India MF - Are my investments good?

[Anoushka Sharma]

I subscribed to the following NFOs:
(1)UTI Contra Fund
(2)ABN Amro Future Leaders Fund
(3)Fidelity Special Situations Fund
(4)Optimix Income Growth Multi Manager FoF Scheme
Inviting comments from you guys as to what you feel about these schemes.

[John Smith]

Got any credit card debt?

[Ram Bhakt]

John,

Home finances in India and US are drastically different. While in US, it is very common for people to have lot of credit card debt, in India, it is very rare. In fact, one of the gripes of the creditors in India is that Indians don't use credit card for credit but only for convenience.
The thing is that debt, consumer debt especially, is frowned upon in Indian society. People will skip a meal but avoid debt. Unless it is a properly structured loan for housing or occupation, in which case it is an investment really. Nobody I even remotely know carries any credit card balance forward.

This is changing a bit now due to consumerism but still I would be surprised to know if anybody has credit card debt and is thinking about investing

[Kj Reddy]

Originally posted by Anoushka Sharma:
I subscribed to the following NFOs:
(1)UTI Contra Fund
(2)ABN Amro Future Leaders Fund
(3)Fidelity Special Situations Fund
(4)Optimix Income Growth Multi Manager FoF Scheme
Inviting comments from you guys as to what you feel about these schemes.

I feel the above MFs new to market. It is better idea that investing in MFs which are all already doing good.

You can find your funds performance at:
http://www.valueresearchonline.com/

[shan Iyer]

I subscribed to the following NFOs:
(1)UTI Contra Fund
(2)ABN Amro Future Leaders Fund
(3)Fidelity Special Situations Fund
(4)Optimix Income Growth Multi Manager FoF Scheme
Inviting comments from you guys as to what you feel about these schemes.

Subsribe to MFs if you feel the yearly returns of 10-12% are enough

. Else, my bet is some good equity.

[Ram Munshi]

I would not suggest to invest in NFO ,invest in more established funds ,a lot of funds are very good funds and giving very good returns
like

1. Reliance vision
2. Reliance Opp.
3. Sundaram Select Mid Cap
4. SBI Multi Cap
5. Franklin Blue Chip
6. HDFC Prudence (Balanced )

..............List can go on ,do some research ,before investing your hard earned just don't go by tips of somebody or your Advisor ,they get huge commission on NFO ,so they might be reluctant to suggest you already established funds.

All the Best

Ram

[Kj Reddy]

Originally posted by Ram Munshi:
I would not suggest to invest in NFO ,invest in more established funds ,a lot of funds are very good funds and giving very good returns
like

1. Reliance vision
2. Reliance Opp.
3. Sundaram Select Mid Cap
4. SBI Multi Cap
5. Franklin Blue Chip
6. HDFC Prudence (Balanced )

..............List can go on ,do some research ,before investing your hard earned just don't go by tips of somebody or your Advisor ,they get huge commission on NFO ,so they might be reluctant to suggest you already established funds.

All the Best

Ram

Even I read some where that above funds are doing good, and would like to add HDFC Equity, SBI Magnum Contra to above funds.

[Chetan Parekh]

Rambo Prasad is good at investment matter. We would like to hear something from him here.

[Rambo Prasad]

I read an article about NFO...you may find it usefull...so I am sharing it with you...
Who gains from MF's 6% fix - Interesting and Revealing

A quick survey of the new fund offers (NFOs) launched in January 2006 shows one thing: though the entry load (the upfront distributor commission, usually 2.25 per cent), or the lack of it, is advertised in bold letters, tucked away in the inside pages of the offer document is a paragraph that says ''The initial issue expenses upto to a maximum of 6 per cent of the initial resources raised by the scheme, will be amortized over a period of five years as permitted under Sebi (Mutual Fund) Regulations 1996''.

This means that 6 per cent of whatever a new fund offer collects during the NFO period can be charged to the scheme, split over five years. Meant to take care of the advertising and marketing costs, most of this money is routed to the distributors as their commission in the form of cash and a percentage of the amount raised.

