Bharti AXA MF Launches Regular Return Fund

Bharti AXA Mutual Fund has announced initial offer period of Bharti AXA Regular Return Fund, which is an open ended income scheme. The fund opens for new issue on 28 January 2009 and remains open till 24 February 2009. The NFO price for the fund is Rs 10 per unit. The scheme will re-open on 16 March 2009. The Scheme seeks to generate regular income through investments in fixed income securities and also to generate long term capital appreciation by investing a portion in equity and equity related instruments.The scheme will offer two plans viz. eco and regular plan with growth & dividend options. Dividend option will further offer dividend payout and reinvestment facility. Dividend reinvestment option will have with monthly, quarterly and annual frequency of dividend re-investment. Dividend pay-out option for regular income will be having monthly, quarterly and annual frequency. Eco plan is available for purchase transactions of up to Rs 2 lakh only. Where the value of any purchase transaction is greater than Rs 2 lakh, then such investments can be placed only in regular plan. Both plans will have common portfolio. The minimum investment amount for both eco and regular plan is Rs 10,000 and in multiples of Re 1 thereafter. Additional investments in an existing folio can be made for Rs 1000. The Mutual Fund seeks to raise a minimum subscription amount of Rs. 1 crore during its New Fund Offer period.

Mutual Funds turn sympathetic towards Unitech

Mutual funds, over time, have become sympathetic to Gurgaon-based realt estate company Unitech Ltd. Though the company will have to repay debt to the tune of Rs 1,100 crore to mutual funds over the next one week, there are many magnanimous fund managers out there who are willing to rollover the debt for some more time.
"Most funds have invested into asset-backed papers. Moreover, if there is rollover of debt, investors stand to gain significantly from increased yields (anywhere between 14 and 16%). Considering Unitech's large asset bank, a default is simply out of question," said the CEO of a domestic fund house.
According to a survey conducted by Matrix Financial Services, various mutual fund schemes have an exposure of over Rs 1,433 crore in Unitech Ltd, through several debt papers issued by the company. Several schemes of Reliance MF, HSBC MF and Sundaram BNP Paribas MF have exposure (to Unitech debt) in the range of Rs 50 crore and Rs 300 crore.
"Unitech does not have a credit problem; it is only constrained by a severe liquidity crunch. From what we understand, the company is ready to pay 40% of the money due to mutual funds in the coming week. We are ready to rollover the remaining 60% for another 20 days or a month," said the fixed income manager of a fund house attached to a PSU bank.
Close to downgrading Unitech's long-term rating to 'B (Ind)' from 'BBB (Ind)' about a week ago, Fitch Ratings, on Wednesday, downgraded Pass Through Certificates (PTCs) that are directly linked to the rating company's national long-term and short-term ratings of Unitech Ltd.
The downgrade signals the company's continued delay in raising the required funds as earlier projected and increasing uncertainty regarding its ability to service its interest cost and fulfil its immediate debt payment obligations.
"In case, there is a potential payment delay on account of liquidity issues expected from an issuer of a bond in a fund's portfolio, one of the ways this kind of challenge is temporarily met is by replacing the bond with another instrument of the same issuer. However, this would affect the cashflow position of the fund," Crisil fund service head Krishnan Sitaram.
If there is a redemption request at that time, the options of meeting that can then be by selling that security or some other security in the portfolio or by availing of a bank loan, Mt Sitaram added.
The company has convened an EGM on January 19 to discuss various nagging issues. According to mutual fund sources, the company is also meeting a couple of banker on January 16 and 17 to decide on loan restructuring.
"We'll be comfortable with a rollover. Many of our investors are willing to reinvest in fresh short-term paper issued by Unitech. Many will also be looking to invest in other debt plans. I guess, there wouldn't be a big repayment issue," said the debt fund manager of a Mumbai-based fund house.
Given the weak operational cashflows, the company will resort to asset sales or debt restructuring over the near-term. According to a BNP Paribas report, forced asset sales in the current environment could further erode equity value. Management indicated that it is in the process of raising Rs 800 crore to tide over the near-term liquidity crisis. Failure to do so could lead to forced sale of underlying assets - primarily land, the report said.

