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1.Losses of debt mutual funds likely to be reversed quickly.

With the Reserve Bank of India (RBI) easing its stance on cash reserve ratio (CRR) and ending open market operations (OMO) in Tuesday's monetary policy announcements, fixed income fund managers feel that yields of long-term bond will come down after witnessing a temporary spike. This may mean that the temporary losses incurred by debt mutual fund investors on Tuesday may be reversed quickly. When yields go up, prices of the debt instruments go down and vice-versa.




Ten-year bonds that were trading at 8.14 per cent prior to the policy came off to 8.08 per cent following the CRR cut. However, uncertainty on further OMOs has pushed up yields over 8.30 per cent. Dhawal Dalal, senior vice-president and head fixed income, DSP BlackRock MF said, "We expect the benchmark 10-year yield to trade in 8.15-30 per cent per annum range in the near-term."

News Source – FINANCIAL CHRONICLE.

 

2.Hybrid funds help reap best out of debt and equity.

Hybrid funds typically comprise those funds which invest in a combination of debt and equity assets. Some well known fund types in this category are balanced funds, MIPs (monthly income plans) and asset allocation funds. Fundamentally, these fund types are quite similar. The difference is in the proportion of debt and equity investments. Some could be equity-oriented like balanced funds (typically 60 per cent or higher equity component) or aggressive MIPs (which typically have an equity component of 25 per cent or more) or some could be debt oriented.

News Source – FINANCIAL CHRONICLE.

READ  Latest Indian Mutual Fund News | 07-July-2011

 

3.MF exposure to NBFCs jumps 30% in six months.

Mutual funds' exposure to non-banking finance companies (NBFCs) has shot up 25-35% in certain categories over the last six months. While the move could help fetch higher yields, it could also adversely impact the funds' liquidity and credit risk, suggest some. 


The exposure of liquid and ultra short term schemes to NBFCs increased from Rs29,303 crore in June 2011 to Rs37,991 crore as of end-December, translating into a jump of 29.64% in six months, Sarthi Advisors, boutique financial services company, noted in a report dated January 16.

News Source – DNA INDIA.

 

GENERAL

4.NFOs: Multiple choice.

Several new equity funds are being launched in the coming months. Union KBC Mutual Fund is launching an open-ended equity scheme – Union KBC Small and Mid Cap Fund. As the name suggests, the Fund would invest 75% to 100% of its assets in small- and mid-sized companies. 


LIC Nomura Mutual Fund plans to launch a Midcap Fund, which would invest in equities of companies having a minimum market-capitalisation of Rs750 crore and maximum market-cap not exceeding the highest market-cap of the BSE Mid-Cap Index constituents. Both the funds will benchmark their performance to the BSE Mid-Cap Index.

Canara Robeco Mutual Fund plans to launch an open-ended equity scheme which will invest in companies of any market capitalisation. Of the 75%-100% of assets that will be invested in equities, 60%-90% will be in large-cap stocks, 15%-40% in mid-cap stocks and up to 10% in small-cap stocks.

READ  Latest Indian Mutual Fund News | 12-Jan-2012

News Source – MONEY LIFE.

Latest Indian Mutual Fund News | 26-Jan-2012
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