FUND HOUSES + FUND MANAGER’S= FUND’S PERFORMANCE

Many fund houses & there number of schemes are operating in the financial market. Launching new schemes, merging of the existing schemes & closing of the schemes is ongoing continuous process in the market. Closely monitoring the performance of these schemes & to keep its track record is interesting but tedious work.

Though there are more than 5000 scripts in the Indian market but investable & tradable scripts from mutual fund aspects are approximately not more than 2000 (on the basis of company’s performances & future prospects).All the fund managers more or less invest in these scripts only as per there scheme’s objectives but inspite of it when we check & compare scheme’s performance with other schemes in the same segment we find significant amount of variation.

Various factors affects the scheme performance & to understand it, one should know the working of these fund houses & their fund managers.

Every fund house has their own panel of investment comprising CEO, number of experts & analyst, which selects the stock for investment after screening of the company balance sheet, fund flow & cash flow statements management’s objects & guidelines, past performance, future targets. Members of this panel even conduct several rounds of discussion to get the clear ideas of the company policies, & its strategic implementations to achieve the set goals.

mutual fund

On the basis of this analysis of every individual stock by its expert panelist, fund houses prepare the list of stocks comprising between 125 to175 scripts for their fund manager’s investments. Expert of these fund houses continuously monitor the major decisions & performance of these companies. Addition & deletions of the scripts from the approved list on the basis of their performances & economic trends is continues ongoing process.

This panel also closely monitor & keep the track record of the existing schemes of their fund houses operating under various fund managers. They check the nature & objectives of the scheme, portfolio size & in its line investment decisions taken by the fund manager, return on investment, portfolio turnover, risk exposure, expenses ratio. If required frequently they interact with fund managers, share views with each other’s & provide some valuable inputs as well.

From the given list of approved stocks fund, managers are suppose to select stocks for their investments & are strictly not allowed any other stock not approved by the fund houses.

But there some areas in which fund houses say remain final such as cash holding, risk analysis, maximum holding in any company, portfolio turnover etc. There are principle guidelines of every fund houses extend to their fund managers but it does not restricts fund manager’s scope & freedom.

Fund manager’s have liberties to select any stock from the given list, to decide about the sector’s weightage, investment to any company to the maximum permissible limits ( as per SEBI & fund house guidelines),purchase, repurchase of stocks, determining the holding period & sale of these stocks. They can consider high valuation stocks with good returns or economic stocks with risk free growth potential.

Fund managers are suppose to take their decisions in all the above mentioned issues, keeping in mind the nature & object of the scheme, risk factors analysis, & expected return on investment. For e.g. :- Balance fund’s manager is not suppose to have aggressive equity investment approach compare to pure equity fund.

Fund managers are allowed to use any strategy for their investments. Mainly there are two strategies used by the fund managers. First is Top-Down strategy (means analysis of the economy & accordingly anticipate the industry/ sector will drive more benefits, generate better returns & investing in the companies belonging to those industry/sector. Whereas the second Bottom -Up strategy focused more in the fundamentals of the company emphasis on the balance sheets analysis, peer group analysis, PE ratios, PE multiples, with logic that company will perform on the basis of strong fundamentals regardless the economic conditions & trends.

Only 24% Indians are financially literate : S & P

About 76% of Indian adults do not adequately understand key financial concepts, including risk diversification, inflation and compound interest. This is lower than the worldwide average of financial literacy, but roughly in line with other BRICS and South Asian nations, according to the Standard & Poor’s Ratings services global financial literacy survey.

1) Only 14% of Indian adults correctly answered the question on risk diversification. Conversely, 56% answered the inflation – question correctly.

2) About 39% of the adults who had borrowed formal loans are financially literate, while about 27% of formal loan borrowing adults were not.

