Lanco Infratech Ltd has announced that consequent upon the approval of the members for the sub-division of the equity shares by passing the Resolutions through Postal Ballot and Minutes of the same recorded on December 14, 2009, the Board of Directors of the Company vide Resolution passed by Circulation, approved and fixed January 05, 2010, as the record date for giving effect to the Sub-division of One Fully paid up Equity Share of Face Value of Rs. 10/- (Rupees Ten only) each into Ten Equity Shares of Face Value of Re. 1/- (Rupee One only) each fully paid up.
The stock closed the day at Rs.536.35, down by Rs.14.60 or 2.65%. The stock hit an intraday high of Rs.558.65 and low of Rs.532.
The total traded quantity was 423049 compared to 2 week average of 366438.
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Friday, December 18, 2009
Wells Fargo Common Stock Offering Raises $12.25 Billion through offer of 489.9 million shares
SAN FRANCISCO: Wells Fargo & Company (NYSE: WFC) said today that underwriters in Wells Fargo's public offering of 426 million shares of common stock have fully exercised their option to purchase an additional 63.9 million shares. This represents 15 percent of the shares purchased in the original offering.
The combination of the original offering of 426 million shares of common stock plus the additional 63.9 million shares results in a total offering of 489.9 million shares of common stock valued at $12.25 billion.
"We are very pleased with the positive reception for this equity offering, and we appreciate the confidence investors have demonstrated in Wells Fargo's strength and future prospects," said Wells Fargo Chief Financial Officer Howard Atkins.
Under terms of the TARP redemption agreement approved by U.S. banking regulators, this increase in size eliminates the requirement to execute asset sales to generate $1.5 billion in equity.
The offering is expected to be complete and proceeds received December 18, 2009. The original offering was announced December 14 and priced December 15. Wells Fargo will use the proceeds of this offering to redeem its series D preferred stock from the U.S. Treasury for $25 billion, repaying in full the government's TARP investment.
Wells Fargo Securities and Goldman Sachs & Co. are acting as lead underwriters for the offering.
Copies of the registration statement (including the base prospectus), the prospectus supplement and other documents Wells Fargo has filed with the SEC containing more complete information about Wells Fargo and the offering are available for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, Wells Fargo, any underwriter or any dealer participating in the offering will arrange to send investors the prospectus if requested by contacting Wells Fargo Securities, LLC, 375 Park Avenue, New York, NY 10152-4077, toll-free telephone: 1-800- 326-5897, or by emailing equity.syndicate@wachovia.com or Goldman, Sachs & Co., Prospectus Department, 85 Broad Street, New York, NY 10004, toll-free telephone: 1-866-471-2526, facsimile: 1-212-902-9316, or by emailing prospectus-ny@ny.email.gs.com.
This news release shall not constitute an offer to sell or a solicitation of an offer to buy any securities, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
In accordance with the Private Securities Litigation Reform Act of 1995, we caution you that this news release contains forward-looking statements about Wells Fargo, including statements about when and how the Company will repay TARP. Forward-looking statements speak only as of the date made, and we do not undertake to update them to reflect changes or events that occur after that date. Several factors could cause actual results to differ materially from forward-looking statements including our ability to access capital markets on favorable terms. For a discussion of factors that could cause actual results to differ from expectations, refer to our reports filed with the Securities and Exchange Commission and available on the SEC's website at www.sec.gov, including our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2009, June 30, 2009 and September 30, 2009, and our Annual Report on Form 10-K for the year ended December 31, 2008, as amended by our Current Report on Form 8-K filed May 11, 2009.
The combination of the original offering of 426 million shares of common stock plus the additional 63.9 million shares results in a total offering of 489.9 million shares of common stock valued at $12.25 billion.
"We are very pleased with the positive reception for this equity offering, and we appreciate the confidence investors have demonstrated in Wells Fargo's strength and future prospects," said Wells Fargo Chief Financial Officer Howard Atkins.
Under terms of the TARP redemption agreement approved by U.S. banking regulators, this increase in size eliminates the requirement to execute asset sales to generate $1.5 billion in equity.
The offering is expected to be complete and proceeds received December 18, 2009. The original offering was announced December 14 and priced December 15. Wells Fargo will use the proceeds of this offering to redeem its series D preferred stock from the U.S. Treasury for $25 billion, repaying in full the government's TARP investment.
