Three Funds Hit the Jackpot With a Variety of Bets

By TIM GRAY

Published: January 8, 2011

FEAR dominated many headlines in the fourth quarter, as unemployment in the United States, a debt crisis in Europe and inflation in China nagged at investors. But hope for an economic resurgence bubbled up, too, and a variety of market sectors had positive returns.

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http://www.nytimes.com/2011/01/09/business/mutfund/09topp.html?_r=1&src=busln

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Equity mkt to be more volatile in 2011 than 2010: ICICI Pru - CNBC-TV18 -

Equity mkt to be more volatile in 2011 than 2010: ICICI Pru - CNBC-TV18 -: "Equity mkt to be more volatile in 2011 than 2010: ICICI Pru"

The Best-Performing Investments of 2010 .

By SHEFALI ANAND

Source: http://online.wsj.com/article/SB10001424052748703909904576052793218751106.html?mod=googlenews_wsj

And the winner is: silver.

With a 66% return for investors this year in India, silver has outperformed most asset classes in 2010.

AFP/Getty Images

A jeweller displays a replica of an Indian 500 rupee currency note made from 10 grams of pure silver.

 

But that doesn't mean you should rush to buy silver coins in the New Year. If anything, the recent steep gains should be cause for skepticism about the potential for further profits.

"Maybe the story is already over, we don't know," says Narendra Kondajji, director of Procyon Financial Planners Pvt. Ltd. in Bangalore.

Besides, Mr. Kondajji says that like other precious metals silver can be hard to sell on short notice, so risk-averse investors should limit their exposure to commodities. "For a common investor, the major option to create wealth is investing in equities," says Mr. Kondajji.

Here's a look at how some popular investments fared in 2010:

Stock Indexes: 16% to 17%

If you had invested in an index of India's leading stocks at the beginning of the year, you would have earned a return of 16% or 17%.

The UTI Master Index Fund, which invests in the 30 stocks that comprise the Bombay Stock Exchange's Sensitive Index or Sensex, was up 16% through Wednesday.

If you had bought the Benchmark Nifty BeES, an exchange-traded fund which tracks the returns of the S&P CNX Nifty Index, you would have earned 16.6%.

Stock Mutual Funds: 14.4%

Most individual investors prefer to buy one of those funds in which money managers attempt to beat the Sensex of Nifty or some other index. How have these done?

The average mutual fund which invests in stocks of large Indian companies was up 14.4% through Monday, according to data from research firm Morningstar India Pvt. Ltd. Of course, this means that some mutual funds did very well, while others did poorly.

One of the best-performing funds in Morningstar's large cap stock fund category was the HDFC Equity fund, which gained 27% in 2010. One of the worst-performing in the year was the Reliance Equity fund, which lost 1.3%.

A spokesman for the fund's money manager, Reliance Capital Asset Management Ltd., declined comment.

Balanced Mutual Funds: 6% to 12%

These are mutual funds which invest in both stocks and bonds. These funds are meant for risk-averse investors because bond prices don't swing as sharply as stock prices. On the other hand, lower risk means that these funds provide lower returns than pure stock funds.

A typical balanced fund which invests around two thirds of its money in stocks and one third in bonds, gained 12% this year, according to Morningstar. Meanwhile, funds which invest only up to 25% in stocks and the rest in bonds were up on average 6%. These funds are often called "Monthly Income Plans."

Bond Mutual Funds: 4% to 5%

Mutual funds which invest in short-term bonds gained an average of 4.5% this year. Medium-term bond funds, which often have the word "income" in their name, gained 5.1%.

Bond funds are used by investors as a substitute for bank fixed deposits, partly because returns on them are not subject to income tax whereas interest on fixed deposits is taxable. However, these funds are more volatile than fixed deposits.

Bank Fixed Deposits: 6.5% to 7%

At the beginning of 2010, one-year fixed deposits typically paid 6.5%. As interest rates have gone up lately, returns in 2011 will be higher. A one-year fixed deposit from ICICI Bank currently pays 7.75%, while the same from Bank of Baroda pays 8%.

Gold: 20%

A gold bar of 99.9% purity gained 23% through Tuesday, according to the Bombay Bullion Association. However, this return doesn't reflect the cost of buying, storing and selling the gold bar.

