Canara Robeco InDiGo - NFO Analysis

NFO Date: - 19th May to 10th June 2010

Fund Features

Scheme Objective:

It is an open-end debt scheme having a primary objective to generate income from a portfolio constituted of debt & money market securities along with investments in Gold ETFs.

Type of Scheme:

Open-end debt scheme

Bench Mark Index:

CRISIL Short Term Bond Fund Index + Price of Gold (neutral allocation: 65:35)

Minimum Investment:

Minimum of Rs. 5,000/- and in multiples of Rs. 1/- thereafter

Entry load/Exit Load

Entry Load: Nil

Exit Load: 1% if redeemed / switched - out within 1 year from the date of allotment

Plans: Growth, Quarterly Dividend Payout

Options: Quarterly Dividend Re-investment

Fund Manager: Mr. Ritesh Jain

Indian Fixed Income Market

·         Rising Short Term Rates: The recent rate hikes and CRR hikes has led to short term rates climbing 50 bps on an average in the last 2 months. Further rate action would lead to yields climbing up going forward.

·         Accrual Strategy: Given the current market volatility, a rising interest rate scenario makes accrual income, an ideal investment strategy. Rising Interest rate scenario and uncertain market conditions make accrual strategy as the best investment philosophy in current market scenario.

Gold as an Investment Asset Class

Rising Demand

·         Accelerating Investment Demand: Increase in monetary base globally leading to robust growth in Investment Demand.

·         Global Currency Diversification: Weakness in US Dollar & Concerns on the Euro front has made countries shift to Gold as an alternative currency. Economic uncertainty has led to central banks world over increasing their Gold Reserves

Declining Supply

·         Declining Mine Production: This leading to increment in Gold prices. Further, dearth of newer discoveries is further adding up to the Demand-Supply gap.

·         Central Banks have turned net buyers of Gold: The signatories under CBGA (Central Bank Gold Agreement) have turned net buyers since the last 3 years to the tune of ~300 tonnes (as on Dec 2009)

Investment Strategy

·         Investing in gold aimed at generating enhanced yield without taking additional duration risk or credit risk.

·         By effectively capturing the seasonal patterns in Gold, the fund aims to generate alpha.

·         Fixed Income to provide accrual income and Gold to provide capital appreciation.

Unique characteristics of the Fund

·         Fund provides investors with the option of investing in Gold and Fixed Income instrument in a single portfolio.

·         Unique combination of Fixed Income and Gold providing accrual income and capital appreciation in one fund.

·         The Fund aims to provide enhanced yield without additional Duration / Credit risk.

·         Capturing the seasonal patterns in Gold by active asset management.

·         Ideal for investors without demat a/c to invest in a Gold based fund.

·         A gold based fund which aims to provide regular flow of income to its investors via a quarterly dividend option.

Please note that declaration of dividend is subject to availability of distributable surplus and there is no assurance of dividend being declared every quarter.

Ideal for investors

·         Investors looking for diversification in their Debt portfolio through Gold as an Asset Class.

·         Investment Horizon: Long Term

·         Risk Appetite: Medium

for more details please visit www.angelmf.com

SBI PSU Fund - NFO Analysis

NFO Date: 17th May to 14th June 2010
Fund Features
Scheme Objective: To provide investors with opportunities for long-term growth in capital along with the liquidity of an open-ended scheme through an active management of investments in a diversified basket of equity stocks of domestic Public Sector Undertakings and in debt and money market instruments issued by PSUs and others.
Type of Scheme: An Open ended Equity Scheme
Bench Mark Index: BSE PSU index
Minimum Investment: Minimum of Rs. 5,000/- and in multiples of Rs. 1/- thereafter
Entry load/Exit Load: Entry Load- Nil
Exit Load-Exit within 3 years from the date of allotment - 1 %, Exit after 3 years - Nil
Plans/Options
Plans: Dividend and Growth Plan
Options: Dividend Payout and Reinvestment option
Fund Manager: Mr.Rama Iyer Srinivasan
Why invest in PSU Theme Now?
A Riskier World
• Substantial Increase in Public Debt
• The Euro Crisis
• Financial Sector Deleveraging
The India Story
• Strong Domestic Economy
• Demographics
• Incremental Flows
PSUs offer Better Risk-Return Trade Off
• PSUs are wealth creators of the nation, with strong fundamentals and are available at attractive valuations compared to broader markets.
• There may arise several disinvestment opportunities too which shall lead to unlocking of value in these companies.
Key Analysis:
• The BSE PSU index has consistently outperformed the other broad market indices by substantial margin.
• In phases of economic downturn while other indices have given negative returns BSE PSU index has given positive returns to the extent of 8% CAGR.

Investment Strategy

• The primary strategy would be to invest in the stocks of PSU companies.
• Endeavors to identify market opportunities & achieve sufficient diversification.
• Control liquidity risks and non-systematic risks by selecting well researched stocks with long & mid-term growth prospects for stability and possibility of returns.
• Investment in equities would be through primary & secondary market, private placement / QIP, preferential/firm allotments or any other mode as may be prescribed/ available.
Fund Manager Profile
NAME: Rama Iyer Srinivasan
EDUCATIONAL QUALIFICATION: M.Com, MFM
EXPERIENCE: Future Capital Holding - Head - Portfolio Management
Ideal for investors
• Interested in long term value unlocking in PSUs.
• Looking for diversification in their portfolio.
• Investment Horizon:- Long Term
• Risk Appetite:- High

Birla SunLife India Reforms fund - NFO Analysis

Sectors which have been focus of Government Reforms

The government focused on some key areas of the economy and started reforms to benefit the overall economy.