3) 26% of the adults in the richest 60% of households are financially literate, while 20% of the poorest 40% of households are financially literate.

s and psurvey

4) The income gap is evident when the survey is broken down by concept – Poor adults are 21 percentage points less likely than richer adults to correctly answer the compound interest topic correctly. With regard to interest, the gap is 11 percentage points.

5) 38 percent of adults with tertiary education are financially literate; compared to 30 percent of adults with secondary education, and 18 percent of adults with primary education.

Interestingly, the survey also found a gender divide – 73% Indian men are not financially literate while 80% Indian women are not financially literate. India beats the 5 point worldwide gender gap. Among other countries, 57% of the adults in the US are financially literate; while in the UK 67% of the adults are financially literate.

In Asia, Singapore is home to the highest percentage of financially literate adults (59 percent), followed by Hong Kong and Japan (both at 43 percent). And less than a third of adults in China (28 percent) are financially literate

Dr. Lal Path Labs Limited IPO Review

About the Company

Founded in 1949,Delhi headquartered Dr. Lal PathLabs Limited is in the business of diagnostic and healthcare tests in India. The Company has developed a national network consisting of its National Reference Laboratory in New Delhi, 163 clinical laboratories, 1,340 patient service centers and more than 5,000 pickup points .

The Company offers 3,368 diagnostic and related healthcare tests.Diagnostic and Healthcare Test is the fastest growing segment in Indian Heathcare sector and the Company is well-positioned in the said segment. The company provides services to individual patients, hospitals and other healthcare providers and also to corporate customers.

In the year 2014-15, the company had earned total income of Rs. 640 crores and net profit of Rs. 87.97 crores.

This is the first IPO of a Diagnostic company and hence is expected to catch fancy of Institutional investors as well as Retail investors and may pave the way for others who have been waiting in the wings ( SRL and Thyrocare ) SRL, a subsidiary of Fortis Healthcare Ltd, had previously filed its documents for an IPO in 2011. Then owned by billionaire brothers Malvinder and Shivinder Singh in their private capacity, the firm was brought under their public listed hospital chain Fortis Healthcare.

Issue Particulars :

Issue Duration : Dec 8, 2015 – Dec 10, 2015
Issue Size: 11,600,000 Equity Shares of Rs. 10
Issue Size: Rs. 626.40 – 638.00 Crores
Face Value: Rs. 10 Per Equity Share
Price Band : Rs. 540 – Rs. 550 Per Equity Share
Market Lot: 20 Shares
Listing proposed at : NSE & BSE

Dr lal


The Promoters of the company :

1. Dr. Arvind Lal
2. Dr. Vandana Lal
3. Eskay House

The object of the Offer :

To obtain the benefits of listing the Equity Shares on the Stock Exchanges

Lead Managers :

Citi Group Global and Kotak Mahindra Capital Company

Discussion relating to Valuation and Price Band :

EPS : for the year ended on March 31, 2015 Basic Rs.16.53For the six months ended September 30, 2015, the basic EPS (not annualized) was Rs. 5.90 and the diluted EPS (not annualized) was Rs 4.47.

Book Value :
As on September 30, 2015, Book Value was Rs. 61.78 per Equity Share on a consolidated basis and Rs. 57.77 per Equity Share on an unconsolidated basis.

The offer for share at upper price band of Rs. 550 is at PE multiple of 35 on the basis of estimated EPS of Rs. 19.25 for the year 2015-16.

Positive

Business model focused on the patient as a customer and an established consumer healthcare brand associated with quality service, in a market where patients generally choose their diagnostic healthcare service provider.

Attractive financial performance ,financial profile and return on investment capital.

Experience leadership team with strong industry expertise and successful track record.

Negative

Intense competition from major players such as Fortis,Metropolis and Thyrocare and small independent Laboratories those exist in every nook and corner of country.

The diagnostic service industry is faced with changing technology and new product introductions.