View Slideshow

Sajjad Hussain/AFP/Getty Images

A goldsmith worked on a piece of jewelry at a workshop in Srinagar, India, Oct. 15.

To avoid the hassle of safe-keeping etc., investors have lately been buying gold ETFs. These trade on a stock exchange like a stock, and are held in an electronic account in the investor's name. The ETF-provider buys physical gold proportionate to your investment and keeps it in a bank vault.
Benchmark's Gold BeEs ETF gained 19.6% for the year through Tuesday.

Prithviraj Kothari, president of the Bombay Bullion Association, expects gold prices to remain strong in 2011, but adds that an increase in interest rates in the U.S. could affect the demand for gold.

Silver: 66%

Silver prices in India rose 66% this year on the back of huge demand from global investors looking to make quick money on commodities. Prices have risen despite oversupply and poor industrial demand.
Barclays Capital expects that given the excess supply of silver, prices could be curbed in 2011. So, this might not be the best time to load up on it.

Mr. Kondajji, the financial planner, notes that for individual investors in India, this is a hard asset to buy because it's not available in an ETF format. He advises clients to "not go beyond 10%" for their overall allocation to commodities, including gold and silver.

Real estate: 5% to 30%

It's tough to measure the performance of real estate because prices vary by cities and neighborhoods.
Still, here's an estimate of how residential real estate prices have moved this year in three major Indian cities.
The smallest returns came in Bangalore, where apartment prices gained 5% to 10%, according to Gulam Zia, national director for research and advisory services at Knight Frank India Pvt. Ltd., a real estate consulting firm.

In Delhi, Mr. Zia estimates that prices went up between 10% and 20% but for some luxury apartments they gained as much as 25%.

Mumbai was the best-performer, with gains of 20% to 30% this year. However, Mr. Zia adds that toward the end of the year sales volumes of new apartments dropped and he expects prices to drop as much as 10% to 20% in the first few months of 2011.

"Buyers in Mumbai should wait for the next quarter or two," says Mr. Zia. He expects some decline in Delhi prices as well.

Given the large amounts of money required to buy real estate, and the lack of liquidity, only the very rich should consider dabbling in this for investment.

Write to Shefali Anand at shefali.anand@wsj.com

Tough year for Mutual Funds

Chandan Kishore Kant / Mumbai December 31, 2010, 0:36 IST

Source: http://www.business-standard.com/india/news/tough-year-for-mutual-funds/420164/

Still adjusting to entry load ban; niche segmentation a new and growing trend.




The year 2010 was tough for domestic mutual funds. Fund houses struggled to get some relief from the continuous outflow but in vain. However, they’re optimistic, given the huge untapped market.



Though there were no major regulatory changes, the industry continued to be hit by the market regulator’s step over a year earlier, of banning entry load for MF equity schemes. Experts had anticipated the changes would be assimilated and the market would return to normalcy in four to six months. However, even after over five quarters of the new regime, fund houses continued to find it hard to address the issue and add assets.




Data with the Securities and Exchange Board of India show the average assets under management (AAUM) was Rs 6,73,186 crore on November 30. This is a decline of over 15 per cent when compared with the AAUM as on December 2009.



Equity schemes were the most hit. It was a year of redemption for them. There was inflow of fresh money, too, but investors in the boom before the market crashed chose to book profits and move out.



The change during the year was substantial reduction in New Fund Offers (NFOs). During the boom period in 2007-08, the industry came up with 55 NFOs, which garnered about Rs 43,000 crore. This year, the number dipped to 16, which could manage to collect a mere Rs 2,738 crore



Fund players said though this year’s markets were at almost the same level as in 2008, the sales of equity MFs could not keep pace. “During that time, NFOs helped the industry garner a much greater sum. On Thursday, NFOs are no more in fashion, as they are incapable of raising funds,” said the chief investment officer of a top fund house.



CEOs admit intense competition but add there is huge scope, as the larger part of the potential market has not been touched or is under-penetrated. After the top eight cities, the other tier-I & tier-II cities are now on the radar of fund houses.



Smaller fund houses and entrants in the market are positioning themselves as niche players. Instead of venturing into all the asset classes, they are specialising in segments, seeing the market getting crowed with seasonal products.