Wells Fargo Securities and Goldman Sachs & Co. are acting as lead underwriters for the offering.
Copies of the registration statement (including the base prospectus), the prospectus supplement and other documents Wells Fargo has filed with the SEC containing more complete information about Wells Fargo and the offering are available for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, Wells Fargo, any underwriter or any dealer participating in the offering will arrange to send investors the prospectus if requested by contacting Wells Fargo Securities, LLC, 375 Park Avenue, New York, NY 10152-4077, toll-free telephone: 1-800- 326-5897, or by emailing equity.syndicate@wachovia.com or Goldman, Sachs & Co., Prospectus Department, 85 Broad Street, New York, NY 10004, toll-free telephone: 1-866-471-2526, facsimile: 1-212-902-9316, or by emailing prospectus-ny@ny.email.gs.com.
This news release shall not constitute an offer to sell or a solicitation of an offer to buy any securities, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
In accordance with the Private Securities Litigation Reform Act of 1995, we caution you that this news release contains forward-looking statements about Wells Fargo, including statements about when and how the Company will repay TARP. Forward-looking statements speak only as of the date made, and we do not undertake to update them to reflect changes or events that occur after that date. Several factors could cause actual results to differ materially from forward-looking statements including our ability to access capital markets on favorable terms. For a discussion of factors that could cause actual results to differ from expectations, refer to our reports filed with the Securities and Exchange Commission and available on the SEC's website at www.sec.gov, including our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2009, June 30, 2009 and September 30, 2009, and our Annual Report on Form 10-K for the year ended December 31, 2008, as amended by our Current Report on Form 8-K filed May 11, 2009.
Citi Partners with India Post for Landmark Remittances Solution
Hong Kong รข€“ Citi has announced a landmark partnership with the Department of Post, Government of India (India Post) to enhance its recently launched MO Videsh remittance product. This international remittance service is powered by Citi's innovative WorldLink® Payment Services, and provides India Post the ability to send payments in more than 130 currencies globally through its existing Eurogiro payments platform.
Under the partnership, India Post will provide global remittance services to its customers in more than 800 head post offices across the country within three months. India Post plans to extend the service to more than 8,000 post offices nationwide within one year.
This deal is significant for both Citi and India Post, leveraging the Citi and Eurogiro partnership to provide India Post with the widest range of currencies globally. Citi's partnership with Eurogiro was established in August 2007 to enable members of Eurogiro, a low value payments network of postal organizations and financial institutions, access to Citi's existing distribution capacity and payment solutions.
With more than 25 years of experience, WorldLink Payment Services is at the forefront of the cross-border payments industry with its powerful and flexible multicurrency platform. Processing more than US$750 billion in transactions annually, WorldLink is the entrusted provider of cross border payment solutions to more than 2,700 client relationships globally, including the public sector, financial institutions, corporations and third party administrators.
Anthony Nappi, Managing Director, Regional Head of Global Transaction Services, Asia Pacific, Citi, said, "This innovative service launch between Citi Global Transaction Services and India Post represents a landmark in the Indian remittances space and clearly sets a new market standard. We are proactively taking a unique approach to meeting the needs of key client segments and remain committed to creating partnerships with post offices regionally and globally based on their future business needs."
"The payments partnership between India Post and Citi demonstrates Eurogiro's strength to bring together the postal and the banking world through the Eurogiro payments platform and global community," notes Juanita Woodward, Director, Customer Relations Asia Pacific, Eurogiro A/S. India Post is the most recent postal organization to join the Eurogiro payments network community, which has members located in more than 50 countries, and illustrates an increased focus by postal organizations around the globe to expand international payment services to the local community through the Eurogiro payments network and community.
Under the partnership, India Post will provide global remittance services to its customers in more than 800 head post offices across the country within three months. India Post plans to extend the service to more than 8,000 post offices nationwide within one year.
This deal is significant for both Citi and India Post, leveraging the Citi and Eurogiro partnership to provide India Post with the widest range of currencies globally. Citi's partnership with Eurogiro was established in August 2007 to enable members of Eurogiro, a low value payments network of postal organizations and financial institutions, access to Citi's existing distribution capacity and payment solutions.
