UTI Infrastructure Advantage Fund

UTI Asset Mgmt Company Pvt. Ltd has launched a diversified equity fund which is a three year close-ended scheme with an investment objective to provide income stribution and /or medium to long term capital appreciation by investing predominantly in equity / equity related instruments in the companies engaged either directly or indirectly in the infrastructure growth of the Indian economy.

I am prety sure that this fund will invest in stocks like BHEL, L&T, GMR etc which are gaining tremendously in the recent spate of the gains that the infrastructure story is gaining in India. There is more and more emphasis on the infrastructure story in India and it is good that this is a closed ended fund so that the fund manager does not have to worry much about short term performance.

Scheme Details
Issue Opens: November 12, 2007
Issue Closes: December 19, 2007
Options : Dividend, Growth and Bonus
Fund Category: Closed-end, Equity Scheme
Minimum Investment: Rs 5000 and Rs 1 for additional purchases
Entry Load: Nil
Exit Load : Nil. However, an early exit charge equivalent to the unamortized NFO expenses will be recovered from the investor in case of redemption before the expiry of 3 years from the date of allotment

ING Global Real Estate Fund

ING Mutual Fund has launched a new fund called ING Global Real Estate Fund. The primary investment objective of the Scheme is to seek capital appreciation by investing predominantly in ING Global Real Estate Securities Fund. The Scheme may, at the discretion of the Investment Manager, also invest in the units of other similar overseas mutual fund schemes, which may constitute a significant part of its corpus. The Scheme may also invest a certain portion of its corpus in money market securities, in order to meet liquidity requirements from time to time.

This is not the same as the real estate mutual funds that i covered in my blog sometime earlier.

Please read the following blogs to get details about what Real Estate Mutual Fund is and its advantages

1. Investing in Real Estate Part - I

2. Investing in Real Estate Part - I


Scheme Details
Issue Opens: November 20, 2007
Issue Closes: December 14, 2007
Options : Dividend, Growth and Bonus
Fund Category: Closed-end, Equity Scheme
Minimum Investment: Rs 5000 and Rs 1000 for additional purchases
Load: Load structure for applications received during NFO and on-going sales:

For application below Rs.1 Crore
Entry Load : 2.5%
CDSC : 1% if redeemed within 180 days from the date of investments (date of allotment if invested during the NFO)

For applications of Rs.1 crore and above but less than Rs. 5 crore
Entry Load : Nil
CDSC : 0.5% if redeemed within 180 days from the date of investments (date of allotment if invested during the NFO)

For applications of Rs.5 crores and above
Entry Load : Nil
CDSC : Nil
Exit Load: Redemptions made on Maturity do not attract any exit load. However, redemptions made during the repurchase facility period will attract, for the present, an exit load of 3% of the amount sought to be redeemed under the Scheme

Prudential ICICI launches Real Estate Securities Fund

Prudential ICICI has launched a new fund called Real Estate Securities Fund. This is pretty unique scheme where the the primary objective of the scheme is to generate income through investments in debt securities maturing in line with the maturity of the Scheme of companies that are in, associated with, or benefiting directly or indirectly from, the real estate sector, and the secondary objective is to generate long-term capital appreciation through investments in equity or equity-related securities of such companies.

This is not the same as the real estate mutual funds that i covered in my blog sometime earlier.

Please read the following blogs to get details about what Real Estate Mutual Fund is and its advantages

1. Investing in Real Estate Part - I

2. Investing in Real Estate Part - I


Scheme Details
Issue Opens: November 15, 2007
Issue Closes: December 14, 2007
Options : The Retail will have only the growth option
Fund Category: Closed-end, Debt Scheme
Minimum Investment: Rs 5000 for retail
Entry Load: Nil

Exit Load: Redemptions made on Maturity do not attract any exit load. However, redemptions made during the repurchase facility period will attract, for the present, an exit load of 3% of the amount sought to be redeemed under the Scheme

Cost: Initial issue expenses, not exceeding 6 per cent of the corpus collected, would be amortized over the three-year close-ended tenure of the scheme
Liquidity: To provide liquidity to the investors, the Scheme proposes to provide repurchase facility at quarterly intervals on every 15th day from the end of each calendar quarter. If such date happens to be a non-business day, repurchase facility would be available on Business Day following the said date.

