CNBC-CRISIL Awards - HDFC is Best Equity, Best Fund House, Birla Best Debt Fund house

HDFC Mutual Fund bagged the Best Fund House and Best Equity Fund House awards while Birla Sun Life Mutual Fund walked away with the Best Debt Fund House of The Year Award. Reliance Gold Savings Fund, which allows investors to invest through SIP without a demat account, won the Most Innovative Fund Of The Year Award.

The winners

Large Cap Equity Funds	Fidelity Equity Fund
Diversified Equity Funds	Mirae Asset India Opportunies Fund
Small and Mid Cap Equity Funds	HDFC Mid-Cap Opportunities Fund
Equity Linked Savings Schemes	Fidelity Tax Advantage Fund
Index Funds	Kotak Sensex ETF

Balanced Funds	HDFC Balanced Fund
Income Funds	UTI Bond Fund
Monthly Income Plans	HDFC Monthly Income Plan

Income Funds	Short Term  JPMorgan India Short Term
Ultra Short Term Fund	Retail  HDFC  Cash  Management
Liquid Funds	Retail  Principal Cash Management

Source: http://www.cafemutual.com/News/InnerNews.aspx?srno=1197&MainType=New&NewsType=Industry&id=21

NSE to launch corporate debt ETF

The National Stock Exchange plans to introduce a ‘Corporate Debt Exchange Traded Fund (ETF)' in this calendar year.

 

ETFs are essentially index funds that are listed and traded on exchanges. In this sense, an ETF is a basket of stocks or assets such as gold or even money market instruments. Its trading value is based on the net asset value of the underlying assets that it represents.

According to a source, “We believe that exchange traded funds on corporate debt can help in bringing more liquidity and depth in the corporate bond market. Investors will be able to invest in a basket of corporate bonds, getting thereby the benefit of a portfolio for investment.”

One medium

The new product is in line with the Government's emphasis on expanding and deepening the corporate debt market. It will help investors put money in a basket of corporate bonds with just one medium. The price discovery will be better. Simultaneously, the new product will give better enter and exit facility, the source added.

ETFs have gained wider acceptance as financial instruments whose unique advantages over mutual funds have caught the eye of many an investor. These instruments are beneficial for investors who find it difficult to master the tricks of the trade of analysing and picking stocks for their portfolio.

Various mutual funds provide ETF products that attempt to replicate the indices on NSE to provide returns that closely correspond to the total returns of the securities represented in the index.

At present, NSE provides ETF in four different categories — equity, debt, gold and world indices. There is no exchange fee on debt and world indices ETFs, while charges vary on gold and equity ETFs.

Gold ETF attracts an exchange fee of Rs 1 for a lakh while equity ETF is charged between Rs 3-3.25 a lakh. There are indications that the corporate debt ETF may get fee waiver too.

Source: http://www.thehindubusinessline.com/markets/stock-markets/article3258855.ece

IFAs find the new capital protection products innovative

Investors are also keen to invest in such capital protection funds where some portion in invested in the equity market ‘options premium’.

In the current challenging market scenario, AMCs have had to think out of the box to make their schemes popular. DSP Blackrock Mutual Fund and Reliance Mutual Fund have both launched Dual Advantage Fund (FMP) where 80 percent of the investment is locked in debt securities and 20 percent is invested in equity and equity related options premium.

The unique feature of this product is that it gives the investor the potential to profit from the ‘options market’ while keeping the investment stable.  Being a FMP, the product is a close-ended scheme with a lock-in period of 3 years. “The important thing about such NFOs is the time of launch. I feel it is a good time when such capital protection products have been launched and there is a rising demand among the investors to buy such product,” said Mukesh Dedhia, Mumbai based IFA.

Amar Pandit, CEO, My Financial Advisor strikes a word of caution.“In such products, the credit quality of the debt investment is important. It is a pretty innovative product where the capital is protected and the investor can also take advantage of the equity market. An investor should only invest in such products when they already have a proper asset allocated portfolio,” said Amar.

Vinod Thakkar, IFA from Kolkata finds many takers for such products. “These capital protection funds provide dual advantage but the only draw-back is that the investment is that it is locked for three years. In the East, most of the investors want to lock their money in debt so such products have a good demand and a number of my clients have invested in these products,” said Vinod.

DSP Blackrock has garnered Rs 168 crore investments through two versions of Dual Advantage Fund launched in February and March this year. “In these funds, investor money is converted from 80 percent debt investment to 100 and the extra returns earned through the equity market is like an icing on the cake. We have got a good response in our earlier products and we are thinking of launching more such products in the next quarter,” said Ajit Menon, Executive Vice President and Head Sales and Marketing, DSP Blackrock.