With more than 25 years of experience, WorldLink Payment Services is at the forefront of the cross-border payments industry with its powerful and flexible multicurrency platform. Processing more than US$750 billion in transactions annually, WorldLink is the entrusted provider of cross border payment solutions to more than 2,700 client relationships globally, including the public sector, financial institutions, corporations and third party administrators.
Anthony Nappi, Managing Director, Regional Head of Global Transaction Services, Asia Pacific, Citi, said, "This innovative service launch between Citi Global Transaction Services and India Post represents a landmark in the Indian remittances space and clearly sets a new market standard. We are proactively taking a unique approach to meeting the needs of key client segments and remain committed to creating partnerships with post offices regionally and globally based on their future business needs."
"The payments partnership between India Post and Citi demonstrates Eurogiro's strength to bring together the postal and the banking world through the Eurogiro payments platform and global community," notes Juanita Woodward, Director, Customer Relations Asia Pacific, Eurogiro A/S. India Post is the most recent postal organization to join the Eurogiro payments network community, which has members located in more than 50 countries, and illustrates an increased focus by postal organizations around the globe to expand international payment services to the local community through the Eurogiro payments network and community.
McDonough to retire from Bank of America Merrill Lynch
NEW YORK - Bank of America (NYSE:BAC) announced the retirement of William J. McDonough, effective December 31. The former president of the Federal Reserve Bank of New York and former chairman of the Public Company Accounting Oversight Board, McDonough joined Merrill Lynch & Co. nearly four years ago as vice chairman and special advisor to the chairman and continued in this role at Bank of America Merrill Lynch. McDonough advised senior management and was actively involved in business development efforts with governments and financial institutions around the world.
While at the Fed from 1993 to 2003, McDonough played a key role in efforts to preserve liquidity in the financial markets after the attacks of September 11, 2001, and was instrumental in successful efforts to recapitalize Long Term Capital Management after its financial problems in 1998. During this time, he also served as vice chairman and a permanent member of the Federal Open Market Committee, the group responsible for formulating the nation's monetary policy. McDonough also was a member of the Board of Directors of the Bank for International Settlements and chairman of the Basel Committee on Banking Supervision. Earlier he was vice chairman of First Chicago Corp., and its bank, First National Bank of Chicago. McDonough is also a senior member of the Group of Thirty, an influential Washington-based financial advisory body.
"Bill McDonough has been at the pinnacle of financial services industry for decades," stated Kenneth D. Lewis, chief executive officer of Bank of America Corporation. "Having known Bill for many years, I'd like to thank him for his many contributions, specifically to our company and more broadly to our industry as a leader in both the public and private sectors."
"Bill McDonough has one of the finest minds in public policy," said Anne Finucane, global chief strategy and marketing officer at Bank of America. "Our company, the legacy Merrill Lynch firm, and the senior managers who have worked with Bill have greatly benefited from his expert insights, thoughtful counsel and wealth of relationships."
Prior to his career with First Chicago, McDonough was with the U.S. State Department from 1961 to 1967 and the U.S. Navy from 1956 to 1961.
McDonough is currently a member of the board of directors of the New York Philharmonic Orchestra. He is also Chairman of the Investments Committee for the United Nations Joint Staff Pension Fund.
McDonough earned a master's degree in economics from Georgetown University in Washington, D.C. and a bachelor's degree, also in economics, from Holy Cross College in Worcester, Massachusetts.
While at the Fed from 1993 to 2003, McDonough played a key role in efforts to preserve liquidity in the financial markets after the attacks of September 11, 2001, and was instrumental in successful efforts to recapitalize Long Term Capital Management after its financial problems in 1998. During this time, he also served as vice chairman and a permanent member of the Federal Open Market Committee, the group responsible for formulating the nation's monetary policy. McDonough also was a member of the Board of Directors of the Bank for International Settlements and chairman of the Basel Committee on Banking Supervision. Earlier he was vice chairman of First Chicago Corp., and its bank, First National Bank of Chicago. McDonough is also a senior member of the Group of Thirty, an influential Washington-based financial advisory body.
"Bill McDonough has been at the pinnacle of financial services industry for decades," stated Kenneth D. Lewis, chief executive officer of Bank of America Corporation. "Having known Bill for many years, I'd like to thank him for his many contributions, specifically to our company and more broadly to our industry as a leader in both the public and private sectors."
