Daiwa launches asset management business in India; Fidelity MF launches India Children's Plan; Franklin Templeton MF floats Fixed Tenure Fund-Series XV; IDFC Mutual Fund launches Fixed Maturity Plan-Quarterly Series 62
Daiwa launches asset management business in India
Daiwa Asset Management Co Ltd (DAM), the asset management arm of the Japan-based Daiwa Securities Group, has launched its business in India. DAM manages over 300 funds investing in various asset classes with assets under management of over $115 billion.
Mr Toshiro Ishibashi, president, DAM, said, "This investment in India is of strategic importance to the Daiwa Securities Group as it gives us a foothold in potentially, one of the largest retail asset management markets in the world."
In March 2010, the Daiwa Securities Group had announced a buy-out of Shinsei Asset Management (India) Pvt Ltd. Post the completion of this acquisition in December 2010, the company has been renamed Daiwa Asset Management (India) Pvt Ltd.
Consequent to the above acquisition, the other associated entities, Shinsei Trustee
Company (India) Pvt Ltd and Shinsei Mutual Fund along with three existing schemes have all been re-named as Daiwa entities.
Fidelity MF launches India Children's Plan
Fidelity Mutual Fund has launched Fidelity India Children's Plan, an open-ended balanced fund.
Education Fund seeks to generate long-term capital appreciation from a diversified portfolio of predominantly equity and equity related securities and to generate reasonable returns through a portfolio of debt and money market instruments to help generating funds in the long term to save for the cost of children's education.
Marriage Fund seeks to generate long-term capital appreciation from a diversified portfolio of predominantly equity and equity related securities and to generate reasonable returns through a portfolio of debt and money market instruments. The Fund could also additionally invest in domestic Gold ETFs. This could help generating funds in the long term to save for the cost of children's marriage.The new issue opens on 17th January and closes on 31st January. The minimum investment amount is Rs5,000.
Savings Fund seeks to generate reasonable returns predominantly from a diversified portfolio of debt and money market instruments.
The benchmark index for Education Fund is 70%-BSE 200 Index and 30%-CRISIL Short Term Bond Fund Index. For Marriage Fund: 70%-BSE 200 Index, 20%-Gold Prices and 10% - CRISIL Short Term Bond Fund Index. For Savings Fund: CRISIL Short Term Bond Fund Index.
Franklin Templeton MF floats Fixed Tenure Fund-Series XV
Franklin Templeton Mutual Fund has launched Franklin Templeton Fixed Tenure Fund (FTFTF)-Series XV (3 year plan), a close-ended income scheme.
The scheme seeks to generate returns and reduce interest rate volatility, through a portfolio of fixed income securities that are maturing on or before the maturity of the Scheme along with capital appreciation through equity exposure.The new issue opens on 17th January and closes on 31st January. The minimum investment amount is Rs10,000.
IDFC Mutual Fund launches Fixed Maturity Plan-Quarterly Series 62
IDFC Mutual Fund has launched IDFC Fixed Maturity Plan-Quarterly Series 62, a close-ended income scheme.The investment objective of the scheme is to generate income by investing in a portfolio of debt and money market instruments maturing before the maturity of the scheme.The new issue opens on 17th January and closes on 18th January. The minimum investment amount is Rs10,000.
These markets in diverse countries like the Philippines, Vietnam and Turkey are being sold as a chance to get in on the ground floor. But it’s important for investors to make distinctions between these markets
Both emerging markets and the emerging marketing campaign, led by the famous BRIC countries as propounded by Goldman Sachs and James O'Neill, have been very successful. To repeat the success, the modern marketing 'MadMen' of Wall Street have created a new asset: Frontier Markets. Even the venerable Financial Times describes these markets as "a lot like emerging markets a generation ago". So these assets are being sold as a chance to get in on the ground floor of a no-lose growth story.
A good example of frontier markets is the MSCI Frontier Emerging Markets Index of 26 countries, which basically includes every market not part of another index. A little more discriminating is the selection of the ever inventive Goldman Sachs. Called imaginatively the Goldman 11, these countries include South Korea, Mexico, Indonesia, Turkey, the Philippines, Egypt, Vietnam, Pakistan, Nigeria, Bangladesh and Iran.
In an attempt to replicate the success of the BRIC brand, there are the CIVETS. These include Columbia, Indonesia, Vietnam, Egypt, Turkey and South Africa. The choice of the civet, a mammal, might be accurate. The civet is known for two things: creating very expensive coffee by ingesting and excreting the coffee bean and potentially being the source for an interspecies virus known as SARS (severe acute respiratory syndrome).
