Trade Egypt ETF Carefully: Egypt ETF Trading despite closure of Egyptian Stock Exchanges

The latest unrest in the Middle east countries is opening up new dimensions and lot of lessons to be learnt for the so called ETF investors.
ETF's or Exchange Traded Funds, which are considered to be low cost and highly efficient investment, are not that risk free, as things unfold in the political developments in countries like Egypt, Tunisia, etc., where there is civil unrest and political problems.

Egypt ETF: Trading going on in Egypt based Exchange Traded Funds

We recently covered the details about What to do when ETF Closes or Shuts down? and had listed the ETF Investments Risks & Precautions

However, the case with the latest development in the ETF markets for the case of Egypt ETF is completely different.
In this article, we discuss the Egypt ETF performance in the current scenario, and the new interesting cases which have emerged for Egypt ETF like the Van Eck Market Vectors Egypt Index exchange-trade fund EGPT.P

Let's look at the developments one by one:
First, there is a civil unrest in a country like Egypt. So what do you expect - general closure that includes closure of the country's stock exchanges.
Second, the next expectation will be that the stock market indices for that exchange will not trade, as the stock exchanges are closed. Similarly, the financial products like ETF which are based on that country's stock indices will either stop trading or will fall.

Interestingly, things have happened differently for Egypt based ETF.
First - even though the Egyptian Stock Exchanges are closed, and hence the indices are not moving, the Van Eck Market Vectors Egypt Index ETF is still trading. This is something really interesting and should be an eye-opener for people who believe that ETF's really TRACKS the underlying index.
The underlying index is shut down at the moment, but the ETF is trading and showing large swings in either direction.
So what's the price driving factor for this ETF in such times? There is no definitive answer to it, but the market experts claim that the prices are moving based on speculation, fear on the downside and greed and some so called algorithms for pricing models on the upside.
In essence, there is no surity of anything.

Another important fact to note - the prices of this Van Eck Market Vectors Egypt Index ETF have shown large swings - both on the positive side and the negative side. On Friday, this was down in big no. while on Monday, it managed to cut back its losses and gained around 6.5%.
Now that's interesting.

So what is happening on this trading for Van Eck Market Vectors Egypt ETF?
Investors and traders feel that the civil unrest is temporary and they are using it as a buying opportunity. The general perception going on in the market is that "Egypt is too large country to fail". (Really? I beg to differ)
This might be perceived as a positive sign in market.

Not only that, the SPDR S&P ETF which is for emerging Middle East & Africa has shown positive price movement.
Although Van Eck is reported to have put on hold the creation of new ETF units for Egypt ETF, the redemption is still going on. Hence, the ETF is learnt to be trading at a premium.
Common investors are advised to be cautious on trading in such turbulent times

Google: What's Going Wrong with Google?

Today, we've been joined by a new member in the contributors group. He likes to called Monty and will be working on doing a "transperancy analysis" on companies, businesses, countries and more, in his own unique critical, hilarious style. Enjoy these articles from Monty
Hello Everyone. I thought of starting my venture on FT Times with something on the bigger businesses. The king of Internet - Google!
Why I selected Google? Well, I really like it's search engine. No, I'm not talking about quality, but about the way it initially designed itself in the beginning (and in turn forced other search engines to become algorithm based rather than directory based).
It was Google Search Engine which enabled each individual on this planet to find info on the internet, if not in the first few results, atleast some relevant info somewhere down the line. Quality I will discuss later. Google Logo from Google.com
Another reason for taking on Google as a topic was the recent developments. The Google Chairman, Eric Schmidt, recently stepped down, declared to sell his Google Shares.

One thing I really like about the corporate world is any news - good or bad - is conveyed in such a good diplomatic way that it appears to be a really positive news. So there we had it - on the Official Google Blog - Eric posted his message about how positive development this is going to be (See Google Blog Post by Eric. It appears that Google does not need any "adult supervision" anymore.
However, the world around the corporates - the media, the analysts and all - have their own ways of interpreting the information. So The Guardian quoted the news as saying Eric is actually being replaced by Larry Page. Moreover, Eric is going to sell a good enough portion of Google shares.
Eric was instrumental in many things - he was there with Google for more than a decade, was instrumetal in making Google a public listed company, and all of a sudden, his "adult supervision" was no longer needed.
The market was shocked at such development.

Now let's see what led to this situation (offcourse in my style and from my perspective):
- In essence, Eric has made way for Larry, the founder of Google.
- "No Adult supervision needed" is something which might indicate the need for new innovation, new ideas and their successful implementations
- May be that is something Eric failed to drive, so the company goes back to the basic roots - innovation in areas where it failed
- Company did grow with Eric, but the growth appeared only in no. of employees but no new innovative and materialistic money generating products coming in
- More problems than businesses - Google locked horns with governments and other regulatory authorities - for eg. had to leave China

Where did it suffer setbacks?
Almost everywhere. Let's have a look it in a dialogues form (Again, my perspective, just in a good format :-)

Q: Hey Google, what happened to the venture into the mobile phone business? (We questioned it earlier also Google Nexus One Phone: Does Google really need it?)
Google: Yeah. We did that well (we suppose). So what if we fail to make a mark. So what if there were already cheap (and better) smartphones available from Chinese market at lower prices. We did try our innovations!
We kept our employees happy by distributing the nexus to them.

Q: How about the social media failures?
Google: Failures - what failures? Dont you know we created a lot of "Buzz", then we already had "Orkut" (heard that name before), then we surfed on the "Wave". We're still experimenting.

Q: OK, Gmail is still the best?
Google: We believe. The so called gmail killer by Facebook still does not exist. Gmail is loved by all

Q: How about the Apps market?
Google: Well, there are some news that Apps market is not picking up. But that's fine.

Q: Chrome did do really well - fast browser built up the market share in no time
Google: Yes, that's what we are banking upon. We even invited selected US based users to participate in the lucky draw and get a Chrome based netbook free for trial. Looking forward to it.