"Bill McDonough has one of the finest minds in public policy," said Anne Finucane, global chief strategy and marketing officer at Bank of America. "Our company, the legacy Merrill Lynch firm, and the senior managers who have worked with Bill have greatly benefited from his expert insights, thoughtful counsel and wealth of relationships."
Prior to his career with First Chicago, McDonough was with the U.S. State Department from 1961 to 1967 and the U.S. Navy from 1956 to 1961.
McDonough is currently a member of the board of directors of the New York Philharmonic Orchestra. He is also Chairman of the Investments Committee for the United Nations Joint Staff Pension Fund.
McDonough earned a master's degree in economics from Georgetown University in Washington, D.C. and a bachelor's degree, also in economics, from Holy Cross College in Worcester, Massachusetts.
McDonough to retire from Bank of America Merrill Lynch
NEW YORK - Bank of America (NYSE:BAC) announced the retirement of William J. McDonough, effective December 31. The former president of the Federal Reserve Bank of New York and former chairman of the Public Company Accounting Oversight Board, McDonough joined Merrill Lynch & Co. nearly four years ago as vice chairman and special advisor to the chairman and continued in this role at Bank of America Merrill Lynch. McDonough advised senior management and was actively involved in business development efforts with governments and financial institutions around the world.
While at the Fed from 1993 to 2003, McDonough played a key role in efforts to preserve liquidity in the financial markets after the attacks of September 11, 2001, and was instrumental in successful efforts to recapitalize Long Term Capital Management after its financial problems in 1998. During this time, he also served as vice chairman and a permanent member of the Federal Open Market Committee, the group responsible for formulating the nation's monetary policy. McDonough also was a member of the Board of Directors of the Bank for International Settlements and chairman of the Basel Committee on Banking Supervision. Earlier he was vice chairman of First Chicago Corp., and its bank, First National Bank of Chicago. McDonough is also a senior member of the Group of Thirty, an influential Washington-based financial advisory body.
"Bill McDonough has been at the pinnacle of financial services industry for decades," stated Kenneth D. Lewis, chief executive officer of Bank of America Corporation. "Having known Bill for many years, I'd like to thank him for his many contributions, specifically to our company and more broadly to our industry as a leader in both the public and private sectors."
"Bill McDonough has one of the finest minds in public policy," said Anne Finucane, global chief strategy and marketing officer at Bank of America. "Our company, the legacy Merrill Lynch firm, and the senior managers who have worked with Bill have greatly benefited from his expert insights, thoughtful counsel and wealth of relationships."
Prior to his career with First Chicago, McDonough was with the U.S. State Department from 1961 to 1967 and the U.S. Navy from 1956 to 1961.
McDonough is currently a member of the board of directors of the New York Philharmonic Orchestra. He is also Chairman of the Investments Committee for the United Nations Joint Staff Pension Fund.
McDonough earned a master's degree in economics from Georgetown University in Washington, D.C. and a bachelor's degree, also in economics, from Holy Cross College in Worcester, Massachusetts.
While at the Fed from 1993 to 2003, McDonough played a key role in efforts to preserve liquidity in the financial markets after the attacks of September 11, 2001, and was instrumental in successful efforts to recapitalize Long Term Capital Management after its financial problems in 1998. During this time, he also served as vice chairman and a permanent member of the Federal Open Market Committee, the group responsible for formulating the nation's monetary policy. McDonough also was a member of the Board of Directors of the Bank for International Settlements and chairman of the Basel Committee on Banking Supervision. Earlier he was vice chairman of First Chicago Corp., and its bank, First National Bank of Chicago. McDonough is also a senior member of the Group of Thirty, an influential Washington-based financial advisory body.
"Bill McDonough has been at the pinnacle of financial services industry for decades," stated Kenneth D. Lewis, chief executive officer of Bank of America Corporation. "Having known Bill for many years, I'd like to thank him for his many contributions, specifically to our company and more broadly to our industry as a leader in both the public and private sectors."
"Bill McDonough has one of the finest minds in public policy," said Anne Finucane, global chief strategy and marketing officer at Bank of America. "Our company, the legacy Merrill Lynch firm, and the senior managers who have worked with Bill have greatly benefited from his expert insights, thoughtful counsel and wealth of relationships."
