Mr. Ved Prakash Chaturvedi, Managing Director, Tata Asset Management Ltd

Mr. Ved Prakash Chaturvedi, Managing Director, Tata Asset Management Ltd has worked with various leading financial services organisations in India. These include CRISIL (Indian business of Standard & Poors), Banque Nationale De Paris, SBI Funds Management. Mr. Chaturvedi has a Bachelor’s Degree in Electronics Engineering and an MBA from the Indian Institute of Management, Bangalore. Chaturvedi is also a Director on the Board of Association of Mutual Funds in India (AMFI), Member of the SEBI Advisory Committee of Mutual Funds, Member of the Capital Market Committee of the Indian Merchants’ Chamber (IMC) and a Committee Member of the Confederation of Indian Industry (CII) National Committee on Mutual Funds.

Tata Mutual Fund manages around Rs202bn (average AUM for the month) as on September 30, 2009 worth of assets across its varied offerings. Tata Mutual Fund offers an investment option for everyone, whether you are a businessman or salaried professional, a retired person or housewife, an aggressive investor or a conservative capital builder.

Replying to Yash Ved of India Infoline, Ved Prakash Chaturvedi says, “Economic growth in many emerging markets has decoupled from the economic growth in developed markets.”

What is your view on the Indian stock markets ?

In our view an incipient recovery is under way in the Indian equity markets. However, there are apprehensions with respect to the deficient rainfall and with respect to the Chinese and global situation. On balance, global sentiment determines fund flows to emerging markets and to India and hence will continue to be a driver of market levels here.
Equity markets do not go up or down in a straight line. We have seen a very sharp run-up in our equity markets in the last few months. There will be possibly a period of consolidation and then based on the outlook for earnings growth from companies markets will move ahead.
Most analysts expect that fiscal year 2010-11 will be a year where we can expect EPS growth from companies as business confidence returns. If this scenario materializes, then we can expect some good cheer in Indian equity markets over this period.

What is your view on the Indian and global economy?

If evidence of the last 24 months is to be believed it does seem that economic growth in many emerging markets has decoupled from the economic growth in developed markets. In fact, for 2009 it seems that most of the global growth will actually come from emerging markets. However, it needs to be remembered that the largest pool of capital still lies with developed economies. Thus, investment flows into emerging markets continue to be driven by sentiments prevailing in developed markets. Thus, though economies have decoupled market movements still bear co-relation to developed market movements owing to the fact that sentiment there impacts fund flows and sentiment in emerging markets. This situation is likely to continue for some more time.
We cannot comment on the outlook for economic growth in developed markets as we do not track those markets proactively. However, our general view is that once the uncertainties of the global economy slowly fade away, business confidence and consumer confidence across the globe will slowly recover.

How do you see inflation and interest rates going ahead?

The coming few months will possibly see focus on inflation. It is a fact of life that when too much liquidity is injected into our system and money supply increases while the supply of goods and services do not increase proportionately it is a driver of inflation. It should also be kept in mind that since in our country inflation is measured on a year-on-year basis, the “base effect” will also cause headline numbers of inflation to start looking up as we go into 2010. The drought situation is also to be considered. Thus, inflationary expectations are likely to return in the next 18 months at some point of time.

How much schemes are you currently dealing with?

We currently have a range of 38 investment schemes – 20 Equity schemes, 14 Debt & Cash schemes and 4 Balanced or Hybrid schemes.

What is your view rupee on the rupee?

Over the long period of time, the rupee and emerging market currency should strengthen against the US dollar. But in short time frame, things will be more volatile.

Which of the sectors you are bullish?

We are positive on infrastructure, construction, engineering and capital goods.

Your message to the retail investors?

Our message is that long term story in India is very good as growth rates are likely to continue. Investors should understand risk appetite and carefully invest so as to benefit to growth of Indian economy.

Source: http://www.indiainfoline.com/Research/LeaderSpeak/Default.aspx?ReportNo=720

Diversification of assets overseas is must for portfolio

Nakul Karnik, an IIM graduate and an analyst with a knowledge processing outsourcing unit, tracks the Middle East and North Africa (MENA) markets. He believes that there are strong growth opportunities there. Putting his money where his mouth is, Karnik has invested some of his savings in exchange-traded funds listed in the US. These funds track opportunities in the MENA markets and have made Karnik good money.