Q: Now to the core - what about your search stats and quality?
Google: Quality - who questions our quality, we decide the quality.
Remember the buzz - "Google takes more than 200 parameters into account for search engine rankings". What they are, nobody will ever know (probably even google doesn't)
We keep experimenting - it now appears that anything on any news websites will be given precedence. So whether you search for an "XYZ Review", all one will get to see is news websites which dont really contain a review, but generic news information about XYZ. So search for a "review" will lead you to "news".
Although there are some really good authentic sites included in "Google News", we also accomodate some copy-cats. (There should be room for all). After all, we take the call. No problems if users get unhappy with the results in a small no. of cases.

Q: What about Spam Handling?
Google: Spam is what we are fighting with at the moment. So what if we have to block lots of sites and blogs. It does not matter who published what at what point of time. If our algorithms believe that it is spam, so it is. We've pulled the plugs - let the "spammers" suffer.
A small guy publishes a good original content on his small blog. After sometimes, Big guys copy it on their Big site (including Google News verified sites).
In our ways, Big guy is big, so it must be the small guy who has copied from the big guy. So punish the small guy and call him a "spammer". We have fool-proof algorithms to do that. Unfortunately, despite our algorithms take 200+ parameters into consideration, our algorithms aren't smart enough to take publish time into consideration - whether the small guy published it first or the big guy copied it later.
Even though our increasing headcounts are being questioned by Wall street analysts, we still rely on our algorithms to decide what is spam. We dont have enough people to decide the spam - that task is outsourced to our algorithms - they take the call. Spammers are out!
The internet is our kingdom, we'll clean it up the way we want it. End of the Story!

Q: What are the future plans?
Google: Looking forward to some more innovations under the new leadership.
We're doing a lot of experiements - Solar Panels Energy: Angle of Solar Panel Tilt Correlation: Google Experiments
After all, there are more things to do than search.
End of Q&A.

Now, Google appears to be in a transition phase. From a company working from a garage, to the internet search engine king, to the public listed company, to the business expansion in non-core markets and now back with the founders in the driving seat.
The "Do No Evil" company needs more insights for capturing the market share. Already, lost grounds in China and similar other countries with huge population. Remember, Google clients are commmon people (apart from a handful of corporates).
The "Spam" elimination exercise has already made a lot of people furious. Publishers, Bloggers have turned their back to Google.
Search being its core, is taking a hit. Everything in top search results comes from NEWS websites. Seems like the algorithm needs a rethink.
Support - does it really provide any? Everything is left to volunteers who "try" to help on open forums. No questions can be asked, no answers can be demanded, no liability. This is where it needs to work on.
With other search engine giants like Bing and Yahoo coming out in a big way, dont be surprised if Google starts loosing its search market share also. It needs improvement, and quickly. Twitter and Facebook are way ahead - Technology runs at a rapid pace

Fidelity India Children's Plan: Review, Analysis & Details of Fidelity Children Plan Funds

All parents in this world care for their children - and that means providing them with all kinds of support - financial support being the most important one. It requires paying for all kinds of expenses for the children, right from the birth till the child becomes capable enough to live on his own.
In countries like India, parental care continues till long - even after a person has settled in his job, got married and so on. Hence, Indian investment market is flooded with so called Children Plans or Children Investment Plans, which claim to take the worries off the parents provided an investment is made in such plans by the parents.

Fidelity India Children's Plan Review & Investment Calculations

Fidelity, which is a reputed name in Investment business, has come out with its own version of Children Plan called the Fidelity India Children's Plan. In this article, we review the Fidelity India Children's Plan investment scheme and try to explian whether this investment is any good option for investment

The 3 main expenses for a child in India are his education, his marriage, and some savings which can be given to him to settle down or start up service/business so that he can start earning. Fidelity has focussed on these 3 expenses for a child and that is the underlying funda behind this offering.
This investment product from Fidelity called the Fidelity India Children's Plan is actually a mix of 3 funds - you can call it Fund of Funds (What's this? Fund of Funds Explained). The three underlying funds in this children investment plans are:

- Education Fund

- Marriage Fund

- Savings Fund

So in essence, when you invest your money in Fidelity India Children's Plan, that money will get invested in different proportions in above 3 funds which will be managed by Fidelity Fund Managers. From the one pager document which is available on Fidelity's site (PDF), it appears that an investor is allowed to make investments into his choice of funds, as he is allowed to switch money from one fund to the other.
Before checking the calcuations, let's see some basic details of this Fidelity India Children's Plan and it's udnerlying funds:

Things which are common to all the funds:
Minimum Investment Amount is Rs. 5,000 PER FUND. i.e. anyone willing to invest in all the 3 funds will have to invest atleast 15,000 Rs.
Above that, investments are accepted only in multiples of Rs. 500 in each fund. Now this is something which I dont like. First there is a minimum investment amount at 5K, and if anyone wants to invest more than that, there is a multiple to be followed at 500. It creates a problem for investors if they are tight on budget or are going by some allocation on their own (say anyone willing to invest a total of 20K in equal proportions in all 3 funds, he cant invest 20K/3 = 6,666.67 since it is not a multiple of 500). Investors either have to do away with their calculations or invest different amounts. In my opinion, anything in multiple of Re. 1 should be allowed over and above the minimum investment limit.

One more thing which investors must clearly note is the Minimum redemption amount/units: Rs. 1,000 or 100 Units in respect of each Fund
This again will cause a problem if an investor wants to redeem systematically. Another restriction!

Like any typical mutual fund option, you have the Growth and Dividend Options.

SIP, SWP and STP are available in all the 3 plans.

There are no charges for switching between your invested capital these 3 funds. However, it is not clear whether the switching amount has to be a multiple of Rs. 500 or not.
So overall, if you think you can meet these "restrictions" of investment set by Fidelity India Children's Plan, you can consider this for investment.

