Month: August 2008

We all know that the basic principle of maximizing returns is to BUY Low and Sell High. However, the Indian Investor in general has always failed to Invest when the markets are cheap. On the contrary, they invest in Gold when it is cheap and consider it as a long term investment but are scared to invest in equities or maybe they have short term perceptions. [We have all seen in Reliance Power IPO]

Sr. Fund Manager, Mr. Prashant Jain of HDFC Mutual Fund has written an excellent note to his investors saying,

Best returns are typically on investments made in bad times.

You can read the entire document written by Prashant Jain here. [PDF]

JP Morgan Mutual Fund plans to launch JPMorgan JF Greater China Equity Off-shore Fund, an open-ended Fund of Funds scheme. The fund house has filed offer document with Securities and Exchange Board of India (SEBI) in this regard.

The fund house will invest up to 80%-100% of the raised funds in units/shares of the scheme. Similarly, it will invest up to 20% in money market instruments and/or units of liquid schemes.The fund primarily invests in a diversified portfolio of companies incorporated or which have their registered office located in, or derive the predominant part of their economic activity from, a country in the Greater China region.

The scheme offers only growth option. The minimum subscription amount under this option is fixed at Rs 10,000 and in multiples of Re 1 thereafter.

Slowing economy has increased the risks on investments in Commercial Papers – CPs of companies with low investment ratings.

Companies with low investment rating are going to find it even more difficult to raise money in the already liquidity hungry market. Mutual fund houses are reducing the exposure to commercial papers issued by companies with low investment rating.

Slowing economy has increased the risks on such investments and fund managers are in no position to take any chances. Total investment liquid and liquid plus schemes and FMPs in these instruments has declined to around Rs 1670 crore at the end of July this year compared to Rs 3000 crore at the end of January this year.

Poor liquidity conditions prevailing in the market has also given more space to the fund managers to concentrate only on high investment rating companies. Usually these companies pay lower rate of return which forces fund managers to diversify in high risk investments. However, during the current high interest rate regime, even the companies with top investment ratings are willing to pay at par with the market rates.