Despite the odd names, there is some truth to the Frontier Market "Story". In the last six months of 2010, the MSCI Frontier Markets Index did outperform the emerging markets by gaining 16.5% against 12.3%. Of course this is a rather recent phenomenon. After doing quite well from 2003 to mid-2008, frontier markets collapsed. Like all markets, frontier markets did recover, but until recently they underperformed not only the emerging market index by 27% but the S&P 500 as well.
In terms of economic growth, these markets are very attractive, with some of the fastest-growing economies in the world. Their debt burden is often lower than both emerging and developed markets. Their growth seems generally to have a lower correlation to both emerging and developed markets, and at 13 times earnings their equities seem quite cheap. Besides they all have growing populations with young cheap labour.
But the happy talk only goes so far. There is another side of the story. First, other than marketing, the grouping of frontier markets has no purpose. To place countries as different as Kuwait, Argentina, Bangladesh, Kenya and Estonia in the same group is simply silly. These countries, their markets, economies and growth prospects have really nothing to do with each other.
Many of the problems for investors in these countries are similar to those in other emerging markets except on steroids. Their legal infrastructures are exceptionally economically inefficient if they exist at all. Many have high levels of political instability and some are nearly failed states. According to Transparency International's Corruption Index, there are countries in this group like Qatar and Estonia which rank fairly well, 19 and 26 respectively. Most do not. Few rank even in the top 100. Countries like Bangladesh, Nigeria and Philippines are all tied at 134.
Like many emerging markets, they are dominated by state-owned and family-owned companies. According to one ranking provided by the Asian Corporate Governance Association, their corporate governance is rather low. Indonesia and the Philippines ranked at the bottom for Asia with scores of 40 and 37 respectively. In contrast, Singapore has a score of 67 out of 100.
Their labour forces are young, but sadly their economies are often growing too slowly to provide jobs. Unemployment rates among younger workers are often as high as 40%. Education does not seem to help. According to the International Monetary Fund (IMF), in Egypt, Jordan and Tunisia, the unemployment rate exceeds 15% even for those workers with a tertiary education.
Also the growth assumptions may be dependent on some potentially short-term effects. For example, the African investment story is based on a belief that Chinese demand will continue. According to recent research at the IMF, the quantitative monetary easing (QE2) in the US has transferred itself almost completely to emerging markets.
The result is often highly volatile markets. Presently, Chile, Peru, Indonesia, the Philippines, Sri Lanka, Taiwan and Thailand are all at or near all-time highs. In the past, many of these markets have dropped enormous amounts. Egypt, in 2008, dropped 60%. While this was similar to the S&P 500, the recovery has not. While the S&P 500 is only 17% off its all-time high, Egypt is still 36% below its peak. Kuwait has recovered only 4% since 2008 and is still 54% off its all-time high. Saudi Arabia reached its peak in 2006. Even after five years it is trading at only 35% of its peak.
While the promise is there, it is exceptionally important for the investor to make sophisticated distinctions between these markets. Strategies that might be applicable to more developed markets have no use in frontier markets. And as always, new highs should be a signal for caution rather than the promise of greater profits.
(The writer is president of Emerging Market Strategies and can be contacted at [email protected] or [email protected])
New Delhi: The finance ministry today said inflation will come down to around 6.5% by March-end, from 8.43% in December, reports PTI.
"It will be around 6.5% by March end," finance secretary Ashok Chawla told reporters here.
The finance secretary's remarks came even as expensive food items jacked up overall inflation, measured on the basis of wholesale prices, to 8.43% in December from 7.48% in November.
Also, the government's move to raise petrol prices is expected to fuel inflation.
"Six months ago we may have said inflation will be 5.5%-6% (by March end). Since it is always a dynamic process, today nobody is saying because the trend has not really gone down," Mr Chawla said.
He, however, added that inflation is coming down.
The wholesale price rise in December has also prompted the prime minister's economic panel to further revise upward the March-end inflation forecast to up to 7% from 6.5% estimated earlier.
Food inflation has also remained high through December, touching the year high level of 18.32%. It finally eased somewhat for the week ended 1st January to 16.91%.
The government, recently, unveiled measures to check spiralling prices by deciding to continue ban on exports of edible oils, pulses and non-basmati rice and asked states to waive local taxes on essential commodities.