Mutual Funds
Motilal Oswal MOSt Focused 25 Fund: First actively-managed scheme from Motilal Oswal

The first actively managed scheme from Motilal Oswal Mutual Fund would look to select just 25 stocks. Though a focussed portfolio sounds good theoretically, it would be a tough job for the fund managers looking to beat the market

Motilal Oswal Mutual Fund plans to launch its first open-ended equity diversified scheme—Motilal Oswal MOSt Focused 25 Fund. Motilal Oswal Mutual Fund at present, in its product basket, has three exchange traded funds (ETFs) investing in equities. The new scheme would invest in a portfolio of just 25 stocks, similar to the Axis Focused 25 Fund and DSP BlackRock Focus 25 Fund. (Read: Will Axis Focused 25, a fund that will invest in just 25 stocks, deliver?) The scheme would invest 65%-100% in equities selected from the top 200 listed companies by size of market capitalization and up to 25% would be invested in equities falling out of the mentioned criterion, but with minimum market capitalization of Rs1,400 crore. Along with meeting the above criteria, the scheme would limit its exposure to just 25 companies. The remaining part of the portfolio, up to a maximum of 10%, would be invested in debt. A number of fund managers find it tough to beat the benchmark even when there is no limit on the number of stocks. Therefore, picking a winning portfolio of just 25 stocks would be a tough job for any fund manager.

 

This would be the first actively managed scheme from the fund house and it would not be an easy task for the fund manager to select just 25 stocks that are expected to beat the market. Fund managers have to tackle risk more proactively. They have less room for error. They emphasise in-depth stock research—digging into a company’s business and the quality of its finances and management, looking for the top prospects in myriad industries. And, as an extra cushion, managers have to buy shares at a discount to what they believe is the actual worth. Is this possible for all fund managers? It is tough. Axis’ Focused 25 Fund and DSP Blackrock’s Focus 25 Fund have a track record of less than three years hence we cannot adequately judge the performance.

 

It would be interesting to see how the fund management of Motilal Oswal Mutual Fund performs. Taher Badhsah is one of the two fund managers of this scheme and he would be handling the equity investments. He has over 18 years of experience in fund management and investment research. The other fund manager Abhiroop Mukherjee would be handling the debt portion. He has over four years of experience in the fixed income trading.

 

Other scheme details

NFO Period:  22 April 2013 to 6 May 2013

 

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%

 

Benchmark index:  CNX Nifty Index

Entry Load: Nil

Exit Load: Nil

 

Minimum Application Amount (During NFO):

Rs10,000 and in multiples of Re1 thereafter.

Additional Application Amount:

Rs1,000 and in multiples of Re1 thereafter.

 

Systematic Investment Plan (SIP):

Minimum instalment amount - Rs1,000 and Rs2,000, respectively, for monthly and quarterly frequency respectively and in multiples of Re1 thereafter.

 

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%.

User

R*Shares Nifty ETF: Just another Nifty Index scheme

Will the new scheme be able to lure investors?

Reliance Mutual Fund plans to launch a new index exchange traded fund (ETF)—R*Shares Nifty ETF. The scheme would invest in stocks comprising the CNX Nifty Index in the same weightage as in the index and endeavour to track the benchmark index. Presently there seven ETFs that are based on the CNX Nifty Index. Five of these schemes have a corpus of under Rs10 crore. Goldman Sachs Nifty BeES has a corpus size of around Rs400 crore and Kotak Nifty ETF has a corpus around Rs45 crore. Seeing the poor response to the other ETFs, Reliance Mutual Fund has still decided to tread in this highly competitive space.
 

The fund house, at the moment, has two index ETFs in its basket— R*Shares Banking ETF and R*Shares CNX 100. Reliance has earlier filed offer documents to launch two ETFs— R*Shares Consumption Fund and R*Shares Dividend Opportunity Fund last year, as well. (Read: R*Shares ETFs: Should you invest in R*Shares Consumption Fund and R*Shares Dividend Opportunity Fund?) These schemes are yet to be launched. The two current ETFs—R*Shares Banking ETF and R*Shares CNX 100—have been able to generate a corpus of just Rs11 crore and Rs1 crore respectively.
 