Prior to his career with First Chicago, McDonough was with the U.S. State Department from 1961 to 1967 and the U.S. Navy from 1956 to 1961.
McDonough is currently a member of the board of directors of the New York Philharmonic Orchestra. He is also Chairman of the Investments Committee for the United Nations Joint Staff Pension Fund.
McDonough earned a master's degree in economics from Georgetown University in Washington, D.C. and a bachelor's degree, also in economics, from Holy Cross College in Worcester, Massachusetts.
Aurobindo Pharma gets final approval for Cetirizine Hydrochloride Syrup (Rx)
Aurobindo Pharma Ltd is pleased to announce that it has received the final approval for Cetirizine Hydrochloride Syrup 1mg/mL (ANDA No 090751) from the US Food & Drug Administration (USFDA). This approval of Cetirizine Hydrochloride Syrup is under Prescription drug product category.
Cetirizine Hydrochloride Syrup 1mg/mL is the generic equivalent of McNeil Consumer Healthcare Zyrtec Syrup 1mg/mL. Cetirizine Hydrochloride Syrup is indicated for the relief of symptoms associated with seasonal allergic rhinitis in adults and children above 2 years of age and falls under the Anti-Allergic segment.
Aurobindo has a total of 110 ANDA approvals (82 Final approvals and 28 Tentative approvals) from USFDA.
The stock was trading at Rs.891, up by Rs.11.65 or 1.32%. The stock hit an intraday high of Rs.894.20 and low of Rs.875.15.
The total traded quantity was 20109 compared to 2 week average of 41335.
Cetirizine Hydrochloride Syrup 1mg/mL is the generic equivalent of McNeil Consumer Healthcare Zyrtec Syrup 1mg/mL. Cetirizine Hydrochloride Syrup is indicated for the relief of symptoms associated with seasonal allergic rhinitis in adults and children above 2 years of age and falls under the Anti-Allergic segment.
Aurobindo has a total of 110 ANDA approvals (82 Final approvals and 28 Tentative approvals) from USFDA.
The stock was trading at Rs.891, up by Rs.11.65 or 1.32%. The stock hit an intraday high of Rs.894.20 and low of Rs.875.15.
The total traded quantity was 20109 compared to 2 week average of 41335.
KEC International secures six new projects worth Rs 550 crores
KEC International Ltd. (KEC), a global leader in the power transmission EPC business and a part of the Rs. 15,000 crore RPG Group, has won major orders in Algeria and Abu Dhabi worth Rs. 474 crore and Rs. 76 crore respectively, against international competition.
In Algeria, for CEEG Spa, KEC will undertake five turnkey projects of 400 KV, 200 KV and 60 KV covering both single and double circuit transmission lines worth Rs. 474 crore. The total length of these five projects is 858 km and the completion period ranges from 12 to 18 months.
In Abu Dhabi. KEC will execute a project of modification and realiocation on existing lines with design and supply of Emergency Line Restoration System (ERS) in Ruwais & Shuweihat for Abu Dhabi Transport Authority / Ghantoot Transport & Gen. Cont. Est. This project is to be completed within 12 months. The value of this order is Rs. 76 crore.
"In Abu Dhabi we are diversifying our client base and we will perform our first International ERS (Emergency Line Restoration System) project," said Mr. Ramesh Chandak, MD & CEO, KEC International Ltd.
The stock was trading at Rs.583.05, up by Rs.15.55 or 2.74%. The stock hit an intraday high of Rs.589.90 and low of Rs.571.
The total traded quantity was 47221 compared to 2 week average of 28258.
In Algeria, for CEEG Spa, KEC will undertake five turnkey projects of 400 KV, 200 KV and 60 KV covering both single and double circuit transmission lines worth Rs. 474 crore. The total length of these five projects is 858 km and the completion period ranges from 12 to 18 months.
In Abu Dhabi. KEC will execute a project of modification and realiocation on existing lines with design and supply of Emergency Line Restoration System (ERS) in Ruwais & Shuweihat for Abu Dhabi Transport Authority / Ghantoot Transport & Gen. Cont. Est. This project is to be completed within 12 months. The value of this order is Rs. 76 crore.
