How double indexation increases return in FMP?

Finance minister Mr P.Chidambaram in one of the award function asked the recipient of the award "What is your wish list in this year's budget" and the recipient "he din want to pay more taxes" and the recipient is none other than India richest person Mr Mukesh Ambani. In return FM commented that "India is a country where a normal person as well as the richest person does not want to pay taxes".

If Mukesh Ambani himself is more conscious about paying taxes, aam aadmi like you and me should be trying to save taxes in a judicious manner. So lets see how we can reduce taxes on Fixed Maturity Plan by double indexation.

How is the profit taxed from debt mutual funds?

Debt mutual funds have a long term capital gain tax which is taxing the interest if the investment is held for more than a year. There are two methods of taxation.

1. 10% on the interest gained without indexation.

Taxable amount = Amount Returned - Amount Invested

2. 20% on the interest gained without indexation.

In the second gain, the taxable amount is calculated by

Taxable amount = Amount Returned – (Amount Invested * Inflation Index for Redemption financial Year/ Inflation Index for Investment financial Year)

Inflation index for every year is released by the govt.

Lets understand this concept with an example.

Assuming an FMP of 15 months returning 11% and Rs 10,000 is invested. Inflation index for 2006-2007 100 and inflation index for 2007-2008 is 105 and for 2008-2009 is 111. s Tax is calculated using indexation at the rate of 20%.

Scenario 1:

Amount invested in sep 2007.

Amount redeemed in Dec 2008 = Rs 11,000

Taxable Amount = 11000 - (10000 * (inflation index for 2008-2009 / inflation index for 2007-2008))

= 11000 - (10000 * 111/105)

= 11000 - 10571 = 430

Tax @ 20% = 20% of 430 = 86

Amount redeemed = 10914.

Scenario 2:

Amount invested in Mar 2007.

Amount redeemed in Dec 2008 = Rs 11,000

Taxable Amount = 11000 - (10000 * (inflation index for 2008-2009 / inflation index for 2006-2007))

= 11000 - (10000 * 111/100)

= 11000 - 11100 = -100

Net Loss = 100 and hence no tax.

Amount redeemed = 11000

So in this case we have totally avoided tax.


Hence while planning an FMP investment, we should plan it in such a way that it spans two financial years to get the advantage of double indexation.

Sensex may hit 10500 levels: Ramesh Damani

Ramesh Damani, a member of BSE, said that this is a rare moment and extraordinary time in the capital markets. He added that this crisis is a once in 100-year event. He feels Indian markets have not yet seen bear market bottom as yet and sees the market ranging between12,000 and 13,000 levels. He expects a huge slowdown in growth and sees the Sensex slipping to 10,500. 

Damani said, “Price corrections may be over in a few months but time corrections will not be regained.” He does not expect to see the Sensex at 20000 for a long time. 

Here is a verbatim transcript of the exclusive interview with Ramesh Damani on CNBC-TV18. Also watch the accompanying video.

Q: What do you expect to see now over the next few days given what has happened in the west?

A: This is like a one in fifty year event or once in a hundred year event almost. We are living through extraordinary times in capitalism since the Berlin Wall fell. Today, the market has been going down so fast that somewhere during the day we will see a point of maximum pessimism, but we probably aren’t at the final bottom in this bear market. Once the index has broken 12,500 it is not going to stop at 12,000. It is probably going to head significantly lower. In fact, the way to look at the market is that 12,500–13,000 is probably now the higher end of the range for our markets. So, we are in for a very tough time, and I will just quote you what Lenin used to say in 1920s that, “Capitalist will sell you that six foot of rope with which you will hang him.” Thus, that is pretty much what the Wall Street and all the central banks in the world have done and all the financial institutions have hung their own noose around themselves.

Q: How do you approach the panic this morning? Do you seek value right now, or do you say no we are going to get better prices the way things are going and that there is no hurry to just go out and buy stocks yet?

A: I am sure when everyone is selling one clearly wants to be the buyer. I am not sure whether one will make money over the next three weeks. If one goes through the cash section, there are companies trading at book value, cash value and asset values––a whole host of bargains are available not only in A group but also in B group. 

So one may cherry pick but he probably may not make money in the next three weeks. However, probably over the next 12 or 24-months, these investments will mature and do better. But having watched cash shares for the last two decades, I have never seen anything like this. It has just been a total disregard to volumes of 10,000 shares; stocks have gone down to around 10%. 

These are good legitimate companies, having good businesses with huge cash in the balance sheets, not leveraged. There is just an all round panic and rout in cash particularly. I think what we are now seeing is a rout coming into the A group. One should certainly step in and buy where one is convinced about it. 

Q: For a lot of people who watched bear markets in the past, the flow chart usually works with incessant price damage and then there is a period when the market does nothing. In that sense where do you think we are? Do you think this is going to be a much longer phase than many of us imagined in January?

A: I think so clearly. If one goes back and studies the history of bear markets, we are barely in the first five over of the game. Bear market requires time and price corrections; the price corrections will get over in the next few months but the time correction will not. There has been an entire generation of people on the Wall Street, for instance, when the Dow peaked at 1,000 in the 1960s, it did not see that new high on the Dow for a period of almost 18 years. People in Nikkei who saw the high in 1989 haven’t seen anywhere close to the highs. Hence, the great bull markets end in a flurry and then comes a new bull market. The greater the excesses that have been created in the past bull markets, the longer it takes for it to regain its highs. I think 20,000 is going to probably stand for a long time.

Q: Is there still a global situation as you read it, or as you indicated earlier do you think now the domestic infrastructure in terms of growth expectations, etc. will start coming apart a bit?

A: The point I am trying to make is we have moved from an economy that was globally very leveraged, where capital was easy, there was an idea, a project and particularly in emerging markets such as India, money was thrown at promoters. One had a case where one bet the balance sheets and his stock price went up 10-times. It was in a capital expansionary phase and people forgot to respect the capital. People forgot to respect return on capital assets. Hence, the market now would go from a global leveraged situation to a global de-leveraged situation, and the first wicket that will be knocked off to continue analogy is growth because capital is not available for expansion. They will be put on hold because as growth subsides all the subsidiary functions will be put on hold. So, we will see a huge slowdown in growth. The predictions of 7-8% Gross Domestic Product (GDP) growth probably will have to go slightly down even in cases like India. Once that growth goes down the Price-Earnings (P/E) will be knocked off which is probably happening in India at present. 

Thus, we are going to get through an environment, where if one gets a company which grows at 15–20% and is available at a P/E of 7–8 times, it will probably be a great investment to lock in. The arrears that company could grow at 35–40% are clearly behind us for the immediate future.

Q: Past bear markets have generally taken out 50% in some cases more. Do you think from 21,000 we could get whittle down to 10,000–10,500 Sensex? Is that conceivable according to you on current reckoning?

A: I think it is entirely conceivable. Markets can be overvalued for long periods of time; 10,000 might be an undervaluation watermark for the market. We could remain undervalued for a long period of time, especially, given the hit that people who have invested in equity in 2006-2007-2008 have taken. I am very certain that bear markets will end in a revulsion; they do not end in denial. A few weeks ago, most global players, a lot of local players were in a state of denial, it was an interruption, it was a correction that the bull market would continue on. The market has now decisively proved that we are in a bear market and bear markets take time. The one thing that bear markets require is not only price but the dimension of time. So it will take time. It is definitely conceivable to me that markets could remain undervalued now for a long period of time.  

Q: Adrian Mowat from JP Morgan made the point that any support will come in from domestic hands. Do you see that likely in our market because if the rout spreads to the A Group as you said, what will happen with the Domestic Institutional Investors (DIIs), mutual funds, etc.?

A: They have been great supports to the Indian market. They have been consistently buying in a very disciplined and logical manner. However, sometimes water just goes over the dam and one cannot hold it. The water has just rushed over it. There is very little one can do. It will find its own level. 

India needs to distinguish between what happens in the markets and what happens in the economy. I think as an economy we are underleveraged, we will plod along. We have our own strengths that we will play to. I think markets are going to take a shellacking because there could be periods when the economy continues to do fine, the stock markets do not do well. The great mistake people make is that they think those two are related but those are not related. There could be periods of time when the economy will grow at 6.5–7% and the market will not do anything. For example, China, which has been growing 8–10% for the last 10 years and yet the stock market has collapsed 60–70%. Thus, it is basically double from where it started. 

So there is no holy grail that says if GDP (gross domestic product) growth is 7% the markets will follow suit.

Q: You have been a believer in higher crude prices for a while now. Do you think there will be a period where everything in terms of asset classes underperforms and something like gold are the ones that stand tallest? 

A: There is a case for buying gold. However, one doesn’t want to put large percentage of portfolio in it because there is basically a problem storing it. It doesn’t pay the interest to dividends and is basically a very non-productive asset. But as an insurance cover, gold serves two purposes. In case of inflation, it acts as a store of value and then against insurance. The kind of damage one has seen in paper assets means that we will move to harder assets which they know the value of and a common consensus historically has been gold. 

Gold is now trading at almost a 30-year high. Having tested that high it retraced back 20% and now it has gone back to that high. If gold can stay above USD 950–1,000 per ounce, we could see a very sharp upmove in gold. So yes, there is a case for putting maybe a few percentage of one’s portfolio into gold which is basically a non-productive investment. However, in uncertain times like this, gold will often be viewed as a safe haven. So, it does make sense to be a part of one’s portfolio; not maybe a major chunk but maybe as an insurance. 

