Mutual Funds
Edelweiss Debt & Corporate Opportunities Fund: Another hybrid scheme

The scheme would invest over half its portfolio in debt and the remaining portion in equity. For the equity portfolio, it will invest in opportunities arising out of corporate actions

Edelweiss Mutual Fund (Edelweiss MF) plans to launch an open-ended hybrid scheme—Edelweiss Debt and Corporate Opportunities Fund. The scheme would invest in debt & money market instruments having average maturity of up to three years and would invest in equity arbitrage opportunities and corporate actions related opportunities to generate high returns. The scheme would invest over half its portfolio in debt and the remaining portion in equity. Edelweiss Absolute Return Fund is an equity-oriented scheme from Edelweiss MF which employs a similar equity investment strategy. The returns of this scheme have been considerably volatile and negative at times despite investing in arbitrage opportunities, as the scheme bets on the corporate actions of companies. Similarly, in the new scheme, the equity allocation which can go up to 50% of portfolio can bring additional risk. Surprisingly, according to the regulators product labelling guidelines, the scheme labels itself as ‘medium risk’.

According to the scheme information document, “The investment strategy (of the scheme) would be to predominantly invest in a diversified basket of debt & money market instruments having average maturity of up to 3 years. It will also opportunistically allocate some proportion of assets in equity & equity related instruments, primarily focused to benefit from equity derivatives and arbitrage strategies and will invest in opportunities arising out of corporate actions announced in stocks to generate high returns with moderate levels of risk and liquidity.”

Corporate actions are events that bring material change in the functions of a publicly listed company that can affect stakeholders, for good or bad. The term ‘corporate actions’ includes actions such as stock splits, dividends, mergers and acquisitions, rights issues, spin offs as also special situations arising out of corporate activities like initial public offering, follow-on public offering, buy back, delisting, open offers, bonus, offer-for-sale etc. The fund managers of the scheme will carefully analyse any such instances and participate in the same as such if according to their analysis they feel such actions would create value for the investors.

To moderate the risk, the new scheme will invest in arbitrage opportunities between spot and futures prices of exchange traded equities (for e.g. buying the basket of index constituents in the cash segment and selling the index futures, buying ADR/GDR and selling the corresponding stock future, etc). The scheme will also invest in low risk derivatives strategies. These strategies will involve any combination of cash, futures and options.

Below are the performances of equity oriented schemes of Edelweiss MF:

None of the schemes have a track record of more than five years and have failed to attract investors. None of the scheme have a corpus above Rs50 crore.

In terms of taxation, as the allocation to equity is less than 50%, the new scheme will not be treated as an equity scheme. The debt portion of the scheme would be managed by Rahul Totla who has four years of work experience and Mr Paul Parampreet will manage the equity portion of the scheme. He has a work experience of more than eight years


Other details of the scheme

Investment amount:

Minimum of Rs. 5,000/- and in multiples of Re.1/- thereafter.

Minimum of Rs. 1,000/- and multiples of Re. 1/- thereafter.


Benchmark Index:

CRISIL Short Term Bond Fund Index –85% and CNX 500 –15%


Exit load:

If the Units are redeemed / switched out on or before 180 days from the date of allotment – 0.50%

If the Units are redeemed / switched out after 180 days from the date of allotment – Nil


Expense ratio:

Maximum total expense ratio (TER) permissible under Regulation 52(6) Upto 2.25%

Additional expenses under regulation 52(6A)(c) Upto 0.20%

Additional expenses for gross new inflows from specified cities under Regulation 52(6A)(b) Upto 0.30%


SBI, IDBI Bank cuts interest rate on retail loans for festivals

SBI is the fourth bank after PNB, OBC and IDBI Bank to offer special interest rates on loans for buying automobiles and consumer durables such as televisions, air-conditioners and refrigerators during the festive season

State Bank of India (SBI), the country's largest lender on Wednesday reduced its interest rates on loans for cars and consumer durables. SBI is the fourth bank after PNB, OBC and IDBI Bank to offer special interest rates on loans to buy automobiles and consumer durables such as televisions, air-conditioners and refrigerators.


SBI has also decided to lower the processing charges to cash in on the festival season demand.


