Nifty and Sensex

Important difference between Nifty and Sensex is,
1) Nifty takes the full market cap of all of its 50 stock constituents and calculates weights accordingly.
2) Sensex Weights companies based on the free-float market capitalisation. Free-float is the shares not held by the promoters or institutions and hence, freely available for trade.
search terms:-
nifty vs sensex, nifty and sensex weights difference.

"Infrastructure"...raining NFOs

Kotak Mahindra Asset Management Company (KMAMC) is all set to play the infrastructure theme by launching the Kotak Indo World Infrastructure Fund, a three-year close-ended equity scheme.
The fund will open for subscription on November 27 and close on December 22.
Fund is close ended.Investors too keen on infrastructure can prefer investing through SIPs in open-ended funds like UTI Infrastructure, Tata Infrastructure or ICICI prudential infrastructure fund. But limit your exposure to sectoral funds.

SIP in a single stock?

Like SIP in a mutual fund , can one do a systematic investment in a single stock??...
It means allocating a month every month to purchase a particular stock. Say, on 1st on every month I would buy 2 shares of company X and accumulate it over a period of time. This is definitely a great idea. But SIP works better in case of a portfolio( read as collection of stocks or equity MF). This is because when you invest in a single stock, your risk return proportion is very high. But if you are thoroughly convinced about the growth prospects of a stock you can go ahead understanding the risk involved.
To understand this in a better perspective, someone who was buying Reliance stock every compared with someone who had been accumulating Infosys. Both of been accumulating blue chips , but you know the current scenario is not favouring IT stocks. Things may take a turn tomorrow. So, this kinds of risks / returns and your goals need to be understood before you start an SIP in a single stock.

JM Agri & Infrastructure Fund -NFO

Open 19-Nov-2007 Issue Close 18-Dec-2007

Scheme Objective

JM Agri & Infra Fund, is a close-ended equity oriented scheme. The investment objective of the Scheme is to provide long-term growth by investing predominantly in equity / equity related instruments of companies that focus on agriculture and infrastructure development of India.

Fund Class Equity Diversified
Fund Type Close-Ended
Fund Manager Sandip Sabharwal
Entry Load 0.00 %
Exit Load 0.00 %
Comment Exit Load - for ongoing redemptions/switch out after three months from the date of allotment, the exit load till maturity of the scheme will be Nil. However, at the time of redemption, the unitholders will be charged the balance proportionate unamortized initial issue expenses applicable to their investments.
This is a close ended fund and will be converted to a open ended after the specified period. Better to invest in performing funds like JM Basic through SIP. Watch the performance of this fund. if it is good, switch to it once it is open ended. You may invest now only if you bet too much on the fund manager's reputation.

ING Real Estate NFO

ING Investment Management India launched ING Global Real Estate Fund, an open ended Fund of Funds (FoF) scheme for the Indian investors. The scheme opens on Nov. 20, 2007 and closes on Dec. 14, 2007. The earliest closure date is Dec. 7, 2007.
The minimum application amount to invest in ING`s global real estate fund is Rs 5,000 and in multiples of Re 1 thereafter. The minimum additional purchases are of Rs 1,000, in multiples of Re 1 thereafter. The units will be available for Rs 10 per unit during the NFO and at applicable NAV thereafter. The NFO opens on Nov. 20, 2007 and closes on Dec. 14, 2007. Investors will have the choice of three options: dividend option, growth option and bonus option. The Scheme may, at the discretion of the Investment Manager, also invest in the units of other similar overseas mutual fund schemes, which may constitute a significant part of its corpus and for liquidity requirement invest in money market securities.
This scheme will invest overseas via the SEBI guidelines which allow investments by the mutual fund industry to the extent of USD 5 billion.
Those who want to have exposure to Global real estate can apply. Can be added to diversify your portfolio.New investors with lesser MF exposure can look for better options.
It will be treated as debt fund for all taxation purpose. Tax benefits available to equity funds wont apply to this fund.