Marc Faber and a lot of other analysts on the Wall Street have pointed out the ratio between the Dow and the gold, which in 1979, when gold was USD 1,000 per ounce, was 1:1. They are saying that if we move again, the ratio that is now is maybe 10:1, may be 5:5. Subsequently, there could be a sharp fall in equities and a rise in gold. These are theories, I am not saying this can happen but clearly the market has fallen out of love with paper assets. In that case they will move towards gold. 

Q: You have been bearish for sometime now and we are nine-months into this bear market. What’s your sense of how long we have got to crutch along in this bear market?

A: My sense is that it would take time––it might take two to three years before we actually get out of this bear market because bull markets are driven on liquidity. All the analysts and all the papers you read, the inter-bank market is basically frozen in America. Banks are lending to each other.  

Everything works on trust so when we go to restaurants, for instance, and we order a meal, the owner assumes that we will pay him at the end of the meal. It operates on trust. We clearly can’t have a contract for that.

Similarly, the inter-bank market also works on trust, and now, because of these failures, defaults and bankruptcy, the trust is completely vanished. So unless the US goes back and reintroduces the liquidity of the market, introducing a bailout package, it is going to be a long time when people will fund any projects. So people in mature markets, having got such a shellacking at home, will now come and invest in emerging markets which is even more riskier. Conventionally speaking, it seems illogical to me and if capital is not available there will be a problem in growth.

http://www.moneycontrol.com/india/news/market-outlook/sensex-may-hit-10500-levels-ramesh-damani/358913

UTI MF to open 200 branches across India by next year

UTI Mutual Fund today said it is set to open around 200 branches in the country by March next year.

"We have opened at UFC in Jammu to focus on service sector in Jammu and Kashmir, which has a great untapped potential. We hope to do very well in terms of business," Sinha told reporters here.

"Our distribution expansion is in line with our strategy of making our products and services easily accessible to our investors. It is our endeavour to enable investors across the country to share the benefits of growth of the Indian economy," Sinha said.

This fiscal UTI Mutual Fund proposes to further expand its distribution network from 97 UTI Financial centres to 200 centres covering around 422 districts," he said.

New UTI Financial Centre will cover Anantnag, Baramulla, Doda, Jammu, Kathua, Kupwara, Kargil, Ladakh, Poonch, Pulwama, Rajouri, Srinagar and Udhampur districts of J&K, he said.

UTI Mutual Fund is SEBI-registered, and its sponsors are State Bank of India, Punjab National Bank, Bank of Baroda and Life Insurance Corporation of India.

UTI Mutual Fund has assets under management (average) of Rs 46,947.32 crore and investor accounts of over 9.50 million under its 95 domestic schemes (as of August 31, 2008).

Source: http://www.outlookindia.com/pti_news.asp?id=612888

Religare Aegon gets nod to start mutual fund business

Religare Aegon AMC, a joint venture between Dutch insurer Aegon and Indian financial services firm Religare Enterprises has received the Indian market regulator's nod to start fund operations in the country, the company announced Thursday.

Religare Aegon AMC, a joint venture between Dutch insurer Aegon and Indian financial services firm Religare Enterprises has received the Indian market regulator's nod to start fund operations in the country, the company announced Thursday.

'The company has got an approval from Securities and Exchange Board of India (SEBI) to launch mutual fund business in the country. The country is looking at launching its first products by November this year for the Indian retail investor,' the company said in a regulatory statement.

'We will be shortly filing for both debt and equity products with the regulator,' Saurabh Nanavati, Religare Aegon AMC said in the statement. 

'The AMC (asset management company) will have close to 15 operational branches in over 25 cities by March 29,' Nanavati said.

Source: http://www.indiaprwire.com/businessnews/20080925/33714.ht

Curtains for 'SIP plus insurance'

Recent media reports suggest that the ‘SIP (systematic investment plan) plus insurance’ phenomenon will shortly come to an end. Leading life insurance companies under the aegis of an industry association have taken a decision to that effect. An eminent personality from the insurance industry was quoted stating that insurers would not offer insurance cover on savings and investment products offered by competing entities. The statement should be read with reference to Asset Management Companies (AMCs) managing mutual funds. 

Ever since unit linked insurance plans – ULIPs emerged as ‘bread and butter’ offerings of life insurance companies, fund houses and life insurers started vying for the same space. By offering insurance plus investments under a single product, insurance companies (in some ways) introduced a product that competed with mutual funds. Furthermore, not too long ago, media reports also suggested that AMCs approached the market regulator i.e. the Securities and Exchange Board of India seeking permission to sell insurance products to their investors. Perhaps the decision made by life insurance companies was the culmination of all of the above.

Whatever might have prompted the move, we believe this is a welcome step from the investor’s perspective. We have never been enthused by the ‘SIP plus insurance’ offerings. There are several reasons for the same. 

First, by opting for a mutual fund, simply because it offers an insurance cover as an add-on benefit, investors run the risk of getting invested in a fund that may not be right for them. Typically, a fund should find place in an investor’s portfolio for its investment proposition and its ability to help the investor achieve his long-term financial goals. Investing in a fund simply because of the add-on insurance benefit, would certainly not qualify as a good reason for getting invested. 

Second, in the ‘SIP plus insurance’ offerings, the insurance cover is linked to the SIP amount and its tenure. This is certainly no way to buy insurance. Ideally, the insurance cover should be sufficient to indemnify one’s nominees against any financial loss arising on account of the individual meeting with an eventuality. Hence, the concept of Human Life Value must be put into play. By linking the insurance cover to the SIP amount and tenure, the offerings often deprive investors of the opportunity to be adequately insured.

Again, the definition of insurance in the ‘SIP plus insurance’ offerings needs to be looked into. In some cases, the insurance implies the unpaid SIPs i.e. if the eventuality occurs, the SIP installments that haven’t been invested as yet, will be invested on behalf of the nominee and on maturity, the requisite sum (based on market price) will be remitted to him. This would barely qualify as an insurance cover. 

In cases where there is an insurance cover separate from the unpaid SIP, it is linked to the SIP amount. That the insurance cover is often capped (at Rs 1 m or Rs 2 m) doesn’t help. The situation is further complicated by the fact that the insurance cover is only available upto a certain age or the tenure of the SIP; based on the facts of each case, the investor might require an insurance cover over a longer tenure. 

Simply put, in several cases, the ‘SIP plus insurance’ schemes were guilty of misleading investors to believe that they were adequately insured. 

Finally, investment advisors had a gala time peddling the aforementioned schemes under the garb of financial planning. The mantra was, by combining insurance and investment under a single avenue, investors’ financial planning needs were being taken care of. Nothing could be farther from the truth. Any financial planner worth his salt will vouch for the fact that there is much more to financial planning than just investing in an investment plus insurance avenue. 

In conclusion, we believe that investors would do well to address their insurance and investment needs separately. This will ensure that neither takes precedence over the other and in the process, investors give adequate weightage to both objectives. As mentioned earlier, irrespective of the reasons for the curtains being drawn on the ‘SIP plus insurance’ phenomenon, it is a positive step for investors.

Source: http://personalfn.com/detailpf.asp?date=09/23/2008&story=5

Indian investors need not rush for cover

Should investors in Indian mutual funds or insurance companies sponsored by the troubled US institutions bail out? Indications are that they have no reason to panic and liquidate investments in a hurry.

A fresh tidal wave of financial sector collapses in the US has halted the nascent recovery in Indian stocks in its tracks. Even as tumbling commodity prices have defused the inflation threat, stock market investors have a fresh set of worries to grapple with. 

Should they brace for a deluge of selling by ailing US institutions? Should they rethink mutual fund and insurance investments managed by foreign institutions? How would fund flows into the Indian markets be impacted by the credit crunch? Not all of these answers are readily available, but let’s look at the few that are.

In the firing line 

First, will a deluge of ‘sell’ orders from the beleaguered American institutions — Lehman Brothers, Merrill Lynch and AIG, trigger a collapse in Indian stocks? As of now, concerns on this score seem to be overdone. 

Of the above institutions that have admitted to financial troubles, only the Lehman group might have an immediate need to resort to a distress sale of its India positions, as both Merrill Lynch (bought over by the Bank of America) and AIG (handed a lifeline by the US Fed), have averted a crisis for now. 

Lehman Brothers’ holdings in Indian stocks (including its offshore vehicles) amounted to about Rs 1,000 crore as of June 30, a modest number in the context of the Indian market. With about a third of this holding already offloaded in August, a residual portfolio of about Rs 600 crore (or less) may remain. A takeover of Lehman’s Asia operations by Barclay’s, being considered now, may also obviate the need for any further selling in these stocks. 

Shareholding patterns as of June show that Lehman’s holdings were concentrated mainly in mid- and small-cap stocks. 

Therefore, there may be no material threat to overall market, should these holdings be offloaded in a hurry. Though “Lehman” stocks have already been severely punished over the past week, investors should still tread with caution on some stocks featuring significant ‘Lehman’ stakes of 3 per cent or more (as of June). 

These are KPIT Cummins, Fedders Lloyd, Orbit Corporation, Spice Mobiles, West Coast Paper, Northgate Technologies, Emkay Global, Pioneer Embroideries and Development Credit Bank. 

Though there is little risk of selling in ‘Lehman’ stocks destabilising the markets, paring of India holdings by FIIs who have a larger India presence, such as Merrill Lynch or Morgan Stanley, does have the potential to undermine markets. Investors need to be alive to this possibility, given the growing ranks of ailing institutions hit by the credit crisis. 

When sponsors fail


Should investors in Indian mutual funds or insurance companies sponsored by the troubled US institutions exit? Retail investors may hold schemes managed by DSP Merrill Lynch Mutual Fund or AIG Mutual Fund. This apart, they may hold insurance policies in Tata-AIG, which has a presence both in the life and general insurance business. Here, again, investors have no reason to panic or liquidate existing investments in a hurry. 

