At present there are eight banking sector schemes. But more important than choosing the right scheme, an investor needs to be cautious about when to invest in a sector fund.
Birla Sun Life Mutual Fund plans to launch an open ended banking & financial services sector scheme. The scheme would invest over 70% of its portfolio predominantly in equity and equity related securities of companies engaged in banking and financial services. The balance of the assets would be invested in cash, money market and debt instruments. If you do not get your timing right, you may face a significant loss of capital or the opportunity of gaining substantial returns.
For example, if one had invested in a banking sector scheme at the beginning of the year, the investment would have gone down by over 20% by the end of September 2013. Below is the chart of the one-year and three-year and five-year rolling returns with quarterly frequency of the CNX Finance index, which is also the benchmark of the scheme.
The returns of banking schemes have also varied considerably. This makes the choice of choosing the right scheme crucial. Reliance Banking is one of the oldest scheme and has accumulated a corpus of Rs1,300 crore, surpassing all the other schemes in terms of assets under management. UTI Banking Sector which was launched in March 2004 has gathered a corpus of just Rs274 crore. From the list, ICICI Prudential Banking and Financial Services is the only scheme that has performed better that the rest in the periods mentioned. However, from the chart it can be seen that the volatility risk is still present.
Birla Sun Life Mutual Fund is one of the better managed fund house. There are 19 schemes of the mutual fund. Some of the equity schemes of the fund company have performed significantly well in the past. Below is the performance of the schemes.
Mahesh Patil would be the designated Fund Manager of the scheme. He has over 22 years experience in fund management, equity research and corporate finance. Prior to joining the fund house, he has worked with Reliance Infocom Ltd. in Business Strategy, and as a Sr. Research Analyst with Motilal Oswal Securities and Parag Parikh Financial Advisory Services. He currently manages four other schemes of Birla Sun Life Mutual Fund—BSL Frontline Equity, BSL Infrastructure, BSL Top 100 and BSL Long Term Advantage
Additional Scheme Details
Fresh Purchase (Incl. Switch-in): Minimum of Rs5,000/- and in multiples of Re1/- thereafter
Additional Purchase (Incl. Switch-in): Minimum of Rs1,000/- and in multiples of Re1/- thereafter
Repurchase for all Plans/Options: In multiples of Re1/- or 0.001 units
Benchmark Index CNX Finance
For redemption / switch-out of units within 365 days from the date of allotment: 1.00% of applicable NAV.
For redemption / switch-out of units after 365 days from the date of allotment: Nil.
Maximum total expense ratio (TER) permissible under Regulation 52(6)(c)(i) and (6)(a)—2.50%
Additional expenses under regulation 52 (6A) (c)* (more specifically elaborated below)—0.20%
Additional expenses for gross new inflows from specified cities* (more specifically elaborated below)—0.30%
During September quarter, Ramco Cements (erstwhile Madras Cements) reported 86% decline in its net profit at Rs18.27 crore on sluggish demand and high costs. However, MAT credit boosted its bottomline
The Ramco Cements Ltd (formerly known as Madras Cements), south India’s second largest cement producer, for the quarter to end-September saw net profit plunge 86% to Rs18.27 crore from Rs132.89 crore recorded a year ago, while its net sales declined 8% to Rs920.71 from Rs1005.69 for the same time period.
The poor result was due to sluggish cement demand and higher costs. The company said its expenditure rose by 15% to Rs787.02 crore, when compared with Rs685.53 crore in the year ago period.
However, during quarter to end-September, the company got MAT (minimum alternative tax) of Rs10.38 crore and this was nearly equal to its profit before tax of Rs11.96 crore. This helped in boosting net profits of the company during its September quarter.
“Cement, even though a very low-value commodity, is highly taxed. The government should realise this and rationalise the duty on cement,” said AV Dharmakrishnan, chief executive officer.
According to the company filings, the competition commission of India (CCI) imposed a penalty of Rs.258.63 crore for alleged cartelisation. Company filed appeal before the Competition Appellate Tribunal (COMPAT) and the order of CCI has been stayed on condition that the company deposit 10% of the penalty amounting to Rs25.86 crore, final judgement on this issue is still pending so no provision has been considered necessary.
Chennai based Ramco group’s cement company informed both exchanges on 24 September 2013 that, the company changed its name from Madras Cements Ltd to The Ramco Cements Ltd.
On Wednesday, The Ramco Cements closed 2.35% down at Rs172.30 on the BSE, while the benchmark Sensex was marginally down at 20,767.
V-Guard sales were affected in Andhra Pradesh over the frequent shut downs due to Telangana issue, while better power situation across states affected volumes in UPS segment
Kerala-based electrical appliances manufacturer V-Guard Industries Ltd said its second quarter net profit fell about 20% due to lower sales.
For the quarter to end-September, V-Guard said its net profit fell to Rs14.5 crore from Rs17.9 crore while its total revenues, including sales rose to Rs334.5 crore from Rs313.5 crore, same period last year.
Mithun K Chittilappilly, managing director, V-Guard said, “Sales from south markets have not been encouraging as expected. Frequent shut down of markets due to Telangana issues has affected the sales from non-Hyderabad areas. In addition, better power conditions across states and excess rain falls during monsoon has affected the sales of digital UPS and pumps to a considerable extent.”
At 3.50pm on Wednesday, of V-Guard Industries was trading 5.6% down at Rs495.5 on the BSE while the 30-share benchmark was marginally down at 20767.9.