“Transparency, simple but strong and different products, and value addition for investors are the strategies which fund houses are concentrating on,” said the executive vice president of a large distribution & broking firm.



Foreign-based firms having presence in India are in the process of bringing their global products. “Fund houses are more and more investor-focused and take measures to keep investors comfortable by not confusing them,” he adds.

This MLM openly flouts SEBI norms and offers 120% returns in a year through stock market investment!

This MLM openly flouts SEBI norms and offers 120% returns in a year through stock market investment!
December 27, 2010 04:47 PM
Moneylife Digital Team
Source: http://www.moneylife.in/article/78/12686.html

Stockguru.India and its group companies are self-styled investment advisors, offering Rs22,000 on an investment of Rs10,000 in one year

As if there were not enough potholes on the stock market route, here is a multi-level marketing (MLM) company that is promising 20% returns per month! The company Stockguru.India describes itself as the country's 'Premier Financial Consultancy', offering trading solutions in equity, derivatives, currency futures, commodities trading, initial public offerings (IPOs), insurance (life/non-life), general insurance, mutual funds, portfolio management services, terminal handling all under one roof. 

Stockguruindia.com (the company's portal) has only one standard line of advice in all market situations-whether it is a bull market or a bear market, range-bound market or volatile market. It says, "We advise our clients to buy shares at a low price and sell them at a higher price. Selecting the right share at the right price and entering the capital market at the right time is an art. We help all our clients to make huge profits by investing in good shares for very short/short/medium/long term depending upon the client's requirements. Trading/investment for minimum intraday to T+5 days may give you a handsome return of 5% to 25% on your capital investment." 

This MLM company's investment (!) plan is simple. You pay a minimum Rs10,000 as investment and Rs1,000 as registration fees. There is no limit on the maximum amount one can invest. Stockguruindia.com offers a return of 20% per month for up to six months and the principal amount invested is returned in the next six months. It also gives post-dated cheques of the principal and a promissory note as security. In short, on an investment of Rs11,000, the company offers to pay you Rs12,000 in six months and the rest Rs10,000 over the next six months, a total of Rs22,000 or a 120% return in a year. 

So how does Stockguruindia.com offer such a high return where even leading investors like Rakesh Jhunjhunwala found it very hard to earn even 20% return from the stock markets? Here is the company's logic..."If you have gained Rs1,000 somebody has lost Rs1,000. If you have lost Rs1,000 somebody has gained Rs1,000. Most of the people you meet say (around 90%) that we have lost a lot of money in the financial markets. But that means around 90% people you do not know have made huge profits. For every seller there is a buyer." 

If this sounds to be too good to be true, it lures investors with an additional 3% per month income through a binary plan of 27 levels. Binary plans of MLM companies are the new clients you bring in, who are placed below you in rank in a right and left combination. It's nothing but a trap. All MLM companies promise say you rewards if you complete the left leg-right leg cycle. But in practice this does not happen. There are very few people who manage to do this in a proper way. A majority of those participating fall in the category where they lack a single member in one leg, or a member becomes inactive thus freezing the spread of that leg and the business. 

How do MLM companies operate without a trading license from the regulators, the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI)? Why has there been no action against Stockguru.India, Stockguruindia.com and its subsidiaries? Market regulator SEBI had, on its part, issued SEBI (Investment Advisers) Regulations, 2007 (the 'Draft Regulations') to regulate the advisory activities of investment advisers in India. But till date it has remained a draft only. 

According to R Balakrishnan, a columnist for Moneylife, India probably is the only market in the world where a distributor needs to pass an exam, but absolutely no qualifications are required for someone to become a fund manager. The same is applicable for investment advisors as well. As a result, there are a number of 'self-styled investment advisors', including wealth managers, private bankers, chartered accountants and even some MLM companies like Stockguru.India.  

According to the SEBI Act 1992, "No stock-broker, sub-broker, share transfer agent, banker to an issue, trustee of trust deed, registrar to an issue, merchant banker, underwriter, portfolio manager, investment adviser and such other intermediary who may be associated with the securities market shall buy, sell or deal in securities except under, and in accordance with, the conditions of a certificate of registration obtained from the Board in accordance with the regulations made under this Act." 
 