To start with, investors need to note that the assets managed by a mutual fund belong to the unitholders and not to the sponsoring institution. In the event of a failure of the sponsor, it is the capital infusion made by the sponsor to the mutual fund and not the unitholders’ money, that will be at immediate risk. 

Therefore there is little risk of the investor assets being appropriated, in the case of AIG or Merrill Lynch running into financial trouble. Having said this, the key concern for investors in the above entities would arise from any accelerated redemptions in the funds and any change in ownership or fund management of these firms, due to global restructuring of ownership stakes. 

DSP Merrill Lynch MF: In the case of DSP Merrill Lynch Mutual Fund, the 40 per cent stake in the mutual fund held directly by Merrill Lynch is already set to be transferred to BlackRock Inc — an asset management subsidiary of the group (the move is pending SEBI approval). 

Once the transfer is approved, BlackRock and not Merrill Lynch, will be a 40 per cent stakeholder in the domestic fund house (60 per cent still to be held by the DSP group). Investors should note that BlackRock Inc is not entirely immune to Merrill Lynch’s troubles, as Merrill Lynch holds a 49 per cent equity stake in the firm at the global level.

However, Bank of America’s buy-out of Merrill Lynch’s assets earlier this week includes the BlackRock business. 

Initial statements from Bank of America suggest that it views BlackRock Inc, which is one of the world’s largest asset managers ($1.43 trillion in assets), as one of the more promising divisions of Merrill Lynch, alleviating any immediate worries about this division being put on the block. 

All this suggests that investors in DSP Merrill Lynch Mutual Fund may have no reason to exit their fund holdings at this juncture. 

DSPML Mutual Fund manages some of the better performing equity funds in India with a consistent long-term return record; and there are not too many alternatives to these funds at this juncture. 

AIG: Uncertainties about ownership will continue in the case of American insurer- AIG; though an immediate crisis has been averted through an $85-billion loan from the US Fed. AIG’s top management has been replaced, with the Fed taking a 79.9 per cent equity stake in the US insurer. 

Investors in the equity schemes of AIG Mutual Fund may have fewer reasons to hold on. The fund has a relatively short performance record in the Indian market, its equity funds have not turned in an impressive performance so far and there is now the uncertainty about a change in ownership as well. This suggests that it may be prudent for investors who hold a large exposure to AIG Mutual Fund’s equity schemes to consider alternatives, as a de-risking measure. 

As to the insurance business, policyholders in Tata AIG have been assured by the firm that all payment obligations will be honoured. The firm’s strong solvency margins (well above IRDA norms) and the Tata group’s 74 per cent stake in the insurance venture also provide a measure of comfort. 

However, investors in all the above cases should keep a close watch for any changes in the ownership structure of the firms where they have invested. Fresh investments should be held off until clarity on this front emerges.

Source: http://www.thehindubusinessline.com/iw/2008/09/21/stories/2008092150400700.htm

Indian investors of Morgan Stanley AMC safe

Morgan Stanley`s conversion from an investment bank to a retail bank will not impact the performance of its Indian mutual fund subsidiary, Morgan Stanley Asset Management Company (AMC), reports Economic Times. 

The conversion would not have impact on its fortune but will provide stability to the company. Also since the Indian AMC is registered in India and regulated by Securities Exchange Board of India (SEBI), investor`s money is safe. 

The fund currently handles two funds of which the major one is a close-ended equity diversified fund, launched in 1994 with a size of Rs 28.80 billion while the other one is an open-ended diversified equity fund, with a size of only Rs 1.04 billion.

Source: http://www.myiris.com/newsCentre/storyShow.php?fileR=20080924130805198&dir=2008/09/24&secID=mf&code1=&code=

BlackRock acquires 40% stake in DSP ML Fund Managers

BlackRock, a New York-based asset management company, which is the largest quoted asset management company in the world, managing assets in excess of USD 1.3 trillion will acquire a 40% stake in DSP Merrill Lynch Fund Managers, a leading Mutual Fund company in India, reports Business Line. 

After the acquisition DSP Merrill Lynch Fund Managers will be renamed as `DSP BlackRock Investment Managers`, while DSP Merrill Lynch Mutual Fund will be renamed, `DSP BlackRock Mutual Fund`.

DSP Merrill Lynch Fund Managers is a joint venture between DSP Group (owned by Hemendra Kothari) which owns 60% stake in the asset management company and Merrill Lynch.

Merrill Lynch had combined its investment management business Merrill Lynch Investment Managers with BlackRock in exchange for a 49% economic stake in the merged enterprise to form a new entity which operates under the BlackRock brand.

UTI Mutual Fund to continue selling ULIP

UTI Mutual Fund today said it will continue selling Unit Linked Insurance Product (ULIP) to its customers even though there is no clarity on the issue of fund houses selling such products. "We have been selling the ULIP plan to the customers of the Balance Fund since 1971 and would continue to do so," said UTI Mutual Fund Chief Marketing Officer Jaideep Bhattacharya. 

UTI sells ULIP plan of Life Insurance Corporation which happens to be one of the sponsors of the fund house. 
The product has been sold to about 5 lakh customers and has asset size of about Rs 3,100 crore, he said. 
It is one of the low cost product available in the market, he said, adding the cost is as low as 3 per cent as compared to up to 62 per cent in the market. In under-insured market like India, Bhattacharya said, there is need for collaboration with insurers to incease the penetration. 

However, the Life Insurance Council, which is association of life insurance companies, recently decided against offering insurance covers to fresh unit-linked products sold by mutual funds from October 1. It was decided that insurer will not sell group covers to mutual funds that bundle life insurance with units and thereby create competition for ULIPs. 

Regulators including SEBI and IRDA have not come out with the guideline on the issue. Until it is clarified, the confusion would prevail, an industry observer said.

Source: http://economictimes.indiatimes.com/Personal_Finance/UTI_MF_to_continue_selling_ULIP/articleshow/3500142.cms

Forget sectors, you can bet on thematic funds

The unwinding of leveraged positions in Indian equities by foreign institutions, in the wake of the crisis in the US financial sector, is likely to persist over the next couple of months, said UTI Mutual Fund’s senior fund manager, Sanjay Dongre. In an interview with ET, he discusses about the outlook for Indian equities, which, according to him, has to consolidate before the next rally. 

What are the implications of the turmoil in the US financial sector on foreign fund flows and economy? 

The implications are clearly negative. In the past 3-5 years, FIIs have invested in a large chunk of money in our country and some of them happen to be these financial institutions and investment banks. A lot of liquidity that flowed into equity markets in recent years was leveraged money. If these institutions are going through a painful period, they will look at garnering liquidity from the rest of the world. 

Accordingly, a lot of deleveraging will happen, which will result in global liquidity shrinking. In this situation, you cannot expect them to invest money in our economy. On the contrary, they are likely to take out more money from our markets and that is what we have been witnessing in the past 3-4 months. And I see this trend continuing for the next couple of months. To that extent, it will have an impact on the economy and stock markets. 

So, can we assume that the market is still some distance away from the bottom? Do you have any levels in mind? 

I think there would be still some consolidation left in the market because the pain the global financial institutions are going through...so we cannot expect much of inflows from them in the near-term. Also, it is too early to talk about the business plans of these financial institutions, especially when there are a lot of mergers, bankruptcies, and liquidations taking place. 

For instance, when somebody takes over a troubled investment bank, which has a lot of investments in India, it can happen that the acquirer does not like these businesses and can just ask the target company to liquidate everything and get out of the market. These uncertainties exist, so the market has to consolidate for some more time before saying firmly that a bottom has been formed. 

It is usually said that retail investors are the last to enter a bull market and last to exit a bear market. So, would you agree that, when retail investors exit the market in a big way, we would have reached the bottom? 

All the investment gurus have said that bull markets are born out of despair or panic and they die out in a euphoric situation. Retail investors try to move along with the sentiment in the market. So, when there is despair in the market, though it may be the start of a bull market, the retail investor tends to get out as the sentiment is bad. That is where they go wrong. So, I would partly agree on this point, but it needs to be noted that this time, despite the worsening sentiment, retail investors have not exited the market in a big way. 

What is your outlook on corporate earnings growth? What are your major concerns over the quality of earnings growth over the next 3-4 quarters? 

Though Indian companies might have sales growth of around 20% this year, which is lower than the previous years, earnings growth are likely to be only in the high single digits. This is because Indian companies have been facing margin pressure because of higher raw material and interest costs. Since commodity prices are easing, there might be some relief on raw material prices. But, one aspect, which concerns me more at least in the short-term, is the exposure of corporates to derivatives. The turmoil in the US will have a lot of negative impact on these derivative exposures and will affect the companies’ other income. 

What investment strategy would you recommend for retail investors? What are the sectors you would recommend as of now? 

Retail investors should not invest in sector funds... they should focus on thematic or, even better, diversified funds. If there was one sector, which would take the lead when the market rallies, my guess would be the banking and financial sector. I am taking this view, not because these shares have been beaten down the most in the recent months, but that once inflation and interest rates ease by next year, this sector will stand to benefit the most.

Source:http://economictimes.indiatimes.com/Interview Sanjay_Dongre_Senior_fund_manager_UTI_Mutual_Fund/articleshow/3515639.cms

Principal Mutual Fund launches Emerging Bluechip Fund

Principal Mutual Fund on Monday launched the Principal Emerging Bluechip Fund, an open ended equity scheme, which will predominantly invest in small and mid cap companies to tap high growth opportunities offered by such stocks. 