But hold on, let's see where your invested money is going, what are the charges and what can you expect in return? Continue to Next part

Fidelity India Children's Plan: Funds available for Investments

So now you know the basics of Fidelity India Children's Plan as covered in our first part of Fidelity India Children's Plan: Review & Details (Please read part I before reading this part). In this article, we will cover the basic details about individual funds of Fidelity India Children's Plan
For a moment, Just to take you off the track with this Fidelity India Children Plan, and provide you with an independent opinion about education plans business in India, I strongly recommend people to read the article Insurance v/s Investment v/s Tax savings. In that article, a good example is quoted about how different children plans & investment products go about doing business and the market for the same. Although it has no linkage to the Fidelity India Children's Plan Scheme since this is simply a fund scheme based on market returns, reading that example will give a clear insight into the children policy and investment business market and what one should be careful about before deciding to invest in children plans and other schemes.

Coming back to Fidelity India Children's Plan, Let's briefly check each of the 3 funds of Fidelity India Children's Plan:

- Education Fund - Fidelity India Children's Plan :
Trying to cater to the education cost needs of the child, this Education fund will attempt to generate long term gains. So, the money required for children education can be paid through the returns of this fund. All well said, but there is no guarantee of anything.
Whatever money you invest in this Education Fund, 65 to 100% of it will be in equity investments, as this is for long term. But then, no guarantee of any returns. Rest of the money 0-35% will be in debt and money market instruments.

- Marriage Fund - Fidelity India Children's Plan :
Another long term investment horizon fund. Similar Asset allocation like Education fund, but additionally this fund will also invest 0-25% in Gold based ETF's. (See list of Gold Based ETF's available in India)
Again, no guarantee of anything - your returns are dependent on the market risks and the performance of the underlying invested assets

- Savings Fund - Fidelity India Children's Plan :
Everything in Savings fund is invested in debt and money market instruments, so that there is some savings amount available. Since it is dent based investment, dont expect high returns from this funds, as can be from other equity based funds.

Overall, this will be a pure mutual fund scheme, with units being offered at Rs. 10 during NFO period and then the end of the day NAV value will be calculated post the NFO period. Typical Fund of Funds scheme.

So now, you like this product from Fidelity and want to invest in it? Hold on again, let's check the charges you need to pay to invest your money in this scheme and also the charges you will pay if you want to exit from this scheme or redeem your invested money. Last Part: Charges for Fidelity India Children's Plan: Exit Load, Entry Load

Charges for Fidelity India Children's Plan: Exit Load, Entry Load

This is the last part of our series on Fidelity India Children's Plan - Part II. If you've not read the prevous parts, please read them before continuning with this final part.
Charges for Fidelity India Children's Plan:
What are the Entry Load Charges for Fidelity India Children's Plan?
It appears that there are no entry load - like a standard mutual fund regulation which has come in recently. However, investors must check if there is any before making any investment. Nothing is mentioned in the one pager from fidelity about entry load or other charges.

What are the Exit Load Charges for Fidelity India Children's Plan?
Heavy and Heavy Charges if you exit sooner - the sooner you exit, the more charges you pay.
Let's see:
For Education and Marriage Fund, Exit in less than a year will cost you 3%, within 2 years will cost you 2%, within 3 years it will be 1%.
Their idea is to have investors invest their money for long term, so high exit charges. But that's their idea - does it fit your investment requirement?

For Savings Fund, within 1 year exit will cost you 0.5%
Investors can get more info by calling on Fidelity Toll Free no. 1800-2000-600

ANy tax benefit available in Fidelity India Children's Plan
No. You will not be able to save any tax for investments made in Fidelity India Children's Plan.

Final thoughts about Fidelity India Children's Plan?
This is a fund of funds scheme.
Loads of variety, investors have options to switch, but then overall it is nothing more than a mutual fund.
The advertising and the naming of the product is for specific purpose - "To meet the future expenses of your child". You know that the expenses are guaranteed and they are not fixed, but high cost variables. No one knows how much a marriage will cost 15-20 years in future.
However, although this product is being named and advertised for definite purposes - returns, infact, nothing is guaranteed.
Will the returns from the marriage fund after say 15 years of investments be definitely sufficient for marriage of your kid? Not sure.
Will the returns from the marriage fund after say 15 years of investments be definitely sufficient for medical education of your child? Again, not sure.
So, it all depends upon the market and the returns from the invested products which will be managed by the Fidelity Fund Managers.
No tax benefit is available, so no savings there either.
If you trust the fidelity fund managers and are fine with the investment horizons and the charges (if any), then investors can take a call to invest in this fidelity fund.

As an alternative, if things are based on market returns, why not invest in the markets directly through ETF's or Exchange Traded Funds? Here is An example of Nifty 50 based ETF and Nifty Junior ETF with returns calculation. Similar investments can be made in Gold based ETF's See list of Gold Based ETF's available in India

Oil & Gas ETF: Review, Analysis & Details of Gasoline Oil Gas based ETF

The global rise in the demand of Gasoline or petrol is well known to all. The rise in demand is going to rise further and further. Although other sources of Alternative energy (see Alternative Energy Mutual Funds) have been identified, these alternate sources are still not that efficient, and the world is will continue to have its dependency on the surging crude oil prices.

Oil & Gas ETF: Oil & Gas Exchange Traded Funds

Right from the common man willing to fill oil in his car tank, to big corporations and governments, everyone is dependent on oil. One needs to know how to hedge against the oil prices and the simplest way to do that invest in investment products that track the prices of oil and gasoline. If we delve into the history of Oil prices (See Oil prices historical data chart), we'll observe that oil prices have been been fluctuating widely.
To prevent the effect of such highly volatile oil prices, the best way is to invest in oil prices based investment products which can act as a shield or hedge from the fluctuations in oil prices. Here, In this article, we provide a list of few Oil Based ETF or Exchange Traded Funds, which can be invested in or traded for benefitting from oil price fluctuations

1) iShares Dow Jones US Oil & Gas Exp.(ETF) IEO
The first among the Oil based ETF's stands the famous iShares Dow Jones US Oil & Gas ETF.
It attempts to track and has the Dow Jones U.S. Select Oil Exploration & Production Index the underlying index. This index is for oil exploration and manufacturing companies and includes the oil companies which are in the busines of exploration of oil as well as extraction, production, refining, and supply of oil and gas products.

