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