The fund opens for subscription on September 22 and will close on October 10. This fund will be benchmarked to the CNX Midcap Index. The scheme will offer both growth option and dividend option. For the purpose of maintaining liquidity or tap market opportunities the fund’s portfolio may also include large cap stocks. 

The subscription for the scheme shall be allowed during the NFO at Rs 10 per unit and thereafter at NAV based prices upon re-opening for subscription. There is no minimum redemption amount. The minimum application amount is Rs. 5,000. 

There is an entry load of 2.25 per cent, if investment is less than Rs 5 crore. However, there is no entry load for investment of Rs 5 crores and above, as well as for direct investments. There is an exit load of 2.25 per cent if redeemed before one year from the date of allotment. 

Asset allocation pattern is as follows: equity & equity related instruments of mid cap companies 65 per cent - 95 per cent, equity & equity related instruments of small cap companies 5 per cent - 15 per cent, equity & equity related instruments of companies other than mid & small cap companies - 0 per cent-30 per cent. 

The AMC reserves the right to invest in equity derivatives, not exceeding 50 per cent of the net assets and in foreign securities and derivatives subject to certain statutory regulations. 

Said Rajat Jain, chief investment officer, Principal Mutual Fund, “For a long term investor, mid and small cap stocks are a good bet as they offer higher growth opportunity. Mid caps can be volatile; however volatility can be neutralised by a longer investment horizon without significantly impacting the return expectations. In the current scenario quality mid caps are available at reasonable valuations even after factoring in the current volatility in the business environment and we intend to capitalise on such opportunities through this fund.” 

The fund will be managed by Pankaj Tibrewal.

How to read a mutual fund factsheet

Most asset management companies usually publish monthly reports (also called fact sheets) that contain critical information related to the portfolios, at times a roundup on debt and equity markets from the fund manager and performance details of the schemes managed by the AMC.

The idea is to help investors (both existing and potential) to track the performance of the mutual fund schemes so as to take an informed decision. To that end, factsheets serve as an investor’s guide.

To be sure, factsheets were always meant to be the investor’s guide. However, in many cases, they are not upto the mark leaving much scope for improvement and even standardisation. We highlight the most critical reference points for the uninformed investor based on data that is more or less standardised across AMCs.

For ease of reference, we have divided the article in two parts, the first part discusses how to assess the equity fund factsheet and the second part discusses the debt fund factsheet.

A) Equity fund factsheets

Stock allocation

Thankfully, factsheets of most AMCs highlight the portfolio composition well enough, although there is scope for standardisation. For an investor who wants to invest in equity funds, the factsheet can offer some critical insight into the fund management style/approach.

To begin with, consider the top 10 stocks in the portfolio to determine the level of diversification. In our view, a diversified equity fund should have no more than 40 per cent of net assets in the top 10 stocks. This should help the fund negotiate volatility more effectively than its concentrated peers. For instance, Sundaram BNP Paribas Growth Fund is a fund we like for its disciplined investment approach (no more than 5 per cent of assets in a single stock) that ensures that its top 10 stocks are well-diversified.

Sometimes, a fund could be well-diversified across the top 10 stocks, but investments in a single stock could be so high so as to offset an otherwise diversified portfolio. A case in point is HDFC Capital Builder (a well-managed value fund), which was done in during the market crash in May last year due to unduly high investments in a single stock (Hindustan Zinc).

Also look at the fund’s portfolio over several months to get a sense of the consistency in the fund manager’s stock picks. Too much churn in the stock picks (new names every other month) indicates that the fund manager could be punting rather than investing, thereby adding to the trading cost, which ultimately eats into the returns.

Sectoral allocation

Just as you evaluate the stock allocation, it is important to consider the sectoral allocation of the equity fund. Diversified equity funds should be well-diversified across stocks and sectors. A fund could be well-diversified across stocks, but may pay the price for not diversifying well enough across sectors.

For instance, Sundaram Growth Fund, a fund we admire for superior diversification across stocks, learnt the hard way during the last market slide that diversification across stocks is as important as diversification across sectors. The fund had unduly high investments in infrastructure-related sectors.

The crash proved particularly harsh for the fund, as it had failed to diversify across other sectors. So like stocks, being diversified across sectors is just as important; unfortunately, it often takes a sharp dip in the stock markets to highlight the importance.

However, funds like HSBC Equity Fund, which pursue the top down investment approach, have concentrated sectoral allocations, which suit their investment style. These funds need to be evaluated differently from funds that pursue the bottom up investment style.

While calculating the sectoral allocation, the investor must combine like-natured sectors to understand the level of sectoral diversification. For instance, most equity funds list Auto and Ancillaries sectors distinctly; given the similar nature of these sectors, their allocation must be combined.

Another problem relates to the categorisation of companies across sectors. Different equity funds categorise the same company across different sectors. There is no standardisation. While AMFI (Association of Mutual Funds of India) has introduced certain standardisation processes in this regard, the same is not adhered to across the industry.

Asset allocation

Stocks and sectors apart, there is another detail that must catch your attention and that is the asset allocation. The asset allocation table tells you how the fund’s net assets are diversified across stocks, current assets/cash. An equity fund’s allocation to cash should be noted.

Among other reasons, this could be because the fund manager is not comfortable with market levels at that point in time. This fact can be established easily by browsing through the previous month’s factsheets. If the fund manager has been in cash for some time, it means he does not find enough stock-picking opportunities at existing levels.

Being in cash could work in the fund manager’s favour if the market crashes, like it did for Sundaram BNP Paribas Select Midcap May 2006. But a higher cash allocation works against the fund during a rising market, when being fully invested is what counts. Sundaram BNP Paribas Select Midcap has also witnessed this scenario, which explains its relative underperformance over the last few months.

Other data points

In addition to the points listed above, there are some data points that must be marked by the investor.

Portfolio Turnover Ratio

Put simply, this ratio tells the investor how much churn the portfolio has witnessed. This ratio is calculated based on the number of shares bought and sold by the equity fund over the review period. A high Turnover Ratio (vis-�-vis peers or other equity funds from the same fund house) indicates that the portfolio has seen above-average churn.

A high churn by itself does not necessarily imply that the fund is good or bad, however, it must be in line with the fund’s investment philosophy. A growth fund can have a high turnover ratio (although that’s not necessarily a good thing as it adds to the trading costs and therefore eats into your returns).

However, a value fund should typically have a lower churn as the fund manager would usually be investing in the stocks over the long term.

Important as it is, the Portfolio Turnover Ratio is yet to be given due importance by the fund houses (maybe they are afraid of ‘exposing’ their fund managers). How else, do you explain the fact that fund houses either don’t reveal the Portfolio Turnover Ratios or when they do reveal them, it is not standardised thereby robbing investors of the opportunity to compare them across fund houses.

Expense Ratio

This ratio underscores how expensive your equity fund really is. A high Expense Ratio (regulations cap this at 2.50% for equity and debt funds) indicates that your mutual fund investment is expensive. As per regulations, fund management expenses, which form the largest chunk of the expense ratio, must decline with a rise in Net Assets. So larger equity have more scope to reduce their Expense Ratios.

Again, fund houses are not very enthusiastic about sharing this important detail with investors. However, they do declare this ratio every 6 months, which is only because regulations demand that they do so.

Fund manager information

It always helps to know who is managing your fund. Not that we have any particular fund manager in mind, rather we recommend that investors do not get infatuated by any fund manager in particular and look for investment teams instead. Over the long-term, it pays to have your money managed by a group of fund managers, rather than one star fund manager, who could quit the fund house any time and take the performance with him.

So keep an eye on the fund manager details, typically, there should not be many external changes in the fund management team. When the same names manage your money, over a period of time there is stability in the fund management process. Thankfully for investors, majority of the fund houses do provide the fund manager details.

B) Debt Fund Factsheets

Like their equity fund counterparts, debt fund factsheets offer enough insight to the debt fund investor. For this, investors have to keep an eye on at least three aspects:

Average Maturity

For debt fund investors, this is perhaps the most significant detail to look out for in a debt fund factsheet. Since the Average Maturity of a portfolio for a particular month in isolation does not tell the investor much, he must go back several months to see how the Average Maturity of the portfolio has moved in order to understand the fund manager’s view on debt markets.

To give investors an idea - if the fund manager has been maintaining a higher Average Maturity for some time, it means that he expects interest rates to fall over time. On the other hand, if the Average Maturity of the portfolio is lower, it means that the fund manager is cautious about interest rates. Ideally, investors must read up on peer factsheets to understand the consensus on interest rates and if your fund manager has a differing view, you must try to understand why.

Credit Rating Profile

Debt funds invest in securities with varying credit ratings. In the Indian context, most debt funds do not take on undue credit risk - i.e. they invest primarily in securities that are highly rated. Investors should mark the credit rating profile of the debt fund. A large chunk in AAA/Sovereign paper (which is the highest rating) implies that the fund is taking lower credit risk. On the other hand, a higher allocation to AA+/AA paper underlines the fact that the fund manager is taking credit risk.

Asset Allocation

Like with equity funds, debt fund investors must consider the asset allocation of the fund under review. This should help him understand the investment approach of the fund manager and the risk he is taking. Debt funds invest mainly in corporate bonds and government securities, both of which carry varying risk. Investors must make a note of the assets invested across both these segments.

Then there are floating rate funds that invest predominantly in floating rate paper; in practice however, many are predominantly invested in cash/current assets for lack of adequate floating rate instruments.

Likewise, monthly income plans invest a portion of assets in equities (the maximum limit on which is predetermined), investors must check the equity allocation over the last several months to understand the kind of risk the fund manager is taking (on the equity side) and whether he is adhering to the ceiling on equity investments.