"In Abu Dhabi we are diversifying our client base and we will perform our first International ERS (Emergency Line Restoration System) project," said Mr. Ramesh Chandak, MD & CEO, KEC International Ltd.
The stock was trading at Rs.583.05, up by Rs.15.55 or 2.74%. The stock hit an intraday high of Rs.589.90 and low of Rs.571.
The total traded quantity was 47221 compared to 2 week average of 28258.
ONGC Board declares Interim Dividend of 180% for 2009-10
Oil & Natural Gas Corporation Ltd (ONGC) has announced that the Board of Directors of the Company at its meeting held on December 18, 2009, have declared an Interim Dividend of Rs. 18 (Rs. Eighteen) per equity share of Rs. 10 each for the Financial Year 2009-10.
The stock closed the day at Rs.1185.50, down by Rs.14.10 or 1.18%. The stock hit an intraday high of Rs.1205 and low of Rs.1182.
The total traded quantity was 44294 compared to 2 week average of 76016.
The stock closed the day at Rs.1185.50, down by Rs.14.10 or 1.18%. The stock hit an intraday high of Rs.1205 and low of Rs.1182.
The total traded quantity was 44294 compared to 2 week average of 76016.
Websol Energy to approve allotment of bonus shares on Dec 30, 2009
Websol Energy Systems Ltd has announced that a meeting of the Board of Directors of the Company will be held on December 30, 2009 to approve the allotment of Bonus Shares to the Members of the Company whose names appear on the Register of Members as on the Record Date.
The stock was trading at Rs.365, up by Rs.0.70 or 0.19%. The stock hit an intraday high of Rs.370 and low of Rs.360.10.
The total traded quantity was 4881 compared to 2 week average of 3629.
The stock was trading at Rs.365, up by Rs.0.70 or 0.19%. The stock hit an intraday high of Rs.370 and low of Rs.360.10.
The total traded quantity was 4881 compared to 2 week average of 3629.
Jaiprakash Hydro-Power
With reference to the earlier announcement dated December 14, 2009 regarding (Sanction of Scheme of Amalgamation of Jaiprakash Power Ventures Ltd. with Jaiprakash Hydro Power Ltd), Jaiprakash Hydro Power Ltd has informed BSE that formal order dated December 14, 2009, has been received from Hon'ble High Court of Himachal Pradesh at Shimla and the same has been filed with the Registrar of Companies, Punjab, Himachal Pradesh & Chandigarh on December 14, 2009 making the Scheme of Amalgamation effective from December 14, 2009. Necessary formalities of change of name of the Company to Jaiprakash Power Ventures Ltd., in terms of the Scheme, are being carried out with the Registrar of Companies, Punjab, Himachal Pradesh & Chandigarh.
Saturday, December 5, 2009
Goldman likely to pay annual bonus in stock
Goldman Sachs Chief Lloyd Blankfein is weighing plans to increase the share of compensation paid out in equity to executives in a bid to quell public anger over the probability of large pay-outs, the Financial Times said.
Senior executives, including Blankfein, could be awarded all annual bonus in company stock, the Financial Times said, citing people familiar with Goldman's thinking.
On Wednesday, the Wall Street Journal had reported that the company was meeting with major investors in an effort to head off a possible backlash over its record bonuses.
Goldman officials said the meetings were an effort to explain why the company's pay levels are reasonable in light of its performance and to get feedback from key stakeholders.
The Financial Times said on Friday that Goldman's board, however, seemed hesitant to grant shareholders a non-binding, advisory vote on pay policy as it could lead to investors pushing for a bigger say on other policies.
Goldman Sachs could not be contacted by Reuters outside regular US. business hours to confirm the Financial Times report.
UK bank bailout cost hits £850 billion
The price tag for bailing out UK banks has hit 850 billion pounds (USD1.4 trillion) but Britain's spending watchdog says the final cost to taxpayers will not be known for years.
The independent National Audit Office (NAO) said on Friday the government was justified in asking the public to shore up the shaken sector at the height of last year's financial crisis -- although lending to businesses was likely to miss targets.
"It is difficult to imagine the scale of the consequences for the economy and society if major banks had been allowed to collapse," said the NAO's head Amyas Morse."But the big question is what all of this will eventually cost the taxpayer.
"As the crisis begins to subside ... the authorities need to put formal arrangements in place to evaluate the effectiveness of the support provided to banks in order to inform future policy makers."
