Razor's Edge

Three new arbitrage funds have been filed. Do they make much sense?

Three fund houses have filed for launching arbitrage funds: Canbank, Tata and Standard Chartered. Some time ago, SBI came out with its Arbitrage Opportunities Fund and, before that, UTI launched its Spread Fund. Do arbitrage funds make sense? Arbitraging means taking advantage of tiny mis-pricing between the cash and the...

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  • Which Sector Funds?

    Sector funds focus their attention on the stocks of just one sector. Buying them is a bad idea, as we had pointed out earlier. But if you must buy one, which one should you go for? ML Research Desk offers the options

    The theoretical case for sector funds is very strong because it can be based on two very strong tenets of investing: one, focus and concentration on a few stocks works wonders;...

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  • Spot The Difference

    HSBC and Lotus have filed for identical offerings

    Mutual funds have turned into commodities. We have often documented how funds are copying each other’s ideas. Now two fund houses -- HSBC and Lotus -- are launching schemes that are mirror images of one another. The schemes are called HSBC Tax Saver Equity Fund and Lotus India Tax Plan. Both the schemes have the investment objective of generating long-term capital growth from a diversified portfolio of equity and equity-related securities. The schemes would invest 80%-100% of their assets in equity instruments and up to 20% in money market instruments. Both the funds have the option of investing 50% of the net assets in derivative instruments. The schemes are called tax saving schemes because investors in them are entitled to deductions of the amount invested in units of the schemes, subject to a maximum of Rs100,000 under section 80C(2)(xiii) of the Income Tax Act. The only minor difference between the two schemes is the benchmark against which their performance would be measured. Lotus India Tax Plan would be benchmarked against BSE100 while HSBC Tax Saver Equity Fund would be benchmarked against BSE200.

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