Taurus mutual Fund has appointed Prasanna Pathak as equity fund manager

Taurus MF appoints new equity fund manager

Taurus mutual Fund has appointed Prasanna Pathak as equity fund manager, as part of its expansion plan to strengthen its presence in the domestic mutual funds industry. 
Prasanna Pathak is an B.Tech (Chemical Engg.) from LIT, Nagpur and an MBA from S.P. Jain Institute of Management, Mumbai. He brings with him over 6 years of experience. He began his career with Hindustan Lever Limited and was posted in Bangalore for two years. He joined UTI AMC in May 2004 as an Asst. Fund Manager -Fixed Income. Subsequently he moved into Equity Research and then into Fund Management -Equities as an Asst. Fund Manager. 

He was involved in managing a total corpus of around Rs. 2000 crore including Funds like UTI Index Select Fund, UTI Service Sector Fund, UTI Banking Fund, UTI Energy Sector Fund & UTI Master Growth Fund.

Sanjay Sinha Appointed as the Chief Executive Officer of DBS Cholamandalam AMC

DBS Cholamandalam Asset Management Limited (DCAM) today announced that Sanjay Sinha has been appointed as the new CEO of the company.

Sanjay Sinha, 43, was the Chief Investment Officer of SBI Funds Management managing almost Rs 35,000 cr of assets in debt, equity, money-market and off-shore funds. He was earlier with UTI as Vice President and senior fund manager managing nine equity schemes. Sanjay holds an Honors degree in Economics and is a Post Graduate from IIM Kolkata.

Over a career spanning over nineteen years, all of it in Mutual Funds, Sanjay has actively managed every aspect of the business – from product design, sales and marketing, investor servicing to managing a wide variety of funds. One or more of the funds he managed have won performance awards every year since 2003, with as many as 13 awards in 2007 itself.

Welcoming him, Mr M A Alagappan, Chairman of Cholamandalam DBS and of the Murugappa Corporate Board, said: "Sanjay brings with him an unparalleled track record in the industry. He joins us at a time when both the partners, Murugappa Group and DBS, are keen to quickly re-establish the asset management business in a path of sustained growth. Sanjay's in-depth experience and widely recognized capabilities will be of immense value as he leads our efforts to achieve this." 

Sanjay Sinha said: "After almost two decades in some of India's largest organizations, I have always wanted to take on the challenge of building an institution. DBS Cholamandalam has provided me an ideal opportunity to do just that. I am delighted and excited at this prospect". He added, "The mutual fund industry is extremely competitive. I hope to be able to leverage the existing strengths of the company while rapidly scaling up new competencies required to significantly add value to investors."

DBS Cholamandalam Asset Management Limited

DBS Cholamandalam Asset Management Limited (DCAM), a subsidiary of Cholamandalam DBS Finance Limited, a joint venture between the Murugappa Group and DBS of Singapore, is the investment Manager of DBS Chola Mutual Fund. Known for its prudent and disciplined investment philosophy, DCAM offers products across asset classes in equity, debt and money market. Within each asset class, the funds adhere to distinct investment styles, offering investors options to build a portfolio that best suits their goals and objectives.

Cholamandalam DBS Finance Limited

Cholamandalam DBS Finance Ltd., a joint venture between the Murugappa Group and DBS of Singapore. The Company, along with its subsidiaries and affiliates offers individual and institutional customers a range of financial services - personal loan, vehicle finance, home equity loan, capital market finance, corporate finance, mutual funds, securities broking and distribution of investment and insurance products. 

DBS

Headquartered in Singapore, DBS and is one of the largest financial services group in Asia. The largest bank in Singapore and the fifth largest banking group in Hong Kong as measured by assets, DBS has leading positions in consumer banking, treasury and markets, asset management, securities brokerage, equity and debt fund raising. Beyond the anchor markets of Singapore and Hong Kong, DBS serves corporate, institutional and retail customers through its operations in Thailand, Malaysia, Indonesia, India and The Philippines. In China, the Bank has branches and representative offices in Shanghai, Beijing, Guangzhou, Shenzhen, Fuzhou, Tianjin, Dongguan and Hangzhou. The Bank's credit ratings are one of the highest among banks competing in the Asia-Pacific region, and the highest among banks in Singapore.

About the Murugappa Group

Headquartered in Chennai, the Rs.9582 Crore (USD 2.4 billion) Murugappa Group is India’s leading business conglomerate. Market leaders in diverse areas of business including Engineering, Abrasives, Finance, General Insurance, Cycles, Sugar, Farm Inputs, Fertilizers, Plantations, Bio-products and Nutraceuticals, its 29 limited companies have manufacturing facilities spread across 13 states in India. The organisation fosters an environment of professionalism and has a workforce of over 32,000 employees. The Group which has forged strong joint venture alliances with leading international companies like DBS Bank, Mitsui Sumitomo, Cargill, China Engineering & Expoloration Bureau and Groupe Chimique Tunisien, has consolidated its status as one of the fastest growing diversified business houses in India.

Bank of America sees growth opportunities in India

Bank of America on Monday said that its 50-billion dollar acquisition of Merrill Lynch would provide it with significant growth opportunities in India. 

In an investor presentation webcast to discuss the deal, Bank of America Chairman and CEO Ken Lewis and Merrill Lynch chief John Thian said Merrill Lynch has been focusing on growth in India and the deal would result in “significant growth opportunities” in wealth management and investments businesses in the country.

Merrill Lynch has been the market leader in India with full local capabilities and there has been a significant expansion since increasing stake in DSP Merrill Lynch, the Indian entity, to 90 per cent, they said.

While Merrill Lynch has a notable presence in India, particularly in mutual fund and investment banking segments, BofA has also invested in the country as an emerging market. Bank of America has five branches in India — Mumbai, Delhi, Kolkata, Chennai and Bangalore.

Bank of America has said its Indian banking operations have consistently delivering superior returns year after year. Its revenue in its Indian operations rose 30 per cent to Rs 861.7 crore and profit after tax rose 56 per cent to Rs 305.2 crore for the year ended 31st March, 2008.

In October 2007, Bank of America made a capital injection of Rs 328.2 crore into its India operations, boosting the bank’s capital base and strengthening its capital adequacy ratio.

It also owns a subsidiary in India called Bank of America Securities India Pvt Ltd, which is engaged in underwriting, dealing and trading of corporate fixed income securities and related capital market activities.

On an aggregate basis, the bank’s India business reported a total revenue of Rs 889.9 crore in year ended March, an increase of 30 per cent over the previous year, and a net profit of Rs 323.1 crore at a growth rate of 58 per cent.

During his India visit earlier in May this year, Merrill Lynch CEO John Thain had said that India was the most attractive place for investments. 

“When I look around the world where there are great growth opportunities, no place is better than India right now,” he had said.

Globally, the deal is expected to result into thousands of job cuts, but the industry experts said that layoffs could be minimal in India as the two entities are mostly active in separate businesses in the country.

While, Bank of America’s mainstay is banking business and corporate fixed income securities segment, that for Merrill Lynch include mutual fund, equity market investment banking and wealth management businesses.

DSP Merrill Lynch is among India’s leading investment banking and wealth management companies. 

Kothari family- promoted DSP and Merrill Lynch have had a joint venture relationship since 1995 and in late 2005 Merrill Lynch announced raising its stake from 40 per cent to 90 per cent.

However, DSPML Fund Managers, a wholly-owned asset management arm of DSP Merrill Lynch, had continued to be operated as a venture jointly owned by DSP Merrill Lynch with 40 per cent and Kothari and related entities with 60 per cent.

Earlier this year, DSP-ML decided to rename the mutual fund entity as DSP BlackRock MF after BlackRock Inc, the top global asset management firm, acquired a 40 per cent stake in it as part of a global deal with Merrill Lynch.

Mohit Sachdev appointed as Chief Marketing Officer of DBS Chola Amc

DBS Cholamandalam Asset Management Limited (DCAM) announced that Mohit Sachdev has joined the company as Chief Marketing Officer.

Mohit Sachdev, 42, is a B.Tech from IIT Delhi and PGDBM from IIM Bangalore. He was earlier with UTI as President looking after Institutional Business. In his nineteen years of experience in financial services, he has dealt closely with changing debt and equity markets, using his knowledge of markets to guide customers on the right approach to their investments.

Welcoming him on board Mr. N Srinivasan, Director Finance on the Murugappa Corporate Board and Lead Director for the Asset Management Business said, "The AMC has aggressive plans for growth. We are delighted to have Mohit with us to lead the sales and marketing initiatives. His vast experience and insights of the mutual fund markets will be an asset to the company".

Commenting on his appointment Mr. Mohit Sachdev said, "I am very excited by this opportunity to be part of the leadership team that will take DBS Chola Mutual Fund to a higher level. The Murugappa Group and DBS Bank are solid institutions and I eagerly look forward to this challenging assignment".

Trusts charities organisations now turning to Mutual funds

Mutual fund is no more a revenue generator for the likes of big, budding or prospective investors only, even the well-known charitable institutions and organisations are taking the route to earn handsome returns in a short span of time. According to some reliable sources, it has been observed recently that investing in mutual funds is slowly becoming popular among these organisations and as the time progresses it is expected that more and more organisations will join the herd. 

These organisations which consist of both religious and non-religious trusts are investing a majority of the capital with them in the long-term funds in equity schemes. Several eminent names in the field of performing social works such as the Gujarat Cancer Society, Charities Aid Foundation of India, Ram Janambhoomi Nyas, Shwetambar Trust, Missionaries of Charity, International Centre for Entrepreneurship, Hindustan Charity Trust, Birla Kalyan Nidhi Trust and many more have joined the league of investing into the mutual funds. 