Unlike Karnik, not all investors have the resources to invest in global markets nor do they have access to US-listed exchange-traded funds. For such investors looking to diversify overseas, mutual funds provide the opportunity.

WHY INVEST OVERSEAS?
Investing abroad at a time when FIIs are pouring money in India may sound a bit odd. But there is a logic behind this. Given the impact that geo-political events have had on regional markets, diversification makes sense. Besides developed markets offer better avenues of investment.
For instance, opportunity to invest in a search engine, water resources, precious metals mining and clean energy can be easily tapped overseas. These investments are future growth opportunities but they are not available in India.

This diversification within and across asset classes improves the portfolio on the qualitative front. “Diversification of your assets overseas is a must for your portfolio. As a starting point, one could look at parking about 5-10% of one’s portfolio overseas.” Hrishikesh Parandekar, CEO, Karvy Private Wealth.

HOW TO INVEST
RBI permits individuals invest up to $200,000 per year. One can identify various themes or growth drivers before committing money. “GDP growth rates of countries can be an easy yardstick to identify opportunities worldwide, though they has to be seen in the light of other variables,” says Deepak Arackal, vice-president & quantitative investment manager, ING Investment Management India.

Themes such as global energy, global real estate and infrastructure in emerging economies are popular. The best way to tap these themes for the individual investors is mutual funds.

THE FUNDS
The funds operate on multiple models. The first is actively-managed portfolios from India, where the local fund managers buy and sell stocks in foreign markets. Templeton India Equity Income is one of the oldest schemes in this segment.

The second is the fund of funds model. The Indian fund manager invests the money in various funds listed overseas and actively monitors these investments. Quantitative and qualitative parameters are employed to take investment decisions. The third model is a feeder fund model and is a kind of fund of fund. Here the Indian fund invests in a fund listed overseas. Principal Global Opportunities Fund is one of the oldest offering here.

“A fund that offers exposure to markets that have low correlation with Indian markets makes a good option from the diversification point of view,” says Maju Nair, AV-P, Sharekhan. The investor should pick a fund that caters to his needs.

The arrangements of money management at the fund level need not influence the investors’ decision. “But given the taxation treatment, it makes sense to invest in a fund that invests at least 65% of assets in Indian equities and rest in foreign equity,” says an official with an Indian private banking set-up.

WHAT IS ON OFFER?
The Indian mutual fund offerings in this segment are primarily focused on emerging markets equity, energy and commodities worldwide. A look at the adjacent table will give you an idea of the returns generated by such schemes. But there is more to the story than just the returns.
Templeton India Equity Income, a scheme with the longest track record in this category, is managed by Mark Mobius along with Vikas Chiranwal. The scheme invests at least 65% of money in Indian equities and rest of the money is invested in some hand-picked equities across the world.

No wonder the scheme boasts of 14% returns since launch in April 2006 and assets of Rs 1,158.47 crore as on September 30, 2009. On the other hand, top performer, Mirae Asset Global Commodities Stocks Fund, posted 92% returns in one year and invests in the commodity stocks worldwide. The fund was launched in July 2008.

A look at the portfolios of the funds throws up some details of the opportunities the investors can tap. As on September 30, 2009, Reliance Natural Resources Fund had a small exposure to an ETF that invests in water resources, an otherwise difficult to invest theme for an Indian investor.

Sundaram BNP Paribas Global Advantage Fund, on the other hand, boasts of a portfolio comprising 11 fund holdings offering exposures across markets and asset classes. Birla Sunlife International Equity Fund offers two plans, one that invests 65% of the assets in Indian equity and rest overseas and the other that is allowed to invest its entire money in foreign equity.

RISKS
Like any other investments, risks follow returns. Risks related to the geo-political scenario in foreign lands is a key risk and many of us may not be able to read it clearly. “Multiple currency exposures also enhance risks and so is the case with regulatory environment that regulates transparency and compliance levels,” says the official with private banking set-up.

Those who are keen to invest overseas should understand that this may not be just one more vehicle to make more money. A look at the returns connote that many of the funds enlisted here have underperformed the Indian market indices. Hence, the qualitative value addition that bring to your portfolio should be given closer look than just the returns.

