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Wednesday, August 31, 2011

Mutual Fund Review: Reliance Banking Fund

 

Reliance Banking Fund is still the top performer (under the sector specific fund category) among the various mutual fund schemes launched by reliance mutual fund.

 

Type of Scheme: Open Ended Banking Sector Scheme

 

Investment Objective:

 

The main objective of the scheme is to generate income by primarily investing in equities / equity related fixed income securities of the banks.

The fund will invest in banking equities only when the stocks are expected to perform well. If the stocks are not expected to perform well, the scheme will invest in debt and money market instruments.

 

Asset Allocation:

 

Equity / Equity related instruments – 0 to 100%

Debt and Money Market Instruments – 0 to 100%

 

Types of Plans Available:

·                           Retail

·                           Institutional

·                            

Both the plans have the following Options:

Dividend Option – Dividend Payout or Dividend Reinvestment

Growth Option – Growth Option or Bonus Option

Minimum Investment Amount – Rs 5000 and in multiples of Re 1 thereafter

Minimum Additional purchase Amount – Rs 1000 and in multiples of Re 1 thereafter

Entry Load: NA

Exit Load: 1 % if the scheme is redeemed within 1 year from the date of investment. There is no exit load if the scheme is redeemed after 1 year.

Systematic Investment Plan: Yes

Systematic Withdrawal Plan: Yes

Systematic Transfer Plan: Yes

Online Investment: Yes
 

Mutual Fund Review: HSBC MIP Savings Plan

Name: HSBC MIP Savings Plan-Growth
Type: Open-Ended Debt-MIP
Fund Manager: Mr. Shailendra Jhingan, Mr. Jitendra Sriram & Mr. Viresh Mehta
Inception Date: February 13, 2004

Monthly Income Plan (MIP) are the marginal equity funds that provides a conservative investors the stability of debt and growth potential of equities. In MIPs, typically a large portion (75-100%) of the fund is invested in debt and money market instruments and the rest in equity. MIPs are typically suitable for investors who want to largely play it safe, but don't mind taking a little risk in order to increase the potential returns than pure income/debt funds would provide.

HSBC MIP is an open-ended income scheme with the primary objective to seek generation of reasonable income through investments in debt and money market instruments. The secondary objective of the scheme is to invest in equity and equity related instruments to seek capital appreciation. The scheme's savings plan is aggressive in its equity allocation and could invest up to 25% in equities and equity related instruments and up to 100% in debt and money market instruments (including cash and money at call).
 
The scheme has grown at a CAGR of 9.25% since its inception in February 2004 and has comfortably outpaced its benchmark and peers during the selected time frame. Higher equity allocation and vibrant equity markets along with the judicious asset allocation in debt & money market instruments has enhanced the returns of the scheme. Its one year and two year returns at 9.91% and 10.68% are superior to the returns posted by peers and benchmark for the same period As on August 2006 the scheme has an asset base of Rs 80.36 crore and has declined by Rs 21 crore compared to the pervious year same period.
 
Although the scheme could invest upto 25% of its assets in equities but the scheme have restricted its average equity allocation to 20.4% in last one year. As on August 2006 it has apportioned 48.34% of its assets in debt, 20.48% in equities and rest in cash & equivalent. Its debt component has been fluctuating in the range of 39% to 61% over last one year with average allocation at 48.3%.
 
 
 
The scheme has allocated 24.8% of its debt portfolio in securitised debt securities and 13.7% in commercial bond. It has invested 16% of its assets in AAA rated papers, 8.6% in AAA (SO) rated and 9.95% in AA+ (SO) rated paper. As on August 2006 it had an average maturity of 555 days and is higher than the category average. On the equity side its portfolio is spread across 16 stocks which seem to be large for fund with an asset base of Rs 80 crore and equity allocation at 20%. Top five holdings account for less than half of its equity portfolio with Reliance in top place. The scheme has large cap oriented portfolio and IT sector has received highest exposure at 24% followed by Diversified and Oil & Gas sector at 17% and 9% respectively.
 
Minimum investment required to enter the scheme is Rs 5000 in growth option and Rs 25000 in monthly dividend option and Rs 10000 in quarterly dividend option. It charges an Exit load of 0.5% for investments less than Rs 10 lakh and if redeemed within 6 months and nil for investment amount greater than Rs 10 lakh. While no entry load is charged for the scheme. It is benchmarked against Crisil MIP Blended Index. Expense Ratio of the scheme as on July 31, 2006 is 1.95% and is in line with the category average of 1.95%.