This augers well for the mutual fund industry, as in the near future, more funds are expected to flow into this business. A distribution head of a fund house said, “Many charities have surplus funds not needed to fund their immediate charitable activities; often, the trustees invest some or all of this surplus in order to generate extra income to fund future activities.” He also claimed that he has ample trust-oriented mutual fund schemes with him, which is clearly a good omen for the mutual fund industry. 

Interestingly, the Indian Trust Laws have granted the right to religious organisations, Wakf boards, registered societies and even the charitable trust to invest into mutual fund schemes. Investment from these organisations is a good news for all the mutual fund players, as it will ultimately help them on the promotional front, and will also help them in reaching out to people in the remote corners of the country. 

Jayshankar Maharaj of the Ramakrishna Mission also voiced his opinion in favour of the investment in the mutual funds, he said, “ Almost all major organisations are investing in mutual funds now. These boards generally take a very conservative approach as they are dealing with public money. Many trust boards invest in mutual funds which offer systematic investment plans.” 

Rajiv Bajaj, Managing Director, Bajaj Capital explained the reason behind this emerging trend, he said, “ The trend of investing into mutual funds is more of a natural progression. Even though these are non-profit organisations, trust boards always show inclination to optimise their portfolio yields. By investing in mutual funds, these boards crave for simple 12-15% annualised returns. The investment profile of charity organisations is very similar to pension funds.”

Kotak Mahindra Mutual Fund Enters into a Distribution Tie-up with Andhra Bank

Kotak Mahindra Asset Management Company, one of India’s leading mutual fund houses, today entered into a distribution tie-up with Andhra Bank. Under the agreement, Andhra Bank will offer the entire bouquet of Kotak Mutual Fund products from the bank’s 1386 branches. Sandesh Kirkire, Chief Executive Officer, Kotak Mahindra AMC and Rakesh Sethi, General Manager, Marketing, Andhra Bank signed the MOU.

On the occasion, Sandesh Kirkire, Chief Executive Officer, Kotak Mahindra Asset Management Company said, “The banking channel is one of the best platforms to reach out to retail investors. Offering advice on mutual fund investments is an extension of the value added services that are offered by banks. As experts in the field of wealth creation in India, our tie up with Andhra Bank will reinforce our commitment to expand retail participation. With this tie-up customers will gain easy access to the various schemes of Kotak Mahindra AMC at the branches where they do their banking transactions.”

About Kotak Mahindra Mutual Fund www.kotakmutual.com

Kotak Mahindra Asset Management Company Limited (KMAMC), a wholly owned subsidiary of KMBL, is the Asset Manager for Kotak Mahindra Mutual Fund (KMMF). KMAMC started operations in December 1998 and has over 10 Lac investors in various schemes. KMMF offers schemes catering to investors with varying risk - return profiles and was the first fund house in the country to launch a dedicated gilt scheme investing only in government securities.

Kotak Mahindra Mutual Fund provides investors with smart financial products, which are aimed at enhancing customers' wealth, along with services that make the investing process easier. The company has a history of innovative products and services behind it, and has led the way for the industry on many counts.

Set up in 1998, Kotak Mutual Fund currently manages assets in excess of Rs. 19700 crores contributed by over 10.24 lakh investors (as on 31st August, 2008).

Statutory: Kotak Mahindra Mutual Fund is a Trust (Indian Trusts Act, 1882). Investment Manager: Kotak Mahindra Asset Management Company Ltd. Sponsor: Kotak Mahindra Bank Ltd. (liability Rs. NIL). Trustee: Kotak Mahindra Trustee Company Ltd.

Before investing, please read the Offer Document carefully.

About Andhra Bank: 

Andhra bank is established in 1923 by Dr. Bogarju Pattabhi Seetharamaiah, a patriot, freedom fighter and a Gandhian at Masulipatam. 

The bank was nationalized in 1981. Now the bank has 1386 branches spread over 22 States and 2 Union territories. The total business of the bank as on 31.03.2008 is Rs. 83,993 crores (Deposits Rs.49,437 crores and Rs.34,557 crores).

Market to see deep and large correction :: Rakesh Junjunwala (POSTED IN APRIL)

Below mention article posted on this blog in the month of ARPIL 2008

The question bothering the markets still remains - is there more pain left and what is the road ahead? To find out answers to these questions, CNBC-TV18’s Stocks Editor, Udayan Mukherjee caught up with ace investor and market expert Rakesh Jhunjhunwala in a special series called ‘Hunt for the Bottom’.


Jhunjhunwala feels that the markets have seen a bull-run since April 2003 and one cannot have a bull market without corrections. The corrections would be testing the investors’ patience and their sheer belief in the markets, he said. ”All the corrections we have had in the last four years have had been deep but they have not been deep time-wise. I think the real patience and the real belief in the equity and in the market comes when the market tests you time-wise. So I think this is going to be one of the deepest and the longest corrections that we are going to have, in what I believe is going to be a very long bull market,” Jhunjhunwala said.

Excerpts from Udayan Mukherjee’s conversation with Rakesh Jhujhunwala:



Q: Is the worst over, have we seen most of the pain or do you fear that there could be much more pain this time around?

A: We have not four but four-and-a half-years of bull market, which started in April 2003. Whatever be the quality and depth in the length of the bull market, you are not going to have a bull market without corrections, which are not going to test our patience and sheer belief in the market. All the corrections we have had in the last four years have been deep. They have not been deep timewise. The real patience and belief in equity markets comes when the market tests you timewise. This is going to be one of the deepest and longest corrections that we are going to have. However, this is going to be a very long bull market.

Q: In the middle of this phase, you expect to see some rallies which will get sold into as well?

A: Yes. You will surely see rallies and we are in the midst of one. Suppose the markets doesn’t exceed and the index doesn’t go 21,000 and Nifty doesn’t go above 6,200 for the next 18 months, I as an investors won’t bother it at all. I would happily rest with the kind of gain we have had for the last four-and-a half-years.

Q: It could be an 18 months rest you think?

A: Why not.

Q: Six quarters of market not going above the old high?

A: Why not.

Q: Is it a possibility or a probability according to you?

A: It’s both.

Q: You think it’s a highly likely event?

A: I believe in the long-term story. I am going to profit as an equity investor. As an investor, I don’t see a greater rate of return for my capital at any place other than the equity market. I watch the market everyday but I won’t be surprised. I am prepared for it.

Q: But you look at the screen very carefully as well and trade a bit? Is the screen reflecting any strength over the last few days?

A: A good part of the market has already bottomed. It may take time for the market to gain. In the midcap space, a lot of stocks have bottomed. But the price movement tells me that as of now, not much of the market is going to renew those.

Q: Which sectors are still vulnerable to downside? Some sectors had seen massive excesses, but stocks have also fallen 40-50-60%. Do you think enough correction has happened in those sectors or pockets or they may unwind further?

A: That’s a very difficult call to take. We have to play it scrip to scrip. It is difficult to take it sector to sector.

Q: You had concerns about spaces like real estate etc. Do you think they have corrected enough?

A: I have been a real estate stock bear and have been wrong earlier. I still feel there is space to go there.

Q: Any other clear space where lots of excesses have happened?

A: In the infrastructure sector, there is lot of excess valuations. Stocks will take time. It will take time for the excesses to wear off.

Q: You have been a big bull of that space and have had big holdings like Praj, and Punj Lloyd? Do you think there were excesses at the top in those kinds of areas as well?

A: Suddenly the valuations were quite high.

Q: But have they corrected enough after this big fall?

A: They have corrected. But for them to really gain their old highs it will take time.

Q: India has been one of the biggest underperformers in the last three months. Do you think there are local problems as well, which we need to content with over the next one year?

A: The way to tackle inflation is to increase supply. To keep interest rate high in the face of low interest rate worldwide, is a local problem. A friend of mine told me sometime back that the true bottom of this market will be made the day the election is announced, but that has been the history of our markets.

Q: Does politics present a threat to this market?

A: We have seen the worst of whatever the threat could be. I don’t think they are going to impose price controls anywhere. Also, India has grown a lot without the politicians. So, I am not afraid if Mayawati becomes Prime Minister, but I hope she will not. I think politics has done no good. If god were to grant me one wish, I would ask him to let anybody be the Prime Minister of this country, but let not that government be supported by Communists, because if you were to listen to the Communists we were to get everything free and don’t have to work for anything.

Q: Does government policy worry you? We have seen quite a bit of price control etc in the last one-month? Does it worry you significantly?

A: Not at all, because we have been hearing all this for so many years but India has trudged along. Do you think anything has changed in the last 12 years?

Q: What about steel? If I remember correctly, you bought some steel stocks earlier, didn’t you own Tata Steel?

A: Yes. I bought some steel stocks even lately. They are not going to impose any price controls. SAIL and Tata Steel are placed very well as far as government rules are concerned. If steel prices go up, they benefit because they have captive commodities.

Q: What is essentially different about what is going on now in the market and what you saw in 2001 and 1992?

A: Valuations in these times never got to 1992 levels. In 1992, we were trading at 65 times earnings, 2001 at 35-32 times earnings, and this year we peaked at 21 times maybe 2009 earnings.

Q: In some pockets like infrastructure etc we did go to 30-40 kind of P/E multiples?

A: Yes, maybe but that was not a very large part of the market. After all, the largest part of the market is the Sensex and Nifty. The bull market that started in 2003 cannot end at less than 30-35 earnings or at least 25-30 times for the index.