What is Gross Domestic Product ?

The gross domestic product (GDP) is one the primary and major indicators that indicate the health of a country's economy. In the simplest form it represents the total value of all goods and services produced over a specific time period – one can think of it as the size of the economy. Usually, GDP is expressed as a comparison to the previous quarter or year. For example, if the year-to-year GDP is up 9.5%, this is thought to mean that the economy has grown by 9.5% over the last year when compared with the previous year.

Measuring GDP is very complicated but at its most basic, the calculation can be done in one of two ways: either by adding up what everyone earned in the country in a year (income approach), or by adding up what everyone in the country spent (expenditure method). Logically, both measures should arrive at roughly the same total. Given that the basis of calculation is the same across both the periods of time, things that have not been captured in the both the years will negate each other and one will still get a uniform platform for measuring the GDP which is still a meaningful indicator of the economy.

The income approach, which is sometimes referred to as GDP(I), is calculated by adding up total compensation to employees, gross profits for incorporated and non incorporated firms, and taxes less any subsidies. The expenditure method is the more common approach and is calculated by adding total consumption, investment, government spending and net exports.

How does the GDP Affect You ?
For example, if the GDP growth rate is speeding up, the central bank may raise interest rates to stem inflation or cushion the effect of a fall and decrease in the pace of growth. In this case, you would want to lock in a fixed-rate mortgage, because you know that an adjustable-rate mortgage will start charging higher rates next year. When the economy is healthy, one will typically see low unemployment and wage increases as businesses demand labor to meet the growing economy. A significant change in GDP, whether up or down, usually has a significant effect on the stock market. One of the major reasons why the Indian stock market is currently doing well is because of the high growth rate of 8%-9% p.a that India is clocking. It's not hard to understand why money is coming from all corners of the world into the Indian stock market because they expect the Indian companies serving the domestic market to reap the benefits of the growth story. A bad economy usually means lower profits for companies, which in turn means lower stock prices. Investors really worry about negative GDP growth, which is one of the factors economists use to determine whether an economy is in a recession.

You could also use the GDP report from the central to look at which sectors of the economy are growing and which are declining. This would help you determine whether you should invest in, say, a tech-specific mutual fund vs. a fund that focuses on agribusiness or one on infrastructure or power etc.

Sundaram BNP Paribas Energy Opportunities

Sundaram BNP has launched a new fund called Sundaram BNP Paribas Energy Opportunities. This seems to be next flavor of most of the fund houses and after infrastrucure, everyone is focussing on the enengry related sector for the next wave of growth. It is a three year closed-end equity fund. The fund will invest in shares of energy and energy related companies. It will automatically be converted into an open ended fund after three years from the date of allotment.

Enter this fund and i am sure you will own a part of the energy stock such as Reliance industries, ONGC, Reliance petroleum, Suzlon, Tata Power, Reliance energy etc.

The scheme may invest in stocks of companies that fall into any of the following categories:

• Producers of energy
• Contractors for oil & gas
• Suppliers of equipment and materials for creation of necessary infrastructure for production, distribution and consumption of energy
• Providers of services for creation of necessary infrastructure for production, distribution and consumption of energy
• Distributors of energy in various forms
• Manufacturers who may benefit from expanded availability of energy at competitive prices
• End users of power
• Players who benefit from likely changes such as usage of gas by homes and usage of energy from alternative sources and any changes that may emerge due to enhanced availability of energy
• Producers of energy from alternative sources
• Other beneficiaries from the energy theme who may come to the forefront in the years ahead

Scheme Details
Issue Opens: November 12, 2007
Issue Closes: December 11, 2007
Fund Category: Closed-end, Equity Scheme
Benchmark Index: BSE Oil and Gas Index
Minimum Investment: Rs 5000
Entry Load: Nil
Exit Load: Nil. However, redemption will be permitted after deduction of unamortized initial issue expenses
Cost: Initial issue expenses, not exceeding 6 per cent of the corpus collected, would be amortized on a daily basis over the three-year close-ended tenure of the scheme

Performance of Similar Funds
Currently there are only two funds focussing only upon the energy/ power sector which are Reliance Diversified Power Sector and UTI energy fund. Of these, Reliance Diversified Power Sector Fund stands out in terms of performance, with phenomenal returns of over 128 per cent in the last one year period.

