Mutual Funds
JP Morgan launches fund to let you invest in US large-caps

It’s a joke. Would you want to pay 2.5% for a fund that returns 2.58% over the last five years?

JP Morgan Mutual Fund has filed an offer document with the Securities and Exchange Board of India (SEBI) to launch JP Morgan America Large Cap Equity Off-shore Fund, an open ended fund of funds. The scheme will invest 80% to 100% of assets in units / shares of JPMorgan funds like the America Large Cap Fund. It would allocate up to 20% of assets in money market instruments and / or units of liquid schemes.

In recent weeks, there has been a rush of foreign funds queuing up to tap Indian savings for foreign products. Global funds offer diversification benefits, investing in stocks (biotech, technology, energy, agriculture, mining, etc.) that an Indian investor may not be able to get if they invest in domestic schemes. As with other kinds of products, foreign funds are not about returns alone. There are risks too. In the case of JPMorgan America Large Cap Equity, there is a risk of concentration in large-cap stocks.

The Benchmark index for the scheme will be Russell Top 200 (net of 30% withholding tax). The Russell Top 200 Index is a subset of the Russell 3000® Index. It includes 200 of the largest securities based on a combination of their market cap and current index membership and represents approximately 65% of the US market. The top 10 holdings as of 30 April 2011 are Exxon Mobil Corp, Apple Inc, Chevron Corp, International Business Machines, General Electric Co, Microsoft Corp, Procter & Gamble Co, AT&T Inc, JP Morgan Chase & Co And Johnson & Johnson.

Should you invest? Well, if you believe that the Russell Top 200 will give a better return than Indian large-cap stocks, then go ahead. Unfortunately, the Russell Top 200 Index has not performed that well. From 1 May 2006 to 30 April 2011 the Sensex gave an annualised return of 9%, while the Russell Top 200 Index gave a return of just 2.58% in the last five years. Would you want to pay 2.5% for a fund that returns 2.58% over the last five years?

User

SEBI to embark on transparency drive

SEBI generally does not make public its ongoing probes on the ground that the investigations could be jeopardised by interest parties. However, regulators in the US and some other countries generally issue a public statement even at the time of launch of their investigations

New Delhi: Market regulator Securities and Exchange Board of India (SEBI) has decided to embark on a transparency drive with an aim to make its functions as transparent as possible, reports PTI.

As part of the proposed move, SEBI will make public all the prosecution cases undertaken so far in the interest of the markets and investors and might consider revealing even some of its ongoing probes, depending on their sensibility.

The proposed moves, which also include appointment of a chief information officer (CIO), are being seen as part of a new operating environment being ushered in by UK Sinha, who succeeded CB Bhave as SEBI chairman in February this year.

In the past, SEBI has faced the flak for being surrounded in a veil of secrecy, which has been often defended in the name of possible misuse of the information by vested parties.

SEBI generally does not make public its ongoing probes on the ground that the investigations could be jeopardised by interest parties.

However, regulators in the US and some other countries generally issue a public statement even at the time of launch of their investigations.

Besides, SEBI has also decided to appoint a CIO for maintenance and dissemination of all information from it.

The regulator has been told by its board of directors, which includes nominees from the central government, that it needs to appoint a CIO for proper information dissemination.

The board also suggested SEBI to develop a strategic action plan for a period of 3-5 years as against the current practice of such plans being framed for one financial year.

A longer-period strategic action plan would help the regulator maintain better business continuity and transparency in its various functions in the interest of investors and the markets, sources said.

Besides, SEBI has been asked to undertake necessary measures for securing its data and those of market entities from possible cyber attacks and to maintain its business continuity.

The board has also suggested further strengthening of SEBI's various regional offices, as against previously proposed attempts to centralise most of its functions.

On its proposed move to make public as many prosecution cases as possible, SEBI recently uploaded on its websites lists of various kind of cases.

These include cases dismissed in the prosecution, cases that resulted in convictions, prosecution cases launched against collective investment scheme entities, cases where accused was declared as proclaimed offenders and cases that resulted in compounding.

These lists are of cases till 31 March 2011 and SEBI intends to add many more such lists in the coming days.

User

RBI allows FIIs, MFs to hedge risk in corporate bonds from Oct

The central bank had in 2008 planned to introduce the CDS for corporate bonds, but postponed the move in view of the global financial crisis, which was caused by large scale trading in such debt instruments

Mumbai: The Reserve Bank of India (RBI) today came out with a credit default swap (CDS) guidelines that would allow corporate entities including insurers, foreign institutional investors (FIIs) and mutual funds to hedge risk against default in corporate bonds to which they subscribe, reports PTI.

The guidelines, which were finalised by the RBI after receiving views from stakeholders, will come into effect from 24th October, it said in a notification.

CDS is a risk management product which helps entities guard against possibility of defaults in repayment of corporate bonds.

As per guidelines, FIIs, banks, insurers, non-banking finance companies (NBFCs), listed companies, housing finance companies, provident funds and primary dealers can buy credit protection under the scheme.

It further said that banks, primary dealers and NBFCs with sound financial and good track record will be allowed to act as market makers or facilitators (for buying and selling of such swaps).

The bonds for the purpose of CDS would include unlisted and unrated debt instruments, including those issued by the infrastructure companies engaged in sectors like road, port and telecommunication, power among others.

"CDS would increase investors' interest in corporate bonds and would be beneficial to the development of the corporate bond market in India," the RBI said.

Elaborating on the guidelines, the RBI said that besides banks, the NBFCs and primary dealers with a net owned fund of Rs500 crore will be permitted to act as market makers.

The guidelines further said that entities will only be allowed to buy CDS contracts to hedge credit risk and not for speculation.

Earlier in February, the RBI had formed the draft guidelines for allowing corporates to hedge risk against CDS.

The central bank had in 2008 planned to introduce the CDS for corporate bonds, but postponed the move in view of the global financial crisis, which was caused by large scale trading in such debt instruments.

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)