MIP schemes have been doing well from quite some time thanks to the soaring equity markets. HSBC MIP Savings Plan is an aggressively managed MIP scheme as it could invest upto 25% of its assets in equities and is thus suitable for the investors having risk appetite for the same.
 

Stock Review: LG Balakrishnan

The company makes metal forming and transmission parts for the auto sector. They have 17 plants. In Q1, they have posted topline of Rs 215 crore and EPS of close to about Rs 16. If one extrapolates the same, they have posted an EPS Rs 64-65 for FY12 that translates into a PE multiple of 4.2-4.3.

The price to book is less than 1. The total enterprise value of the company is about Rs 310-315 crore. This is because they have very low debt of just Rs 80-90 crore. The market cap of the company is close to about Rs 210.

Talking all this into consideration, it is a very consistent performer. The respectable holding of the promoters stands at 47-48% and 7% is held by the IFC Washington. The share just corrected by 8-10% and one can expect a price of Rs 400 in next 10-12 months.

HDFC Cash Management Fund - Call Plan

Objective

To generate optimal returns while maintaining safety and high liquidity.

Option/Plan

Dividend Plan, Growth Plan. The Dividend Plan offers Daily Dividend option (reinvestment facility only); Weekly and Monthly Dividend option (with payout and Reinvestment facility).

Minimum Application Amount

For new/ existing investors :Rs.100000 and any amount thereafter (Under each Option).
 

Stock Review: Thermax

The kind of performance we have seen from ABB , Crompton Greaves nobody is happy to touch the capital goods and Thermax also falls in this category. But, I have different view for this stock. The company is an engineering solution provider for heat recovery, waste recovery, water treatment, etc. It caters to the core sector industries like cement, steel, fertilizer, dairy. The company has been a consistent performer.

There have been no slippages on quarter on quarter basis except for last year or a year back. One of their overseas subsidiary did not perform well and they had to take an exceptional hit. In FY11, its turnover went up close to one billion dollar. They posted an EPS of close to Rs 30 plus. Going by their Q1 performance, they have been able to maintain the topline of Rs 1,000 crore.

The profitability is always back ended, it comes in the second half of the year. The promoters hold 62% stake and 28-29% is held by institutional investors. It is debt free company and has a very low float. On can can lap these stocks in a market correction like this one.

The stock moved to about Rs 700 couple of month back. At that time people come out with buying ideas on the stock. But whenever there is a correction of this kind people first try to jump out of these stocks. This is the time where one should really accumulate the stock.

A positive view on this stock, largely on account of consistency in performance going ahead. They have an order pipeline of 18 months close to about Rs 7,000 crore order. Taking all this account and the reduction expected in commodity prices will be quite well for the stock. This stock can touch Rs 600 price in the next four-six months time.

Tata Equity Opportunities Fund

Objective

To provide medium to long term capital gains and/or income distribution along with capital gains tax relief to its unitholders, while at all times emphasising the importance of capital appreciation.

Option Available

Growth & Dividend

Entry Load

For Each Investment amount < Rs. 2 Crores - 2.25%.
For Each Investment amount >= Rs. 2 crore - Nil.

Exit Load

For investments greater than or equal to Rs.2 crore: Nil.
For investments less than Rs.2 crore: 1%, if redeemed with in 6 months from the date of allotment.
No exit load will be charged on investment made by the fund of fund scheme.

Minimum Application Amount

Rs.5,000/- and in multiples of Re.1/- thereafter.
 

Mutual Fund Review: DSPBR Balanced

 

While DSPBR Balanced might not seem exciting, it will show its mettle in long-term performances…

Though not the most exciting offering around, it won't disappoint over the long run. Its 10-year annualized return of around 21 per cent (as on May 31, 2011), ahead of 80 per cent of its peers, bears testimony to that. However, investors would not be over the moon with last year's below-average returns.


"This is a more defensive fund," says Shah, with reference to other offerings in the category. "In 2010, mid caps out performed large caps significantly and this fund has only 50 per cent portfolio in mid caps." Hence the underperformance with regards to its peers which had a greater tilt towards mid caps.

What hit the fund in 2010, helped it in 2011. As on April 29, 2011, the fund lost 2.87 per cent (category average: -3.29%). A similar trait was noticed in 2008 when the fund's fall was curtailed to 5 per cent less than the category average. At that time, a reduced exposure to equity came to its aid.