The decision to cut interest rates on auto and consumer durables loans comes nearly a week after the union government decided to pump in funds into state-run banks so that they can lower rates to stimulate demand in the targeted sector.


According to SBI, interest rate on car loan has been slashed by 0.2% to 10.55% from 10.75% earlier. It said, “Processing charge has also been cut from 0.51% of the loan amount with a minimum of Rs1,020 to a flat rate of Rs500”.


The bank has also launched a special festival loan for its salary account holders for buying consumer durables and two-wheelers.


Discounts are available under this offer resulting in effective interest rates starting from 12.05%.


This 'Utsav Ki Umang, SBI ke Sang' offer is valid from 7 October 2013 till 31 January 2014, and covers the purchase of cars, two-wheelers and consumer durables.


IDBI is offering home and auto loans at its base rate of 10.25% during the festive season. The lender has also decided to waive processing fee for both these loans during the festive period starting from 9 October 2013.



Dayananda Kamath k

3 years ago

it is tragedy of indian banking that rbi is a mute spectator and facilitaor for all banking misdeeds. and will act only when situation is out of controll and allows the mighty to go scotfree. 1. prime rate was intorduced and it was misused by banks and rbi did not act.then sudeenly changed to base rate. base rate is the rate dipicting the cost of funds for the bank. but today banks are granting loans at base rate for many of the activities which are for consumption and real estate business, which genrates and forces to create black money in the economy in india. but manufacturing and industry is charged at exorbitant rate. yes they provide cdr so that the moolah can be shared later.full amount payment to builders instead of stage wise relase was encouraged so that the builders/devlopers will get funds at cheap rate than they were to take the loans on their names from banks. are the bankers/ regulator not aware of this. they delibeately allowed it so that the builders can use the money for completing old projects stuck up. the fate of new customers depend on a new scheme or is it scam to be invented.even the govt making it conditional to reduce interest rate on vehicle loans and consumer durable loans to provide capital to nationalised banks. for a paltry capital you will have to sacrifise interest on your entire loan portfolio. one more nonsense decision by nonsense cabinet. i have my own doubt that women are being made heads of banks may be just to have their way.

Astronomers to boycott NASA meeting over ban on Chinese scientists

According to a law signed by Obama, funds of NASA cannot be used to collaborate with China or to host Chinese visitors at US space agency facilities

Some prominent American astronomers are boycotting a meeting called by the National Aeronautics and Space Administration (NASA) next month on exoplanets due to a ban on attendance by Chinese scientists.


The restriction is based on a law passed in 2011 and signed by President Barack Obama that prevents NASA funds from being used to collaborate with China or to host Chinese visitors at US space agency facilities.


Among those leading the boycott are Debra Fischer, an astronomy professor at Yale University, and Geoff Marcy, an astronomy professor at the University of California, Berkeley.


“In good conscience, I cannot attend a meeting that discriminates in this way. The meeting is about planets located trillions of miles away, with no national security implications,” Marcy wrote in an e-mail to the organisers.


The legal language that bans NASA cooperation with the Chinese was inserted into a funding bill by Congressman Frank Wolf, who chairs the House Subcommittee on Commerce, Justice, Science and Related Agencies.


The law bans NASA funds from being used to work “bilaterally in any way with China or any Chinese-owned company” or being “used to effectuate the hosting of official Chinese visitors at facilities belonging to or utilised by NASA,” according to a copy of the legal text sent to AFP by Wolf’s assistant.


According to retired NASA astronaut Leroy Chiao, who was born in the US to Chinese parents, Wolf and several other lawmakers are engaged in a “whole campaign” to prevent US aerospace involvement with China.


“Unfortunately, I think they are uninformed and they have got outdated ideas,” Chiao told AFP.


“Basically they are paranoid. They think China is trying to steal all of our technology.”


Chiao said he supports better ties with China, based on the model of space cooperation that has existed between the United States and Russia since the 1990s.


“Cooperating in space helps the relationship between countries in other areas as well,” he said.


Chiao said he applauded the scientists who are boycotting the astronomy conference, but said “they are a little misinformed, too. They think it is NASA’s fault. But NASA has its hands tied because of the federal laws.”


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