ING Latin America Equity Fund Review

ING Mutual Fund is all set with its offering to come out with the ING Latin America Equity Fund.
The offer document has been filed with SEBI or Securities and Exchange Board India for getting the necessary regulatory approval.

As the name suggests, the ING Latin America Equity Fund, will invest in companies stocks and bonds which are in Latin America including the Caribbean. Since the Latin American countries are expected to be the emerging countries of the world, anyone who believes that Latin American economies will scale to new heights and the companies listed there will be offering good and positive returns can look for investing in this fund offered by ING.

Related: Infrastructure Funds & Tata Growing Economy Fund

A similar fund was launched by Tata under the name Tata Growing Economy Fund. The important thing to note here is that economies do not show good returns just in a matter of small time duration. They tae time to bloom, grow and hence the companies and stocks listed in such economies show returns. Hence, when going for such country or economy based funds, please make it a point to forgo your investments atleast for a 5 year long investment horizon.

Three options will be available for the investors for investing in the ING Latin America Equity Fund

• Dividend option

• Bonus option &

• Growth option.

The minimum application amount is Rs 5,000 and in multiples of Re 1 thereafter.


Load Charges are heavy: 2.5% for investments less that 50 million or 5 Crore Rs. For higher amounts, no entry load. No exit load.
Probably, they want to justify the high entry load charges in the name of forex conversion.

Let’s see how investors respond to this fund, once it is offered in the market. Please take due care while making assumptions about the other country economies and stocks. Forex rate is also a concern for such funds.

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ICICI Prudential Focused Equity Fund Review

In this article, I’ll attempt to provide a review of the ICICI Prudential Focused Equity Fund.

In its recent offer, the ICICI Prudential fund management company has come out with the new scheme called ICICI Prudential Focused Equity Fund. It is an open-ended scheme, typically a diversified equity fund.

Investment objective of ICICI Prudential Focused Equity Fund
As per the advertisements, the ICICI Prudential Focused Equity Fund will attempt to generate long term capital appreciation by investing a majority of its assets in equity and equity related instruments and the rest in debt securities and money market instruments.

How many companies will the fund typically invest in?
The investment scheme will remain limited to 20 large cap companies from the top 200 stocks listed on the NSE on the basis of market capitalization. However, it is not a constraint. If the response to the fund is overwhelming and if the investors take the total assets worth morth than Rs.1000 crore then more company stocks, in addition to the top 20 large companies would be added to the portfolio.

Fund Manager of ICICI Prudential Focused Equity Fund
Mr. Anand Shah will be the manager of this fund. He has more than 7 years of fund management experience.

Issue opening date : 8th April, 2008
Issue closing date : 7th May, 2008
Fund Category : Open Ended Diversified Equity Fund
Benchmark : S&P CNX Nifty.
Minimum investment : Regular Plan - Rs. 5000, Institutional Plan: Rs. 10 crore.

Load structure:

Regular Plan
Entry Load : 2.25% for investment of less than Rs 5 crore, > 5 Crore - NIL
Exit Load : 1% if withdrawn within less than six months for amount less than Rs. 5 Crore,

Institutional Plan
No-load
Performance of the ICICI Prudential AMC:
As per the news from Value Research Online: After Reliance, ICICI Prudential Mutual Fund is the second largest AMC in terms of asset under management (AUM). Its average AUM as on March 31, 2008 was Rs 52,935 crore.. Currently ICICI Prudential manages more than 160 funds of which 26 funds are equity funds and most of them are equity diversified funds (21). ICICI Prudential Mutual Fund has to its credit four 5-star, eleven 4-star and 18 3-star rated funds.

Similar Funds:
There are quite a few focused yet actively managed equity funds Kotak-30, UTI-Leadership Equity and Sundram BNP Paribas Select Focus Fund.

Tax Benefit available under ICICI Prudential Focused Equity Fund:: No Tax benefit

Final Comments:
Typically, what this fund and the fund manager is trying to bet on the performance of the large cap stocks. In the current phase, when the stock market is seeing a lot of volatility, it would be interesting to see the behaviour of this portfolio of top 20 stocks. This portfolio, if strictly holding to top 20 stocks of Nifty, can be considered as an index of top 20 stocks.

So individuals interested in investing in such kind of index can opt for it. However, I’m not in favour of the high fund management charges, which stand at 2.25%. Compare this tobuying ETF, where you have to pay a very small brokerage, less than 0.5%.

Second thing that I want to highlight is about the fund managers efficiency in always sticking to the top 20 stocks. As I’ve explained in my previous post, that no fund manger can continuously beat the markets and it is impossible for anyone to track the market constituents in the most accurate way, the same will be the drawback with this fund. If a stock from position 30 jumps up and comes into top 20, how soon will the fund manager be able to buy it at the cheapest price and include it in his portfolio?

Another thing is that if the fund managers are so much confident about the performance of the top 20 stocks, then can they guarantee any returns?

Anyways, overall this fund looks a good bet to me for the individuals who are willing to bet their money on large caps. It obviously comes at a costly entry load of 2.25%.