Though equity allocation has touched a low of 57 per cent (November 2008), it largely remains within a range of 65 to 75 per cent and has averaged around 69 per cent since 2006.
Despite more than half of its equity portfolio in large caps, this fund follows more of a multi-cap strategy. Once Shah took over mid 2006, the fund moved from a large cap portfolio to make way for mid caps. The equity portfolio of this fund is basically just a replica of the
DSPBR Equity which in turn is a blend of the DSPBR Top 100 and DSPBR Small & Mid Cap funds. If Shah brought in the mid-cap blend, he simultaneously increased the number of stocks too, currently at 74. This has resulted in a low concentration with a long tail of stocks (51) that have an allocation of less than 1 per cent. Currently, no stock has an allocation of over 4 per cent.

Neither will you find aggressive sector bets here.


Though stocks like Reliance Industries, ITC and Glaxosmithkline Pharmaceutical etc that have been held for a long period of time, the portfolio is churned quite frequently. Its turnover ratio of 2.32x over the past one year signifies that. But Shah views it differently, "It is an active portfolio and this has always been the investment style where the large cap stocks are rotated regularly to benefit from market volatility in fairly valued stocks. The mid cap portfolio is more structural".

As far as debt is concerned the fund invests in a variety of papers. Currently majority is into debentures with small amounts in Certificate of Deposits (CDs) and preference shares. The average maturity of the portfolio has come down from 1.31 years in November 2010 to 0.23 years at present.

 

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Also, know how to buy mutual funds online:

 

Invest in DSP BlackRock Mutual Funds Online

 

Invest in Reliance Mutual Funds Online

 

Invest in HDFC Mutual Funds Online

 

Invest in Sundaram Mutual Funds Online

 

Invest in Birla Sunlife Mutual Funds Online

 

Invest in UTI Mutual Funds Online

  

Invest in SBI Mutual Funds Online

 

Invest in Edelweiss Mutual Funds Online

 

Invest in IDFC Mutual Funds Online

 

 

 

Tuesday, August 30, 2011

Sectoral Funds from Birla Sun Life AMC

Birla Sun Life Buy India Fund

Objective
Birla Sun Life Buy India Fund is a multi sector open-end growth scheme with the objective of long-term growth of capital through a portfolio with a target allocation of 100% equity, focusing on investing in businesses that are driven by India's large population and inherent consumption patterns. The secondary objective is income generation and distribution of dividend.

Minimum subscription amount
Rs.5,000/- and in multiples of Re. 1/- thereafter

Entry Load
For Purchase / switch in of units less than Rs. 5 Crores in value: 2.25% For Purchase / switch in of units equal to or greater than Rs. 5 Crores in value: NIL

Exit Load
For Purchase / Switch in of Units, less than Rs. 5 crores in value, an exit load of 1.00% is payable if units are redeemed / switched out within 12 months from the date of allotment. For Purchase / Switch in of Units, equal to or greater than Rs. 5 crores in value, no exit load is payable.

Birla Sun Life New Millennium Fund

Objective
Birla Sun Life New Millenium Fund is a multi-sector open-end growth scheme with the objective of long-term growth of capital through a portfolio with a target allocation of 100% equity, focusing on investing in technology and technology dependent companies, hardware, peripherals and components, software, telecom, media, internet and e-commerce and other technology enabled companies. The secondary objective is income generation and distribution of dividend.

Minimum subscription amount
Rs.5,000/- and in multiples of Re. 1/- thereafter

Entry Load
For Purchase / switch in of units less than Rs. 5 Crores in value: 2.25% For Purchase / switch in of units equal to or greater than Rs. 5 Crores in value: NIL

Exit Load
For Purchase / Switch in of Units, less than Rs. 5 crores in value, an exit load of 1.00% is payable if units are redeemed / switched out within 12 months from the date of allotment. For Purchase / Switch in of Units, equal to or greater than Rs. 5 crores in value, no exit load is payable.
 

Mutual Fund Review: AIG Infrastructure and Economic Reform

 

Though not around for too long, AIG Infrastructure and Economic Reform has shown potential. Husain has successfully implemented the fund's mandate to make it one of the better picks in its category.

 

Its investment objective permits it to invest in companies that could benefit from potential investments in infrastructure and unfolding economic reforms. Any investor familiar with the infrastructure space will be aware that each fund manager has his own view on what constitutes 'infrastructure'.

 

Moreover, other government bodies such as the Income Tax department and the Reserve Bank of India (RBI) also have their own definition. At AIG Mutual Fund, they stick to the definition put forth by the Planning Commission.

 

In this fund, the obvious sectors will be eliminated such as Technology, Pharmaceuticals, Automobiles and Media. Interestingly, even pure Oil & Gas, which translates into refining and exploring, is eliminated - which explains the absence of ONGC and Reliance Industries Ltd. in this portfolio. On the flip side, companies that fall in the transportation segment (pipelines) of the Oil & Gas sector qualify to fit in its investment universe. Real Estate and Construction also fall outside the purview of this fund unless the company gets substantial revenues from building Special Economic Zones (SEZ), airports, ports or other such infrastructure.

