Mutual Funds
BOI AXA Equity Debt Rebalancer Fund: A dynamic scheme aiming to time the market

A handful of dynamic schemes vary their allocation to equity according to a pre-defined formula. Some of these schemes have done no better than any other equity diversified schemes. Would the new scheme from BOI AXA Mutual Fund be any better?

 
Last year, Bank of India re-entered the mutual fund business by acquiring 51% stake in Bharti AXA Mutual Fund. Now known as BOI AXA Mutual Fund, the asset management company is probably planning to set itself apart by launching schemes different from that of other fund houses. Earlier the fund house filed offer documents for hybrid schemes with gold as an asset class—BOI AXA Gold Income Stabiliser Fund and BOI AXA Triple Asset Allocator Fund. The company recently filed an offer document to launch an open-ended dynamic asset allocation fund—BOI AXA Equity Debt Rebalancer Fund. The fund will invest in two asset classes namely; equity and debt securities. Similar to the Triple Asset Allocator Fund the proportion of the portfolio invested in equity or debt is determined based on the month end price-to-equity (PE) ratio of the CNX Nifty Index.
 
The scheme has the flexibility to vary its allocation in equity and debt from 10% to 90% depending on the PE ratio of the Nifty index. “If the valuation of the broader market measured by PE ratio is high, the fund will take greater exposure to debt and vice versa. The proportion between equity and debt securities is determined by PE bands,” mentions the offer document. The allocation would be defined as per the table below:
 
 
Does the scheme make sense? 
We have analysed such market timing schemes in the past. (Read: Dynamic Plans:Dart-throwing) The schemes which invest based on PE valuation of the CNX index have done relatively well compared to other schemes. However, the proportion of equity to debt of all the three schemes vary. Therefore, even the fund houses are divided on an optimum allocation at a particular PE. Another important factor that would affect returns is the stocks selection of the scheme. For the equity portion of the new scheme, stocks would be chosen out of the top 100 companies by market capitalization listed on the National Stock Exchange and the Bombay Stock Exchange. What if the PE of the overall market is low but that of stock selected is high or vice versa? Stock selection would impact the performance of the scheme, maybe even negating the . A better way would probably be to use a market-timing strategy along with a top mutual fund scheme (Read: SIP vs Market-timing)
 
Alok Singh, chief investment officer-fixed income, would manage the debt portion of the scheme and has seven years of experience in the mutual fund industry. Gaurav Kapur, who has just five years of experience in research & fund management, would manage the equity portion.
 
Other details of the scheme:
Benchmark : CNX Nifty: 50% + Crisil Short Term Bond Fund Index: 50%
 
Load Structure:
Entry Load – Nil
Exit Load – 1% if redeemed within one year from the date of allotment
 
Minimum application amount:
Rs5,000 and in multiples of Re1 thereafter
Minimum Additional investment:
Rs1,000 and in multiples of Re1 thereafter
Investment through SIP/STP:
Monthly SIP: Rs1,000 and in multiples of Rs100 thereafter
Minimum duration: 12 months
 
Expenses:
Maximum total expense ratio (TER) permissible under Regulation 52(6)(c)(i) and (6)(a): Up to 2.50%
Additional expenses under regulation 52(6A)(c): Up to 0.20%
Additional expenses for gross new inflows from specified cities: Up to 0.30%
 

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After 21 years, Maharashtra issues circular for anti-terrorism day

After almost 21 years since Rajiv Gandhi was assassinated, the Maharashtra government issued a circular to observe 21st May as anti-terrorism day 

 
While several states across the country mark 21st May as anti-terrorism day, in remembrance of former prime minister Rajiv Gandhi, the government of Maharashtra has finally woken up to the idea. After almost 21 years, since Rajiv Gandhi was assassinated, the Maharashtra government on 16 May 2013 issued a circular to observe the anti-terrorism day from this year onwards.
 
Surprisingly, it took a letter (warning) from the Union home ministry for Maharashtra government to come up with its own circular for observing 21st May as anti-terrorism day in the state.
 
The letter was sent by Bhagwan Shankar, joint secretary in the Union home ministry, on 8 May 2013. Acting swiftly on the letter, the state government then issued its circular within a week after receiving the warning letter, claims social activist Anil Galgali.
 
Galgali, also an avid RTI activist said Maharashtra government was never serious on the issue (terrorism) and it took the warning letter from Union home ministry for the state machinery to issue a circular after 21 years.
 
