Monday, November 28, 2011

Prajna Capital

Prajna Capital

Motilal Oswal MOSt 10-Year Gilt Fund (MOST10)

Posted: 28 Nov 2011 05:04 AM PST



Interest rates seem to be nearing a peak in India. It throws open opportunity to invest in long-term bond funds, say experts.

Motilal Oswal Asset Management Company has unveiled Motilal Oswal MOSt 10-Year Gilt Fund (MOST10) to try to make the most of this opportunity. This is an open-ended debt mutual fund scheme that will invest in government securities.

The fund manager invests 90% to 100% of the money in 10-year benchmark government securities. The fund manager can invest up to 10% of the money in government securities maturing in 7-12 years. The fund will be a passively managed fund. It can be seen as a vehicle for investors trying to benefit from interest rates. Most10 does away with the fund manager risk – the possibility of fund manager taking a wrong bet on government securities. Instead, it will invest in the most liquid security among government securities, where there will be little default risk. The NAV movement of the scheme will be married to the price movement of the benchmark 10-year government security.


Bond prices and interest rates share an inverse relationship. When interest rates fall, bond prices move up and when interest rates rise, bond prices fall. Typically, a fund manager of an actively managed gilt fund will keep the average maturity of the fund low when interest rates are rising. The average maturity goes up when the fund manager of an actively managed fund is expecting the rates to fall. If you are expecting interest rates in the economy to move down, Most10 can be a good vehicle to take advantage of the possible rally in the bond market. The key risk will be rising interest rates, as the fund manager can do little in this passively managed fund.


The proposed expense ratio of the fund is 0.99%. It accepts a minimum investment of . 10,000. If you choose to sell within three months from the date of allotment of units, an exit load of 0.5% will be charged. The NFO closes on December 5.

You can consider this fund as an investment in long-term government securities with no fund manager risk, especially at a time when interest rates are nearing their peaks.

Investment in this fund will be subjected to the risk of interest rates moving up. If that happens, prices in the bond market will fall and investors will suffer losses.
 

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Know How to Invest in Mutual Fund Schemes Online

Posted: 28 Nov 2011 02:47 AM PST

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Axis Capital Protection Oriented Fund Series 2 - New Fund

Posted: 28 Nov 2011 01:38 AM PST

Magnum Equity Fund

Posted: 28 Nov 2011 12:40 AM PST

 

A pure diversified equity scheme, Magnum Equity has generated reasonable, but not astounding returns, over a long period of time. Existing investors can continue to hold their investment. New investors looking to diversify MF portfolios can also consider the scheme.

 

Magnum Equity has been re-positioned from being a predominantly large cap scheme to a pure large cap one. Its investment universe is thus restricted to top 100 companies by market capitalisation. While the fund appears similar to any other diverisified equity scheme in the market, there is one factor that distinguishes it from others. This scheme has a strategy to have at least 50% of the portfolio follow the benchmark strictly, like an index fund.The fund manager's instincts for stock selection are thus reserved for the balance 50% of the portfolio, albeit with restrictions on sectoral exposures. This strategy somewhat limits the scheme's risk with that of the benchmark, but also restricts its ability to outperform its peers that are better diversified. Those seeking conservative to moderate returns without undue risk can consider this scheme as an investment option.
 

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Posted: 27 Nov 2011 10:49 PM PST

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L&T Infra Intends to raise Rs 1,100 crore via tax saving infrastructure bonds

Posted: 27 Nov 2011 08:43 PM PST

L&T INFRASTRUCTURE, the infrastructure-financing arm of L&T Financial Holdings, will be looking to raise a total of `1,100 crore via issue of tax-saving infrastructure bonds, this financial year. The non-banking financial company (NBFC) will be issuing the first tranche of the bonds from November 25 and will try to raise the entire amount in one go.

These bonds will be offered at a coupon of nine per cent on a yearly as well as cumulative basis and will have a buyback option after five and seven years.

Tax saving infrastructure bonds allow retail participation in infrastructure funding and allow a tax rebate up to `20, 000 under section 80 CCF of Income Tax Act on investment over 1lakh. The bonds have a maturity period of 10 years with a lock-in period of five years, after which they can be traded on the Bombay Stock Exchange. The infrastructure bonds have been rated AA+ by CARE AND ICRA and the first tranche of issuance closes on December 24. ICICI Securities, JM Financial and Karvy are the lead managers for the issue.

The company has a loan book of `8,790 crore. Its exposure to power and telecom sectors is 36.8 per cent and 11.8 per cent respectively. Although, the exposure to thermal power includes only operating projects.

L&T Infra is also looking to raise $100 million through extra commercial borrowing route. The plan of raising $100 million is in the pipeline and we should be able to raise funds in a month's time
 
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