 

One conspicuous aspect is the prevalence of banking stocks in this portfolio which are quite different from the ones found in other similar portfolios. So it's ironical to hear Husain say that he does not believe Banking is part of Infrastructure. He justifies his Banking exposure under economic reforms. "Banks have to keep lending to grow. Hence, they have to keep raising capital. For every Rs 100 given as a loan, they need Rs 9 as capital. A public sector bank cannot freely raise funds since the government holding has to be a minimum 51 per cent. If they freely raise funds, the government shareholding will drop. So the government has to put in capital for them to grow. This in turn impacts the government's balance sheet. Some banks got the capital last year, some will get it this year. Till the banks get the capital, their growth is stunted."


This explains why private banks do not find a place here.

Pricing of Energy (diesel, cooking fuel, coal etc) is another area that falls under economic reforms. The fund's second largest holding - Coromandel International is also one that is not popular with its peers. This fertilizer company deals with diammonium phosphate (DAP) and benefitted from the government's decision last year to de-regulate non-urea fertilizer prices. Another beneficiary of the economic reforms process.


Whether by stocks or sectors, this fund is not afraid to go its own way. When the bet on Engineering crossed 30 per cent last year, the category average was less than 15 per cent. Currently, exposure to Financials is way below the category average while that to Services is higher. However, if Husain bet on banking stocks, this fund would have delivered even better returns. He has not been very bullish on public sector banks, two of the reasons being that growth is being stunted by the amount of capital that the government puts in and also because he does not believe they are adequately covered for non-performing assets (NPAs). The fund has been hit with this move.


When Husain took over in 2009, he brought about a substantial change in the portfolio. As a result, there are just two stocks currently that have been around since 2008 - Bharat Electronics Ltd. and Indraprastha Gas Ltd. By and large, the fund manager is fairly active in his movements in and out of stocks. He puts it down to the dynamism in this space - change in regulations, emergence of new sectors and other such factors.

The same vigorous style gets reflected in his asset allocation. The fund is sometimes seen taking substantial cash bets, currently at 20 per cent. While some portfolio managers argue that they do not compromise on being fully invested, that could backfire if it is a sector or thematic fund in question. Once investment is limited to a sector, or a few sectors, when there are periods valuations get stretched to the extremes it could be safer just moving into cash. "We adhere to our strategy of buying cheap when valuations are below fair value and selling when they are above fair value. At times, this strategy may not find sufficient stocks. But we will not purposely deploy the money in a stock which is not attractive at that point in time."

 

So even if the wait is sometimes long (the cash allocation from November to January was above 20%), Husain sticks to his guns.


Husain is a bottom-up stock picker who goes by three broad parameters when buying a stock - dominance of the company in its industry, the management quality and ability, and the valuation of the stock. In this fund, he does inch towards a mid-cap tilt because to a large extent the space itself is characterized by smaller companies. Once he narrows down on his picks, he bets on his convictions. Ever since he took over he never exceeded 25 stocks in his portfolio with his top individual bets sometimes crossing 8 per cent. This does give the portfolio a slightly risky tilt but Husain has this far shown that he knows what he is doing

 

Our View
Why we picked this fund?
This year AIG Infrastructure and Economic Reform completed three years (the minimum period an equity fund has to be in existence before it gets rated by Value Research). On getting rated, it bagged a 4-star.

 

What's good?
Within the 'Equity: Infrastructure' category, this fund has made a mark. The annual returns of the fund have always put it in the second quartile slot. However, the current trailing returns show that the fund has a substantial lead over its peers.

 

What's not?
The mid-cap bent, a fairly concentrated portfolio and a focused theme make it a pretty risky offering.

 

What you should be wary about?
Such thematic funds should not hog a major chunk of your portfolio. In terms of Infrastructure, there have been numerous headwinds in terms of delays, non-availability of raw material, increased cost of raw material, land acquisition approvals as well as scams (as in the case of Telecom). Investors, once in, need to exercise patience and not fret when the going gets tough - as it invariable will in such focused investments.