2) United States Gasoline Fund UGA
The second on our list is United States Gasoline Fund which is trading on NYSE. The working of this Fund is a bit complex to understand, as this works on certain price differentials between the spot prices of the gasoline in NewYork market, versus the prices of the gasoline futures contracts being traded on NYMEX exchange. In essence, this fund works on generating returns based on the investing in futures Contracts and Other Oil-dependent investment products.

3)PowerShares DB Energy Fund ETF DBE
This ETF is from PowerShares and trades on NYSE. It tracks the Deutsche Bank Liquid Commodity Index - Optimum Yield Energy Excess Return Index.
If you are looking for investments in an ETF which has exposure to Energy Commodities, then this is the ETF for you. This PowerShares DB Energy Fund ETF invests in highly liquid energy based commodities like natural gas, sweet crude oil, heating oil, etc.
In a way, this is a good ETF for the energy sector.

4)Vanguard Energy ETF VDE
Another NYSE listed Energy based ETF, from the house of Vanguard. Being the front runners in the low cost fund categories, Vanguard has this energy sector specific ETF (See List of Low Cost Funds from Vanguard).
This ETF tracks the performance of MSCI US Investable Market Energy Index. The good thing about this ETF from Vanguard is that this covers all kinds of US based companies irrespective of their size. Also, the main criteria for inclusion in this scheme is also quite varied, giving a lot of variety to invest - companies in the business of oil rigs construction, to any kind of oil business - be it prodcution, manufacturing, refining, even transportation of oil and oil based products qualify for investment in this scheme.
So this ETF fro Vanguard, which is a trusted name in low cost fund management, offers investors another good option to explore for investments in Oil and Gasoline Based ETF Exchange Traded Funds

ETF Closed / ETF Shutdown: What to do if your Exchange Traded Fund Closes Down?

In this article, we cover details and steps about what to do when an ETF closes down or shuts Down. ETF - Exchange Traded Funds

So you thought that Exchange Traded Funds or ETF's were risk free? Just because an index based ETF is tracking that underlying index, and that underlying index is not going to close down or go bankrupt, that does not mean that the ETF will not close down. The fact is the ETF's or Exchange Traded Funds, do close down or shut down and there is a risk in such ETF investments or Exchange Traded Funds investments.
Let's address the issues one by one:

1) My ETF tracks a major index, hence returns will always be similar to the performance of the index:
No - that is not always the case.
As covered with full details in the article Largest ETF List: Low Prices do matter for ETF, we discuss a case of 3rd and 4th largest ETF's which are tracking the same underlying index, yet the returns from both the ETF's are different.
So dont live under the false impression that ETF's tracking the same index will give similar returns. There are other factors as well (like fund charges and prices), which might affect the ETF returns

Exchange Traded Funds ETF Closure Shut Down

2) ETF or Exchange Traded Funds never close down:
This is myth no. 2. let's look at some stats - The table below shows number of ETF's closed down in USA in the given years.
Year - No. of ETF's Closed

2010 - 49

2009 - 56

2008 - 58

As we can see, there are quite a significant no. of ETF's which are closing down each year. Although one can argue that the no. is declining each year (from 58 in 2008 to 49 in 2010), but the fact is that there are ETF closures. What if you ended up holding your major investments in one of these closed ETF's?
Another thing which can be argued is if around 50 ETF's are closing each year, there are 100's more which are coming up new. Correct, but here we are not worried about what new investment options are coming up. We need to worry about what happens if our invested ETF closes down.

What are the signals that ETF might close down or shut down?
Although there are no such signals which can be clearly mentioned, one can keep a close look at some of the numbers and recent market activities for a particular ETF.
- Is there a sudden decline in the asset under management amount for an ETF?
- Is there a sudden change in the trading volume of an ETF? Are investors redeeming the ETF units at a high pace?
- Is there a remarkable change in the performance of the ETF with respect to its underlying index i.e. high tracking error? like if the index is up by 2% today, your ETF is up only 1%? This typically happens when the fund company which sells ETF has problems.
- Is there another similar ETF which is following the same index and there is a big difference between the returns of the 2 ETF's?

All these pointers can be checked at regular intervals to see if the ETF is showing any signs of problems and is prone to ETF closure.

What to do if my invested ETF has closed down or shut down?
Unfortunately, there is no standard procedure which is followed by the ETF company for closing down the ETF and redeem the units for the ETF investors. What typically happens is the advantages of ETF's become the disadvantages if it is declared to be closed down. Like one of the advantages of ETF is that it trades like a share in open stock market. However, if a closure declaration or closure news comes in, the same open market trading can cause huge selling pressure and prices might fall dramtically. If you happen to sell in that panic mode, you might incure losses.
Other option is to wait till the final redemption date or liquidation date actually comes close, i.e. the last trading date or redemption date of the ETF, and then take what you get. However, again, you dont have any control over what you will get as the actual value will depend upon the market prices, redemption process etc.
So, just dont live under the false impression that ETF's are fool proof investments. Keep a close eye on what's going on with your invested ETF as listed above. ETF's do have risks and they do shut down causing Exchange Trade Funds Closure.

Largest ETF List: Low Prices do matter for ETF selling in USA ETF markets

Exchange Traded Funds or ETF's have been the flavour of the investments since last many years. All know that they come with the multiple benefits of low cost of fund administration charges, benefit of trading like shares yet exactly replicating the underlying index performance, and so on.
It's time now to look at what is going on in the ETF markets in USA and which ETF's are becoming bigger and better. Does the price of fund i.e. fund management charges have any impact on the selling of funds?
If you look at the latest list of ETF's as per the value of investments, then the answer to that question comes out to be a Yes - i.e. price of funds do matter to investors.

