PSUs are perceived as low-risk when compared to a sector fund which invests in a number of PSU companies across various sectors. However, investors must note that the working results of a number of PSU companies depend on government policies. In a lot of cases, optimising returns for shareholders will not be their only objective.

Why Invest?:

If you want to own a chunk of PSU bluechips and benefit from the divestment story

Why Not Invest:

The fund can miss out on opportunities coming in the private sector due to its mandate

 

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