Investing in "Fund of Fund" (FoF)

Fund of funds (FoF) concept~ A fund manager uses his expertise to allocate investments across existing schemes to suit an investment objective. This is intended to address the need for quality advisory and offer investors a solution that is made up of the best-of-breed funds.
Now should you invest in FoF because , it is difficult to choose and keep track of best funds?
Choosing good funds is not as difficult as picking stocks. Enough information is available on web to make an informed decision. It also doubles up the cost of managing your fund to some extent.
The main deterrent is-
Tax treatment ~ All FoFs are taxed as debt funds even if the underlying allocation is across equity schemes. ( as per current Income tax law -11/2007)
Yes, your FoF is taxed as a debt fund even if it allocates all its portfolio to equity funds alone.

Know your taxes when investing in GLOBAL funds.

As per the Indian Income tax rules (current), MF schemes that invest at least 65% of their total corpus in Indian equities are only treated as "Equity Funds" for taxation purposes. For such funds the long term capital gains tax is NIL. i.e If you buy an equity fund and sell it after one year, You have no tax burden on the same irrespective of the amount of profit you make.
So,if the Global/ Asian/ Foreign Equity schemes of Indian fund houses invest less than 65% in Indian equities, they are considered like debt funds for taxation purposes.
When you want to invest in a global fund next time, check out its allocation to Indian equity and understand the taxes applicable before you invest.
An intelligent investor always takes applicable tax laws into consideration before he makes an investment decision.
Global fund- select list-ABN AMRO China India Fund, Birla Sunlife International Equity, Tata Indo Global Infrastructure,Sundaram BNP Paribas Global Advantage,Principal global oppurtunities, Kotak global emerging market,Fidelity international oppurtunities,ICICI Indo Asia fund, DWS Gloabl thematic offshore,DSPML world gold.

Base Effect

The amount that you invest is very important in getting a return. eg. A gets 100% return on his investment and B gets 50% return during the same time period of investment. On the outset A seems to have gained more . But the amount invested also matters. If A had invested Rs 1000 and B invested 1 lakh. A's gain is Rs 1000 and B's gain is 50,000.
So, we can call this the 'Base effect'. Having a decent investment base is very critical to make a impact. Many may not be able to accumulate huge money for investments. So , its always better to keep growing your investment base slowly and steadily. Systematic investment plans like RD and SIP would help the investors build a strong investment base over a period of time.
Little drops make a big ocean. Small amounts can lead to a huge investment base. Happy Investing.
SIP is the best way to create wealth.

NFO- opinion

Franklin Asian Equity Fund - Those of who want to spread their portfolio/ risk across Asian markets can apply.

ICICI Prudential Real Estate Securities Fund (The scheme will not be directly owning or holding real estate properties.) is a 3-year close-ended debt fund, designed to invest in Real Estate Sector and real estate oriented sectors like Cement, Construction, Metals, Hotels, Retail, Banks & Finance Companies etc.
The scheme will:
Predominantly invest (51% to 100%) in high yielding debt securities issued by companies that are associated with or benefitting (directly / indirectly) from the real estate sector.
Invest up to 49% in equity of companies, which are engaged in industries that benefit directly or indirectly from the Real Estate Sector or have substantial investments in property (incl. Land holdings).
The initial allocation of the fund will typically be 70% in debt instruments and 30% in equity
and equity related securities.
For all practical purposes this is a DEBT fund and taxes as per debt funds would apply. 30% leverage on Equity is available. This can be considered as an option against FD. However no returns assured!

Quant. fund in India

Mutual Fund Lotus India Mutual Fund
Scheme Name Lotus India AGILE Fund
Objective of Scheme To generate capital appreciation through investment in equity and equity related instruments. The Scheme will seek to generate capital appreciation by investing in a passive portfolio of stocks selected from the industry Leaders on the basis of a mathematical model.
Scheme Type Open Ended
Scheme Category Growth
New Fund Launch Date 25-Oct-07
New Fund Earliest Closure Date 23-Nov-07
New Fund Offer Closure Date 23-Nov-07
Indicate Load Separately
Entry Load : Where purchase amount is less than Rs. 5 Crores - 2.25% Where purchase amount is equal to or greater than Rs. 5 Crores - Nil Exit Load : if redeemed on or before the expiry of 6 months from the date of allotment - 1% if redeemed after six months and on or before the expiry of 1 year from the date of allotment - 0.6% if redeemed after the expiry of 1 year from the date of allotment - Nil
Offer Price (Rs.) 10
Minimum Subscription Amount Rs. 5,000/- per application
This is a first of its kind QUANT fund in India.This fund will operate on a preset quantitative formula with minimum fund manager intervention.We have to wait and see how this performs over a period of time.
The cost of holding the fund should be lesser as compared to diversified equity as this will be a passive fund.
It will be interesting to see how quant and index funds perform in a market dominated by active funds. Actively managed funds have not been able to meet the indices for a couple of years now and it will be interesting to see the future trends.

