MT: Discussion about Indian MFs

[skeptic99356]

Link to original thread: List the recommended Indian MFs


From: anand1 (Original Message)Sent: 8/29/2003 5:06 PM

Guys

I was trying to dig through the archives whether this was discussed before. So far looks like the forum discussed and recommended the following funds:

Prudential ICICI Floating rate plan
Prudential ICICI Index fund (Nifty fund)

Can we list more, particularly some income funds ? Some other funds like JM Income fund-G and Franklin Templeton Blue chip fund were touched upon but not discussed whether they are recommended or not.

thanks

[skeptic99356]

From: Ram The S...guySent: 8/30/2003 1:30 AM

Anand

My take on the current good MF's

Balanced FundsJM Balanced fund-Growth HDFC Prudence Fund - Growth HDFC Prudence Fund - GrowthDebt FundsAlliance Income fund growth HDFC Income fund Growth Birla Income Plus PNB Debt fund Prudentail ICICI Income plan JM Income fund Escorts income bond-growthEquity FundsFranklin India Bluechip (D) Alliance Basic industries HDFC Equity fund Growth HDFC Top 200 Fund HDFC Top 200 Fund Sundaram Mid cap Reliance vision Growth Franklin India prima plus Prudential ICICI Power Franklin India prima

Good luck..use based on your AAP & risk profile.

I was putting together a document about good resources...to get reserch info on MF

www.Valueresearchonline.com
www.mutualfundsofindia.com
www.investsmartindia.com

www.moneycontrol.com for latest news & info


Ram

[skeptic99356]

From: Ram The S...guySent: 8/30/2003 1:42 AM

Anand

the URL's got scrwed up

so the correct URL are below.

http://www.mutualfundsindia.com
http://[URL="http://www.valueresearchonline.com/"]www.valueresearchonline.com[/URL]

Still have troubles ...google is the answer...

Thanks
Ram

[skeptic99356]

From: anand1Sent: 8/30/2003 1:47 AM

Ram
Thanks for your recommendations.

Here is one discussion from the past about the bond investments in India:
http://groups.msn.com/R2INRIFinanceAndInvestments/general.msnw?action=get_message&ID_Message=2444&ShowDelete=0&ID_CLast=2784&CDir=1&all_topics=1

Vinod's take is that the Indian bond funds are not giving adequate yields commensurate to their risks.
This discussion is dated, what is the latest take on this issue ? Also, cool guy posted information about
JM Income fund-G. What is the latest on this one ?

[skeptic99356]

From: anand1Sent: 8/30/2003 1:54 AM

Here is one more discussion on Indian investments. There are some good posts from "finance doctor" (sanjiv) in this thread.
http://groups.msn.com/R2INRIFinanceAndInvestments/general.msnw?action=get_message&mview=0&ID_Message=10680&LastModified=4675430981153561975&all_topics=1

[skeptic99356]

From: RRKSent: 8/30/2003 1:46 PM

anand1 #4,
How do you got that thread ? Some interesting discussion indeed. I guess our beloved Desi just joined and posted his first post #28 in this thread. Desi, is it right ?

After 8 months, definitely that thread needs a review now. Rs. appreciated. A floor formed for int rate in India, now.

Prudential is showing 14% return for Income Plan in growth scheme for 12 months, ending in June. 8/29 NAV 19.21, 12/31 NAV =18.04; return =6.4% for 6 months.
This is just an example. I guess all debt fund with medium duration holding performed as well.

Add another 4% Rs. appreciation to it to measure the return in $ terms. Not bad !!

**RRK

[skeptic99356]

From: vinod281Sent: 8/30/2003 4:42 PM

1. Remember as yields come down you get a one time capital appreciation. The basic arguments remain the same. In the short term anything can happen. If yields continue to drop you can expect higher returns in the short term.

2. If you look at the TIPS fund the yield has collapsed from almost 4% to 1.9%, thus generating a one time capital gain and giving a three year average annual return of 10%. The best estimate of the expected return going forward is real 1.9%, it does not mean in the next year it cannot generate another 10% gain. It is the same with Indian bond funds. Dont just look at the last 1, 3 year returns and expect the same going forward.

3. The introduction of low cost floating rate funds at 0.75% ER makes these more attractive than the other funds that are charging 1.5% ER. With yields around 6% now the ER now accounts for 25% of your yield for the higher cost funds(Dont know if they have reduced the ER now, been a while since I checked them).

4. Emerging market bonds like India have peculiar features that we (NRI who have the option not to invest in them) need to be careful about. If you are in India and limited to those then there is not much you can do about it. Emerging markets returned over 25% in the last one year (combination of falling interest rate and dollar depreciation).

Vinod

[skeptic99356]

From: vinod281Sent: 8/30/2003 6:10 PM

Here are the yields of govt bonds (gilts)

http://www.personalfn.com/fixedincome/gilts/quotes/index.asp?order='Maturity%20Date'%20&Type=1

Look at YTM (Not current yield) to find out how much yield you would be getting. 5 year yield is around 5%, 10 year around 5.5%, and 30 year yield around 6.2%.

The following will tell you what the spreads are like between gilts and corporates:

http://sify.com/finance/fixedincome/fullstory.php?id=13233188


Corporates have about 50-100 basis points spread at the AA, AAA level. Lower rated would have greater spread. So you know what the expected returns would be like after expenses for a MF.

Vinod

[skeptic99356]

From: vinod281Sent: 8/30/2003 6:26 PM

"Vinod's point #4 defies the basics of economics as I understand them. It can't be tru, becuase all big money and smart money will invest in RBI than in corporatess till corporates raise their rates above RBI to compensate for risk (greater than RBI) - then an equilibrium would be reached.

Desi"

Desi,

RBI bond is different from regular govt bonds called gilts in India. I think you might have assumed that RBI bonds are govt bonds.

Regular India govt bonds (Gilts) correspond to US Treasury bills, notes, bonds.

RBI Bonds in India correspond to EE, I Bonds in US (Closest we have). Basically these are all savings bonds.

Now savings bonds are not tradable and cannot be invested by institutional or even in unlimited amounts by individuals (most of them anyway). Thus smart money cannot arbitrage this away.

Vinod

[skeptic99356]

From: RRKSent: 8/30/2003 7:41 PM

Vinod, I am having fun !