Monday, September 8, 2008

Do you feel let down by your mutual fund investments?

Few would dispute that the year 2008 has been tough on investors. This holds especially true for first-time investors i.e. the ones whose tryst with equity markets only began in the last few years. After having seen the markets surge to record highs, the downturn has certainly caught several investors off-guard. 

And the despondency is not restricted only to those who have participated in equity markets via the direct equity investment route. Even investors in equity mutual funds have borne the brunt of falling markets. As a result, several investors are in panic mode. Some are even contemplating redeeming all their mutual fund investments and instead making investments in risk-free avenues like fixed deposits and bonds. 

But is that the right course of action? We don’t think so. To begin with, investors must conduct an honest appraisal of their risk profile and investment horizon. Also, they must candidly answer the question – why did I get invested in a given mutual fund? 

If an investor truly believes that he can take on higher risk and is willing to stay invested for the long-haul (at least 3-5 years), then we believe there is no reason to panic. In fact, given the attractive valuations, investors should consider adding to their investment portfolios. As regards, the reasons for getting invested – if it was to achieve a predetermined investment objective, then it’s all the more reason to stay the course. 

Conversely, if the answers are on the lines of ‘have a low risk appetite’, ‘wanted to make a quick buck’ or ‘to ride the rising markets for the short-term’, there is a cause for concern. Such investors got invested in avenues that were wrong for them or made investments for the wrong reasons. In either case, they would do well to work out an exit strategy in consultation with their investment advisors. 

As for investors who have the requisite risk-taking ability, investment horizon and clearly defined objectives backed by investment plans, it’s a good time to evaluate if they are invested in the right avenues i.e. in this case, the right mutual funds. Even the best of plans will not deliver if poorly-managed funds are deployed to achieve them. However the evaluation process needs to be a proper one. 

To begin with, investors would do well to understand the fund’s nature and investment style, before evaluating its performance. For example, an aggressively-managed equity fund that professes to take stock and sector bets should be expected to deliver above-average results in rising markets. On the other hand, when markets move southwards, such a fund is likely to be worse hit as well. This is keeping in line with the fund’s high risk – high return investment proposition. Comparing the fund’s performance on the downturn with that of a conservatively-managed equity fund would be unfair, akin to comparing apples with oranges. 

Similarly, understanding the fund’s investment universe is vital as well. For instance, a professed mid cap fund would be predominantly invested in stocks from the mid cap segment. Expecting it to feature among the top performers at a time when large caps are rallying would be unfair. 

Another common mistake is considering funds in isolation. Any advisor worth his salt will emphasise on the importance of diversification. Hence the norm is existence of investment portfolios, instead of investments in single funds in a standalone manner. The key to a well-constructed portfolio is that the downturn in an investment avenue can be offset by an upturn in another. Similarly in a mutual fund portfolio, the presence of diverse investment propositions and styles should help the investor’s cause. Broadly speaking, so long as the investment portfolio is on course to accomplish the predetermined investment objectives, investors should be fine. 

Clearly conducting an appropriate evaluation is easier said than done. Hence investors would do well to engage the services of their investment advisors for the evaluation exercise. The next step is to take corrective measures. 

Now depending on the specifics of each case, it could vary right from altering the allocations to various funds, exiting some funds and investing in new ones to doing nothing. Surprised? Don’t be. It’s possible that investors are already invested in funds that are right for them and in the right allocation as well. And it is not uncommon even for the best of funds to hit a rough patch. If no material changes have occurred in a fund’s investment proposition and its ability to deliver over the long-term is undiminished, keeping the faith and staying put wouldn’t be a bad idea. 

The importance of the evaluation exercise, especially in testing times cannot be overstated. From an investor’s perspective, the key lies in striking a balance between pressing the panic buttons and being complacent. Also, engaging the services of a competent investment advisor is vital.

Source: http://personalfn.com/detail.asp?date=9/6/2008&story=3

12 new players set to enter AMC space

Uncertainity in the financial market has not stopped firms from foraying into the mutual fund space. About a dozen players are currently seeking regulatory clearance from the market regulator for setting up asset management company.  

Some players like Axis Bank, Future Finance Ltd, Peerless General Finance & Investment Ltd etc have applied for mutual fund license.  

Besides, Schroder Investment Management of Singapore and PGLH of Delaware in USA are also seeking regulatory nod for setting up asset management company.  

As per the data available with the Sebi, seven more companies have applied for approval for setting up mutual funds.  

About six companies recently got the regulator's approval for starting mutual funds business. These include Goldman Sachs Asset Management, Edelweiss and Canara Rebeco.  

After witnessing a decline for two months in a row, the mutual fund industry has witnessed nearly three per cent rise in its asset under management in August.  