FMP update

Here are some more launches of FMP that are available in the market at this point of time

Please read the following blogs to get details about what an FMP is and its advantages

1. Why invest in Fixed maturity plans ?

2. Fixed Maturity Plan - FAQ

Lotus India Fixed Maturity Plans- 375 Days-Series V

Objective: The objective of the scheme is to generate income by investing in a portfolio of debt and money market instruments normally maturing in line with the duration of the scheme.

Asset Allocation: The fund will invest 0%-100% in money market instruments including reverse repo. The investment in government securities issued by the central government and/or state government(s) will be 0%-50%. The fund will invest 0%-100% debt instruments such as bonds and debentures. The investment in securitised debt will be up to 50%. The investment in fixed income derivatives will be up to 50%.

Fund Opens: 12 November 2007
Fund Closes: 20 November 2007
Face Value: Rs 10

Investment Options: Lotus India Fixed Maturity Plan - 375 Days - Series III offers two plans i.e. retail & institutional. Both plans offer two options i.e. dividend reinvestment and growth.

Entry Load: There will no entry load charged for the scheme due to its close-ended structure.

Exit Load: The scheme charges an exit load of 3.00%, if the investment is redeemed before the maturity date. Whereas there will be no exit load charged on the redemption made on or after the maturity date.

Minimum Investment Amount: Minimum investment under retail plan is Rs 5,000 and in multiple of Re 1 thereafter. Minimum investment under institutional plan is Rs 50 lakh and in multiple of Re 1 thereafter.

Benchmark Index: CRISIL Short Term Bond Fund Index.


KOTAK FMP 3M SERIES 26

Tenor - 90 Days

Fund Opens - 12 November 2007
Fund Closes - 14 November 2007
Face Value - Rs 10

Investment - Minimum Rs. 5000/- (Rupees Five Thousand only) and in multiple of Re. 1 each for both Growth & Dividend options

Options - Growth, Dividend Reinvestment and Dividend Payout

Entry Load NIL

Exit Load 1 % if redeemed before the maturity date. However, if an investor wants to switch his investments from one option to other option under the same scheme during the tenure of the scheme, no exit load will be charged

SBI Mutual Fund launches Capital Protection Oriented Fund Series - I

SBI Mutual Fund has launched a close-ended equity fund called ‘Capital Protection Oriented Fund Series - I’. It will have a maturity period of 5 years, after which it will be converted into an open-ended fund. The new fund offer will be open between October 5, 2007 and November 2, 2007.

The scheme endeavours to protect the capital invested through focused investments in debt and money market instruments as well as equity while at the same time also seeking to provide investors with opportunities for long-term growth in capital.

Around 73-100 per cent of investments would be allocated to Debt Securities & Money market instruments. Securitized Debt (which is part of the above asset allocation) in the portfolio would be upto 20 per cent. Equity and Equity related instruments including derivatives will be upto 27%.

The investment strategy will be to Debt Investments will be in Government Securities and in securities having the highest investment grade rating. Investments in debt securities in the scheme will be largely limited to those having maturities not exceeding the residual maturity of the scheme. The scheme will invest in fixed debt instruments only. Equity investments will be in stocks listed on NSE and BSE having a market capitalization equal to or higher than the market capitalisation of the least market capitalised stock of the BSE 100 Index. The equity component will have minimum of 10 stocks.

Crisil has assigned “AAA(so)” rating for SBI Capital Protection Oriented Fund – Series I.

Disclaimer clause – “The rating only indicates highest degree of certainty regarding payment of face value of investment to the unit holders on maturity and is not an opinion on the stability of the scheme’s NAV before its maturity date.”