Source: http://economictimes.indiatimes.com/personal-finance/mutual-funds/analysis/MFs-can-help-you-reaching-clean-energy-firms/articleshow/5194434.cms

Dubai MFs eye India

Dubai-based mutual funds are keen to tap the Indian market. That country’s finanacial regulator, Dubai Financial Services Authority (DFSA), has discussed with the Securities and Exchange Board of India (SEBI) the possibility of allowing Dubai mutual funds to be directly marketed and sold in India.
“We have indicated to SEBI that we are interested in an arrangement wherein Dubai International Financial Centre (DIFC) region’s mutual funds can be marketed and sold directly in India, Mr Paul M Koster, Chief Executive, DFSA, told Business Line on the sidelines of a recent Dubai- India economic partnership conference in the city.
The DIFC region is the financial hub of Dubai and has 1,643 registered mutual funds, out of which five are domestic (to Dubai) funds with a collective assets under management (AUM) of $290 million as of November 2008.
“DFSA’s proposal might mean a paradigm shift in the policy regime in India as far as mutual fund regulations are concerned,” said a senior India-based regulatory expert.
Currently, no regulation exists that would allow an international fund to market and sell its products directly in India, said Mr A.P. Kurian, Chairman, Association of Mutual Funds in India.

Source: http://www.thehindubusinessline.com/2009/11/03/stories/2009110351840100.htm

The Importance Of Being Positive

What a long journey it has been from last Diwali to this one. Leading up to the festival on 23rd October, 2008, there was real fear in the air. For a whole generation of people used to working and saving and investing in a benign environment, those few days redefined what panic could be. Certainly, most of us have seen market crashes before, in 2001, 1992 and perhaps earlier too. We've also seen periods of general economic crisis. However, this was different. The panic that we all felt in our hearts was of a different quality. It reset our mental standard for what we thought was a bad situation. Many, many of us were staring at a 360 degree disaster that encompassed not just our savings and investments, but also jobs, businesses, real estate as well as future prospects in all of these.
Or so we thought. In these short 354 days from one festival to the next, there has been a complete transformation of the mental framework in which we are making investments. In a manner of speaking, people are saying that if we could survive that, then we can survive anything. In a strange and perverse way, the extreme panic has retreated, after the economic recovery happened, in a manner that has restored confidence to a level that is actually more than what existed in 2007. Then, many of us were circumspect about there being a bubble and what would happen if and when it did burst. Now, we feel that it has thrown the worst at us and we're still OK. In the ordinary scheme of things, the normal comment any cautious soul would pass on this would be to advise circumspection.
However, maybe this is not that sort of a time. Perhaps one should imbibe a bit of the Diwali spirit and say that yes, we made it through the worst of times. There are any number of problems in the world and the investment markets could well be running ahead of themselves. All that is true, but at the end of the day it boils down to what attitude you'd like to take. I guess these last twelve months have proven that no matter how dark the outlook is, if you have to act on belief alone then it's better to believe that things are going to be better than that things are going to get worse.
If a bunch of pessimists compete with a bunch of optimists on the investment returns they can generate (and of course, there's no other difference between them), then the optimists are far more likely to win.