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Review: Mirae Asset India Opportunities Fund NFO

Mirae Asset Mutual Fund has launched its first ever equity fund in India. The offering from Mirae Asset MF is called Mirae Asset India Opportunities Fund.
The fund is an open-ended diversified equity fund, which means that any no. of units can be created and redeemed as per the demand and supply of the Mutual fund units.
The fund is said to have an objective to generate long-term capital appreciation by capitalizing on potential opportunities through predominantly investing in equities and equity related securities.

On their official website of Mirae Asset Mutual fund and in advertisements in leading news papers of the country, they have the following table to make some claims:

The claim is that at any given point of time, there are few sectors which are underperforming, while there are a few sectors which are out performing – A fact very well known even by every Tom, Dick and Harry in the world of investments and trading.. Also, the data presented in table above confirms the same. For e.g. in 2003, it was Metal, Capital Goods and Auto sectors that performed well over other sectors, while in 2005, Consumer Duarables, Capital Goods and FMCG outperformed others. In 2007, Metal, Capital Goods and Oil & gas beat the rest of the sectors. Nothing wrong in these numbers as they are based on historical data. But the claim for the future is based upon these historical assumptions.

Mirae Mutual Fund claims that it has the capability to pick and choose the outperforming sectors and hence this mutual fund money will be switched between the stocks belonging the sectors that Mirae MF believes will outperform. How well they can do it, is a debatable question and is left to the investors to decide upon.

Interestingly, This is the first ever mutual fund by Mirae in India. They have been an international asset management company in the past and have now offered their first ever fund in India. Ultimately, this is another new NFO of a Mutual fund with the same kind of claims – no guarantee of any returns. Mirae claim to use their international experience and equity research for the benefit of their investors, hence investors can make a bet.

The New Fund Offer priced at Rs.10 per unit (plus applicable entry load)
Open from: 11 February 2008 to 10 March 2008.
The fund would invest between 65-100% in Indian equities and equity related securities and 0-30% in money market instruments and debt securities investments. It includes investment up to 25% of in securitised debt.
Minimum amount for investments: Rs. 5000 and thereafter in multiples of Re 1.
Entry load: 2.25% for each purchase of less than Rs. 5 crore. Nil for higher amounts
SIP Facility is available: The fund offers SIP facility even during the new fund offer. For SIP, the minimum investment is 6 installments of Rs 1000 each or 4 installments of Rs. 1500 each, i.e. Rs 6000 and thereafter multiples of Re.1. A major benefit to the investors' is that there is no entry load on the SIP investments.
Benchmark Index: BSE 200 Index.
Offers Tax benefits: NO

The fund house is also planning to launch a quant-based fund. All the best to investors who want to invest in Mirae Asset India Opportunities Fund!

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Review: UTI Long Term Advantage Fund (Save Tax benefit)

UTI Mutual Fund has come out with the NFO of its UTI Long Term Advantage Fund
UTI Mutual funds have been the front runners in the mutual fund industry in India and they have established a reputed name in money management. They have come out with this new fund called UTI Long Term Advantage Fund. Though the NFO is open from 19th December onwards, the scheme offering tax benefit will make it an attractive and considerable option for the people who want to desperately invest to save tax at the last minute.

Another thing is that presently, the markets are having a high level of volatility and have seen hovering around the bottoms. The 3 year lock-in period will ensure your money is invested in for a relatively long term of 3 years and may appreciate, provided you trust the UTI Fund management and they have good stock picking skills.
Another good feature is that this scheme being closed ended, does not qualify to claim entry load charges. Hence, it is attractive for investors who are dying for making a last minute tax savings investments.

Details of the scheme: 10 year long close ended ELSS scheme, which also offers tax benefits under section 80 C of the Income Tax Act.
NFO Period: From December 19, 2007 to March 19, 2008.

Options Available
Growth Option and Dividend Option with Payout and Reinvestment facilities.

Tax Benefit Offered: Yes, under section 80 C of Income Tax Act

Lockin Period: 3 years (minimum)

Minimum initial investment: Rs.500/- and in multiples of Rs.500/- thereafter with no upper limit.
But as per section 80 C of the Income Tax Act, 1961, the tax benefit will be available only upto a maximum amount of Rs.1,00,000/-

Entry Load: The scheme, being a close-ended scheme, is not permitted to charge Entry Load.

Exit Load : Nil. If the investor opts for redemption before the completion of 10 years the proportionate unamortized portion of the NFO expenses outstanding as on the date of the redemption shall be recovered from such investors.

Fund Manager: Ms. Swati Kulkarni
The scheme aims to provides an opportunity for capital appreciation through investment in well managed high quality companies that have potential to grow at reasonable rate in the long term

The so-called claimed benefits of investment in Equity Linked Saving Scheme

1 Opportunity for capital appreciation through power of equities


2 Tax benefits under Sec 80 C of Income Tax Act – 1961 - Contribution made by individuals & HUFs will be eligible for deduction of the whole of the amount paid or deposited subject to maximum of Rs. 100000/-
(along with other specified investments) under Section 80 C of Income Tax Act, 1961 as provided therein.