In addition, the Act says, "No person shall sponsor or cause to be sponsored or carry on or caused to be carried on any venture capital funds or collective investment scheme (CIS) including mutual funds, unless he obtains a certificate of registration from the Board in accordance with the regulations." 

Stockguru.India and all its group companies are openly flouting the norms and rules. It is not registered with SEBI as investment adviser and still offers to trade on behalf of its clients. According to information available over the internet, Stockguru.India and its chairman and managing director Lokeshwar Dev, will help anyone to open a demat account with Sharekhan so that they can manage the investor's money. We checked with Sharekhan and the brokerage said, neither Stockguru.India nor Lokeshwar Dev have any relations with or any demat account with them. 

In addition, neither Stockguru.India nor any of its group companies possess a certificate of registration from SEBI for CIS, but they are still collecting huge amounts from clients under the pretext of stock market investment. 
Are the regulators sleeping on this one?

Shaky financial advisors look for stronger ground

Shaky financial advisors look for stronger ground

HT Correspondent, Hindustan Times
Email Author
Mumbai, December 26, 2010  

  

                                                                                                                                                         Source: http://www.hindustantimes.com/Shaky-financial-advisors-look-for-stronger-ground/Article1-643146.aspx   

Independent financial advisors have gained ground in the investment business after a year of tumult that saw a regulator-enforced shift from commission-based earnings to fee-based earnings but the industry is still shaky. Advisors have courageously bid good-bye to the old regime, but are grumbling about the poor earnings potential in the new world after the Securities and Exchange Board of India (SEBI) backed measures that barred entry loads in mutual funds.

A survey of 373 independent advisors across the country conducted by Cafemutual reveals that as many as 95% want regulation that would help raise the standard of financial advisory firms.

The survey revealed that in a clear shift of focus, as many as 42% of independent financial advisors have started charging fees from their clients.

However, commissions have always been influencing the funds sold and the survey results confirm this. Almost 57% of the independent financial advisors in the survey said that commission structure was influential in pushing investment products.

Almost 70% of those surveyed said the stance of the mutual fund industry on entry load ban has not been supportive of independent financial advisors.

Most of the independent financial advisors (74%) feel that the decision on no entry loads would not be reversed even with a new SEBI chief coming on board in February after the end of incumbent chairman CB Bhave’s term.

"I think we will come out with a progressive solution rather than going back on entry load as it is a good decision in the long run," said the head of private banking at a leading private sector bank in India.

Equity Investments vs. Mutual Fund

Analyze the market conditions carefully with the help of a broker who can guide you towards investing in right stocks.

Prajakta Ambre | Fri Sep 3, 2010 TAGS: diversified funds, equity vs mutual fund, investing in equities, investing in mutual fund, investing in right stocks,investing in stock market, investment plans, MIP, mutual fund manager, SIP, Stock market news

Source: http://www.stockmarketdigital.com/blogs/editor/equity-investments-vs-mutual-fund

Stock markets have been in a highly volatile mood since the beginning of the year. Investors are playing safe as far as equity investments are concerned. Many investors believe that investing in a stock market is all about investing in equity shares at low prices and selling them at high prices at the right time to achieve the expected returns.

This popular belief doesn’t always work because markets keep fluctuating and have tremendous impact on the way trading is done. Regardless of the investment options you have, choosing right stocks is the first step you should take while investing in the stock market.

If you are a new investor, and are uncertain about the kind of stocks you should pick, then you should start with investing money in Mutual Funds or SIPs (Systematic Investment Plans). Mutual Fund Investment is a subject to lower risk as they are tradable securities and can be bought and sold freely, at the current value of the securities invested in.

The money invested in a Mutual Fund Company belongs to you as an individual investor and you can withdraw from the fund at any point of time. This again depends on the kind of Mutual Fund you select. Nonetheless, make sure that you check the track record of the Mutual Fund Company before your start investing.

As far as investing in SIPs or MIPs (Monthly Investment Plans) is concerned, there is nothing like good timing or bad timing. The longer you wait to invest in SIPs, the more complicated it may get for you.

Analyze the market conditions carefully with the help of a broker who can guide you towards opening an account and recommend you the kind of stocks you should select. The broker handles your major transactions; however, you should remain cautious and make the right decision while buying stocks.