Conclusion / Investment Strategy

As this is the first company under consumer healthcare diagnosis services sector having established brand and has no listed peers to compare with, it may enjoy the benefit of first mover of the sector and hence may attract fancy of investors. Although it being an expensive offer, moderate investment for short to medium term may be considered.

Best Savings Bank Account for your Child

Financial Experts believe that it is never too late to start investing. But at the same time, they also emphasis that the sooner you start, better it is for your future. Keeping this in mind, many parents’ start saving for their children right from the day they are born. And what’s safer than keeping money in a Bank account in the name of your child. Having a savings bank account for your child not only helps you to build a corpus for child’s future needs like education, but it also helps to inculcate the habit of savings in children from an early age.

Having kids savings account is like having a bigger piggy bank, where the money will be safe and can earn interest on the same.

Following are some of the popular savings accounts for kids offered by Banks in India.

1. ICICI Bank Young Star Account

Young Star Account is Kids saving account of ICICI bank. In order to open this account you must be existing account holder of ICICI bank.

ICICI Bank Young Star Account Features

Young Stars Account

ICICI Bank Young Stars Account is a banking service for children in the age group of 1day – 18years. The guardian can open and operate the account on behalf of the minor.

• Standing Instructions Facility to debit money from parents account to the youngstars account.
• Special Internet Banking
• Money Multiplier Facility
• Choose Young Stars debit card with limits of Rs. 1,000 / Rs. 2,500 / Rs. 5,000 for shopping and cash withdrawal each day.
• Free Young Stars Debit Card

saving bank account for child

Smart Star Account

Minors above 10 years of age, can independently open and operate the account.

• The minimum Monthly Average Balance (MAB) to be maintained is Rs.2,500.
• Free Personalised debit card with spend and withdrawal limit of Rs. 5000
• Personalised cheque book – cheques can be issued by the child
• Free Internet Banking access
• Free Mobile Banking Access
• Free email statement
• Pre-paid Mobile recharge facility

2. Kotak My Junior Account

Kotak My Junior Account is one of the best kids saving account. This account offers multiple benefits.

Kotak My Junior Account Features

• Earn 6% interest p.a. on savings account balance over Rs. 1 Lakh and 5.0% interest p.a. on balances up to Rs, 1 Lakh on Resident Accounts only.
Debit Cards will be issued to children above the age of 10 years and it will have a daily withdrawal limit of Rs. 5,000/- only.
• Rewards for saving money regularly in this account. These rewards includes book voucher, movie ticket and discount vouchers.
• Exclusive Kotak Junior ID card
• Exclusive privileges and discounts at multiple places.

3. HDFC Kids advantage Account

HDFC offers Kids advantage account for the child. HDFC Kids advantage account offers additional benefits like education insurance cover etc.

HDFC Kids Advantage Account Features

• HDFC Kids Advantage Account is for minor up to 18 years of age.
• This account offers free education insurance cover of 1 Lac.
• You can give standing instruction to transfer any amount from your account to your Kid’s Advantage account every month.
• Automatic sweep facility in case amount reaches/exceeds to Rs.35000
• Free cash withdrawals on any other Bank’s ATM
• ATM/International Debit Card will be issued for children between 7-18 years of age in your child’s name with your permission. Your child can withdraw Rs. 2,500 at ATMs and spend Rs. 10,000 at merchant locations per day.
• Free NetBanking for you to monitor your child’s account.
• Standing Instruction to transfer any amount from your account to your Kid’s Advantage account every month (Minimum value Rs. 1,000 & Minimum tenure 1 year) (Mandatory).

4. Axis Future Stars Saving Account

Axis bank kids saving account is known as Future Stars saving account. This account is useful if you want to introduce your child to the basic principles of money management.

