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Showing posts from January, 2008

"What is the level of NAV?"

As much as I hate to admit this, mis-selling in the Indian mutual funds (MF) industry is as much the industry's and the agent's fault, as much as the investors'. Ok, well, the MFs and agents have the upper hand, but investors clearly get swayed by greed and agree to buy whatever comes their way, without wondering what they're getting into.

For instance, one question that many people ask me after I recommend a fund for them is: "What must be the NAV of this fund now?" If I say something like 70+ or even 100+, they immediately retort by saying it's too expensive! Even regular readers of my magazine and those whom i advice regularly about MF investments, raise this doubt every once in a while about my recommendation's NAV level. The lower the NAV, they say, it's cheaper to buy it. Despite educating investors and readers regularly, this is the biggest MF myth that we (responsible) correspondents and analysts have repeatedly tried to break, but, with ve…

Great commercials

Two of my favourite commercials. BOI's service standards and customer satisfaction may be another story, but it sure sends out a poignant message here. That unlike some banks, especially foreign, that do not want their customers to come to the branch, BOI would love to have them over, every once in a while.

Run Mumbai Run

Mumbai marathon is a great event to be a part of, even if you're running the 7 kms dream run. Today was my second straight year of participating in the marathon. I am not an athlete, nor do I practice running regularly, so I could not run the entire 7 kms stretch at one shot. So I walked, jogged, walked, jogged and finished the entire stretch in one hour 5 minutes.

It wasn't as fun this year as it was the last year. Partly because last year it was my first year, so I was obviously a lot more exited about it. But significantly because this year the crowd was much more. Also, the corporate crowd - corporates and NGOs mobilise and sponsor their own, as well as other, people to run - was more than before. And since they prefer to run in groups, there were a lot of such groups (ranging from 10 to 30 people running together) running the Dream Run today, occupying a lot of space on the road. It was difficult to run and maintain a good speed without meandering and having to run zig-za…


AMFI standardises fund fact sheet formats

Have you noticed how mutual fund (MF) fact sheets differ from fund house to fund house? While Sundaram BNP Paribas MF always profiles its fund managers in its fact sheet, most others just mention their names while funds like Birla MF carries just their names on their last pages without saying who manages which fund. Few MFs like Templeton disclose key risk-return ratios, while most others avoid. How detailed scheme objectives are explained also differs from MF to MF.

In a move to standardise the information that you get to read in a fund fact sheet so that fair comparisons can be carried out, the Association of Mutual Funds of India (Amfi) has now recommended a standard format for fact sheets.

What’s new?
Amfi recommends that apart from the basic information like a scheme’s name, its objective, and type, all MFs must also disclose the names and experiences of fund managers. Apart from expense ratios, you will now get to see how much your new fund …


Sebi issues draft guidelines on real estate investment trusts

Invest in real estate, they say. It costs only Rs x a square foot, they add. But you cannot buy a couple of square feet of land even as an investment. And that’s why the idea of a real estate investment trust or REIT is so attractive. After a long wait, the securities and exchange board of India (Sebi) has drafted guidelines on Real Estate Investment Trusts (REIT) to be launched in India. It is expected to issue the final guidelines later this year.

How will it work?
A REIT will be structured in a similar way as a mutual fund in India is structured. The sponsor company will need to set up a real estate investment management company that will manage the funds on a day-to-day basis. This investment management company will need to report to a real estate investment trust, in whose hands your money will be entrusted in. The investment management company and trust will then launch real estate schemes that will solicit monies to be …


Sebi introduces no-load options for direct investments in mutual funds

Isn’t it sad that if you have been investing in mutual funds (MF) after researching about various options, zeroing in on the chosen one, filling up forms and submitting them to the fund house, all of this by yourself, you still had to pay the upfront charges or entry loads to the MF house, that would eventually be passed onto agents?

Not any more. The securities and exchange board of India (Sebi) has scraped entry loads on direct applications to MFs. This means that if you invest directly with the fund house by submitting your application forms at any of its collections centres, you don’t need to pay entry loads (presently 2.25 per cent). Internet transactions done through the MF’s website are also now exempt of loads. However, if you apply to MFs through an agent, you will continue to pay the entry loads. No-load options will now be available in all existing schemes as well as new schemes. Load would be charged even…

PAN and KYC for all now

If you want to invest in MF, make sure you are KYC compliant and have your PAN handy

Effective January 1, 2008, Permanent Account Number (PAN) card is mandatory for all your mutual fund (MF) investments, as against in excess of Rs 50,000 earlier. In addition to submitting your PAN number, you will now also have to adhere to ‘Know your Customer’ (KYC) norms.

All these norms will now be followed to help MFs know their investors better. KYC norms are required under the ‘Prevention of Money Laundering Act (PMLA)’, to keep a check on the legality of funds used for investments. Money laundering means converting money that is earned through illegal ways, like terrorism, into legal money by passing it through various banking channels. This makes it difficult for authorities to track the ‘dirty money’ to their illegal origins. It’s is a serious issue globally, as according to an International Monetary Fund report, the aggregate size of money laundering in the world could be somewhere between US …

Tata's Rs 1-lakh car: Boom or curse?