Full time investors with a very good risk appetite can take negotiable risks with equity investments. Equity investments include various types of equities that have diverse impacts. One of which is private equity that contains equity securities which cannot be publicly traded. There are many other investment strategies that can be considered and the amount of risk each investor incurs depends on that type of investment.

Mature investors prefer to diversify their investment strategies to be on the safer side. As you can buy multiple shares with a single trading account, you can opt for both short term and long term equity shares.

Start with slow and steady investments and be a safe player. Support your instinct with correct facts by watching the stock market carefully and expect the desired returns on your investment. Thus, it makes more sense for investors to stick to mutual funds at this point of time and have an indirect exposure to the stock market to stay invested for a long term and incur benefits.

What makes you richer? ULIPs or Mutual Funds?

Both ULIPs and Mutual Funds help you maximize your monetary prospects. But we tell you which is better!

Gaurav Sharma | Sun Dec 26, 2010 TAGS: equity investments, investment options, MFs, mutual fund, mutual fund vs ulip, ulip vs mutual fund, ULIPs, Ulips vs mutual funds, Unit Linked Insurance Plans

Source: http://www.stockmarketdigital.com/blogs/finance/what-makes-you-richer-ulips-or-mutual-funds

ULIPs (Unit Linked Insurance Plans) and MFs (Mutual Funds) are some of the best financial instruments that help you earn well and maximize your wealth prospects within a stipulated time. When it comes to diversifying your wealth, you should considering investing in both.

However, if you have to choose between the two investment options, then you should refer to the following comparison in order to make the best choice.

• Longevity

- ULIP is a long-term investment product with a term of ten years and more than that.
- Mutual Fund is a relatively short-term product with a timeline of three to five years.

• Expenses

- Expenses incurred in ULIPs are bigger and are decided by the respective insurance company.
- Expenses incurred in Mutual Funds are lesser as they are set in pre-established investment system.

• Tax Benefit - ULIPs give better advantages as tax benefits qualified under Section 80C of Indian Income Tax Act help saving tax worth Rs. 10,000.
• Under Mutual Funds, Equity linked tax saving scheme (ELSS) is the only investment option that provides the tax benefits.

• Return on Investment (ROI)

- In ULIP investments, charges get spread over a prolonged period of time and thus, the return on investment is good yet deferred.
- In case of a Mutual Fund, return on investment is quicker and higher than expected, depending on the skill of the fund manager.

• Net asset value (NAV)

- In ULIPs, the insurance company allots units to the ULIP investors and the NAV is calculated and declared on a daily basis.
- In Mutual Fund, the respective company allots units to the Mutual Fund investors and though the NAV, the current value of the investment is calculated on a daily basis.
 

Conclusion
Thus, from the investment point of view, Mutual Fund is definitely a better option. However, if you need insurance cover along with investments for a longer period of time, go for ULIPs.

UK Sinha is new SEBI chairman

Source: http://www.rediff.com/business/report/uk-sinha-is-new-sebi-chairman/20101213.htm

U K Sinha, chairman of the Association of Mutual Funds in India, has been named the new chairman of the Securities and Exchange Board of India.

Sinha will take over on February 17 next year when incumbent C B Bhave's term ends.

Bhave took charge as Sebi chairman on February 18, 2008 on a three-year term. However, the terms of chairman and whole-time directors at Sebi have been increased to five years since then. Similarly, the terms of RBI and insurance watchdog IRDA's chiefs have also been increased to five years.

Sinha, a former IAS officer of Bihar cadre (1976 batch), had lost out in the race the last time when the Prime Minister's Office preferred Bhave over him.

According to media reports, Sinha quit IAS when he was holding the rank of an Additional Secretary to the Government of India and continuing on deputation with UTI.

But after quitting civil service, he was given another five-year term as CMD, not as a government nominee, but as the choice of the stakeholders of UTI AMC. State Bank of India (SBI), Bank of Baroda (BOB), Life Insurance Corporation Corpn. and Punjab National Bank (PNB) are the promoters of UTI AMC.

Sinha earlier held key positions in the Government of India, notably in the Ministry of Finance, where he was the Joint Secretary, looking after capital markets, external commercial borrowings, banking and currency and coins.

During his tenure at the ministry, he spearheaded several initiatives, such as banking and capital market reforms.