The combined average Asset Under Management (AUM) of the 34 fund houses in the country increased to Rs 5,44,317.26 crore at the end of August, as compared to Rs 5,29,629.46 crore in July, according to data released by the Association of Mutual Funds in India.  

Analysts feel that fixed maturity plans and liquid schemes have become the flavour of the season for fund houses and investors are now focusing on these close-ended funds.  

HDFC MF, whose average AUM surged 3,106.60 crore or 6.12 per cent to Rs 53,858.63 crore, thereby replacing ICICI Prudential which witnessed a drop in its AUM to Rs 53,092.78 crore in August.


Source: http://www.business-standard.com/india/storypage.php?tp=on&autono=46185

Seven more firms get Sebi approval to sell mutual funds

India has 35 asset management companies offering more than 950 mutual fund schemes and managing assets worth Rs5.44 trillion as of August
Ravi Krishnan 
Mumbai: Seven firms plan to offer new mutual funds, braving choppy stock markets, after receiving in-principle approval from the Securities and Exchange Board of India, or Sebi. 
Nineteen firms had applied to the capital market regulator for approval to sell mutual funds, seeking to tap rising incomes and potential savings in the world’s second fastest growing major economy.
Sebi has given approval to Nikko Asset Management, Goldman Sachs Asset Management, Indiabulls Financial Services Ltd, Religare Securities Ltd, Shinsei Bank Ltd, Dawnay Day International Ltd and Matrix Financial Services, according to the regulatory body’s website. Approval for the remaining 12 is pending.
Private equity firm New Silk Route Advisors spent about Rs200 crore last month to buy Dawnay Day AV Financial Services, including UK-based Dawnay Day International’s 50% stake, chairman and managing director Alok Vajpeyi’s 25% holding and a further 25% owned by an employee trust, Mint reported on 21 August.
http://www.livemint.com/2008/09/08003143/Seven-more-firms-get-Sebi-appr.html

Birla Sun Life Distribution hires Kanwar Vivek as CEO

MUMBAI, SEPTEMBER 08, 2008: Birla Sun Life Distribution Company Limited (BSDL) has appointed Kanwar Vivek as the Chief Executive Officer. He will report on key governance issues to the Board and on business and operating matters to Pankaj Razdan, Deputy Chief Executive, Aditya Birla Financial Services Group.

BSDL is a premier wealth management company that focusses on investment advisory and financial planning. 

Kanwar comes to BSDL from ICICI Bank, where he was the General Manager, Retail Liability Group. At the bank his responsibilities included - retail household customers, salary segment, institutional clients and HNIs. 

Commenting on the appointment Pankaj Razdan, Deputy Chief Executive, Financial Services, Aditya Birla Group, said: “Kanwar’s appointment is part of the ‘People First’ strategy adopted by us to attract key leadership, to partner us in our vision for growth. We have a vision for BSDL as a retail distributor of choice. And Kanwar’s rich experience will be an immense asset. His role will be to provide strategic leadership and ensure rapid business growth and profitability of the Distribution, Wealth Management and retail broking businesses.”

Said Kanwar: “I am excited by the opportunity to be a member of the fast expanding family of the Aditya Birla Financial Services Group. The Birla Sun Life Distribution company offers a very strong platform for us to take a quantum leap, supported by a strong brand and parentage. ” 

Kanwar, 45, who graduated in Economics from Delhi University and has a Post Graduate Diploma in Management from Institute of Management Technology, Ghaziabad has also been associated with organisations like ITC Classic Finance, HCL, NELCO and Indian Airlines.

About Birla Sun Life Distribution Company Limited (BSDL):

Birla Sun Life Distribution is a joint venture between Aditya Birla Group and Sun Life Financial Inc. of Canada. Ranked among the top players in the distribution of mutual funds, BSDL’s product range covers mutual funds, life insurance and other financial instruments. The company provides life insurance products of Birla Sun Life Insurance, through a wholly owned subsidiary Birla Sun Life Insurance Advisory Services Limited (BSLIAS).

The company caters to the Corporate and Institutional Segment, the Private Client Group, the mass retail segment and sub broker channel. With a direct presence through its own branches (40) and additional reach through its network of Business Associates (2000) across more than 100 centres, BSDL has a trusted investor base of over 3,25,000. 

About Aditya Birla Financial Services Group (ABFSG):

The Aditya Birla Group has a strong presence across various financial verticals that include life insurance, asset management, distribution and wealth management, security based lending, insurance broking & advisory services and private equity. The companies that comprise the Aditya Birla Financial Services Group (ABFSG) are: Birla Sun Life Insurance Company, Birla Sun Life Asset Management Company, Birla Sun Life Distribution Company, Birla Global Finance Company, Birla Insurance Advisory & Broking Services and Aditya Birla Capital Advisors. 

