Archive for January 22nd, 2010

Mutual Funds : Marginalise Your Investment Risk

Hello Friends here we come up with another write up on “SMC Gyan Series”.

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Mutual Funds : Marginalise Your Investment Risk

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Topic is “Mutual Funds : Marginalise Your Investment Risk
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Mutual funds are the best investment tool for the retail investor as it offers the twin benefits of good returns and safety as compared with other avenues such as bank deposits or stock investing.

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Choose the wrong fund and you would have been better off keeping money in a bank fixed deposit.

Keep in mind the points listed below and you could at least marginalize your investment risk:

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1) Past performance –

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While past performance is not an indicator of the future it does throw some light on the investment philosophies of the fund, how it has performed in the past and the kind of returns it is offering to the investor over a period of time.

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Also check out the two-year and one-year returns for consistency.

How did these funds perform in the bull and bear markets of the immediate past?

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Tracking the performance in the bear market is particularly important because the true test of a portfolio is often revealed in how little it falls in a bad market.

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2) Know your fund manager

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The success of a fund to a great extent depends on the fund manager.

The same fund managers manage most successful funds.

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Ask before investing, has the fund manager or strategy changed recently?

For instance, the portfolio manager who generated the fund’s successful performance may no longer be managing the fund.

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3) Does it suit your risk profile?

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Certain sector-specific schemes come with a high-risk  high-return tag.

Such plans are suspect to crashes in case the industry loses the market men fancy.

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If the investor is totally risk averse he can opt for pure debt schemes with little or no risk.

Most prefer the balanced schemes which invest in the equity and debt markets.

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Growth and pure equity plans give greater returns than pure debt plans but their risk is higher.

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4) Read the prospectus

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The prospectus says a lot about the fund.

A reading of the fund’s prospectus is a must to learn about its investment strategy and the risk that it will expose you to.

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Funds with higher rates of return may take risks that are beyond your comfort level and are inconsistent with your financial goals.

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But remember that all funds carry some level of risk.

Just because a fund invests in does not mean it does not have significant risk.

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Thinking about your long-term investment strategies and tolerance for risk can help you decide what type of fund is best suited for you.

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5) How will the fund affect the diversification of your portfolio?

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When choosing a mutual fund, you should consider how your interest in that fund affects the overall diversification of your investment portfolio.

Maintaining a diversified and balanced portfolio is key to maintaining an acceptable level of risk.

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6) What it costs you?

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A fund with high costs must perform better than a low-cost fund to generate the same returns for you.

Even small differences in fees can translate into large differences in returns over time.

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Finally, don’t pick a fund simply because it has shown a spurt in value in the current rally.

Ferret out information of a fund for at least three years.

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The one thing to remember while investing in equity funds is that it makes no sense to get in and out of a fund with each turn of the market.

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Like stocks, the right equity mutual fund will pay off big — if you have the patience.

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Similarly, it makes little sense to hold on to a fund that lags behind the total market year after year.

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SMC Global Securities : Money Wise Be Wise !

US Based VC Fund To Heavily Invest in Indian Firms

US Based VC Fund To Heavily Invest in Indian Firms

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New Enterprise Associates Inc. (NEA), an US-based venture capital (VC) fund will allocate 15%, or $375 million, for investment in Indian firms, a senior company official said.

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Earlier, it had also raised $2.5 billion (Rs 11,425 crore) in its 13th fund to focus on the emerging markets.

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Firm’s senior managing director told to media person that they will be only doing growth equity deals in India.

Moreover, they may enter early in some sectors and do follow-on funding till they reach $50 million.

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Firm does have plans of investing funds in India over a period of four years, with a deal size of $30-80 million.

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Though, their main focus will be the mid-market segment, all the way.

The new fund will also restructure its alliances in India.

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NEA – IndoUS, started in 2006 by Vinod Dham, Vani Kola and Kumar Shiralagi, when NEA had no direct presence in India.

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It raised $189 million in 2007 and has invested in firms such as mobile phone marketer mGinger, movie rental service Seventymm Services Pvt. Ltd, and online gift service Myntra Designs Pvt. Ltd.

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The services sector and the clean technology space are among sectors the company will invest in.

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The NEA fund also marks a revival of venture fund-raising.

The global financial meltdown that followed the September 2008 collapse of US investment bank Lehman Brothers Holdings Inc. dramatically affected the VC environment.

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“Even funds with a good track record have found it difficult to raise money with many trying to raise funds since the past one year,” said Jagannadham Thunuguntla, equity head at Delhi-based investment bank SMC Capitals Ltd.

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“It is not good news for first-time fund managers.

However, for the ones who have managed to raise money and invest in 2009-2010 they will get fair valuations and can at least expect modest returns” he added.

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Rubber Imports Seen Rising to Record Levels This Fiscal

Hello Friends here we come up with the Latest Agri Commodities updates from various parts of the country.

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Rubber Imports Seen Rising to Record Levels This Fiscal

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Rubber imports seen rising to record levels this fiscal :

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Having crossed 1.42 lakh tonnes during January, rubber imports are poised to surpass all-time records this year.

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Imports during the first nine months of the current fiscal have surged 118 per cent.

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Industry estimates put the year-end import at 1,80,000 tonnes, more than double the 77,616 tonnes imported in 2008-09.

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Import during 2007-08 was 86,394 tonnes and in 2006-07 it was 89,799 tonnes.

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Increasing demand from the consuming industry and production slippages are spurring imports.

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With the country slipping out of recession, rubber demand and consumption have picked up from last February onwards, sources in the Rubber Board said.

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In Other major Commodities Updates we can read about centre govt move to boost ethanol price.

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Centre tries to boost ethanol price, violates contracts with OMCs:

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The move could boost prices for your evening tipple and all other sectors using alcohol as an input/raw material.

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And that, after violating earlier ethanol supply contracts struck between Oil Marketing Companies (OMCs) and sugar mills, besides circumventing the stipulations fo the National Biofuel Policy, all ostensibly to advantage sugar companies.

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The new ethanol requirement will take effect from Feb. 1 and last 90 days.

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In direct contrast, the food ministry here has pro-actively revived the ethanol doping programme (EDP) for fuel even while facilitating a higher price level for the new contracts in a year of low cane output and high priced sugar imports.

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