Mutual Funds
Tata Regular Savings Equity Fund: A dynamic arbitrage scheme
Investing in a mix of equity derivatives for arbitrage and stocks for wealth creation, the scheme will vary the stock allocation using a market-timing model
 
Effective from 27 July 2015, Tata Mutual Fund changed the scheme features of Tata Monthly Income Fund and renamed the scheme to Tata Regular Saving Equity Fund. Earlier a monthly income plan and categorised as a debt-oriented hybrid scheme, the scheme will now invest to take advantage of arbitrage opportunities in the equity market. Hence, the scheme will now be categorised as an equity scheme. The new avatar of the scheme will now invest 15%-35% in stocks and 30%-70% in equity derivatives for arbitrage opportunities. The balance of the assets will be invested in debt, cash and money market securities. This scheme has another unique feature where the exposure to stocks will be determined by a price-to-equity (PE) based market-timing model. 
 
Fund houses have rushed to launch such alternatives to monthly income plans. Tata Mutual Fund on the other hand has converted its existing monthly income plan in to an equity savings fund. This new category of schemes invests in a mix of arbitrage opportunities and net long equity positions. Being equity oriented, the returns are tax-free after a year, unlike MIPs. We have compared MIPs with ESFs here - MIPs Vs Equity Savings Funds.
 
Tata MF has chosen to differentiate its scheme by introducing a market-timing model for the equity exposure; they call it the Tata Red Line Strategy. Here, the equity exposure is decided by comparing the 20-day average trailing PE of CNX Nifty (20DMA) to the long term average PE of the Nifty. The table below gives the exact equity allocation for different levels of PE. As it can be seen, when the market is extremely overvalued, the equity exposure is reduced and vice-versa. Therefore, the (net long) equity allocation will vary from 0-35% depending on the overall market valuation.
 
 
The long term average and standard deviation is calculated from 1 January 1999 till the date of the observation. The equity exposure will only be rebalanced as above, irrespective of the total weight in the portfolio.
 
The scheme is managed by Akhil Mittal (Debt Portfolio) & Atul Bhole (Equity Portfolio).
 

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COMMENTS

Nilesh KAMERKAR

2 years ago

Benjamin Graham said

“Mathematics is ordinarily considered as producing precise and dependable results; but in the stock market the more elaborate and abstruse the mathematics the more uncertain and speculative are the conclusions we draw there from."

Facebook's solar-powered drone to beam internet from the sky
Facebook has completed the production of its first full-scale solar-powered internet drone that will deliver wireless internet with lasers from the sky in parts of the developing world where internet availability is still a dream.
 
Mark Zuckerberg has announced the completion of Aquila, Facebook’s first unmanned plane that beams down internet connectivity from the sky, as part of his project with Internet.org.
 
"It has the wingspan of a Boeing 737, but weighs less than a car and can stay in the air for months at a time,” Zuckerberg said in a statement posted on his Facebook blog on Thursday.
 
"We have also made a breakthrough in laser communications technology. We have successfully tested a new laser that can transmit data at 10 gigabits per second,” he continued.
 
"That is 10 times faster than any previous system, and it can accurately connect with a point the size of a dime from more than 10 miles away,” Zuckerberg said.
 
Aquila’s wings are made of a type of material called carbon fibre.
 
"When the carbon fibre material undergoes a kind of heating process known as curing, it can become “stronger than steel for the same mass of material,” Yael Maguire, Facebook Connectivity Lab director, wrote in a blog post.
 
The drone has been developed by Facebook’s Connectivity Lab which is part of Facebook’s Internet.org initiative to bring the internet to places where there is a lack of connectivity.
 
This effort is important “because 10 percent of the world’s population lives in areas without existing internet infrastructure. To affordably connect everyone, we need to build completely new technologies,” Zuckerberg informed.
 
In an accompanying video, Facebook engineers said that the drone will fly from 60,000 to 90,000 feet above the Earth and stay in the sky three months at a time.
 
"Using aircraft to connect communities using lasers might seem like science fiction. But science fiction is often just science before its time,” Zuckerberg wrote.
 
This is how it will work.
 
Facebook will have lasers on the ground that can locate the dome-shaped optical head, located on the bottom of the plane, in the air ? basically shooting a laser at a dime-sized target that is more than 10 miles away, tech portal The Verge reported.
 
The plane will first hone in on the general location of the laser on the ground, proceeding to target it further and lock onto the location so that it can start beaming down the internet.
 
Because the plane requires a connection with the lasers on the ground though, you might experience a slower connection when it's raining or cloudy.
 
"Over the coming months, we will test these systems in the real world and continue refining them so we can turn their promise into reality,” Zuckerberg further posted.
 
"Aquila” is also a constellation, named after the bird that carried Zeus' thunderbolts to battle in Greco-Roman mythology.

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ITC to soon foray into dairy business
Leading FMCG company ITC Ltd. will shortly be foraying into dairy products, its chairman Y.C. Deveshwar said here on Friday.
 
"Dairy products are on the anvil," he said, during the company's Annual General Meeting. 
 
He said ITC Ltd. has emerged as one of the fastest growing consumer goods company over the last 10 years and its packaged food portfolio has expanded substantially. 
 
"Today, the company has an impressive presence in all the three sectors of the economy," he said.
 
The major business segments for the company are consumer goods, agri-business and services, besides hotels.
 
Presently, two integrated consumer goods plants in Maharashtra and West Bengal, a food manufacturing and logistics facility in Punjab and a packaged food manufacturing unit in West Bengal are underway.
 
The company has 250 owned and outsourced manufacturing units.

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