Monday, December 15, 2008

NFO Nest - December 2008

NFO Nest
(December 2008)

A silver lining in the dark cloud…

The SBI Mutual Fund, with an investor base of over 55 lakh and a large network across the country, has mobilised Rs 1,677 crore under SBI Debt Fund Series-90 Day-32 plan that was closed on November 25, 2008. The scheme received good response from both retail and institutional investors with 2,300 applications being received during the New Fund Offer period…” so goes the news item. Today, such a news item in the field of finance is few and far between.

The following funds find their place in the NFO Nest in December, 2008.

Benchmark S& P CNX 500 Fund
Opens: 17 Nov, 2008 Closes: 15 Dec, 2008

Benchmark S&P CNX 500 Fund, India's first passively managed fund tracking the S&P CNX 500, aims at generating capital appreciation through equity investments by investing in securities which are constituents of S&P CNX 500 index in the same proportion as in the index. The fund will have at least 90 per cent exposure in the stocks of its chosen index. In case, it is not able to buy a stock that is stated in the index, then it can have exposure in its derivative instrument of up to 10 per cent. The fund may also invest in various debt instruments like money market instruments, G-Sec, Bonds, Debentures and Cash but it should not be more than 10 per cent of the total net assets.

Popular globally, index funds are yet to attract significant assets in India. Nearly 60 percent of the diversified stock funds have seen their net asset values fall more than the benchmark index's 54 percent fall this year, according to global fund tracker Lipper. Benchmark S&P CNX 500 Fund will be a low cost choice for investors seeking a broad exposure of Indian equity. Index funds can have a maximum expense ratio of 1.5% compared to 2.25% for actively managed funds. This fund is likely to provide one of the the widest equity exposure to investors. The index provides a broad diversification across sectors and industries accounting for nearly 92 per cent of the market capitalization. The case for indexing is getting stronger. In the current market meltdown many funds have collapsed far more than their benchmark, for lack of disciplined investment approach.

IDFC Tax Advantage Fund
Opens: 1 Dec, 2008 Closes: 17 Dec, 2008


IDFC Tax Advantage (ELSS) Fund seeks to generate long-term capital growth from a diversified portfolio of predominantly equity and equity related securities. The scheme will invest in well-managed growth companies that are available at a reasonable value and offer a high return growth potential. Companies would be identified through a systematic process of forecasting earnings based on a deep understanding of the industry growth potential and interaction with company management to access the company’s long term sustainable profit growth. The scheme aims at investing 65% to 100% in equity and equity related securities, 0% to 20% in debt and money market instruments and 0% to 20% in securitized debt instruments. The performance of the scheme will be measured against the BSE 200 index.

Sahara Star Value Fund, Sahara Annual Interval Fund, Sahara Super 20 Fund, Canara Robeco Dynamic Bond Fund, Tata Smart Investment Plan, Birla Sunlife Medium Term Plan, Gilt Benchmark Exchange Traded Scheme, Goldman Sachs India Money Market Fund, ING US Opportunistic Equity Fund, Baroda Liquid Plus Fund and Lotus India Active Nifty Fund are expected to be launched in the coming months.

1 comment:

Sushil Girdher said...

For a more informed investor who has the time to research, I would recommend selecting mutual fund schemes to invest in based on the following criteria.

1. Longterm Performance , consistency in Returns
2. Short Term Performance (though a fund has performed well in the past, is there a let down in short to mid term performance)
3. Performance across market cycles, like during bullish and bearish phases (how well did the fund perform during the bearish phases)
4. Fund Corpus (When selecting midcap funds, the corpus size is very important)
5. Fund Managers performance with the scheme(If a fund just got a new fund manager, I would observe the performance under this new manager before I select the fund)
6. For equity mutual funds, one will also need to evaluate risk. (Exposure to midcaps, Standard Deviation of the fund)
7. For debt mutual funds, apart from risk one also need to examine entry/exit loads and expense ratio are very important.