Q: Let me paint a bearish scenario. The bears say that interest rates go up even from here, which may not be justified. But in our country sometimes we do things which are not justified. GDP growth slows to sub-7%, earnings growth slows to 10-12%, could we have then in that kind of situation a compressed one-two year kind of a bear phase? Is that a likely scenario or even a possible scenario in your eyes? 


A: 4,100-4,200 which corresponds to 12,500-13,000 on the Index is a level which we are not going to penetrate on the downward side very easily. 5,300-5,400 upside on the Nifty is a level that we will not penetrate easily. So, we could be in a 4,200 range. The range could be 4,500-5,300 instead of 4,200-5,300. We could pass a year or 18 months.



Q: Is it a good time for investors to buy stocks or do you think they won’t be rewarded in the next one-year or so?

A: I don’t think we as investors should be worried about what rewards we can get in a year. I have made the biggest money by understanding that I get the reward within a time period which is reasonable and one-year is never reasonable. If one gets good stocks at valuations which one thinks are good and feel the ultimate value of the stock will be far higher, one should buy it.

Q: How much damage has been done this time around because in our country because a very narrow section of the population invest in stocks?

A: Everybody’s portfolio is damaged, but my portfolio doubled in one-year. You went from 100-200 then, came back to 140-150 and right now are at 130-135. The increase was very severe and the fall was equally severe. I don’t think the damage has take place with those Charlie’s who came to make a fast buck. The serous investors who invested through the last four-five years have been getting very good returns.

Q: Do you think they will hold the faith, which has been seen so far in the mutual fund portfolio with no major redemptions? Do you think this whole phase will pass without significant mutual fund redemptions?

A: Why do you think these redemptions are not taking place? It’s not an act of defiance according to me. It is because may be it is supports. The amount of money that has to come to India for investing locally is far greater than what we have had. So, some people are withdrawing but every other money is going up. Prosperity is also going up. People who are running businesses are feeling the prosperity. So, may be the redemptions may not take place. It could also be that the kind of money which has come is good genuine money and not some short-term scam money.

Q: Having seen five-years of bull run and then a sharp three-month correction, do you think it is time to re-orient your investment strategy somewhat because a few things have fallen off the cliff? - Is it time to change your horses?

A: I have followed one investment strategy all my life. Good investing gives you good returns. It depends on your investment strategy. My investment methodology and strategies don’t change as markets keep changing. If I have a good stock, then it is going to give returns. One thing which supports the market is the bodyweight of solid liquidity. With these kind of high oil prices, where is all this surplus money with West Asian countries going to go?

Q: But you trade as well, do you sense that different sectors are coming back? IT has had a nice rally after a long time, They were two years out in the cold. Is it possible that some of these losers of the last couple of years could stage a comeback?

A: I am not personally so bullish on IT.

Q: You have not been for a while?

A: Yes, because they are a mature industry, all institutions own them. I think growth is going to be limited there. There are uncertainties in the principal markets. Although I have true respect and true regard for the Infosys management, I think meeting their guidance is going to be a challenge.

Q: Do you think there is a risk out there?

A: I think there is a challenge, because conditions in the US are going to get worse by the day. They are saying they expect the second quarter in the US to be better .

Q: Which is when you think the problems will start dropping in?

A: I think there will be three stages of the problem in America. First is the realisation of the subprime problem. Second, the economy will slowdown as a result. I think defaults would creep into prime housing, into credit cards and auto loans and maybe commercial real estate. I think that will be the second stage. The third stage is going to be a depression.

Q: Have you ever bought an FMCG stock in your life?

A: Yes, I have.

Q: Not Tata Tea?

A: No, not Tata Tea. I have another FMCG stock in which I own more than 5%.

Q: So, a largecap FMCG stock?

A: I won’t say largecap but fairly good company called Agro Tech Foods.

Q: But none of the ones we know like Colgate, Dabur, Marico, and Lever. You have never bought them in your life?

A: I may have bought some stocks like Colgate and sold it. I bought some shares in Lever in 2004 and sold it in 2005. I have made good money there.

Q: Have you ever been a big pharmaceutical investor?

A: I have a large investment in Lupin and made good money in Matrix. I made some small investments in Ranbaxy.

Q: Do you subscribe to the theory that capital goods or power is a sector, which was such a big leader, is on the wane and will not lead to the next rally?

A: Wane is about P/Es. Pharma P/Es are set to go up. That’s one sector which will not dip if we get a prolonged correction. If you look at some of the P/E e ratios of pharma companies, they are certainly attractive. Everybody has been so ebullient about capital goods and that’s why P/E’s are high. It will take time for earnings to catch up. 

Q: What are your thoughts on oil and gas as a space? You just spoke about crude; do you think there is an oil and gas play in India from a stock market perspective?

A: Well I would Reliance is a big oil and gas play. There could be some interesting plays in the smallcaps and the midcaps.

Q: Exploration?

A: Yes, exploration.

Q: You were once a bull on Indian Oil Corporation. You lost your hope in them?

A: I will never buy them, I promise. Wherever government is involved I am going to be very careful.

Q: That's surprising coming from you because you made a lot of money from PSU companies like BEML and Bharat Electronics?

A: But at what valuations? I started buying Bharat Electronics at Rs 32, BEML at Rs 30. Also what I realized and why I sold this is that for companies to really gain at these valuations, one has got have that plus-plus. The investor has to have faith that these companies are innovative, they are going to do something new. They are going to do something different. I don't find that in the public sector. They are constrained. Indian Oil--I read Rs 450 crore is what we are losing on fuel everyday. But there are interesting opportunities in exploration. I have some investment in that sector.

Q: But they are small and midcap companies?

A: Yes.

Q: What are the chances that in 2009 you go to something much beyond the old high that you saw on the index? Do you think it is conceivable? What needs to fall into place for that to pan out?

A: America needs to go for present tense. It is important that Infosys achieves this guidance it has given. What is important to the Indian economy is the value-add that software brings. If Infosys adds 25,000 employees, it translates into 25,000 cars and 25,000 homes. Then, that in turn leads to cement and steel. It is not any small value-add. If the US grows at 4%, Indian software will grow at 40%. The sentiment of investors worldwide will be extremely bullish. If you achieve earnings of say 1,030-1,040 in March 2009, then you go to 1,200 by March 2010. So, maybe in May 2009 you are going to see a very good rise.

Q: Are you looking at 25-30 P/E multiples? 

A: For that we are still 4-5 years away. We will get there.

Q: We didn’t pass it in December last year?

A: That is why the top of the bull market was not made. The top of the bull market will be made when the value of the Indian Embassy in Japan is greater than the land in Delhi. If we had continued with the real estate led bull market in December 2007 we would have reached those levels.

Q: Do you sometimes feel apprehensive with your view today that 4,200 is a bottom worst case scenario can be violated and you may be surprised?

A: If it is violated, I would surely be surprised. But welcome this correction. I don’t think it is a bear market. It is a correction because had we continued at that pace we might have reached a level where we would have damaged that market beyond repair. It will still go much further. For that to happen, we have got to have this correction.

Q: How will you approach this phase if it pans out like you expected, one year of essentially rangebound movements. From your trading and investment perspective, how will you approach it?

A: I will limit my trading extremely. My trading levels will come to 10-20% of that level. We need a rangebound markets. I don’t buy anything at one price but buy at stages.

Q: What will you trade more in the next one year the Nifty or individual stocks? Where will the opportunities be?

A: Nowadays,, I tend to trade in the Nifty more because I find it very liquid.

Q: From an investment perspective?

A: I will see whatever opportunity comes. I am making investments. I made some investments in April, March, and February.

Q: Will you consider paring down some money and moving to cash in the next one-year?

A: I essentially have no debt or very little debt. So, I can always take debt if I find investments to be adequate. If I feel that I have such a great opportunity that I must invest and I don’t have the capital, I may sell some of my investments and interchange.

Q: So, your convinced that this is just a long painful correction in a bull market. It is not a bear market that you are seeing for the last three-months?

A: That’s what I think.

Q: Convinced?

A: Yes, 100%. Once America bottoms because the greater surprise is going to come from the World Cup markets. There is so much to come from India once this gas comes. More the power, more investment is needed. This will itself be such a big trigger. I cannot believe that the bull story, which is linked to India’s economy with 5-6% of Indian’s savings coming into equity and with the kind of Indian sprit and entrepreneurship, can die. If this is the end of the bull market then India really has incurred god’s wrath. But it may be long and painful.

http://indian-mutualfund.blogspot.com/2008/04/question-bothering-markets-still.html

http://indian-mutualfund.blogspot.com/2008/04/question-bothering-markets-still.html

Source: moneycontrol.com

Lehman Files for Biggest Bankruptcy as Suitors Balk (Update2)

Lehman Brothers Holdings Inc., the fourth-largest U.S. investment bank, succumbed to the subprime mortgage crisis it helped create in the biggest bankruptcy filing in history. 

The 158-year-old firm, which survived railroad bankruptcies of the 1800s, the Great Depression in the 1930s and the collapse of Long-Term Capital Management a decade ago, filed a Chapter 11 petition with U.S. Bankruptcy Court in Manhattan today. The collapse of Lehman, which listed more than $613 billion of debt, dwarfs WorldCom Inc.'s insolvency in 2002 and Drexel Burnham Lambert's failure in 1990. 

Lehman was forced into bankruptcy after Barclays Plc and Bank of America Corp. abandoned takeover talks yesterday and the company lost 94 percent of its market value this year. Chief Executive Officer Richard Fuld, who turned the New York-based firm into the biggest underwriter of mortgage-backed securities at the top of the U.S. real estate market, joins his counterparts at Bear Stearns Cos., Merrill Lynch & Co. and more than 10 banks that couldn't survive this year's credit crunch. 