First of all, let's have a look at the list of Largest ETF's as per the recent data prepared by Bloomberg. For more details about benefits of investing in ETF or Exchange traded funds, please see ETF Investing: Investments in Exchange Traded Funds.
Figures in the bracket is the amount for assets under management for each of the funds.
.
1 - SPDR S&P 500 ETF Trust by State Street ($90 billion)

2-

3- Vanguard Emerging Market ETF ($46.2 billion) - (See all Popular Vanguard Mutual Funds)

4- BlackRock iShares MSCI Emerging Markets ETF ($46 billion)



It is known that the US ETF market is close to 1 trillion USD. Out of that, the leader SPDR S&P 500 ETF Trust manages almost 10% of the total US ETF market. The rest around (4.5% each) is now with no. 3 and no. 4 rank holders.
We will concentrate our discussion on the two funds only (listed no. 3 and 4 above) because they both track the same index.

What is more important to note in the above list is that although Vanguard is just marginally above BlackRock (only difference of 0.2 billion), the situation was completely different a year ago. It was the BlackRock fund which was almo0st double the size of Vanguard Emerging Market ETF.
Hence, this clearly indicates that Vanguard has been able to pull lot of ETF investors to its funds in the growing ETF market, while BlackRock fund appears to be loosing its base.

Why has this happened? Why BlackRock iShares MSCI Emerging Markets ETF lost to Vanguard Emerging Market ETF?
The answer perheps lies in the cost or price for funds. Whenever any investor invests his money to buy any ETF units, the fund company charges an amount. For Vanguard, the amount is only 27 cents per 100 USD, while for BlackRock, it is 69 cents per 100 USD invested. A big difference of more than double the charges.
Now since both these ETF funds are tracking the same underlying index, where should an investor go if there is a big difference of more that double in terms of the fund charges? The answer is simple - people like to buy cheap and that is what Vanguard has been able to do successfully.
No wonder it has established itself as the no. 1 low cost mutual fund house using the same low prices formula.

So what's the word here? Prices do matter! - whether it is a supermarket or consumer durables or investments, prices do matter and when people are given a choice between 2 similar things, they will obviously go for the cheaper one.

Another thing that might have hit the BlackRock iShares MSCI Emerging Markets ETF loosing its market share to Vanguard Emerging Market ETF is the returns from both these funds. Both these ETF Funds track the same underlying index. However, BlackRock iShares MSCI Emerging Markets ETF has returned only 137 percent compared to Vanguard's 151 % (Data as per Bloomberg). That again gets to fund management and its performance. At the end of the day - its the returns that matter, and as per the above data compiled by Bloomberg, Vanguard fund managers have been good enough compared to BlackRock.
Performance, as well as Prices, both matter for the investment business

IDFC Infrastructure Bonds: Review, Analysis & Calculation for Effective Returns

It was recently we covered the general details of the recently introduced Tax Free Infrastructure Bonds Details: Save Tax On Investments in Infra Bonds - that article covered the basic details of working of Long Term Tax Free Infrastructure Bonds and the beenfits available to the investors both in terms of returns as well as saving of taxes. In this article, we cover the review, analysis, tax saving calcuations and details of recently launched IDFC Long Term infrastructure Bonds, for tax savings and investment returns calculations

Review of IDFC Long term Infrastructure Bonds for Tax Saving

As the financial year in India is coming close, we are seeing a surge in promotional offers for tax saving schemes - both in advertisements as well as introduction of new tax saving scheme offers. The leading financial company, IDFC has come out with its tax saving scheme for Long Term Infrastructure Bonds called IDFC Long term Infrastructure Bonds. The issue is currently open and will close on 4th February.
Let's have a look at the basic details first and then we will check the effective calculations for investors, whether it makes sense to put your hard earned money in these Long term infrastructure Bonds from IDFC or not.

This scheme is for sale of infrastructure bonds, each bond will cost 5,000 Rs. One can buy as many bonds as he likes, but tax saving will only be given on a maximum investment of 20,000 Rs. i.e. only 4 bonds purchase will qualify for tax saving.
The scheme is lauched by IDFC under the section 80 CCF of Income Tax Act, which offers tax savings.

Any ratings given to IDFC Long term Infrastructure Bonds for Tax Saving?
Yes, ICRA has given LAAA and FITCH has given AAA (ind) which indicates a stable outlook for this investment scheme.

Is there a lock-in period for IDFC Long term Infrastructure Bonds for Tax Saving?
Yes - although the maturity period of these bonds is 10 years, the bonds can be traded on NSE and BSE after 5 years of holding period.
Repo or lending on these bonds will be allowed only after the lock in period of 5 years, as that is the minimum required lock in period for tax benefit purpose for Indfrastructure bonds.

What options are available for interest payment for IDFC Long term Infrastructure Bonds for Tax Saving?
One can opt for either annual interest payment or cumulative interest payment for these bonds.
Obviously, the effective returns will be higher in case of cumulative interest payment.

What are the subscription dates for IDFC Long term Infrastructure Bonds for Tax Saving?
The issue is currently open and will close for subscription of 4th February 2011.

How can one invest in IDFC Long term Infrastructure Bonds for Tax Saving?
Although paper based applications will be acceptable, here we provide the contact details and direct online link to IDFC site for reader who are interested in investing in IDFC Infrastructure Bonds for Tax Saving. IDFC site link.
You dont need to have a demat account for applying for IDFC Long term Infrastructure Bonds for Tax Saving. You can as well get them in physical paper based forms.

However, before going for investments, you must first check the calculations whether you are really getting any benefit from these bonds investments or not? Continue to Calculations of effective returns for IDFC Long term Infrastructure Bonds for Tax Saving

IDFC Infrastructure Bonds for Tax Saving: Calculation & Effective Returns

In this article, we cover the calculation for effective returns from IDFC Long term Infrastructure Bonds for Tax Saving. This is second part of article IDFC Long term Infrastructure Bonds for Tax Saving: Review, Analysis & Calculation for Effective Returns. Please read part I before reading this part II

Calculations for effective returns from IDFC Long term Infrastructure Bonds for Tax Saving

Now, please note that tax saving is available only for maximum of 20,000 Rs. invested in these bonds. So whether you buy bonds worth 1 Lakh or 10 Crore, you will get only a maximum tax benefit for 20,000 Rs. investment.