Source: http://economictimes.indiatimes.com/articleshow/3987776.cms

Fitch affirms 'AAA (ind)' rating of IDFC Liquid Fund

Fitch Ratings has today affirmed IDFC Liquid Fund's National rating at 'AAA(ind)'. The rating reflects the fund's highest standards for credit quality and its conservative investment approach, relative to other liquid funds in India. The agency has considered the fund's investment policies, management capabilities, risk management procedures and supporting controls in ensuring consistency with management's objectives.
As of 29 December 2008, 96% of the portfolio was invested in assets rated 'F1+ (ind)'/'AAA (ind)' or equivalent, while the minimum credit rating of securities held was 'F1' or equivalent. Fitch notes that the portfolio management team intends to maintain the fund's credit quality when choosing new investments. However, the poor liquidity of lower rated securities in the Indian debt market may put the portfolio credit quality under stress, should assets held in the portfolio be downgraded.
The fund faces concentration risk as at end-December 2008; a large portion of the fund's assets are invested with debt securities of just three issuers, of which the largest, in terms of portfolio exposure is a Government supported entity, hence partially mitigating this concentration risk.
The investment manager of the mutual fund is IDFC Asset Management Company Pvt. Ltd. The sponsor of the mutual fund is IDFC, a diversified financial institution providing a range of financing products and services with infrastructure as its focus area.
Fitch's National fund credit ratings are assigned on a scale of 'AAA(ind)' to 'C(ind)', on a rating scale similar to that of Fitch's National Long-term credit ratings, with 'AAA(ind)' indicating the highest credit quality standards within the country. The assigned rating provides a relative measure of the fund creditworthiness only in comparison with other funds in India as it is a National rating. It is therefore not internationally comparable. Fitch's bond fund credit rating do not consider the effect of market risk on net asset value ("NAV") movements, and are not an indication of the stability of the fund's NAV. Such issues are assessed in Fitch's bond fund volatility ratings.

Source: http://news.moneycontrol.com/india/news/pressnews/fitch-affirmsaaaind-rating-idfc-liquid-fund/14/00/379201

Reliance Mutual Fund Plans To Launch A New Scheme

Reliance Mutual Fund plans to launch a new scheme called Reliance Infrastructure Fund- an open-ended equity scheme.

The Scheme will offer two plans- retail and institutional option and both plans will offer- growth plan with growth option and bonus option and dividend plan with dividend payout option and dividend reinvestment option. The scheme may invest upto 65%-100% in equities and equity related securities including the derivatives. At least 65% of investment would be made in equity/equity related securities of companies engaged in infrastructure sectors and infrastructure related sectors. Apart from this, the scheme will invest upto 35% in debt and money market securities including investments in securitized debt. Investment in securitized debt should be upto 30%.

Source: http://indian-mutualfund.blogspot.com/

NFO :: Fidelity Wealth Builder Fund

Fidelity International's Indian asset management company today announced the launch of its Fidelity Wealth Builder Fund, an open ended fund of funds scheme offering asset allocation options with three Plans. The investment objective of the fund is to seek to generate reasonable returns based on the Plan selected with minimum and maximum asset allocation between debt and equity. The fund manager will use a two-tier investment approach – asset allocation and fund selection – to invest in Fidelity’s funds. This is a zero entry load Fund with free switching between Plans permitted.
The NFO will be open from January 14 to February 5, 2009. The Fund will open for ongoing purchases and redemptions from March 2, 2009.
Ashu Suyash, Managing Director and Country Head - India, Fidelity International, said, “Asset allocation decisions can drive as much as 91.5% of investment returns variability, as studies have shown. In the current market conditions of heightened volatility, a fund like the Fidelity Wealth Builder Fund provides investors a convenient route to benefit from disciplined asset allocation. We are in an environment where attractive returns are likely in the bond market and there is potential for bear-market rallies in equities on the back of increasingly attractive valuations.”
The Fidelity Wealth Builder Fund offers three Plans with varying levels of exposure to debt and equity that investors can choose from depending on their risk appetite.

Under Plan A, the Fund will invest up to 85% in debt schemes and around 15% in equity schemes.

Under Plan B, the Fund will invest around 30% of net assets in equity schemes and the remaining in debt schemes and

under Plan C, the Fund will invest at least 50% of the net assets of the Plan in debt schemes and 50% of the net assets of the Plan in the equity schemes.
Ms. Suyash added, “To encourage investors who have turned risk averse, the Fidelity Wealth Builder Fund is a fund with no entry load. Whether investors invest through their advisers or directly, they will not be charged an entry load. Moreover, the Fund also offers investors free switch-in and switch-out facility between the Plans, if, over time, investors’ outlook for debt and equity changes.”
The Fund will offer Growth and Dividend options. A dividend is proposed to be declared, subject to availability of distributable surplus, on a Quarterly basis under Plan A and Plan B. Under Plan C, the dividend may be declared by the Trustee, at its discretion, from time to time subject to the availability of distributable surplus.
The Fidelity Wealth Builder Fund will have a custom benchmark for each Plan created using the CRISIL Composite Bond Fund Index and the BSE 200 in the proportion of the split between debt and equity for each Plan.
The Fund has no entry load but an exit load of 1% will be applicable for redemptions within a year from the date of purchase.

The minimum initial investment is Rs. 5000. Investors can invest in the Fidelity Wealth Builder Fund even through the SIP route with a minimum amount of Rs. 500 per installment with the total of all installments not being less than Rs. 5000. In addition, the systematic transfer and systematic withdrawal plans are also available.

Indian bond yields off lows, federal auction eyed

Indian federal bond yields rose from intraday lows on Thursday as some investors pared positions ahead of a debt sale on Friday, but hopes the central bank may cut interest rates further curbed a sharper rise.

The 10-year bond yield ended at 5.55 percent, off the day's low of 5.47 percent but still below Wednesday's close of 5.58 percent.

Volumes were heavy at 121.20 billion rupees ($2.5 billion) on the central bank's trading platform, with the 10-year bond being the most heavily traded.