The consolidated revenues from these businesses crossed the one billion dollar mark, in 2007-08. In the first quarter of 2008-09, the businesses continued their strong momentum of growth with consolidated revenues crossing Rs. 982.8 crore for the first quarter, up from Rs. 535.9 crore in the first quarter of last year.

ABFSG already comprises a family of over 3 million customers and 12, 000 + employees. Their Life Insurance business is ranked no. 4, among private players, July YTD in 2008-09. And The Mutual Fund is ranked no. 5. 

About Aditya Birla Group:

The Aditya Birla Group (www.adityabirla.com), a US $28 billion conglomerate, is among the largest business houses in India. 

It enjoys a leadership position in all the sectors in which it operates. It is anchored by a force of 100,000 employees, belonging to 25 nationalities. Its operations span 25 countries across six continents and is reckoned as India’s first multinational corporation. Headquartered in Mumbai, India, over 60 per cent of the Group’s revenues flow from our overseas operations. The Group nurtures a work culture where success is built on learning and innovation. The Aditya Birla Group has been adjudged “The Best Employer in India and among the top 20 in Asia” by the Hewitt, Economic Times and Wall Street Journal Study 2007.

About Sun Life Financial Inc.:

Sun Life Financial Inc. is a leading international financial services organization providing a diverse range of wealth accumulation and protection products and services to individuals and corporate customers.

Tracing its roots back to 1865, Sun Life Financial and its partners today have operations in key markets worldwide, including Canada, the United States, the United Kingdom, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. As of March 31st, 2008, the Sun Life Financial group of companies had total assets under management of US$ 404.7 billion.

Sun Life Financial Inc. trades on the Toronto (TSX), New York (NYSE) and Philippine (PSE) stock exchanges under ticker symbol “SLF”. Additional information can be found at: www.sunlife.com

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Aggrasive Portfolio

  • Principal Emerging Bluechip fund (Stock picker Fund) 11%
  • Reliance Growth Fund (Stock Picker Fund) 11%
  • IDFC Premier Equity Fund (Stock picker Fund) (STP) 11%
  • HDFC Equity Fund (Mid cap Fund) 11%
  • Birla Sun Life Front Line Equity Fund (Large Cap Fund) 10%
  • HDFC TOP 200 Fund (Large Cap Fund) 8%
  • Sundram BNP Paribas Select Midcap Fund (Midcap Fund) 8%
  • Fidelity Special Situation Fund (Stock picker Fund) 8%
  • Principal MIP Fund (15% Equity oriented) 10%
  • IDFC Savings Advantage Fund (Liquid Fund) 6%
  • Kotak Flexi Fund (Liquid Fund) 6%

Moderate Portfolio

  • HDFC TOP 200 Fund (Large Cap Fund) 11%
  • Principal Large Cap Fund (Largecap Equity Fund) 10%
  • Reliance Vision Fund (Large Cap Fund) 10%
  • IDFC Imperial Equity Fund (Large Cap Fund) 10%
  • Reliance Regular Saving Fund (Stock Picker Fund) 10%
  • Birla Sun Life Front Line Equity Fund (Large Cap Fund) 9%
  • HDFC Prudence Fund (Balance Fund) 9%
  • ICICI Prudential Dynamic Plan (Dynamic Fund) 9%
  • Principal MIP Fund (15% Equity oriented) 10%
  • IDFC Savings Advantage Fund (Liquid Fund) 6%
  • Kotak Flexi Fund (Liquid Fund) 6%

Conservative Portfolio

  • ICICI Prudential Index Fund (Index Fund) 16%
  • HDFC Prudence Fund (Balance Fund) 16%
  • Reliance Regular Savings Fund - Balanced Option (Balance Fund) 16%
  • Principal Monthly Income Plan (MIP Fund) 16%
  • HDFC TOP 200 Fund (Large Cap Fund) 8%
  • Principal Large Cap Fund (Largecap Equity Fund) 8%
  • JM Arbitrage Advantage Fund (Arbitrage Fund) 16%
  • IDFC Savings Advantage Fund (Liquid Fund) 14%

Best SIP Fund For 10 Years

  • IDFC Premier Equity Fund (Stock Picker Fund)
  • Principal Emerging Bluechip Fund (Stock Picker Fund)
  • Sundram BNP Paribas Select Midcap Fund (Midcap Fund)
  • JM Emerging Leader Fund (Multicap Fund)
  • Reliance Regular Saving Scheme (Equity Stock Picker)
  • Biral Mid cap Fund (Mid cap Fund)
  • Fidility Special Situation Fund (Stock Picker)
  • DSP Gold Fund (Equity oriented Gold Sector Fund)