Presentation is loading. Please wait.

Presentation is loading. Please wait.

DEBT FUND ANALYSIS Oct 01, 2008 – Oct 15, 2008. DEBT FUND ANALYSIS Debt Market Outlook Debt Market Update Debt Portfolio Strategy Liquid Plus Funds are.

Similar presentations


Presentation on theme: "DEBT FUND ANALYSIS Oct 01, 2008 – Oct 15, 2008. DEBT FUND ANALYSIS Debt Market Outlook Debt Market Update Debt Portfolio Strategy Liquid Plus Funds are."— Presentation transcript:

1 DEBT FUND ANALYSIS Oct 01, 2008 – Oct 15, 2008

2 DEBT FUND ANALYSIS Debt Market Outlook Debt Market Update Debt Portfolio Strategy Liquid Plus Funds are still a safer bet from a short term (3-6 months) horizon The current FMP yields are high and may not sustain in the long run, therefore investment in long term FMPs is recommended 2 Market movements The G-sec market was on a negative note as bears clawed down the bond prices on back of tight liquidity and devolvement of the 7.94% 2021 The 10-year bond is trading at a four week high of 8.73% and the auctioned bonds are trading over 10bps above their cut-offs, participants found these levels too lucrative to miss Annual inflation for the week ended September 20, 2008, witnessed a pull back falling below the 12% mark to 11.99%. Major contributor to this fall was a pull back in primary articles and food products Liquidity/borrowings: Liquidity remained constrained for issuers of non- convertible debentures on October 1; the LAF repo reporting the highest-ever borrowing of INR bn Participants remained cash-starved during this non reporting week, as investor demand for fixed income instruments continued to reel (dwindle) under advance tax outflows of INR 400 bn; the daily average LAF repo at INR gained INR 270 bn over the previous week Liquidity is expected to ease from current levels. A steep rise in inflows on account of redemptions and interest payments will inject money into the system Participants are likely to have made their CRR provisions this will reduce overall pressure on liquidity Overnight money market rates are expected to soften from present levels; improvement of bps will not be surprising

3 DEBT FUND ANALYSIS Recommended Debt MF Categories Liquid Plus Funds: These funds have favorable portfolio composition. These funds are expected to invest close to 40% on higher side and 25% on the lower side in Corporate Bonds with maturity above 1 year These funds are able to take advantage of rise in Overnight rates and also increase the portfolio yield by taking call in high duration bonds. In the current scenario where overnight rates are expected to remain high and yields on corporate bond to ease slightly from current levels. These funds are better positioned to take advantage of both the scenarios These funds provide an indirect bet on Short to Medium term bonds. In case of 100% investment in these bonds an investor can be subject to mark to market compulsion and any rise in rates is likely to hurt the return on investment. However, with investment in Liquid Plus Funds an investor can take advantage of spread investment strategy of these funds These funds are treated as an income fund and are exempt from the rise in Dividend Distribution Tax. Old rate of Dividend Distribution Tax is applicable to these funds 3

4 DEBT FUND ANALYSIS 4

5 5

6 6

7 Recommended Schemes in Liquid Plus Funds Liquid Plus Funds – Retail & Institutional Birla Sun Life Liquid Plus Fund DWS Liquid Plus Fund ICICI Prudential Flexible Income Plan Reliance Liquid Plus Fund 7

8 DEBT FUND ANALYSIS 8

9 9

10 10

11 DEBT FUND ANALYSIS 11

12 DEBT FUND ANALYSIS Recommended Debt MF Categories Fixed Maturity Plans: Product with various maturities FMPs are available with numerous maturity options –1 month, 3 months, 6 months, 1 year, 3 years and 5 years. One can invest in the relevant plan depending upon his investment horizon and the requirement of cash flows on maturity Minimal risk Unlike debt funds, which are exposed to three kinds of risks viz. interest rate, credit and liquidity risk, FMPs are a better option FMPs are least exposed to interest rate risk as the fund manager holds the instruments till maturity getting a fixed rate of return. Thus FMP can manage to get a specific interest on these instruments and investors have a fair idea about it. This helps investors tailor their investments as per their future cash requirements They primarily invest in AAA, P1+ or such kind of good rated credit instruments with maturity profile of the securities in line with the maturity of the plan so there is also low credit risk with minimal liquidity risk involved Tax Efficient Returns FMPs yield competitive & tax efficient returns as the tax rates on a FMP are comparatively lesser than the tax rates in other debt funds 12

13 DEBT FUND ANALYSIS FMPs with tenure less than 1 Year Name of the SchemeTenure Closing Date Min. Investment Indicative Yield (Pre Tax) ING Quarterly FMP 91 – Series A3 (Insti.)91 Days06-Oct-08500, % ING Quarterly FMP 91 – Series A3 (Reg.)91 Days06-Oct-085, % HDFC FMP 90D September 2008 (Insti.)90 Days06-Oct-0810,000, % HDFC FMP 90D September 2008 (Reg.)90 Days06-Oct-085, % UTI Fixed Income Interval Fund - Series II - Quarterly Interval Plan VII (Insti.) 3 months06-Oct-081,000, % UTI Fixed Income Interval Fund - Series II - Quarterly Interval Plan VII (Reg.) 3 months06-Oct-0810, % DSPML FMP -3M - Series 16 (Insti.)3 months06-Oct-0810,000, % DSPML FMP -3M - Series 16 (Reg.)3 months06-Oct-0810, % DSP Merrill Lynch FMP - 1M - Series 3 (Insti.)1 months06-Oct-0810,000, % DSP Merrill Lynch FMP - 1M - Series 3 (Reg.)1 months06-Oct-0810, % ABN AMRO Interval Fund – Series 2 - Quarterly Plan N3 months06-Oct-0810, % 13