At the day's low, the benchmark yield had fallen 73 basis points this week. In the previous week, it rose 113 basis points due to concerns over heavy government borrowing.

Dealers said they would watch cut-off levels at the federal debt auction due on Friday for further cues.

"Cut-off yields at the debt auction are likely to be slightly higher than those in the secondary market as abundant supply exists," said Bekxy Kuriakose, head of fixed income at DBS Chola Mutual Fund.

Annual inflation fell to a 11-month low of 5.24 percent in early January compared with 5.91 percent in the previous week, marginally below a Reuters poll of 5.28 percent.

Analysts said the fall and expectations of a further cut in fuel prices would give the central bank room to cut rates to revive the slowing economy at its next monetary policy review on Jan. 27.

Other economists said the bank may hold off, preferring to assess the impact of the aggressive moves already taken.

Since mid-October, the central bank has cut the repo rate, at which it lends to banks, by 350 basis points as high borrowing costs and global financial crisis took a toll on economic growth.

"We expect an additional 100-150 basis points easing in policy rates in the coming months," Citigroup said in a note. ($1 = 49 rupees)

Source: http://in.reuters.com/article/domesticNews/idINBOM13292220090115?sp=true

Unitech FMP exposure’s Rs 1,500 cr

FIXED maturity plans (FMPs), which are short term in nature, have invested a mammoth Rs 1,500 crore in troubled real estate major Unitech. This is part of a Rs 2,500-crore debt which Unitech has to repay by March 2009. The company is now trying to refinance a part of the exposure to FMPs and convert it into a long-term debt. For this, Unitech is in talks with banks to refinance part of the exposure, said investment company sources who wished not to be named. The other part of the exposure is expected to be rescheduled. Unitech’s head, corporate strategy and planning, R Nagaraju clarified that Unitech’s exposure to mutual funds was 15% of the total debt, not Rs 1,500 crore. However, he did not confirm how the company plans to pay back the debt. “There is a strategy in place to repay the Rs 2,500-crore debt by March 2009,” he said. According to an Edelweiss sector report published in November 2008, Unitech’s total outstanding debt is Rs 10,000 crore, while its net debt is Rs 8,350 crore. It has been reported that Unitech has already restructured Rs 1,000 crore loans, mainly with PSU banks, and the company is also talking to banks to restructure an additional Rs 500 crore to cut debt. The Reserve Bank of India recently allowed banks to restructure loans given to real estate companies for commercial real estate, and not classify them as non-performing assets (NPA). Earlier, the moment a loan extended to the real estate sector is restructured, the lender has to classify it as a bad loan. At the same time, however, one-time restructuring of loans to any other sector such as steel, textile or cement would not result in the loans being classified as NPAs. This new window has been given to banks till June 30, 2009.

Source:http://epaper.timesofindia.com/Default/Client.asp?Daily=ETM&login=default&Enter=true&Skin=ET&GZ=T&AW=1232011727453

Unitech Exposure - Debt-Money Market Funds

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Fitch affirms 'AAA(ind)' rtg of UTI Floating Rate Fund

Fitch Ratings has today affirmed UTI Floating RateFund's (Short Term Plan) National rating at 'AAA(ind)'. Therating reflects the fund's highest standards for credit quality,its conservative investment approach, well established riskmanagement processes and management controls, relative to otherliquid funds in India. The agency has considered the fund's investment policies,management capabilities, risk management procedures andsupporting controls in ensuring consistency with management'sobjectives. As of 30 November 2008, 96% of the portfolio was invested inassets rated 'F1+(ind)'/'AAA(ind)' or equivalent. The securitywith the lowest rating in the portfolio has a rating of'AA+(ind)' or equivalent. Fitch notes that the portfolio management team intends tomaintain the fund's credit quality when choosing new investments.However, the poor liquidity of lower rated securities in theIndian debt market may put the portfolio credit quality understress, should assets held in the portfolio be downgraded. The fund faces concentration risk as at end-November 2008;68% of the fund's assets were invested with debt securities ofjust three issuers, but all three issuers have the highest creditrating and their debt securities are relatively liquid, hencepartially mitigating this concentration risk. The investment manager of the mutual fund is UTI AssetManagement Company Pvt. Ltd. The sponsors of the mutual fund areState Bank of India, Punjab National Bank, Bank of Baroda andLife Insurance Corporation of India. Fitch's National fund credit ratings are assigned on a scaleof 'AAA(ind)' to 'C(ind)', on a rating scale similar to that ofFitch's National Long-term credit ratings, with 'AAA(ind)'indicating the highest credit quality standards within thecountry. The assigned rating provides a relative measure of the fund'screditworthiness only in comparison with other funds in India asit is a National rating. It is therefore not internationallycomparable. Fitch's bond fund credit rating do not consider the effect ofmarket risk on net asset value ("NAV") movements, and are not anindication of the stability of the fund's NAV. Such issues areassessed in Fitch's bond fund volatility ratings.

Source: http://in.reuters.com/article/domesticNews/idINWNA393920090115