Second, dont get a wrong impression about maximum tax savings. The tax saving actually depends upon your tax bracket. So if you invest, say 20,000 in the IDFC Long term Infrastructure Bonds for Tax Saving, and you fall in 10% tax bracket, then the tax you save is only 10% of 20K i.e. only 2,000 Rs.
People who are in highest tax bracket of 30% will save the maximum tax i.e. 30% of 20K = 6,000 Rs.
So first check your tax bracket and follow the calculations below.

Now to check how much effectively you get by investing in these IDFC Long term Infrastructure Bonds for Tax Saving, let's take an example of a person who is in highest tax bracket of 30% and he invest 20K in these bonds which is locked for 5 long years. Assume that he sells off his bonds after 5 years

What he saves in taxes is 30% * 20K = 6,000 Rs. (one time only)
What he receives each year in form of interest payment = 8% per annum * 5 years = 40% i.e. 40% of 20K = 8,000 Rs. (over a period of 5 years)

Total Returns over a period of 5 years = 6K + 8K = 14K
Total invested amount = 20K

Returns % over a period of 5 years = 14K/20K = 70%
If we take a simple average over 5 years, returns per year = 70% / 5 years = 14%

So this appears to be a good option to invest your money as the returns are much higher (considering a simple average)
But then, the biggest problem is that your money is locked in for 5 long years. If you are fine with that and dont need that money, it is worth investing in these bonds.
However, if you have any liabilities, like a high interest loan payments to be made, say a car loan chargin you 12% per annum, then instead of investing in these bonds, it is better to pre-pay your high interest car loan. You will save in the long run.

For the case of 20% tax bracket investor, the tax saving will be 20% only. Effective return will be 20% tax saving + 40% interest income = 60%.
Over a 5 year period, it comes to just 12% (simple average). Again, check your liabilities and see if you can get rid of any outstanding loans before making any such investments.

For 10% tax bracket, I dont really see any effective gains. Total returns over 5 year period will be 50%, making it 10% annual (simple average). No point in locking your money for 5 long years for such a return. Instead, check out high interest paying Fixed deposits now available through various banks.

Even for the best case of 30% tax bracket we discussed above, one must note that over the 5 year long period, the value of your money will keep coming down due to inflation and increased cost of living. So dont live under the false impression that you will actually get the worth calculated above. Remember its for 5 long years, your money is getting blocked.
Also note that the interest you earn on these bonds is NOT tax free. Reduce that tax and again check for effective returns for 30% tax bracket:
Interst Income: 40%
After 30% tax: 40% * 0.7 = 28%
Net : 30% (Tax saving) + 28% = 58% (over 5 years)
Simple avergae annual return = 58% /5 = 11.6% only.

So make your own calculations, Invest cautiosly, and only if you just need tax saving and have no other liabilities

All Other Tax Saving Infrastructure Issues open Now:
IIFCL Infrastructure Bonds for Tax Saving - Closing 4th March 2011

L&T Infrastructure Bonds for Tax Saving - Closing 7th March 2011

PFC Infrastructure Bonds: Review - Closing on 22nd March 2011

Chinese Yuan Exchange Rates rise to Record High: USD-Yuan Forex Rate

The emerging economy leader, China, has done it again. Just before the US visit of President Hu Jintao, the Chinese currency rose to 1 record high against the US Dollar in the last 17 years.

Chinese Yuan-USD ($) Forex Exchange Rates

The pegging of the Chinese Yuan ended in 2005, and since then this is the highest level of Chinese Yuan to trade against the USD. At the time of writing this article, the yuan was quoting at 6.583 against the USD.

China is learned to have around 252 billion USD trade surplus with the USA and it was indicated that Yuan can appreciate further from the current levels.

It is also alleged that China has been keeping the Yuan artificially weak, and that has given an unfair advantage to Chinese service providers and exporters, thereby causing a loss to the US based manufacturers as it is cheaper to get goods as well as services from China, if the exchange rates are low in Yuan.
It is also mentioned by one of the officials that the Chinese currency is really under-valued, to the tune of more than 40%. Now that is a big figure. If the Yuan continues to appreciate further, and becomes fairly valued it will definitely hit the Chinese Exporters, both for the services as well as good sector. But that will tilt the benefit in favour of American manufacturers and service providers.

However, chinese officials are looking for bigger picture of better relationships between two big nations - USA and China - rather than the Chines Yuan - USD exchange rates. One good thing in favour of stronger Yuan for China is that it will help it control the inflation, which is currently clocking above 5%.
One may see more policies taking shape, to support the Yuan. Let's see what comes out of the Chinese President's visit to the USA, and what effect it has on the USD-Yuan exchange rates.

Demand Media IPO: Review Analysis & Details of Demand Media IPO

There is news about an online content creation company's IPO to hit the primary stock markets very soon. The news has come out about the online contenct company called Demand Media , which is expected to come out with its IPO by January end. It is reported that it has got clearance for its IPO from SEC recently. Demand Media arm has decided to come out with the Initial Public Offering or IPO.
In this article, we will look at the Review, Analysis and Details of the Demand Media IPO and try to do the Review and analysis of Demand Media IPO.

Demand Media IPO: Review Analysis & Details

Some basic details first about the Demand Media IPO, which are available as of now:
- The size of Demand Media IPO is around 112.5 million USD

- The company owns big websites like eHow.com, LiveStrong.com and other sites. It also serves more than 350 websites including some like reputed new papers

- The business model is simple - hire and pay freelancer content creators, use algorithms to get and serve the relevant content as per the increasing online demand, get paid through Cost per click or CPM impression baseds advertising like Google Adsense

What are the primary reasons for Demand Media to come out with the Demand Media IPO?
The main reason for any company to come and list its shares in the stock market is to collect money from common public and so is the case with Demand Media IPO
At the time of writing this article, it was not known about how this money collected will be used by Demand Media

What is the issue size of the Demand Media IPO?
Around 112.5 million USD is the size of the Demand Media IPO.