14 DEBT FUND ANALYSIS FMPs with tenure more than1 Year Name of the SchemeTenure Closing Date Min. Investment Indicative Yield (Pre Tax) TATA FIXED INVSTMENT PLAN Series 4 Scheme B (SHIP.)18 months16-Oct-0810,000, % TATA FIXED INVSTMENT PLAN Series 4 Scheme B (HIP.)18 months16-Oct-082,500, % TATA FIXED INVSTMENT PLAN Series 4 Scheme B (RIP.)18 months16-Oct-0810, % JM FMF -XIII - Yearly Plan (Insti.)375 Days15-Oct-08500, % JM FMF -XIII - Yearly Plan (Reg.)375 Days15-Oct-085, % Kotak FMP 19M Series 1 (Insti.)19 months13-Oct-081,000, % Kotak FMP 19M Series 1 (Reg.)19 months13-Oct-085, % BIRLA SUN LIFE FIXED TERM PLAN - SERIES BG (370 Days) (Insti.) 370 Days08-Oct-0810,000, % BIRLA SUN LIFE FIXED TERM PLAN - SERIES BG (370 Days) (Reg.) 370 Days08-Oct-085, % IDFC Fixed Maturity Plan Nineteen Months Series 1 (Insti.)19 months07-Oct-0810,000, % IDFC Fixed Maturity Plan Nineteen Months Series 1 (Reg.)19 months07-Oct % ABN AMRO Fixed Term Plan - Series 14: Plan A (Insti.)370 Days06-Oct-082,500, % ABN AMRO Fixed Term Plan - Series 14: Plan A (Reg.)370 Days06-Oct-085, % ING Yearly FMP Series A2 (Insti.)366 Days6-Oct-08500, % ING Yearly FMP Series A2 (Reg.)366 Days6-Oct-085, % 14

15 DEBT FUND ANALYSIS Edelweiss Securities Ltd 11th Floor, 1101 A&B Godrej Coliseum Off Eastern Express Highway, Sion (E) Mumbai – Ph: Edelweiss Securities Ltd 10th Floor, Hindustan Times House, 18-20, Kasturba Gandhi Marg, New Delhi Ph: Edelweiss Securities Ltd 1st Floor, Plot No. 4009, 100 ft Road, HAL II Stage, Bangalore – Ph: Edelweiss Securities Ltd 10th Floor, Arcadia, Nariman Point, Mumbai – Ph: Information/Sales: Edelweiss Securities Ltd 2nd Floor, Savitri Towers, 3A Upper Wood Street, Kolkata – Ph: Contact Details 15

16 DEBT FUND ANALYSIS Disclaimer This document has been prepared by Edelweiss and is strictly confidential and is intended for the use by recipient only and may not be circulated, redistributed, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of Edelweiss. Receipt and review of this document constitutes your agreement not to circulate, redistribute, retransmit or disclose to others the contents, opinions, conclusion, or information contained herein. In the preparation of the material contained in this document, Edelweiss has used information that is publicly available, including information developed in-house Information gathered & material used in this document is believed to be from reliable sources and is given in good faith. Edelweiss however does not warrant the accuracy, reasonableness and/or completeness of any information. For data reference to any third party in this material no such party will assume any liability for the same. Edelweiss and/or any affiliate of Edelweiss does not in any way through this material solicit any offer for purchase, sale of any financial transaction/commodities/products of any financial instrument dealt in this material. All recipients of this material should before dealing and or transacting in any of the products referred to in this material make their own investigation, seek appropriate professional advice. The investments discussed in this material may not be suitable for all investors. Any person subscribing to or investigating in any product/financial instruments should do so on the basis of and after verifying the terms attached to such product/financial instrument. Edelweiss (including its affiliates) and any of its officers, directors, personnel and employees, shall not be liable for any loss, damage of any nature, including but not limited to direct, indirect, punitive, special, exemplary, and consequential, as also any loss of profit in any way arising from the use of this material in any manner. The recipient alone shall be fully responsible/are liable for any decision taken on the basis of this material. Edelweiss has included statements/opinions/recommendations in this document which contain words or phrases such as will, expect, should and similar expressions or variations of such expressions, that are forward looking statements. Financial products and instruments are subject to market risks and yields may fluctuate depending on various factors affecting capital/debt markets. Please note that past performance of financial products and instruments does not necessarily indicate the future prospects and performance thereof. Actual results may differ materially from those suggested by the forward looking statements due to risks or uncertainties associated with our expectations with respect to, but not limited to, exposure to market risks, general economic and political conditions in India and other countries globally, which have an impact on our services and/or investments, the monetary and interest policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or rates or prices, the performance of the financial markets in India and globally, changes in domestic and foreign laws, regulations and taxes and changes in competition in the industry. By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated. Edelweiss (including its affiliates) or its officers, directors, personnel and employees, including persons involved in the preparation or issuance of this material may; (a) from time to time, have long or short positions in, and buy or sell the securities mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation in the financial instruments/products/commodities discussed herein or act as advisor or lender/borrower in respect of such securities/financial instruments/products/commodities or have other potential conflict of interest with respect to any recommendation and related information and opinions. The said persons may have acted upon and/or in a manner contradictory with the information contained here. This document is intended to be used only by resident Indians, non-resident Indians, persons of Indian origin, subject to the applicable laws and regulations of any Indian or foreign regulatory authority. This document should not be regarded as solicitation of business in any jurisdiction including India. Mutual Fund investments are subject to market risk please read the offer document of the respective schemes carefully before investing.


Download ppt "DEBT FUND ANALYSIS Oct 01, 2008 – Oct 15, 2008. DEBT FUND ANALYSIS Debt Market Outlook Debt Market Update Debt Portfolio Strategy Liquid Plus Funds are."

Similar presentations


Ads by Google