Today, Tata Motors unveiled the much talked-about Rs one-lakh car, called Nano, at the Delhi auto expo exhibition. The reason why so much buzz has been about this car is its price tag. Nano's price makes it the cheapest car to be available in India and breaks more than a decade old record that was earlier set and maintained by Maruti 800.

Boom for industry.....
The car makes great economic sense. It automatically gives an impetus for bike and two-wheeler owners to upgrade to a car by paying marginally high cost. Reports say that car is comfortable for four large people. Besides, it's great for the Indian automobile industry if cars can be produced and sold en-mass for such a low cost. With Indian aspirational values on a high and still rising, in simple words many people now would be now able to afford a car, as against, say five or 10 years back.

....but a curse for the cities
Having said this, I have no doubt in my mind that Tata Rs 1-lakh car is a CURSE for Indian cities. India…

Save and Be Insured

Kotak MF offer SIP with a cheap life cover

Bundling your insurance and investment needs into one is an expensive proposition as insurance policies like unit linked insurance plans that aim to meet your investment needs charge commission as high as 30 per cent. Your investment needs are well taken care by mutual funds (MF) at a much lower cost, but do you have a choice when it comes to insurance?

You may well have one now. Kotak MF has launched a facility, called Kotak Star Kid (KSK), which marries your investment as well as insurance needs into one single product and offers it to you at a lower cost. All you need to do is start a fresh systematic investment plan (SIP) in either Kotak 30 scheme or Kotak Tax Saver fund over either 5, 10, 15 or 20 years, and then appoint your child as a nominee. KSK offers you a life cover - provided by Kotak Life Insurance - at a cost of 3.25 per cent, one per cent more than a typical SIP charge (2.25 per cent). Your choice is not unlimited though; the MF…

Panchgani - Episode IV - Celebrating New Year’s Eve 2007-08

The next day we visited the Mapro garden. This was my first visit in several years. This was the place where Mapro first started making jams in the factory. Though they later shifted to a facility some 8 kms from Wai, Mapro has still retained the old facility on the Panchgani-Mahableshwar highway as a visitor’s gallery. At the time we were there, there was some shortage for leeches’ syrups, so they were being made in a great hurry, instead of jams.

Mapro facility is now a major tourist spot in Panchgani – Mahableshwar. Apart from the jam factory, they have a beautiful garden and a thriving nursery with plants for sale. The hills are a home to a lot of beautiful flowers on account of the cold climate for most parts of the year.

Poinsettia flowers were in full bloom on display with their bright red leaves. Their leaves are red during Christmas – these flowers are also known as Christmas flowers – and they turn green during summer. Amidst poinsettia flowers was this lovely orchid, which Ma…

Panchgani - Episode III - With Lord Bhathena and Lady Batliwala (2007-08)

Our guests of 2006 - Mamu, the Queen, alongwith F&B madam Shirin - already had my vote as the best guests that we have ever had in our home in the hills. Because they are most accommodating, not demanding at all, willing to eat and drink whatever we give without any qualms and are very down-to-earth.

Quite unlike some of our greedy and shameless guests who expect to be served chicken and mutton extravagances day in and out. For instance, we’ve had some guests over at our house that treat our home as a hotel, have a hearty breakfast and set out for sightseeing leaving mom alone in the house to cook lunch and dinner for them. Then, there was this family who despite knowing the acute water shortage, used to bathe, each of them, twice a day, daily. Then, there was this person who took offence once just because mom did not offer her own Pond’s cream to her. Or so we heard from somewhere. Guess there are such types of guests also.

So having the Lord and the Queen (“I’m so sorry”), with …

Panchgani - Episode II - In GOD's valley (2007-08)

One evening, we also visited Godavali Orphanage, known as GOD’s valley. This orphanage was founded by the angelic couple, Mr & Mrs Shroff. At its peak, this modest facility housed 100 children at any given time. Either orphaned children used to be brought here by well-wishers, doctors or hospitals, NGOs, or the Shroffs used to fetch them from hospitals or places where abandoned children were found. The Shroffs have taken real good care of all the children, much like their own children. The kids are housed in the sprawling campus but with very modest facilities, used to be educated in a local English-medium school and taught the ways of life. Orphaned kids who were brought here when they were barely days old have now grown up, married and leading good lives in society; they are forever grateful to the Shroffs - they call them mummy and daddy - for giving them a new lease of life. The Shroffs have treated all the kids with utmost love and tender care.

In what could be called as one o…

Panchgani - Episode I - Having fun with the kids (2007-08)

Trips to Panchgani are always looked forward as they help me get away from all the hustle and bustle of city life. Not that I do not enjoy Bombay, but I also value quiet, tranquil moments that the hills have to offer.

What set apart this trip from most of the recent ones is that I got to be a kid again. And gladly. This time around, my friends were these three little kids named Dev and Disha (10-year old twins) and little princess Khurshid.

I spent all my first week’s afternoons playing Badminton with them in Desai’s garden. I would go there thinking it is afternoon and that I should get some sleep so I should play for like ½ hour and would then take leave. But ½ hour would soon turn into an hour and then two to three hours would just sweep by without realizing. Time flies by so fast.

I have always been horrible at sports, including badminton, but after practicing for like 4-5 days with them, I must say that my badminton is not all that bad! Carom too was played over steaming hot cups of…