What is the price band of Demand Media IPO?
It is reported that the recommended price band for Demand Media IPO $14 to $16 per share.

How many shares will be sold in the Demand Media IPO?
The total no. of shares to be sold through this IPO is 8.65 million shares.

What are the IPO dates for Demand Media IPO
The IPO dates have not yet been finalised. But the IPO is expected to hit the markets sometimes in the last of January 2011. The roadshows will go on for the next two weeks

How will the capital raised by Demand Media IPO be used?
No info about that as of now.

Any ratings given to Demand Media IPO?
No information about that as of now.
It will trade with Symbol DMD on the New York Stock Exchange (NYSE)

What are the analysts recommendations and business results for Demand Media IPO?
Most important thing that investors in such online media copanies shouold know is that this is purely an online business. It is driven by Demand and Supply of the online content. So when sites like ehow.com and livestrong.come are seeing good traffic, that leads to more revenue for the company. However, we should not forget the dotcom bubble burst where majority of the online dotcoms and related companies saw a rapid fall.
It's a good model, to hire freelancers on need basis (and demand basis), to create content and then sell the content to other websites or host it on your own website to get paid through advertising.

This IPO is eagerly watched and awaited by many. The reason is this is one of the first IPO's of the year 2011 so response to this might indicate the investors mood. ALso, being an online company, this is looked upon as a risky business. If the response to this IPO is going to be good, then it will again indicate investors mood whether they are willing to take up riskier investments or not. Investors need to take the call according to their risk appetite

MOSt Shares M100 ETF-NFO: Review Analysis & Details of Motilal Oswal MOSt Shares M100 ETF

This article contains info about Motilal Oswal MOSt Shares M100 ETF - Fund NFO, Review, Analysis, Details & Opinion. One more NFO or New Fund Offer from the brokerage and mutual fund house of India has come through - its from motilal Oswal. High on the heels of the Reliance Small Cap Fund (See Review), the Motilal Oswal MF Mutual Fund House has launched its NFO or New Fund Offer for an ETF or Exchange Traded Fund called the Motilal Oswal MOSt Shares M100 ETF . We had earlier provided details about another similar Large Cap ETF from Motilal Oswal called the Motilal Oswal MOSt Shares M50 ETF, which was focussed on large cap stocks. This new offering will add another diversification, as this will be for MidCap stocks and investors who wish to bet their money on midcap stocks through ETFs, can go with Motilal Oswal MOSt Shares M100 ETF
In this article, we will analyse how good is this Motilal Oswal MOSt Shares M100 ETF - Fund NFO, whether this Motilal Oswal MOSt Shares M100 ETF - Fund offers anything new or unique for the investors and whether the investors should invest in Motilal Oswal MOSt Shares M100 ETF - Fund .

Motilal Oswal MOSt Shares M100 ETF - Fund NFO: Review Analysis & Details

Let's begin with some basic details about Motilal Oswal MOSt Shares M100 ETF - Fund.

What are the NFO dates for Motilal Oswal MOSt Shares M100 ETF - Fund ?
The NFO period for Motilal Oswal MOSt Shares M100 ETF - Fund will open on January 12, 2011.

What is so unique about this Motilal Oswal MOSt Shares M100 ETF - Fund?
This ETF will track the CNX Midcap Index as the underlying index.
This will be another ETF or Exchange traded fund which will track the performance of the underlying midcap index listed above. This will provide the midcap investors another opportunity to invest in midcap sector stock basket while still retaining the benefit of trading this basket as a stock or share - that's what ETF offers.
However, some tracking error needs to be accounted for. It is more in Index Funds and less in ETF's as in ETF's the trading happens continously, while the Index funds are mostly End of the Day priced and rebalanced at various intervals of time, varying from few days to months.

Why and how does the tracking error come in?
The underlying index like Nifty or Sensex does not have any brokerage charges or any dependent trading activities. However the index funds/ETF's do have them. As the fund managers try to replicate the performance of the underlying index, they buy and sell securities and try to maintain their fund in similar proportion to the index, they end up paying brokerage charges which affects the returns. The frequency of rebalancing the fund constituents also takes a toll. For more informtion on Index Funds, see Index Funds Explained with Example)

So overall, depending upon the frequency of rebalancing and trading activities of the fund manager, the returns from Motilal Oswal MOSt Shares M100 ETF will be generated for the investors. Continue to Part II -Risks in Motilal Oswal MOSt Shares M100 ETF - Fund and other competitive products

Motilal Oswal MOSt Shares M100 ETF-Fund NFO: Details & Competitor Products

This article contains info about Motilal Oswal MOSt Shares M100 ETF - Fund NFO, Review, Analysis, Details & Opinion. This is part II of the article Part I. Please read part I before continuting with this part.

Being a Midcap Index based ETF, investors will have to rely upon the the intra-day price movements to trade on intraday basis, like that available in ETF's. That has the advantage that market decides the prices, while there will be less chance of getting affected by the tracking errors and rebalancing problems eating up the profits.

The details are as below:

Overall, this Motilal Oswal MOSt Shares M100 ETF - Fund seems to be a mid cap specific ETF fund.
Mr. Rajnish Rastogi will be the fund manager.

During NFO, application will be received in the minimum amount of Rs 10,000 and in multiple of Re. 1 thereafter. However, since this is an ETF, my recommendation will be that investors can wait till it gets listed in the NSE and then buy it at the market price. Again, this is subject to investors preference, but when the product is anyway going to get listed on the Stoick Exchange for free trading, what is the point in blocking your money during the NFO period.
The trading of Motilal Oswal MOSt Shares M100 ETF will be on NSE or National Stock Exchange of India.
There are other similar products available for investments in the midcap and smallcap sector, please see the details below:
IDBI Nifty Junior Index Fund NFO: Review Analysis ..., IDFC Small Cap Equity Fund NFO: Review Analysis & ..., Reliance Small Cap Fund: Details & Investment Summ..., etc

CNBC TV-18 Loosing Out Marketshare? ET NOW Gets Top Technical Analysts

It appears to be a case of end of the one man show which CNBC TV-18 has enjoyed in the Indian Business Viewership markets for the last so many years.
Some time or the other in the business cycle, this is bound to happen with all kinds of businesses and this is the recent example of such a time.