Future Stars Saving Account Features

• Low minimum opening deposit of 2500 Rs.
• First 5 free transactions at Axis Bank ATMs
• Free SMS Alerts, Monthly e-statements/Passbook and Internet Banking Facility
• Free ATM card for children below 10 years with a daily withdrawal limit of Rs.1,500
• Visa Classic Debit Card at a nominal fee of Rs.150 for issuance and Rs.150 annually thereafter in metro and urban locations
• One free payable-at-par Cheque book per quarter in the child’s name
• No Average Monthly Balance requirement if a Fixed Deposit (for 6 months) of Rs.25,000 or a Recurring Deposit of Rs.2,000 (for a year) is maintained.
• For children above 10, an image of their can choice can be printed on the debit card
• Avail of personal accident insurance cover of upto Rs.2 lakhs by swiping your card once every 6 months
• Combined Lost Card Liability and Purchase protection liability of up to Rs. 50,000 to protect against fraudulent use of the debit card or damage/loss of articles purchased using debit card.

5. SBI PehlaKadam PehliUdaan

PehlaKadam and PehliUdaan are two different kids saving account offered by SBI bank. Both these saving bank accounts offer multiple features like internet banking, mobile banking etc.

• Interest at 4.00% p.a. calculated on a daily balance
• Transferability of accounts to any SBI Branch without changing the account number.
• Nomination facility is available and recommended.
• Specially designed branded Passbook issued free of charge.

Personal Accident Insurance Cover (offered by SBI General) for the Parent (in case of Pehla Kadam account only).

PehlaKadam Account Features

• PehlaKadam is account for minor of any age.
• This account will be jointly opened with the parent/guardian.
• No Minimum balance requirement.
• Special ATM card with embossed child photo will be issued.
• Auto sweep facility available.

PehliUdaan Account Features

• PehliUdaan is account for minor above 10 years age.
• PehliUddan account can be opened on the sole name of minor.
• Mode of operation of this account will single by minor.
• All other features of this account is similar to PehlaKadam.

6. Power Kids by IDBI Bank:

The power kids’ savings account by IDBI Bank is actually powerful as it requires an average quarterly balance (AQB) of only Rs.1500 and does not charges any penalty on non-maintenance of desired AQB.

It has a set daily withdrawal limit of Rs.2,000 on its ATM-cum-Debit card. Moreover, the children having their savings account can easily strengthen their relationship further with IDBI Bank by availing education loan for their higher studies on discounted rates.

• No charges for non maintenance of AQB
• Exclusive designed Kids ATM Card*
• Personalized Cheque Book
• Free monthly statements via mail on request
• Free Passbook
• Demand Drafts and Pay orders on request
• Free five ATM transactions at other Bank ATMs at Non Metro Locations

There are other banks like United Bank of India, Karur Vysya Ban, Citi Bank and HSBC bank.

Real estate in pune : Emotion vs Practical

Implications of buying versus renting a flat

Assume there is a 2 BHK Flat for sale at Kharadi (in Pune – for that matter you can assume your locality). Considering the cost of the flat between 60L to 80L. Assuming 70 L as a total cost of the flat. After US housing loan fall, no bank will give you more than 85% of total cost amount which doesn’t even include local taxes from certain banks. Assuming you have taken a loan for 20 years. Here is the calculation.

Base payment 15 % = 10.5L (this will rip you off with all your previous savings)
Loan amount = 59.5 L
EMI per month Rs.59,000 per month

Maintenance charges approx 24K Rs per year = 2000 Rs per month
Average property Tax per month = 1000-1500 Rs per month

– Tax benefit is discount on the Interest amount = 50K per year = 4K per month

That also for first few years as most of the EMI goes in interest.

– 1 Lac in base amount is any way settled for PF, 80CC and LIC contribution

– Total EMI comes to approx Rs 65,000 per month for next 20 years.

(Society maintenance, water taxes and corporation tax will increase with inflation).

After paying this much money per month.

Real-Estate-Re-L

You have to say no to your family for shopping (even after a CTC of 12 Lacs)No holiday trips, no gifts to parents, skip friend’s marriage, no new Car for initial few years and lot of cost cutting measures. If you get fired from the company, you are doomed. or what If recession hits. Days are not far for such crisis to hit the market. China market and Greece are examples of it.