Himanshu Vyapak, Deputy CEO, Reliance AMC agrees. “This is a new route that the investors are taking without eroding their capital as 80 percent is invested in debt. Even in such a volatile market, we have got positive response from investors as the product does not have too much risk attached to it.We have been able to gather Rs 185 crore from the earlier version of the Dual Advantage Fund where 20 percent of money is invested in equity related options premium and in the current NFO which is closing today, we feel we will be able to raise Rs 300 crore,” said Himanshu.

A few other fund houses are also in the queue for launching such kind of products.

Source: http://www.cafemutual.com/News/InnerNews.aspx?srno=1193&MainType=New&NewsType=Industry&id=21

Market's risk-reward ratio balanced right now: Daiwa MF

In an interview to CNBC-TV18, David Pezarkar, head - equity, Daiwa Mutual Fund says that the global markets are consolidating now. He stressed that there is no reason to be ultra-bullish on Indian markets. He feels that capital goods might not outperform because of many uncertainties in the sector, but there could be individual standouts that need to be looked at.

Below is the edited version of the transcript. Also watch the accompanying video.

Q: Liquidity and global market support has been working in our favour. Do you see that peter off in next couple of months?

A: Global markets are some sort of consolidating now. As of now, there is no reason to be ultra bullish on our markets. Most of the optimism has faded away. The markets will stay in a sort of range.

Investors would be advised to try and look at panic kind of reactions to add on to their equity positions in large cap, well managed companies with strong balance sheets. I think that will again be the focus after the January and February rally of high beta stocks.

Q: How would you approach capital goods now?

A: Performance of all the sectors in March has been a complete reversal when compared to their outperform show in January and February. There has been a move towards risk aversion.

Sectors such as FMCG and pharma which were outperformers in 2010-2011 have again started outperforming. Capital goods might not outperform. We would have to look at individual stock ideas. The unbridled optimism which was created in earlier months might not sustain. There are too many uncertainties for the sector as a whole, but there could be individual standouts and those will have to be looked at.

Q: We have reached the lower end of the trading range. Do you think the risk reward is in favour of investments?

A: The risk reward is sort of balanced as of now. There is some amount of nervousness around but we are not seeing the kind of pessimism that we saw in November-December last year.

If we see that kind of pessimism or we see similar kind of selloff, then it will give a extremely good investment opportunity. At this point it is better to look at the large well managed companies and trade in a range of 7-10%. 

Whenever a stock is down around 5-6% from its high, one can look at it. Unfortunately that's how the markets will behave for next two or three months or unless we see strong policy action or oil cooling off substantially.

Source: http://www.moneycontrol.com/news/mf-interview/markets-to-stayrange-daiwa-mf_686689.html

ELSS better than PPF, NSC: Crisil

Investment in an Equity-Linked Savings Scheme (ELSS) of a mutual fund can yield higher returns compared to other instruments like PPF and NSC, a report by Crisil has said

"Our analysis shows that ELSS gave 26 percent and 22 percent annualised returns over three and 10 years respectively vis-a-vis 8-9 percent offered by traditional tax saving investment products such as public provident fund (PPF) and national savings certificates (NSC)," Crisil said.

Crisil noted that interest on Employees Provident Fund (EPF) for 2011-12 was slashed to 8.25 percent from 9.5 percent in the previous year and thus ELSS can act as a strong alternative to investors.

Though the traditional debt products are considered to be relatively safer bet as they are not affected by volatility, they are unable to generate higher inflation-adjusted returns over the long run.

The PPF accounts fetched 8.12 percent over the last 10 years and in the similar period, the NSC gave an interest of 9.10 percent. The average inflation over the past 10 years stood at 6.05 percent.

"ELSS is not only an attractive option to save tax, but also helps create wealth over the long run. ELSS as a category has outperformed the Nifty 500 across three and 10 years. With average inflation around 7 percent over the past three years, top Crisil-ranked ELSS gave an inflation adjusted return of 14 percent, which is significantly higher than returns offered by other tax saving products," Crisil senior director Mukesh Agarwal said.

The rating agency, however, cautioned that the ELSS investment requires some amount of market risk and had to cherry pick those schemes which have performed consistently well.

"Since investments in ELSS are subject to market risks, investors must take into consideration their age and risk-taking abilities. The investment horizon should be more than five years for higher inflation-adjusted returns.

Further, investors must choose funds that have performed well both in good and bad times," Crisil head for Funds and fixed income research Jiju Vidyadharan said.

It said ELSS is not eligible for tax benefits under the DTC, but since the implementation of the new tax regime has been postponed, investors can park their funds in these equity schemes for now.

Source: http://www.indianexpress.com/news/elss-better-than-ppf-nsc-crisil/929093/0