Indian Business Viewership MarketShare: is CNBC TV 18 loosing out to ET Now, NDTV Profit, Zee Business and others?

CNBC TV-18 has enjoyed the no. 1 viewership rank for last 10 years or so in the Indian Television space for business and market related channel, simply because that was the only business channel to be available. As the markets opened up making way for new entrants, the market share of CNBC-TV18 is now being "shared" or better to say being lost out to other new entrants.

In fact, CNBC-TV 18 itself started a new news channel in Hindi, CNBC Awaaz, to capture the local audience who were usually turned off by the English speaking business news anchors. Unfortunately, we dont have any statistics available right now about the viewership of business channels, but entry of new business channels in recent years like NDTV Profit, Zee Business, etc. has definitely lead to a dip in viewrship of CNBC-TV18.

The heart and soul of a televeision channels are its programs. For a channel which is about stock trading, investments and markets, that someway or the other depends upon the anchors, the investments advisors, and the guest speakers and advisors who come up with their suggestions and trading tips. A simple example that explains the importance of dependencies on these individuals is that CNBC TV18 itself has a prime time show in the name of one of their ace anchors - Udayan Mukherjee (for "Markets Today with Udayan Mukherjee").
If, for example, such ace anchors move out, it can impact the viewership significantly.
And unfortunately that is what is happening with CNBC TV18. They have recently lost their much followed technical analysts to the newly launched ET NOW channel, which belongs to the Times Group. These technical analysts who have moved from CNBC to ET Now are Ashwini Gujral, Sudarshan Sukhani, Deepak Mohoni, etc. These are the analysts who are learnt to be closely followed by majority of the traders and investors. Their movement to other channels might mean loss of viewership to CNBC.

And the buck doesnt stop their. ET Now has a strong print media as well. They are carrying big ads in their print media about the availability of these so called top technical analysts with the ET Now channel. They are heavily publishing such ads, and technical traders who are habitual of following tips from these guys are bound to switch channels for obvious reasons.

MoneyControl, the CNBC owned website, also used to put adsense ads for its PowerYourTrade (PYT) services. In the past, these ads used to regularly carry the name of Ashwini Gujral. Basically trying to capitalize on the brand value of Ashwini and his trading tips. These adsense ads for PYT still exists, but the name of Ashwini no longer appears in them.

Another issue is with the kind of content that CNBC has switched to in recent times. It is observed that the content focus is now shifting to some kinds of experiments - especially on the Hindi version of CNBC Awaaz. Like for giving stock market predictions for year 2011, astrologers and tarot readers like Bejan Daruwala were called and they were asked about the market direction. At this moment, they appear to be on experimental basis as the coverage with astrologers and tarot readers is not regular.
But if this is going to become a regular service, then in my personal opinion, CNBC is bound to loose the market share in the Hindi speaking audience as well. Its true that Indian Public may like to go for astrologers predictions, but you never know when can it backfire.

Then comes the other stuff - take the case of Car and Bike show called CNG or "chalti ka naam gaadi". Except for telling the technical specs of a vehicle, we hardly get to hear any specific recommendations about a particular car or bike. There are no talks about any negative features. It's always the general description of the newly launched car or bike, "Itna BHP ka power, itne ki mileage ka daawa, front suspension, rear suspension, blah, blah" and similar info which is already available in the manual or the internet. In the name of comparing between two cars or bikes, they just read out the specs and features one by one. People get bored of hearing the same stuff. A better show to watch is NDTV "Car and Bike Show" and how the positives and negatives are covered clearly. Something for CNG to take tips from.
Property Tips, Stock 20-20 tips, are all the same story - same generalized description. The only show that stands our is the "Tax Guru" that too is because of the Mr. Lakhotia and his clear answers.

Surely, CNBC TV18 needs to do some more review of its contents, rather than going by the current ways

NMC Nagpur Municipal Corporation get Sixth Pay Commission Salary: Pension, Pay Arrears & Salary Hike Details

Details about NMC Nagpur Municipal Corporation Sixth Pay Commission Salary Pay Hike for staff of Nagpur Municipal Corporation
Finally the good news has arrived for the Nagpur Municipal Corporation NMC Staff including Teachers of Nagpur who will be getting the Sixth Pay Commission Salary, Pension as well as the Pay Arrears as per the recent recommendations.

NMC Nagpur Municipal Corporation get Sixth Pay Commission Salary Salary Pay Hike

Around 9400 employees are expected to get the benefits of the new pay scales, and that includes the teaching staff or teachers, who are around 1500 members strong.

How many staff of NMC Nagpur Municipal Corporation will get the revised pay?
It is reported that there will be around 9400 employees of NMC who will benefit. This no. includes around 1.5 thousand teaching staff as well

General Sixth Pay Commission Salary Hike & Arrears Calculator (Indicative)

Salary Calculator for Pension calculations for Sixth Pay Commission Salary Hike (Indicative)

By which date is this decision effective?
It is reported that the salary hike is effective from 1st December, 2010. Already some portions of money was paid as Diwali advance to class 3 and class 4 employees
The effective hike from Dec 1, is now on the way to be paid to all the eligible staff members, so this comes as a big new year gift to the government employees.

What is the reaction to this development by the NMC Nagpur Municipal Corporation staff?
The staff is really happy about the high salaries which they will be getting.

How much extra burden will it cost to the government for salary hike as per the Sixth Pay Commission ?
It is expected that the additional Rs 50 crore per year will have to be spent by the government for this salary hike.
Current year cost is around 12 Crore Rs.
The employees (beneficiaries) are obviously happy about this