Galgali had also sent a letter to the President of India, prime minister and chief secretary, urging them to enquire in to the delay in issuing the circular and take action against the officer/s responsible for the 21-year delay.
 
The day is observed to generate awareness in the country among all sections of people, about the danger of terrorism and violence and its effect on the people, society and the country as a whole. 
 
It was on this day in 1991 that Rajiv Gandhi fell to the designs of terrorists. This practice to observe 21st May as anti-terrorism day began in 1992. However many states including Maharashtra ignored it every year. 

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Overall salary hikes to be at 12% this year: TeamLease study

According to the study, not only will hiring increase going forward, salaries too will see an upward movement across most industries

 
With companies emphasizing ever more on skills, there seems to be greater synchrony between skills and salaries, states TeamLease’s Salary Primer for 2013. According to the report, not only will hiring increase going forward, salaries too will see an upward movement across most industries. While the hiring has registered 11% growth, salaries will witness 12% increase across industries and functions, the report said.
 
Further, with companies striking a balance between skills and increment, attrition rate also has been brought under control, emphasizing a buoyant and mature job market. From a sectoral perspective, most of the sectors register a healthy growth in increments. In fact, even the BFSI sector which had a relatively poor increment scheme last year seems to be on a course correction and will be rewarding skilled talent accordingly. And finally, the gap between permanent salaries and temporary salaries is now negligible, the study revealed.
 
Key findings of the survey
The skills arms race has begun: The year saw frenetic talent acquisition activity—near 11% increase over the previous year—and equally aggressive retention initiatives that raised increment payouts to an average 12% across industries and functions. The focus is on securing valuable skills through measured and commensurate pay actions.
 
More industries do well on skills-increments: FMCD and BFSI, industries that have grappled with longevity unsuccessfully so far, get a grip on the equation this year. Healthcare, pharmaceuticals, power and energy walk away with even better longevity returns to their relatively low spends on increment. All this, while FMCG sees diminishing returns to a significantly increased increment spend.
 
Convergences not rhetoric any more: With industries such as hospitality and BPO /ITeS and prominent profiles such as project lead (IT and knowledge services) and AutoCAD engineer (automobile and allied industries) displaying unified salaries with variances in mostly low single digits, the temp versus perm distinction on salary payouts is relegated to the past. A recurring theme is that the Sales and Marketing functional domain is a predominantly temp landscape now.
 
Dominance of IT threatened, unsuccessfully though: Automobile and allied industries almost does a catch up (17.6% rate of growth as against the IT and Knowledge Services’ 18.2%). Automobile and Allied Industries perform better on increment payouts, however, alongside Healthcare and Pharmaceuticals. FMCG and Power and Energy tie for the second spot with substantial increment growth rates with only the latter gaining improvements on longevity.
 
Mumbai and Delhi trounce Bangalore: Across industries and functions—with the exception of IT and Knowledge Services and Automobile and Allied Industries—the two mega cities of Mumbai and Delhi take formidable leads with growth rates significantly higher than Bangalore. Pune curries favour with substantial salary payouts to niche profiles such as SAP Developer and specialized domains such as engineering.
 
Specialization wins big: Niche and high-skilled profiles such as network architect, SAP developer/ consultant and project lead are in greater demand than the generalized and traditionally well-paid profiles such as IT executive / IT manager and accountant. The “niche-set” pockets salary and increment growth rates upwards of 12% and are toasted by most industries that employ them.
 
Salary growth rates in the early-teens are commonplace: To not be counted among profiles that get paid well in excess of 10% almost always means a profile is not skilled enough for its industry requirements. For example, RF engineer and vigilance officer make smart gains on increments thanks chiefly to their superior and specialized skills. Draftsman and loan advisor are examples of profiles that have stagnated on this count for years in succession.
 
Attrition rates stabilize: Across industry 11 out of 15 industries do well to grow longevity at best or contain attrition at best. The remaining four—agriculture and agrochemicals, BFSI, BPO and IT enabled services and FMCD—are characterized by profiles that attrite regardless of increment dole outs.
 
Commenting on the report, Sangeeta Lala, senior vice-president and co-founder TeamLease Services, said, “The headwinds of global change, blowing hot and cold have only so much as reshaped the contours of the Indian labour markets for the better. Salaries continue to rise—more for the deserving, employers are aggressively acquiring and rewarding the right skills and capabilities, talent migration is shaped by career enrichment opportunity as much as it is by market forces, and equity has prevailed.”

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