Mutual Fund- FAQs

This article on money control answers the most frequently asked and critical questions on Mutual Funds.
A must read for new investors in mutual funds.
Ace investors may also have a point or two to gain from this article..
Happy Reading...Link
Also Read, Ideas money Mutual Funds FAQ

Mutual fund - New fund offers

UTI-Infrastructure Advantage Fund-Series I.

The new fund offer (NFO) opens on November 12, 2007 and closes on December 19, 2007. Units can be purchased only during the NFO period.
Fund is close ended.Investors too keen on infrastructure can prefer investing through SIPs in open-ended funds like UTI Infrastructure, Tata Infrastructure or ICICI prudential infrastructure fund. But limit your exposure to sectoral funds.

Scheme Name JPMorgan India Smaller Companies
Launch Date 09/11/2007 closing on November 30th 2007
Fund Manager Mr. Harshad Patwardhan
Investment Objective :The investment objective is to seek to generate long term capital appreciation from a portfolio that is substantially constituted of equity and equity related securities focused on smaller companies. Generally, the universe will be the companies constituting the bottom fourth by way of market capitalization of stocks listed on the National Stock Exchange or The Bombay Stock Exchange. The fund manager may from time to time include other equity and equity related securities outside the universe to achieve optimal portfolio construction. However, there can be no assurance that the investment objective of the scheme will be realised.Minimum investment is 5000 rs Entry load of 2.5 percent Exit load of 1 percent
Lot of proven mid caps available in the market. Pure small cap oriented funds are very few ( DSPML Small companies fund and Sundaram BNP paribas select small cap). Investors who have a big time horizon and want to have smaller companies in their portfolio can look at this fund.

Sundaram BNP Paribas Select Thematic Funds Energy Opportunities

There is a a new fund offer from Sundaram BNP which is on the most happening energy sector. Those who want to bet on this sector can allocate a small amount to this fund.
Energy is a growing sector and has all the attention of stock market now. But the risk of investing in a thematic fund applies to this fund too.
If you are a new investor, better avoid and get into some proven diversified fund through SIP route.
The NFO opens on 12/11/2007 and closes on 11/12/2007
Offer Document - Download

Lack of conviction for Retail investors??

"Indian mutual funds (MFs) total assets under management (AUM) crossed the magical Rs 5 lakh crore mark at the end of October.
But with the Sensex at the 20,000 levels, market insiders say that very little fresh money has come in from that set of investors whom fund houses have been diligently trying to target: retail."

This news shows that although FIIs are pouring in money, Retail investors are booking profits and staying away from investing further.

Ultimately FIIs are benefiting more while most of retail investors stay out of the race. I think the concept of long -term investing and it's benefits needs to precipitate further.

ideasmoney turns ONE on Nov 4 , 2007

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Not comfortable with equities/ equity MF

This week I happened to meet at least a few people who talked to me about the risks of stock market. One of them who spoke on these lines was an MBA (Finance). Even after talking with data, logic and information ( mostly provided on this blog), I couldn't see them impressed. I didn't press them too much because I am not an agent selling Mutual Funds :-).
When so many FIIs flock here ( including some of their pension funds), we are yet to get into a perfect equity investing cult in this country ( esp. the southern part of the country??).
The equity Mutual Fund penetration has been improving but has a long way to go. At the current 30-40% CAGR, MF can be a $10 trillion industry in few years to come. But still it would be only a part of the country's true savings potential.
Equity/ Equity MF investments definitely carry a risk along with them. But by intelligent means of investing and staying in the market for long run, one can definitely get better tax free returns when compared to debt investments.
My lesson from the interaction last week with the equity averse investors made realise...." People create their own destiny".

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