One of the biggest negatives of investing in ETFs is the poor liquidity. These schemes are structured in such a way that you could end up buying at a premium and selling at a discount. Low trading volumes and settlement concerns are major factors that lead to low liquidity. It would be interesting to see if the fund house is able to generate a substantial corpus and generate trading volumes so as to attract investors.

 

Other details of the scheme
 

Minimum Application Amount DURING NFO
 

Rs5,000 & in multiples of Re1 thereafter
 

Expenses
 

Maximum total expense ratio (TER) permissible under Regulation 52(6)(c)(i) and (6)(a): Up to 1.50%
 

Additional expenses under regulation 52(6A)(c): Up to 0.20%
 

Additional expenses for gross new inflows from specified cities: Up to 0.30%.

User

DTH and broadcasters to benefit the most from digitisation, says Credit Suisse

The media sector will be one of the few sectors in India to demonstrate healthy earnings growth in the next two years, says Credit Suisse in its Equity Research report

The Indian TV industry is passing through an once-in-a-lifetime change in the form of digitisation, whereby the entire country will move to a digital mode of content distribution. Digitisation will allow broadcasters to charge a fairer price for content and result in an increase in ARPU (average revenue per user) as well, apart from better distribution of ARPU. Digitisation will impact advertising as well—it will increase the reach for a number of small channels (with consumers getting >2x channels) and hence, should be negative for the existing large bouquets and positive for niche channels.

 

Sun TV, given its dominance in the south, is able to better monetise its content, evident from its DTH (Direct to Home) ARPU which  is  almost  2x  that  of  Zee. These are the observations made by Credit Suisse analysts in its Equity Research report on the television industry in India.

 

According to Credit Suisse, there is not enough clarity on revenue sharing between the multiple-system operators (MSOs) and the local cable operators (LCOs). Once the advantage of analog cable, i.e. lower taxes and content costs, goes away, LCOs will be forced to hike prices. This would  enable  DTH  (Direct  to  Home)  companies  to  also  raise  tariffs.  Unlike DTH,  the  MSOs  need  to  share  revenues  with  LCOs  and  hence  have  a higher  profitability  on  a  per-subscriber  basis.  Credit Suisse analysts maintain ‘outperform’ on Dish TV (24% potential upside).

 

DTH companies are likely to benefit not only from additional subscriptions, but also improvements in ARPU, according to Credit Suisse. Despite a slowing economy,

ad spend should hold up on likely FMCG gross margin expansion and consequently improve the profits of broadcasters. On the whole, the media sector will be one of the few sectors in India to demonstrate healthy earnings growth in the next two years, says Credit Suisse.

 

The Indian media industry’s size stood at around $17 billion last year.  There is still significant under-penetration in terms of consumer spends on media and entertainment in India, with the country far behind developed countries on parameters such as media industry size as a percentage of GDP and annual media spend per capita.

 

Credit Suisse analysts feel that Sun TV, Dish TV India and Zee TV will be the high performers in the equity market (Please see figure below)
 

In the table below, Credit Suisse presents a comparison of Indian media companies with foreign ones in the sector, for equity performance:

 

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COMMENTS

arun adalja

4 years ago

if you have 2 tvs in a house then you require two set top box and you have for both connection and it becomes costly in past we just pay some money for second tv.dth fellows can avoid two set top box by putting some thing.views are welcome.

REPLY

Gunda

In Reply to arun adalja 4 years ago

Already exists. For the second TV, DTH operators usually charge you something like Rs. 150-200 per box even if your subscribed package for the first TV is 500 rupees. So instead of 1000 rupees for two TVs in the same home for DTH, you will pay 650-700 rupees.

arun adalja

In Reply to Gunda 4 years ago

if you pay for 2 tvs around rs 600 per month then it is a costly affair for dth.in past we used to pay rs 300 per month for two cable connections.

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