Nothing wrong with that, except that the investor believes that the commission in an NFO is either zero or 2.25 per cent at most and are unaware of this other hidden charge, that can add up to as high as 7 per cent. These have also encouraged malpractices in mutual fund distribution.

Practices that benefit the distributor and the large investors who play ball. Who loses? The long-term retail investor. Here's how:

Fund house XYZ launches yet another NFO. It offers the large distributors Rs 100-125 per application (irrespective of the application amount on each form) and 2.25-5 per cent of the amount collected. All fund houses offer cash incentive to the distributors.

Now the market splits across regions. In the urban centers, the six large foreign banks have a stranglehold on the market and they negotiate commission directly with the fund. These banks are not interested in the cash incentive, they have high net worth individuals (HNIs) who ask no questions.

Banks rotate high net worth investors money by liquidating old schemes to buy NFOs. Bank gets fat fees, meets revenue targets and HNI gets annual statement where portfolio has grown 20 per cent in a market that has returned 40 per cent. HNI is usually too busy to figure out how much he could have made had he not churned his portfolio.

At the other end of the market is the large distributor in the smaller towns and cities who plays the multiple entity and multiple Association of Mutual Funds of India (AMFI) Registration Number (ARN) number game. Fund houses club multiple applications by the same name and treat it as one. So a person making a straight Rs 1 lakh application will give the broker only Rs 100 as cash incentive.

If the broker could break this up into 10 or 20 application forms, he earns Rs 1,000 or Rs 2,000. The distributor gets family and associates to sit for the AMFI exam and gets multiple ARN numbers, each of which can now be used to split the application. The Indian Express has papers that show eight ARN numbers on different names that have one address on them.

Now the game moves up one notch. The distributor and the HNI now get together. HNI splits his Rs 1 lakh application into multiple entities and also across the various ARN number of his friend distributor and applies on the last day of the NFO closing. Part of the upfront cash is shared with the investor as is the percentage commission.

Once the NFO opens for subscription, the investor redeems at once. The whole process earns the investor cash for rotating his money, the distributor gets his cut, they have both skimmed the cream off the fund, leaving the rest of the investors to bear the 6 per cent cost over the next five years.

The rush of new fund offers with equity schemes that are no different than what the fund houses already have, shows that the game is still being played hard and fast. Some fund houses like Templeton, Fidelity and HDFC, who are trying to break out of this distributor stranglehold are trying out solutions like exit loads and closed end funds.

Of course, all it takes is Sebi to change the amortization rule. But Sebi is still waiting for the funds and AMFI to sort out the mess.

Tomorrow: How and why the retail investor pays?

[Rambo Prasad]

My suggestion would be dont trust anyone as far as money is concerned..Particularly dont trust your mutual fund broker...He will recommend you the fund that pays him the highest commision...

--Be cautious before choosing a NFO
--Dont worry too much about the load factor..If the returns are good then the load money isn't significant
--Find out about the fund manager who will be managing the fund..
---Look at the total asset size of the fund...
--Diversify and invest in more than one funds...
---Get tto know about the sectoral preferance and weightage of the fund..
--Look at the past performance of the fund..
---Dont invest online for SIP(systematic investment plan)...Because they charge you entry load every time you do that call the mutual fund representative...

---if your risk appetite is less look for STP(Systematic transfer plans also)

Personally I haven't invested much into mutual funds excepting the ELSS funds for tax saving purpose...but some of the funds have given very descent returns of around 50-80%...

[Anoushka Sharma]

Correct me if I am wrong. I agree that these existing equity funds have been doing good, but considering that the market is at such high levels, does it really make sense to invest in these funds at this point in time. If you look at the NFOs I have picked, these are all targeting companies which have been valued low at this point in time, but do have future potential. So these are equity funds with a twist.
Except the Optimix one which is a fund of funds and supposedly invests in the best of equity funds and debt funds. There is a 15% and 30% equity option and I have selected the 15% one.
Whut say???