3 No long term capital gains tax (Subject to Securities Transaction Tax) on investment under equity oriented fund including ELSS Scheme.


4 Tax free dividends.

5 Shorter lock-in period in comparison to most of other tax saving instruments. 6 3 year lock- in period helps in minimizing volatility. However, the biggest advantage for investing in this scheme is that due to the lock-in period of 3 years, there will be no Long Term Capital gains tax and dividends are also taxfree

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Review: Morgan Stanley ACE (Across Capitalisation Equity) Fund

Morgan Stanley Mutual Fund has come out with its open ended equity scheme Morgan Stanley A.C.E (Across Capitalisation Equity) Fund.

Price per Unit: Rs. 10 (inclusive of entry load of 2.25% - which means that the entyr load charges of 2.25% will be automatically deducted from Rs. 10 and remaining will be invested)

NFO Period: open from February 11 to March 10. The fund will reopen for ongoing transactions from April 2008.

The distinct feature of this fund that sets it apart from other conventional mutual funds is that along with equity investments, this fund will also invest a portion in equity derivatives.

Morgan Stanley claims that the fund house follows a ‘community of boutiques’ model for fund managers, which aims to ensure that each investment strategy is managed by a dedicated team with specific experience in that strategy. For instance, this scheme will be managed by a fund manager who specialises in selection of second line shares. God know what it means – atleast I cannot understand it.

Investing some part of money in equity derivatives will be good for hedging or risk management, however, as explained in this article about hedging, it comes at a cost. Therefore, one may gain substantially if he is in a hedged position, only if he is lucky; and may loose limited if he is unlucky. He may also miss-out on a major bull run due to the hedged position.

So nothing new in this fund as well. Same old claims, same old concepts with jazzy buzzwords and keywords. Investors may try their luck if interested to see if they can make something extra from the 2.25% entry load charges.

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Review: Standard Chartered Small & Midcap Equity Fund

In this article, I aim to cover the review of Standard Chartered Small & Midcap Equity Mutual Fund .
Standard Chartered Mutual Fund has come out with its newly launched fund called Standard Chartered Small and Mid cap Equity Fund . This scheme is currently open with it NFO period, so people willing to subscribe to it may apply before 15th February. This fund is a close-ended equity scheme with a duration of 3 years and another important point to notice is that this fund scheme comes with an automatic conversion into an open-ended equity on the completion of 3 years.

All things remain the same. They have declared an investment objective (now-a-days it has become a formality)- to generate capital appreciation from a diversified portfolio of equity and equity related instruments in small and mid cap stocks. There are 2 options for investors - dividend or growth option. Dividend option gives you reinvestment facility

Charges:

The NFO has no entry load charges as it is of close-ended nature. However, after conversion of the scheme into open ended (after 3 years) there will be 2.25% an entry load charged for purchases of less than Rs. 5 crores.
No exit load during the closed ended scheme period if the investment redeemed before the date of maturity. After the conversion of the scheme into open-ended, it may charge 1% an exit load for redemption of investment units within 1 year from the date of subscription.

As per the details The scheme will invest up to 65-100% in equities and equity related instruments included in the CNX Midcap Index or equity and equity related instruments of companies which have a market capitalization lower than the highest components of CNX Midcap Index, of which small cap stocks shall be 15-50% of net assets and mid cap stocks shall be 50-100% of net assets. The scheme will invest 0-35% in equity and equity related instruments of companies, which have a market capitalization higher than the highest component of CNX Midcap Index i.e. in equity and equity related instruments of companies with market capitalization above the defined small, mid cap stocks. Investments in derivatives may be up to 100% of the net asset of the scheme. Investments in securities lending shall be up to 100% of equity investments in the scheme.

Apart from that, there are some vague reasoning quoted on the official website (http://www.standardcharteredmf.com/equityschemes/small&midcapequityfund.asp):

Reason 1: There are enough opportunities in an overpriced" market:
Who knows what is under-priced, what is over-priced and what is fairly priced?

Reason 2: Small and mid-cap stocks have higher growth rates:
Really? Who took the beatings when the stock markets went for a tail-spin recently? The Nifty and Sensex with Large Caps were the once which managed to recover. The mid and small caps are the ones which are still facing the heat.

Reason 3: Burn-out risk for smaller companies has considerably declined:
Really? No financial expert would accept that.

Reason 4: Selection based on the position in the growth - cycle stage:
Is it that easy to identify the growth companies from thousands of mid cap and small cap companies?

Reason 5: Picking winners in the Small/Mid Cap requires skill:
And the people at Standard Chartered have that skill – don’t they? Can you please guarantee a 1% return over the 3 year period?

Ultimately, this is another similar mutual fund with thousands of them already in the market. However, the Nil NFO charges during the first 3 years make it attractive for investors who want to bet on the mid-cap and small-cap stocks. There is no information present on the website about the other charges like Fund management fee, administrative charges, etc. No tax benefits are available. One may try his luck by betting !

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