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MFs Walk A Tight Rope

Monday, July 30, 2012
By Anand Birai

If there was no dearth of discouraging news for the mutual fund investors over a few years now, there are some more to add to their woes. By now it is evident that the monsoons are not normal this year and will have overall negative impact on various sectors of the economy. This may worsen the condition on the sides of inflation rate which in turn would mean a tighter monetary policy and high interest rates. The capital markets might not have much to boast about and hence, the mutual fund investors will have to struggle to beat the inflation rate. The impact could be more than the inflation rate on household budgets due to various reasons.  It is a high time for the mutual fund investors to be prepared for not expecting real positive returns but instead control the damage to minimize the real losses. It is going to be a walk on a tight rope.

Reduce your allocation of investments from equity portfolio. This is one segment from which you cannot expect a sudden advantage in the given situation. On the account of one year, most of the equity funds are in the negative territory. The investors in the funds with negative Net Asset Value (NAV) or marginal gains should remain invested until recovering the profits had they invested with a long term view.

New investments should be made in the debt and gilt funds but again not for the view up to more than a year. The interest rate volatility might bring in more opportunities in the future which could provide another good opportunity to enter. The returns for a year in the debt fund have been at least around the term deposit rates and look safer in coming year too. Similar is the case with the gilt funds.

Take a cautious approach in the Exchange Traded Funds (ETFs). Among ETFs consider only Gold ETFs as they, prominently, have been giving positive returns of about 27% over a year.

Avoid investing in new funds and rather go for a fund with a good track record and with history of at least 3 years. It is advisable to sail in the tested waters during the rough weather.

There are not many other options with the investors for the sound investments and going slow but at the same time keeping a close watch on your portfolio can enable you to protect your portfolio from volatility.

MF UPDATE

ICICI declares dividend under its scheme
ICICI MF has declared dividend under the quarterly dividend option of ICICI Prudential Corporate Bond Fund on the face value of Rs. 10 per unit. The quantum of dividend for distribution will be Rs. 0.22 per unit for Plan A, Rs. 0.22 for Plan B and Rs. 0.23 for Plan C. The record date for dividend distribution has been fixed as 26th July 2012.

IDBI launches IDBI Gold Fund
IDBI MF has launched a new fund named as IDBI Gold Fund, an open ended fund of fund scheme. The face value of the scheme is Rs. 10 per unit. The new issue will be open for subscription from 25th July 2012 and closes on 8th August 2012. The investment objective of the scheme is to provide returns that closely correspond to returns provided by IDBI Gold Exchange Traded Fund. The performance of the scheme will be benchmarked against Domestic Price of Physical Gold and will be managed by V. Balasubramanian. The scheme will allocate 95% to 100% of assets in Units of Gold Exchange Traded Fund with medium to high risk profile. Whereas, it would allocate upto 5% of assets in reverse repo / short term fixed deposits / money market instruments and in IDBI Liquid Scheme of IDBI Mutual Fund with low risk profile. The scheme offers only growth option. Exit load charge will be 1% for exit within 12 months from the date of allotment. 

SBI announces changes under SBI Short Horizon Debt Fund  
SBI MF has announced certain changes under dividend payout facility shall be available for SBI Short Horizon Debt Fund - Ultra Short Term - Monthly dividend option and SBI Short Horizon Debt Fund - Short Term - Fortnightly and Monthly dividend option irrespective of the amount of investment. Earlier, the facility was available only for investments above Rs. 1 crore. The above mentioned change will be effective from 25th July 2012.

HDFC announces change in fund manager  
HDFC MF has announced change in fund management responsibilities under its schemes, with effect from 25th July 2012. Accordingly, HDFC Cash Management Plan - Savings Plan & Call Plan, HDFC Quarterly Interval Fund, and HDFC Fixed Maturity Plans - Series XXI & XXII will be managed by Anil Bamboli and HDFC Fixed Maturity Plans - Series XVIII, XIX & XX will be managed by Shobhit Mehrotra. Moreover, Bharat Pareek, Fund Manager - Fixed Income has resigned from the services of HDFC Asset Management Company Limited and shall cease to be the Fund Manager of the above mentioned schemes, with effect from 24th July 2012.

ING announces change in fund management responsibilities for its schemes  
ING MF has announced change in fund management responsibilities under its schemes, with effect from 27th July 2012. Accordingly, ING Treasury Advantage Fund, ING Income Fund, ING Liquid Fund and ING Short Term Income Fund will be managed by Nidhi Sharma. Moreover, Himanshu Shethia - Fund Manager has resigned from the services of ING Investment Management (I) Private Limited and shall cease to be the Fund Manager of the above mentioned schemes.

 Pramerica revises exit load for its Pramerica Dynamic Bond Fund  
Pramerica MF has announced to revise the exit load structure under Pramerica Dynamic Bond Fund. Accordingly, an exit load of 1.25% will be charged if units are redeemed or switched out upto 1 year from the date of allotment and no exit load will be charged if units are redeemed or switched out after 12 months. The revised exit load structure will be effective from 1st August 2012.  


 

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