A host of gold fund-of-funds were launched one after the other recently. IDBI Gold fund will join the list soon
IDBI recently filed an offer document with the Securities and Exchange Board of India (SEBI) to launch an open-ended fund-of-fund (FOF)—IDBI Gold Fund. The scheme would invest 95%-100% of the assets in units of IDBI Gold Exchange Traded Fund (ETF) and the remaining would be invested in liquid and debt schemes of IDBI.
This comes just a month after IDBI launched its gold ETF. IDBI has been late to join the trend in the launch of gold FOFs. We had eight such funds launched this year where the scheme invests in the gold ETF of the same fund. Reliance was the first to launch its scheme and the rest soon followed. Religare, which launched its gold fund on the 5th December, was the latest addition to the list. Gold FOFs are mainly targeted to those investors who are not able to invest in gold ETFs since they did not have a demat account, they can now participate by investing in such funds not only by lump sum payments but through systematic investments, as well. But does it make sense to invest in gold FOFs? On seeing the returns of the funds since inception up to 30 November 2011, most of the funds have almost matched their benchmark return. And some have trailed by more than 2%. But these have been launched recently; hence there would be some tracking error as the fund has yet to gather assets.
But is gold a safe investment option as many think it to be? Moneylife has written several times in the past that gold is a high risk asset class and one should be aware of these risks before investing in a highly speculative product like gold. The price of gold has gone up six times in the last 10 years. Any asset that has gone up so much for so long a time carries a huge risk of a crash. How will a risk-averse investor react to an ETF that can crash by 20%-30% like equity?
Veteran journalists express their concerns about ‘paid news’ at a panel discussion
“India needs to have some strong media watchdog, which will not interfere with journalistic freedom but must come down heavily on paid news,” said Geeta Seshu, a veteran journalist She was speaking at a panel discussion organised by Moneylife Foundation on paid news, following a screening of the movie ‘Brokering News’, directed by Umesh Agarwal, which deals with the subject.
Smruti Koppikkar, associate editor (West) and bureau chief at Outlook, pointed out that disclosures of reporters or media houses holding stakes in companies or earning favours from politicians is not feasible regularly in the long run. She also said, “The problem is also that people do not want to pay for the news that they read.”
Dnyanada Deshpande, who had worked as an editor for television channel IBN Lokmat talked about the nexus between regional media publications and politicians; and also about the awards given to individuals by media houses. “If a media house manages to get some very credible people on their jury or as awardees; they legitimise their stand. People then stop questioning their content. Awards are more about who give them than who receive them.
Ranjona Banerji, eminent journalist, said, “Somewhere, media house management also needs to be held accountable and be made to introspect—because they force in a lot of content. And one must be wary of correspondents who double up as advertising agents for corporates or political parties.”
The panel discussion ended with a lively interaction with the audience which comprised many journalists and social activists, and ended in applause.
Ambani is in talks to buy Network 18, says Wall Street Journal. Earlier D E Shaw, (which has a joint venture with Reliance) bought 14% stake in NDTV
Mukesh Ambani, the chairman of Reliance Industries, India’s biggest private sector conglomerate, is apparently in talks to buy Network 18, the television and internet company, the Wall Street Journal said quoting people familiar with the situation. Network18 Media and Investments, the holding company for the conglomerate, has annual revenue of about Rs1,500 crore but makes losses.
The Network18 group is up to its neck in debt and is apparently talking with Thomson Reuters to sell a 26% stake in Newswire18, in real-time financial news agency.
The Network 18 group comprises a variety of television, print, web and entertainment properties most of which are losing money. Its main properties are collaborations with top media companies such as CNBC, CNN, MTV, Viacom, etc.
This would be the second move by Mr Ambani to acquire media control. Earlier, US-based DE Shaw, a private equity and hedge fund, entered into a joint venture agreement with Reliance Industries in India. Exactly around that time, DE Shaw acquired a 14% stake in New Delhi Television (NDTV) for Rs70 crore. NDTV which is perennially losing money, operates three news channels—NDTV 24/7, NDTV India and NDTV Profit. Viewership of these channels is plummeting after competition in each segment intensified.
According to media reports, billionaire Mukesh Ambani, India’s richest person has also been holding talks with a host of media and entertainment firms, including Walt Disney’s Indian venture UTV Software, to acquire content for its upcoming telecom venture. US-based Walt Disney holds over 50% stake in UTV Software Communications and it is in process of acquiring the entire stake in the Indian firm. A deal with Walt Disney would give RIL’s telecom venture access to a host of games, entertainment and other children-focussed content solutions.
RIL has a 95% stake in Infotel Broadband Services, marking its entry into the telecom sector. Infotel is the only company to have pan-India BWA (Broadband Wireless Access) licence.
More than two decades ago Reliance had made a bid to enter the media by buying the Observer newspaper which it ran half-heartedly and closed down. Anil Ambani, the estranged and debt-strapped younger brother of Mukesh was leading that effort. The ADAG group controlled by Anil Ambani has large stakes in TV Today and other media companies.