``There is likely to be a domino effect as other firms and individuals who relied on Lehman for financing feel the effects of its meltdown,'' said Charles ``Chuck'' Tatelbaum, a bankruptcy lawyer with Lauderdale, Florida-based Adorno & Yoss and former editor of the American Bankruptcy Institute Journal. ``The whole thing is frankly frightening for the U.S. economy.'' 

Shares, Bonds 

Lehman shares dropped 81 percent in Frankfurt trading to 75 cents from their $3.65 close in New York on Friday. UBS AG, HBOS Plc, and Axa SA led a decline of more than 3 percent for European stock markets on speculation a forced sale of Lehman's assets could lead to further writedowns at other banks. 

Benchmark gauges of corporate credit risk rose by a record in Europe, and traded at an all-time high in North America as investment banks sought to minimize losses from Lehman's collapse. U.S. two-year Treasuries climbed, pushing yields below 2 percent for the first time since April, as investors sought the relative safety of government debt. 

Lehman bondholders may get about 60 cents on the dollar if the investment bank is forced into liquidation, analysts at CreditSights Inc. said. The filing is by Lehman's holding company and won't include any of its subsidiaries. Lehman owes its 10 largest unsecured creditors more than $157 billion, including debts to bondholders totaling $155 billion. 

Aozora Bank, Mizuho 

The largest single creditor listed in today's filing is Tokyo-based Aozora Bank Ltd., owed $463 million for a bank loan. Other top creditors include Mizuho Corporate Bank Ltd., owed $382 million, and a Citigroup Inc. unit based in Hong Kong owed an estimated $275 million. Lehman listed $639 billion of assets. Citigroup and The Bank of New York Mellon Corp. are among trustees for bondholders who Lehman owed about $155 billion. 

Barclays, which emerged as a leading candidate to acquire Lehman, pulled out first yesterday, saying it couldn't obtain guarantees from the government or other Wall Street firms to protect against losses on Lehman's assets. Bank of America withdrew about three hours later, before saying it would acquire Merrill Lynch. Brokers sought yesterday to consolidate trades linked to Lehman to minimize the impact of a bankruptcy filing. 

Founded in 1850 by three immigrants from Germany, Lehman has managed to avert previous potential disasters and was among the handful of U.S. financial firms that had endured for more than a century. 

`Chain Reaction' 

Fuld, the longest-serving CEO on Wall Street, attempted to shore up the firm's finances in the second quarter by raising $14 billion of capital, selling $147 billion of assets, increasing cash holdings and reducing reliance on short-term funding to create a buffer against a bank run. 

Instability in the financial and credit markets left Lehman officials struggling to keep the firm afloat, Ian Lowitt, the firm's chief financial officer, said in a court filing in the bankruptcy case. Liquidity problems plagued Lehman earlier this year, he said. 

``This loss of liquidity created a chain reaction of adverse economic consequences,'' Lowitt said. 

Lehman, which has about 25,000 employees worldwide, last week reported the biggest loss in its history and said it planned to sell a majority stake in its asset-management unit, spin off real-estate holdings and cut the dividend in an effort to shore up capital and regain investor confidence. The efforts failed to stem speculation that the firm's mortgage holdings would lead to more losses. 

Talks Fail 

``The uncertainty, particularly among the banks through which the company clears securities trades, ultimately made it impossible for the company to continue to operate its business,'' Lowitt said in the filing. The firm had sought about $4 billion for the asset-management unit, he added. 

The U.S. Treasury and the Federal Reserve negotiated with Wall Street executives for the past three days in New York, trying to strike an agreement that would prevent the investment bank from failing before markets open today. Treasury Secretary Henry Paulson indicated that he didn't want to use U.S. taxpayer funds to ease a sale of the company. 

Fuld, 62, is exploring the sale of its broker-dealer operation and continues to hold talks on the sale of its asset- management unit, including fund manager Neuberger Berman, the company said today in the statement. 

The U.S. Securities and Exchange Commission said customer accounts at Lehman are protected and agency staff will remain at the brokerage firm in the coming weeks. 

SEC Statement 

Securities rules require segregation of Lehman's securities and cash, and accounts are covered by insurance provided by the Securities Investor Protection Corp., the Washington-based agency said last night. SEC employees working inside the broker's office will continue that assignment, the agency said. 

``We are committed to using our regulatory and supervisory authorities to reduce the potential for dislocations from recent events, and to maintain the smooth functioning of the financial markets,'' said SEC Chairman Christopher Cox in a statement yesterday. 

Brokerage units that fail usually are handled by the SIPC, which appoints a trustee to liquidate the business and protect its customers. Lehman's customer accounts may also be farmed out to other firms that could protect cash and securities, on the model of the failed junk-bond firm Drexel Burnham Lambert, which filed for bankruptcy in 1990. 

`A Big Mess' 

Lehman's trades in commodities, derivatives and other financial instruments could be unwound by the bank's counterparties, said Andrew Rahl, co-head of bankruptcy in New York at law firm Reed Smith LLP and a specialist in financial companies. 

A liquidation of the brokerage unit might be ``a big mess'' if Lehman used customer accounts to raise cash, and sale and repurchase agreements had to be unwound, Rahl said. 

The trigger for SIPC to take over the Lehman brokerage would be a freezing of customer accounts, or a Chapter 11 filing that implied the unit was insolvent and its customers might not be able to access their property, the official said. 

``First there will be chaos and then an adjustment process as losses distribute themselves through the market,'' said Gilbert Schwartz, a former Federal Reserve attorney and now a partner at Schwartz & Ballen LLP in Washington. ``There won't be any lasting turmoil. Treasury and the Fed have determined that markets have adjusted to the situation since Bear Stearns. If every time a big institution went bust the markets expected the government to step in, no one would ever adapt.'' 

`Uncharted Territory' 

Ladenburg Thalmann & Co. analyst Richard Bove wasn't as sanguine. 

``We will be entering uncharted territory,'' he said. ``Forcing liquidation will set off problems in other companies and markets everywhere.'' 

Rival banks and brokers today held a session for netting derivatives transactions with Lehman to reduce uncertainty in the derivatives market. That move means canceling trades that offset each other, the International Swaps and Derivatives Association said in a statement. The ISDA includes 218 banks, brokerages, insurance companies and other financial institutions from the U.S. and abroad. 

In the U.K., the Financial Services Authority asked banks to disclose their exposure to Lehman, spokeswoman Teresa LaThangue said in a statement today. 

Any sale of Lehman's investment management units is subject to court approval and creditor scrutiny under bankruptcy rules, according to Tatelbaum. 

``Bankruptcy severs all counterparty contracts, and therein lies the systemic risk,'' said David Kotok, chief investment officer of Vineland, New Jersey-based Cumberland Advisors Inc., which manages $1 billion. ``This would be the first time we've tested how much damage will be done by a bankruptcy.'' 

Lehman's filing was made by lawyers from New York's Weil Gotshal & Manges LLP led by Harvey Miller. 

The case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

Source:http://www.bloomberg.com/apps/news?pid=20601087&sid=awh5hRyXkvs4&refer=home

Birla Sun Life Commodity Equities Fund - NFO

Birla Sun Life Commodity Equities Fund is opening on September 15th 2008 .

More Details are as follows.

Name of the Scheme : Birla Sun Life Commodity Equities Fund

Structure : An Open Ended Growth Scheme

Investment Objective : 
An open-ended Growth Scheme with the objective to offer long term growth of capital, by investing in

(1) stocks of commodity companies, i.e., companies engaged in or focusing on or benefiting from the specified commodity business and/or

(2) scheme(s), that invest predominantly in commodity linked stocks. If and when allowed by the regulator, the Fund may also invest in commodity derivatives or such mutual fund Schemes that invest in commodity derivatives.These securities could be issued in India or overseas.

Various Fund under this Plan 
• Birla Sun Life Commodity Equities Fund – Global Energy Plan
• Birla Sun Life Commodity Equities Fund – Global Precious Metals Plan
• Birla Sun Life Commodity Equities Fund – Global Agri Plan
• Birla Sun Life Commodity Equities Fund – Global Water Plan
• Birla Sun Life Commodity Equities Fund – Global Multi Commodity Plan
• Birla Sun Life Commodity Equities Fund – India Multi Commodity Plan
Each Plan shall have a Separate Portfolio.

Minimum Application Amount
Retail Plan: Minimum of Rs. 5,000/- and in multiples of Re. 1/- thereafter during the
NFO period and ongoing basis.
Institutional Plan: Minimum of Rs. 5,00,00,000/ and in multiples of Re. 1/- thereafter
during the NFO period and ongoing basis.
Minimum Additional Application Amount
Retail Plan: Minimum of Rs. 1,000/- and in multiples of Re 1/- thereafter on an
ongoing basis.
Institutional Plan: Minimum of Rs. 10,000/- and in multiples of Re 1/- thereafter on
an ongoing basis.

Minimum Redemption Amount
In Multiples of Re. 1/-
Minimum Target Amount to be raised
Rs. 1,00,00,000/- during the New Fund Offer Period.
New Fund Offer Price
Rs. 10/- per unit for cash plus applicable entry load.

Repatriation Facility :
NRIs, FIIs and PIOs may invest in the scheme on a full repatriation basis.(Investment will be governed by rules laid down by RBI/SEBI in this regard).
Mutual Fund Offer Document

Source:http://www.rupya.com/archives/2008/09/13/birla-sun-life-commodity-equities-fund-new-fund-offer/