 

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Also, know how to buy mutual funds online:

 

Invest in DSP BlackRock Mutual Funds Online

 

Invest in Reliance Mutual Funds Online

 

Invest in HDFC Mutual Funds Online

 

Invest in Sundaram Mutual Funds Online

 

Invest in Birla Sunlife Mutual Funds Online

 

Invest in UTI Mutual Funds Online

  

Invest in SBI Mutual Funds Online

 

Invest in Edelweiss Mutual Funds Online

 

Invest in IDFC Mutual Funds Online

 

Mutual Fund Review: Prudential ICICI Growth Plan

Type: Equity Diversified
Fund Manager: S Naren, Deven Sangoi
Inception Date: 19-Jun-1998
 
Prudential ICICI Growth Plan – cumulative was launched in Jun 1998 and has been in operation for more than eight years now, and is predominantly a large cap oriented stock. The scheme has grown at a CAGR of 29.43%, whereas the scheme's benchmark index S&P Nifty has appreciated by 17.04 % in the same period. The scheme due to its large cap focus has managed to maintain its rankings in the top quartile inspite of the recent market meltdown. The investment objective of the scheme as per its offer document is to seek to generate long term capital appreciation from a portfolio that is invested predominantly in equity and equity related securities.
 
Prudential ICICI Mutual fund has Rs 34118.87 crores of assets under management, which is a growth of around 59% over the last years. Only UTI Mutual Fund has a greater asset base at Rs 35027.49 crores.

Prudential ICICI Growth Plan has invested in 34 scrips, top 5 holdings account for 21.56% of the portfolio and top 10 scrips constitute 36.85% of the portfolio. Reliance Industries receives the highest weightage in this month's portfolio with around 5.4% of the total net assets being invested in the scrip.
 
 

The total equity allocation is 86.35% and 12.67% of the net assets are invested in cash and equivalent. The scheme seem to have unwind some positions in the equity markets in view of the increased volatility lately as the equity allocation has come down from 95.22% in Apr 06 to current levels.

Diversified, Banks and Auto & IT are some of the sector which the fund manager is bullish on as reflected by higher asset allocation in these sectors in the last one year, and even in the recent portfolio these sectors dominate with Diversified sector alone constituting 18.17% of the net assets, with Banks and IT sectors receiving 9.66% and 8.37% allocation respectively.

Infosys Technologies, ONGC, Grasim Industries and TCS are some of the other top holdings of the portfolio. And between them they account for one-fifth of the portfolio.

The scheme has done quite a bit of shopping this month and as many as seven new stocks have entered the portfolio, namely, Bank of Baroda, JP Associates, Zee Telefilms, BHEL, Aventis Pharma, Tata Steel and Tech Mahindra, whereas, the scheme exited from some of the stocks like EID Parry, Gujarat Ambuja Cements, Indian Hotels, MTNL, NTPC and Triveni Engg. & Ind. Ltd.

 

Midcap stocks form only a miniscule part of the portfolio and traditionally Midcap and small cap exposure has not gone beyond 7-10% in the last one year, which has resulted in lending stability to the portfolio.
 
The scheme has managed to outperform its peer group average in the last one year period due to its focus on large cap stocks, as Midcap stocks have taken a severe beating in the recent crash, and most scheme with sizeable Midcap exposure are yet to recover from the aftermath. The scheme's CAGR returns of around 29% since the last eight years is noteworthy as it has seen both the phases of the market and has delivered in all circumstances. Investors looking for a scheme which can lend long term stability to their portfolio may well find their answer in Prudential ICICI Growth Plan
 

ICICI Prudential Mutual Fund - Its Schemes

 

 

ICICI Prudential Asset Management Company is a Joint Venture between ICICI Bank and Prudential Plc. ICICI bank is one of the largest banks in India and Prudential Plc is one of the largest players in financial services in United Kingdom.

 

ICICI Prudential Mutual fund has launched a number of Equity Schemes, Balanced Schemes, and Fixed Income Funds.

 

Some of the best performing Equity Mutual Fund Schemes in ICICI Prudential Mutual Fund are:

 

·                           ICICI Prudential Banking and Financial Services Fund – Retail – Dividend

·                           ICICI Prudential Banking and Financial Services Fund – Retail – Growth

·                           ICICI Prudential FMCG Fund – Growth

·                           ICICI Prudential FMCG Fund – Dividend

·                           ICICI Prudential Focused Bluechip Equity Fund – Retail – Growth

·                           ICICI Prudential Focused Bluechip Equity Fund – Retail – Dividend

·                           ICICI Prudential Fusion Fund – Dividend

·                           ICICI Prudential Fusion Fund - Growth

·                           ICICI Prudential Discovery Fund – Dividend

·                           ICICI Prudential Discovery Fund - Growth

·                           ICICI Prudential RIGHT Fund – Dividend

·                           ICICI Prudential RIGHT Fund - Growth
 

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