Originally posted by KJ Reddy:

Even I read some where that above funds are doing good, and would like to add HDFC Equity, SBI Magnum Contra to above funds.

[Kj Reddy]

Originally posted by Anoushka Sharma:
Correct me if I am wrong. I agree that these existing equity funds have been doing good, but considering that the market is at such high levels, does it really make sense to invest in these funds at this point in time. If you look at the NFOs I have picked, these are all targeting companies which have been valued low at this point in time, but do have future potential. So these are equity funds with a twist.
Except the Optimix one which is a fund of funds and supposedly invests in the best of equity funds and debt funds. There is a 15% and 30% equity option and I have selected the 15% one.
Whut say???

You are correct, do not invest in equity funds if you are going to invest money in bulk. But if you are going for SIP(Systematic Investment Plan) you can go for Equity. Franklin BlueChip, HDFC Equity funds did very well even before sensex is climbing.

[Kj Reddy]

Hope the following article helps you:

http://ia.rediff.com/getahead/2006/apr/06fund.htm

[Pradeep bhatt]

Franklin BlueChip

It is not doing good. Stay away.

[Kj Reddy]

Originally posted by Pradip Bhat:


It is not doing good. Stay away.

Yep, fresh investments in Franklin Bluechip is not advisable, I am just read it at:

http://ia.rediff.com/getahead/2006/mar/31fund.htm

[shan Iyer]

You are correct, do not invest in equity funds if you are going to invest money in bulk. But if you are going for SIP(Systematic Investment Plan) you can go for Equity. Franklin BlueChip, HDFC Equity funds did very well even before sensex is climbing.

If one is really frightened of trading in equity directly in the market, investing in good IPOs is the best way out!! I never suggest MFs/SIP to anyone, as the rate of returns are EXTREMELY low.

[Rambo Prasad]

If one is really frightened of trading in equity directly in the market, investing in good IPOs is the best way out!! I never suggest MFs/SIP to anyone, as the rate of returns are EXTREMELY low.

Does 50-100% sound extremely low to you...I disagree with him ...If you are new to the markets or if you dont have time to track the market it is better to take the MF route...

Check out this http://mutualfunds.moneycontrol.com/mf/gainerloser/snapshot.php?op1=ab&option=eqd

Many funds have even delivered more than 100%

[Rajan Chinna]

Mr.Rambo, What is your top 5 MF pick?

[Anoushka Sharma]

rambo, I have been selecting the growth option for my investements. My question, as per current income tax rules, what would be better, growth or dividend reinvestment. Can you shed some light on the same.

Originally posted by Rambo Prasad:


Does 50-100% sound extremely low to you...I disagree with him ...If you are new to the markets or if you dont have time to track the market it is better to take the MF route...

Check out this http://mutualfunds.moneycontrol.com/mf/gainerloser/snapshot.php?op1=ab&option=eqd

Many funds have even delivered more than 100%

[Rambo Prasad]

Anoushka,

Check out this..This could help

http://www.rediff.com/getahead/2005/dec/01fund.htm

[Rambo Prasad]

Mr.Rambo, What is your top 5 MF pick?

Rajan, I haven't investment much in mutual funds other than the ELSS for tax saving scheme...
In ELSS I have invested in five funds(15k in each)
Sbi Magnum
Hdfc Tax saver
Hdfc long term advantage
Sundaram
Reliance...

I opted for divident reinvest plan...Other than these I haven't invested in MF's...I started working only from July..Besides my 2 months salary was paid in black.... So didn't actually plan much in this regard....
[ April 16, 2006: Message edited by: Rambo Prasad ]

[Anoushka Sharma]

nice article Rambo, but it doesnt speak about STT (securities transaction tax). Any ideas on that?

Originally posted by Rambo Prasad:
Anoushka,

Check out this..This could help

http://www.rediff.com/getahead/2005/dec/01fund.htm

[Rajan Chinna]

Rambo, thanks for the info.

By the way can we buy those funds thru ICICI? If so I believe there will be some service charge rite?

[Anoushka Sharma]

http://inhome.rediff.com/money/2006/may/03perfin.htm