·         Telecommunication: New Telecom Policy was introduced, opening the sector to private participants transforming India's telecom sector as one of the largest and the fastest growing telecom markets in the world.

·         Roads: Road projects have improved connectivity, in turn opening up various business opportunities, simulating consumption, production and need for more better infrastructure.

·         Power: Reforms like FDI in power generation, 5 year tax holiday and assured returns on investment, opening up for private, Electricity ACT 2003 etc, led to improved efficiency and opportunities.

·         Banking & Financial Service: Opening up for private players, allowing nationalized banks to offer up to 49% of equity to public, introduction of Prime lending Rates & removal lending rate controls, raising of FDI Limits of Private banks to 74%, led to an increased competition thus increasing penetration and efficiency.

·         Tax reforms: Introduction of VAT simplified taxes, increased Tax revenues and compliance. Further if GST (Goods and Services Tax) is introduced it will lead to increased output and productivity, and also contribute significantly to national income and GDP leading to higher tax compliance and ultimately lower effective tax rates.

Indian Economic Growth Trend

·         The Healthy growth rate of the economy in the terms of GDP over the years shows that the Government reforms in the important areas of the economy have helped it to maintain its resilience.

·         In order to maintain its growth potential the economy will require support from its key sectors, thus reforms and increased spending in these key sectors will be of high importance.

·         Thus there will be a large number of companies that will benefit from the government's significant outlay.

Reforms and increased Government spending presents Long Term Investment Opportunities.

Sectors in Focus for Reforms

·         Banking & Financial Services.

·         Physical Infrastructure

·         Power

·         Education

·         PSU Divestment

·         Oil & Gas

·         Fertilizer Sector

·         Retail

·         Telecom

·         These sectors are of prime importance for the growth of any country's economy and currently Indian Government is taking progressive measures for their development.

·         Thus these sectors currently present long term investment opportunities.

Favorable environment for Reforms

·         The environment for the reforms is conducive with a strong pro-reform Government at the center and little dependence on allies, the stage is set for some major reforms to be carried out.

·         Better capital availability: More foreign and private capital with higher political visibility and better prospects of long-term growth

·         Reforms: Allowing higher FDI, developing financial markets (incl. corporate bonds), GST, Direct Tax Code

·         Strong infra focus: Higher spend on physical infra to achieve sustained 9% growth

·         Containment of deficit: Disinvestment, free pricing mechanism, alternate sources, of finance, eg. 3G spectrum

·         Better governance: Better execution, appointment of technocrats to head initiatives (e.g., Nandan Nilekani for UIN)

·         Inclusive growth: Continued focus on rural and human infra to make growth more inclusive.

Invest in companies likely to benefit from India's Economic Reforms

·         Governments' Focus on the sectors for reforms changes according to the need of the economy.

·         Thus you should invest in those sectors which are fully supported by the government, for long term growth potential.

·         Ideally an investment theme which concentrates on such sectors which have growth potential supported by government will be a good avenue for portfolio diversification. 

www.angelmf.com

Diversify your Portfolio with Proper Asset Mix

The healthy growth rate of the economy which is maintained over the years shows its resilience and its great long term potential.

Equity Market Scenario

·         The Indian economy is expected to grow at 7.2% in FY10 and 8% plus levels in FY11.

·         Recent Growth driven by higher government spending, increased private consumption and investment.

·         From close to 0.6% in April'09, industrial production has grown to 15% in Feb'10 due domestic recovery, inventory restocking and fiscal stimulus.

·         In coming months good IIP numbers are expected on lower base and revival of domestic demand.

Debt Market Scenario

·         The government has begun withdrawing most of the policy measures announced during the global credit crisis. This can be reflected in the following,

-          Hike in SLR by 100 bps in Oct 2009 and CRR ratio by 75 bps in Jan 2010.

-          RBI raised key policy rates - repo and reverse repo by 50bps since March.

·         It is expected that the process of monetary normalization will continue in coming months to contain inflation.

·         Credit growth which was at 10% in Oct'09 has now improved to 17% by March'10 end.

·         Deposit growth has been coming down and is now presently at 17% by Mar 10 from 22% in Apr 09.

·         Money Supply is also down to 17% from 20% at the start of financial year.

Opportunity in both the Markets

Debt Market:

·         The short to medium tenor of the yield curve is still steep and offers value in terms of roll down effect and higher accrual in rising interest rate scenario.

·         Inflation is expected to remain high in coming months and thereafter come down slowly on base effect.

·         Government is slowly withdrawing the stimulus to contain inflation.

·         This gives an excellent opportunity to enter the debt markets to lock-in long term gains.

Equity Market:

·         India is among the few economies globally which continues to deliver strong broad based growth on a large scale.

·         Industrial production, which was major growth-driver in FY10, is likely to grow at close to double-digit in FY11.

·         Markets are currently in the phase of consolidation after a sharp rise in the last 12 months.

·         Thus this will present an opportunity to enter the equity markets to create a strong portfolio.

What should be the Investment strategy?

·         Ideal strategy in the current scenario will be a proper asset allocation that will provide both steady returns and capital appreciation.

·         Investors need an investment strategy which keeps in mind both the country's growth as well as its inflationary conditions.

·         On the debt side the product should take advantage of the current high bond yields and steepness of short to medium tenor of the yield curve.

·         On the equity side the product should take advantage of temporary volatility created by the international events which will give an excellent opportunity to create a good quality portfolio.