Snapshot
Face value: Rs 10
Type: Close-end
Options: Growth. The returns to investors in this option would be through capital appreciation only.
Minimum application amount: Rs 5000
Entry load: Nil
Exit load: Nil and the money is locked for 5 years
Benchmark index: CRISIL MIP Blended Index

ICICI Bank cuts deposit rates

ICICI Bank has cut its deposit rates by upto 50 bps (0.5% p.a) on with effect from Nov 12.

It has cut rate on the 390 day deposits to 8.5%. The bank also cut rate on 590 day deposits to 8.75% and discontinued the 890-day special deposit scheme.

At the same time it has increased the interest rate for the one-year to four-year tenure, which was earlier running at about 6.5-6.7% to 8%.

Many other banks have also cut the deposit rates for the 1 year period. While the CRR has been increased by the RBI, the banks are taking a route to reduce the deposit rates instead of the increasing the lending rates.

How to Choose a Stock Broker ?

There are more than 8,000 SEBI registered brokers and sub-brokers, all providing a similar service, i.e., buying and selling securities. Given this large number, it would be very difficult for one to find the right broker. Thereforem one must look atleast for the following factors before selecting a broker:

1. Broking rates :
As per SEBI guidelines, a broker can charge a maximum of 2.5 per cent of the consideration as brokerage. The standard rate charged by most, ranges from 0.30 to 0.5 per cent depending on the volume of business that ones does. In most cases brokers provide competitive rates to the high value investors and to regular traders. Therefore, depending on the kind of trading that ones does or intends to do (delivery based trading, intra day, derivatives,) one must look at the rates that is applicable and then choose a broker.

2. Delivery channels for doing transactions:
One must chose a broker where the investor can buy or sell securities, either by phone (Through a call center) across the country and world, by giving an order through the internet or by making personal visits or through the mobile phone. The more the number of channels that a broker offers and provides a decent level of response times for each channel, then that broker should be preferred.

3. Other investment instruments:
Brokers now a days also provide a facility to invest in other financial instruments such as Mutual Funds, Bonds, FMPs, IPOs, Commodities etc. Thus one should ideally look for a broker who can facilitate investing all the above instruments and provide for a single stop investment hub for the investor.

4. Reputation:
Broking is a business that requires a low capital base. An individual/corporate/institution can acquire membership as a broker of National Stock Exchange (NSE) with a net worth of 100 lakhs. Thus it is very important that one is not lured by the freebies of the new brokers without ascertaining their reputation. There are enough number of instances where the broker does not deliver the shares on time or does not deliver the money due in time. Looking at the history of them especially when the markets were not doing well will give a good idea on their reputation.

5. Flexibility:
The stock exchanges follow the T+2 settlement schedule. This means that settlement occurs two days after the transaction. Hence, if you decide to buy shares on a given day, you must submit the cheque to the broker well in advance, so that he can deposit the amount with the exchange. Some of the brokers do provide flexibility in terms of payments made, while others ask for an upfront payment of funds. Brokers also allow margin based trades and square off of positions in intra-day transactions. Ideally, one must check with the broker as to what are the facilities available. At the same time too much of flexibility means that the there is something fishy that the broker is resorting to.

6. Investment advice :
Brokers also have sometimes a tie up with a research company or have their own research wing that produces research reports which are then circulated to the brokers clients and given them advice. There are different types of reports such as fundamental driven or technically driver (based on chart analysis of previous movements).

7. Service Quality:
Service quality of the broker is another important determinant. For instance, how fast a broker can transact for his clients reflects his service standards. Since markets operate on a real time basis, at times, small delays result in financial losses. Another aspect of quality is transfer of security by the broker to the client account, settlement of funds, timely dispatch of contract notes, providing transaction ledger to the clients etc.

8. Stock pledging:
Some of the brokers offer other facilities where one can pledge the shares that one has got and borrow money. This is useful especially in emergency situations for an investor who does not want to sell his stick but wants money.

9. Other frills :Some of the brokers also offer some frills like no charge on demat account if the customer has done trades whose turnover is more than a minimum amount prescribed by the broker.

Thus one should look at the above factors before deciding a broker for doing their transactions.