Source: http://new.valueresearchonline.com/story/h2_storyView.asp?str=100928

How to Find the Best Managed Funds - Part 2

In the first part of this report we looked at how you pick the best quality managed funds. In this part we are going to look at how you choose the best performing managed funds from your selection of quality funds.
Many of the research houses have useful analysis tools and a particularly good one to use is the Peer Group Ranking Report available with Morningstar. What this tool will do is rank all of your selected funds into a respective category. Let's say you are looking for a geared Australian share fund as part of your portfolio. Morningstar will find every available fund that specialises in Australian shares and uses gearing in their investment strategy. Likewise, you may want to find a fund that invests into the largest international companies. Whatever type of fund you are looking for, Morningstar will have a category for it.
Within each category, the Peer Group Ranking Report will show the performance figures of each fund over 3 months, 6 months, 1 year, 2 years, 3 years, 5 years and 10 years. When looking at performance the best time frame to look for is 3 years. Many purists will tell you that past performance is no guarantee of future performance and this is true if you were looking at one fund in isolation or choosing a fund based purely on performance without looking at the quality of the fund manager.
Viewing performance over a 3 year time frame allows you to see how consistent the fund has been performing. Shorter time periods like 3 months or even 1 year are not long enough and performances could be adversely affected by volatility in the markets. Likewise, you do not want to base your selection on the longer time frames like 10 years. The quality of the fund may have changed over that time and it is likely the fund has different individual investment analysts and managers.
Looking at a specific category like large valuation international funds, you will find that Morningstar has approximately 60 funds in this category with a 3 year performance history. The Peer Group Ranking Report then shows the performance of each of these funds ranked overall and in quartiles. For example, if the peer group consists of 60 funds, then the 15 best performing funds over 3 years would be ranked in the 1st quartile. The 15 worst performing funds would be ranked in the 4th quartile.
If you looked at a Morningstar report for September 2009 you would see that the Platinum International Fund had a 5 star ranking and was ranked 1 out of 58 funds placing it in the first quartile over the 3 year period.
So, the 2nd step in the process involves selecting only those funds performing in the 1st or 2nd quartile over 3 years. I always include the 2nd quartile, particularly if you have a small peer group like geared Australian share funds, as there may not be any 4 or 5 star funds in the 1st quartile. Never pick a fund in the 3rd or 4th quartile and if a fund does not have a 3 year history then move on and find another fund. What you are looking for is proven performance history and you will only get that with at least 3 years trading. Many research houses will give a high ranking to a fund based on the quality of the fund manager even if it has only been trading for a year and has no comparative peer group performance.
So, let's recap on the formula to pick the best managed funds.
* 1st Step: Pick only those funds ranked 4 or 5 stars * 2nd Step: Pick only those funds ranked in the 1st or 2nd quartile.
This formula will give you the knowledge that you not only have the best quality managed funds in your portfolio, but also the best performing managed funds. It also gives you an excellent basis for conducting an annual review of your portfolio. If the fund falls below 4 stars or the 2nd quartile, then look to replace it.
If you have any questions about the system or the Peer Group Ranking Report feel free to contact me or leave a comment on my website.Rob Bourne has been involved in the financial services industry for over 35 years. As a practising financial adviser he focuses on the need for practical and down to earth financial education. The aim is to educate people through financial education so they can take control of their own financial future. Visit Rob's website here for more information on business opportunities and investing.

Source: http://ezinearticles.com/?How-to-Find-the-Best-Managed-Funds-Part-2&id=3148941

How to Find the Best Managed Funds - Part 1

Finding the best managed funds is not difficult. It is a 2 step process. All you need to do is find the best performing funds within the best quality of fund managers. In more technical terms this is using both a qualitative and quantitative approach to selecting the best managed funds. Part 1 of this report is about the 1st step or qualitative approach to finding the best fund managers. Part 2 of the report will explain the 2nd step or quantitative approach to finding the best performing funds.
Using managed or mutual funds are a popular way of investing and getting exposure to diverse markets that you can't always do with direct shares.
The universe of managed funds to choose from is large. In Australia alone you have a choice of over 12,000 funds although many of these are structured as superannuation or pension funds.
Outside of superannuation there are over 4000 funds to choose from. Many of these funds will have a targeted investment philosophy such as only investing in the top 100 Australian shares or small cap shares. Others still will invest in demographic regions such as US, Europe, Asia or Japan. They might also decide on a sector approach like just investing into industrial shares or resource stocks and could even target a specific niche like gold stocks.
With such a large universe of funds to choose from, finding the best managed funds can be a challenge. Chasing the best performing funds may also prove dangerous and short lived. They may be poor quality or have unproven investment strategies and inconsistent investment managers.
Independent research houses are widely used by financial advisers to provide a qualitative analysis of fund managers. The important thing to understand with most of the research houses used by financial advisers is that the fund managers pay the research houses to have their funds researched. This creates an unfair playing field for the smaller fund managers who are unable to afford the high research fees needed to complete a comprehensive research.
The other aspect of most research houses is that their research is mostly of a qualitative nature. In other words, they place little or no weighting on past performance and the ratings of any funds are based on assessing the skills and experience of the managers, the investment approach used and what controls are in place to handle risks.
It is not a perfect world and many good quality funds are never recommended by financial advisers simply because there has been no independent research carried out. If you find any of these funds then you will need to do your own research otherwise stick to those funds which have been researched.
After completing their qualitative analysis of the fund manager and their respective managed funds the research houses will award them a rating. There are also many research houses to choose from and the more popular ones used by financial advisers include Morningstar, Lonsec and VanEyk. Morningstar use a star rating system from 1 star to 5 stars. 5 stars representing the highest quality of fund and manager.
The first step in finding the best managed funds is simple. Stick to the funds with either a 4 or 5 star rating. Nothing else should be considered.
The best quality funds can also be the worst performing funds. In part 2 we'll look at how you find the best performing funds.Rob Bourne has been involved in the financial services industry for over 35 years. As a practicing financial adviser he focuses on the need for practical and down to earth financial education. The aim is to educate people through financial education so they can take control of their own financial future. Visit Rob's website here for more information on business opportunities and investing.