Hence, total cost of ownership for 20 years = 65,000 X 20 X 12 months + 10.5 L = 1, 66, 50,000 (approx 1.67 crore)

What have you got:

“Home for 20 years”, and after 20 years you will have a 20 years old flat in 20 years old society (dirty and filthy )

– After 20 years if the cost of your 2 BHK home is say 2 Cr by market value ( I doubt because it will be very old flat in the middle of crowded city). You make nothing out of it.

– Secondly, even if it values so. I doubt how many buyers will be interested in a property ageing 20 years for 2 crores.

– We are predicting 20yrs hence. Wasting / suffering our today for future. That too a long term future, we have never seen.

-With the rising suicide rate world-wide, who knows something unfortunate happens at our floor and you will end up selling it at a lower price.

-With the heavy infrastructure development in Pune and Pune dependency on few lakes for water, I am certain of water shortage in coming years.

– Lastly, for Indian’s at least buying a house is a emotional decision. What I mean is, even if the house is worth 5 crores tomorrow. House owner will never ever think of selling to book a profit of it to enjoy his life. It’s worst that we just boast of investments and businesses but are emotional at heart. Even our share market BSE, NSE run on emotional atyachaar.

Let’s talk about rented flat

If you take the same flat on rent or say next door flat, at present rent for 2 BHK is Rs 14,000 all other things including.

– Assuming rent increase at 10% (very unlikely it will be less). Year on year you will pay rent approximately 1.44L, 1.58 L, or 1.74 L , at 20th year you will be paying 1.44 X 1.1^(20-1)= 8.8L

Total rent you will pay = 1.44((1-(1.1)^20)/(1-(1.1)) = 82L

Benefits

1. You can change home any time, even for small reason like neighbor’s wife is hitting on you (I will not leave in that case tongue emoticon )
2. Better job in Bangalore or US or Mumbai (I just love it… am dreaming of getting a job in Silicon Valley or Wanna to sit in a office near Powai lake :))
3. Better Job in Yerewada (do you want to manage the traffic in case you buy the flat in Kharadi, already BRTS has increased a lot of trouble on Pune roads).
4. Growing family need a 3 BHK. (Think of future need also) or villa.
5. As your rent grows so will you HRA so more tax benefit? – Apparently rent receipts have more benefit in taxes than a Housing loan.
6. A new cosmopolitan area is coming up in the city which is better than where you stay now ( I would love to stay in Vimannagar than in Dhanori tongue emoticon )
7. If you move out of the city, finding a tenant is a problem. A tenant who may convert your dream home into filthy home(sounds scary right?)
Etc.

So what should I do?

Now if you are smart enough you will put some money in equity or SIP Because you are paying only 14, 000 rent and not 60,000 EMI.
Assuming you put 25000 Rs in investment for 20 years at an annual return of 15 % or 1.2% a month (buy plot in tier 2 cities, Mutual fund, SIP, Bank FD, PPF) you can reduce the investment amount as your rent increase. Still by our personal calculations, You can make anything between 3-5 Cr after 20 years depending on your Smartness.

Then you can purchase the above flat as second home for your kids and spent some money on cleaning it up smile emoticon

Moreover, after 20 years you will be sure enough where you want to settle down and hence making an investment after 20 years sounds more wiser than investing now in flat. This is the time to enjoy your life to the fullest, doing mistake, learning from it, going on an adventurous trip, checking out bucket list and list goes on and these all will be possible only if you’re not under a heavy loans. I agree that your salary will also increase which you may use a counter to this article but by the time it will increase enough that you can do anything, you would have reached an age of 40 and you won’t feel like enjoying anymore at 40 (exceptions exist)

Decision is yours and life you get once So, Make a wise decision.
Compiled & Issued in public interest.