Just like Mombot used to make it

Designed to gather information on how robots interact with people, the Snackbot has been carefully crafted for maximum approachability in every detail, from its height to its colour. “We figured, what better way to get people to interact with a robot than have something that offers them food?” its creator Dr Paul Rybski from the Carnegie Mellon University said. The Snackbot is but one soldier in a veritable army of new robots designed to serve and cook food and, in the process, act as good-will ambassadors, and salesmen, for a more automated future.

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The gimmick called arbitrage funds

Over the past two years, the markets have been hugely volatile— which is ideal for arbitrage funds. But over this period, of the 12 arbitrage funds, only three funds outperformed and nine underperformed their benchmarks

Fund companies push arbitrage funds as one of the best options in a volatile market environment for those investors who wish to invest in a low-risk portfolio and yet gain decent returns. Theoretically, these funds benefit from the arbitrage opportunities arising out of price differences between the equity and derivatives segment of the stock market. So, these funds should do well when the market is volatile. But as is usual with mutual funds, the reality is different. Or rather, as with any other mutual fund product, the reality is simple: like all other funds, arbitrage funds also make money mainly when the market is rallying for a while. Volatility kills them!

What else explains the following facts? In the past two years, the Indian markets have remained highly volatile as it saw a bull run as well as a bear run. Arbitrage funds should have done extremely well in this period. If we look at the past two years’ performance of 12 arbitrage funds, it was terrible—only three funds outperformed and nine underperformed. Over three years, out of a total of nine funds, five funds outperformed while the others underperformed—an outcome akin to the toss of a coin. The performance of the 15 funds that were available over the past one year is hardly surprising, either; seven funds outperformed and eight underperformed. Again, the outcome of a coin toss.

So, what is so great about arbitrage funds? They are just another marketing gimmick of a complicated product. Over the past one year, most of these funds have given a return of 4%. A bank fixed deposit for a period of one year gives a return of 6%. The performance of these funds over the period of six months and three months were pathetic. Their returns were just 1%-2%.
 

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COMMENTS

B V Vijaya

7 years ago

Nacked truth has been revealed. When these schemes were launched I thought that as an adviser this fund could be added to give stability to portfolio & increase the confidence of investor in equity investments. After 2 years the result is not good.At the moment it has added a category of fund having no results

Ready for a major move

The latest positive data on the infrastructure sector failed to spark a market rally

Indian markets finally ended the day on a flat note after the finance ministry’s Economic Survey for 2009-10 predicted that India would bounce back to a high 9% growth in 2011-12 and is on its way to becoming the world’s fastest-growing economy in four years. The latest data on the infrastructure sector for January 2010 also helped the market to bounce back. At the end of the day, the Sensex declined 2 points from the previous day’s close to 16,254 while the Nifty gained 1 point to close at 4,860. Yesterday, we had said that the market would move sideways until the Union Budget, and it did so today. However, tomorrow, the Budget will be tabled and the market is getting ready for a major move, probably downward.

At 12:00 hrs IST, the Sensex was trading down 58 points from the previous day’s close at 16,198. At 14:00 hrs, the index was trading at 16,220, down 36 points.

At the end of the day, Banco Products gained 2%, after the company clarified that it does not supply the specific gasket fitted in the recalled A-star model of Maruti Suzuki.

Aurobindo Pharma ended flat after the company received tentative approval from the US Food & Drug Administration for Nevirapine tablets in oral suspension form.

PAE Ltd has entered into a distribution agreement with Schneider Electric India for the Xantrex range of products, which consists of solar invertors, solar chargers and charge controllers. The stock gained 1%.

Kerala Ayurveda has signed an expression of interest with Arya Vaidya Pharmacy (Coimbatore) to evaluate the integration of both businesses. The stock declined 1%.

During trading hours, the government announced that the infrastructure sector output grew 9.4% in January 2010 from a year earlier, higher than an upwardly revised annual growth of 6.4% in December 2009. During April-January, the first 10 months of the 2009-10 fiscal year, output rose 5.4% from 3% a year ago. The infrastructure sector accounts for 26.7% of India's industrial output.

The Economic Survey said capital inflows from advanced economies could be a challenge for India as they might lead to overheating of the economy. With interest rates at historic lows in most advanced economies, capital flows from these countries are finding their way into the fast-growing Asian economies, including India. It added that if inflows exceed the domestic absorptive capacity, it could lead to overheating of the economy. The Survey showed that this can also be looked at as the “impossible trinity” dilemma of policy choice between price stability, exchange-rate stability and capital mobility.

The economic survey for the 2009-10 financial year urged a calibrated exit from fiscal stimulus, which cushioned India’s economy from the worst of the global downturn. The report, presented in Parliament ahead of tomorrow’s general Budget, forecast economic growth at 8.25%-8.75% in 2010-11, accelerating to over 9% the year after, compared with projected growth of 7.2%-7.5% in the current year.

The economic survey said the risk of a double-dip recession in advanced economies has a direct implication for India. The survey said production of farm and allied sectors fell 0.2% in 2009-10, adding that there is a need for serious policy initiatives to achieve 4% annual agriculture growth. The survey suggested direct food subsidy via food coupons to households and favours making available food in the open market. The survey also favours issuing monthly ration coupons for the poor.

During the day, Asia’s key benchmark indices in Indonesia, Japan, South Korea, Hong Kong, Singapore and Taiwan fell between 0.49%-1.57%, but China’s rose 1.27%.

On Wednesday 24 February 2010, in the US markets, the Dow Jones Industrial Average was up 92 points while the S&P 500 and the Nasdaq Composite gained 11 points and 22 points, respectively.
 

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