Source: http://ezinearticles.com/?How-to-Find-the-Best-Managed-Funds-Part-1&id=3140657

Axis MF's maiden equity fund offer to open on Nov 11

Axis Mutual Fund will float its maiden diversified equity scheme - Axis Equity Fund - on November 11, as per information on the mutual fund's website. The open-ended equity scheme will close for initial subscription on December 8. Post the new fund offer, the scheme would re-open for ongoing purchases and redemption from January 7. The fund will deploy at least 80% of its corpus in equities, and keep the rest in fixed income securities. The scheme has the flexibility to invest across market capitalisation and sectors.

On October 16, NewsWire18 reported the fund house plans to launch an equity scheme on November 10 or November 11. It flagged off its mutual fund operations on October 8 by floating two funds - Axis Liquid Fund and Axis Treasury Advantage Fund - which collectively garnered Rs 20 billion.
Axis Equity Fund other features:

* Options: Growth and dividend

* Minimum application: Rs 5,000 and in multiples of one rupee thereafter;

* Additional subscription: 100 rupees and in multiples of one rupee thereafter;

* Entry load: Nil;

* Exit load: 1% for units redeemed within one year from allotment date;

* Performance benchmark index: S&P CNX Nifty Index;

* Fund manager: Chandresh Nigam, head-equities.

Source: http://www.moneycontrol.com/news/mf-news/axis-mfs-maiden-equity-fund-offer-to-opennov-11_421762.html

Mid-caps are the flavour of the season

The post-Lehman meltdown was a once-in-a-century event, but the way the equity markets across the world reinvented themselves in a span of a few months is the stuff of legends.

With changing market dynamics, Indian fund managers too promptly reshuffled portfolios, changed sectoral preferences and adopted suitable strategies to keep their funds afloat. Diversified equity schemes have thus managed to deliver one year average trailing returns of about 90% with a good number of them having conveniently returned over 100% for the period.
Tuning their strategies to the whims and fancies of the market, many fund managers had cautiously begun to deploy their excessive cash holdings back into the equity markets since April this year. The cash holdings — raised to as high as 25-40% by equity funds last year to protect capital from further erosion — finally found their way back into the equity mainstream. Those prompt enough to do so have also reaped in the best of the returns even as others followed suit. The cash holdings of the equity schemes are thus back to the pre-meltdown levels of 5-7% for the quarter ended September 2009.

Growth oriented mid-cap stocks are back in vogue after their 2008 debacle. Mid-cap stocks have become an obvious choice for most funds since many fund managers rightly believe that steam is already out of the large caps. However, having burnt their fingers last time, these fund managers are taking cautious calls before venturing into the midcap space — targeting those with ample and clear growth visibility and liquidity, provided they are available at reasonable valuations.

“Last year everything fell irrespective of quality. This year, everything is on a rise — again irrespective of quality. We are thus treading high cautiously in these markets,” says Anand Shah, head of equity at Canara Robeco.

Even as preferences with respect to choice of stocks and market capitalisation has undergone considerable change since last year, the mutual fund industry appears quite unanimous in its choice of sectors. Energy, infrastructure (including capital goods) and financial services continue to dominate the sectoral preferences of the Indian fund managers. With power and infrastructure being the focal point of the country’s economic development, stocks catering to this segment — especially in the mid-cap space — have become the fund managers’ hot picks.
Says Mahesh Patil, co-head of Equity at Birla Sun Life AMC: “These sectors are here to stay irrespective of the changes in the political circuit.”

While consumer goods and pharmaceuticals — favourites of 2008 — have seen little shrinkage in popularity, Information Technology and Automobiles appear to have generated to renewed interest in fund managers this year.

Source: http://economictimes.indiatimes.com/Market-News/Mid-caps-are-the-flavour-of-the-season/articleshow/5178520.cms