Britain, along with other countries, partly nationalised some banks and offered quarantees, insurance and loans to the industry after the credit crisis pitched the world into recession in the wake of the collapse of Wall Street giant Lehman Brothers last year.
The UK government has put the potential loss to the taxpayer at between 20 billion and 50 billion pounds, depending on losses on bad assets held by Royal Bank of Scotland and the price at which the state sells stakes in RBS and Lloyds Banking Group.
And the costs keep mounting. The finance ministry expects to have spent 107 million pounds on advisers alone by next April, with Credit Suisse and Deutsche Bank each appointed on retainers of 200,000 pounds per month for a year, the NAO said. Success fees could reach 5.8 million pounds.
RBS and Lloyds have agreed to lend more to consumers and businesses as part of their bailout. But although both are on target for mortgage lending, lending to businesses is likely to fall short of targets, the NAO said.
RBS agreed to lend an additional 25 billion pounds in 2009-2010, while Lloyds agreed to lend an additional 14 billion to help businesses and consumers weather the credit crisis.
The NAO is an independent body funded by parliament, rather than the government of the day. But it has limited powers and its role is largely to draw attention to cases where it feels public money has been misused.
No engineer in India good enough for Infy prize?
New Delhi: India churns out around seven lakh engineers every year. And yet how many of them are actually good enough to win some of the prestigious domestic and global awards? The issue has come to the forefront with Infosys Technologies reportedly having failed to find a worthy candidate for its Infosys Engineering Science Prize 2009. 
The company has decided not to give the prize in that category to anyone this year. Infosys' Chief Operating Officer (COO), SD Shibulal, told that there were 34 nominees for the engineering and computer science prize but even after relaxing the age limit to 55 years, the jury could not find anyone who met all the criteria of the Infosys Prize. So, the jury took the unanimous decision to not award the prize for the engineering sciences discipline this year.
Infosys Science Foundation is a not-for-profit trust set up by Infosys Technologies. The company has named three scientists and two academic experts as winners of Infosys Prize 2009 for outstanding contributions to scientific research.
The winner in physical sciences is Thanu Padmanabhan of Inter-University Centre for Astronomy and Astrophyics, Pune, in recognition of his contribution to a deeper understanding of Einstein's theory of gravity in the context of thermodynamics. For mathematical sciences, Ashoke Sen of Harish Chandra Research Institute at Allahabad was given the prize in recognition for his contributions to mathematical physics. For life sciences, K VijayRaghavan of National Centre of Biological Sciences in Bangalore got the award.
The winner in the social sciences and economics category is Abhijit Vinayak Banerjee of Massachusetts Institute of Technology for his contributions to the economic theory of development. Upinder Singh of the University of Delhi won an award for her contributions as an outstanding historian of ancient and early medieval India.
The company has decided not to give the prize in that category to anyone this year. Infosys' Chief Operating Officer (COO), SD Shibulal, told that there were 34 nominees for the engineering and computer science prize but even after relaxing the age limit to 55 years, the jury could not find anyone who met all the criteria of the Infosys Prize. So, the jury took the unanimous decision to not award the prize for the engineering sciences discipline this year.
Infosys Science Foundation is a not-for-profit trust set up by Infosys Technologies. The company has named three scientists and two academic experts as winners of Infosys Prize 2009 for outstanding contributions to scientific research.
The winner in physical sciences is Thanu Padmanabhan of Inter-University Centre for Astronomy and Astrophyics, Pune, in recognition of his contribution to a deeper understanding of Einstein's theory of gravity in the context of thermodynamics. For mathematical sciences, Ashoke Sen of Harish Chandra Research Institute at Allahabad was given the prize in recognition for his contributions to mathematical physics. For life sciences, K VijayRaghavan of National Centre of Biological Sciences in Bangalore got the award.
The winner in the social sciences and economics category is Abhijit Vinayak Banerjee of Massachusetts Institute of Technology for his contributions to the economic theory of development. Upinder Singh of the University of Delhi won an award for her contributions as an outstanding historian of ancient and early medieval India.
CAT goes online, students go offline
Bangalore: After a disappointing start to the online CAT, the authorities have given different theories to the problem ranging from a virus attack to server crash. However, in the eyes of students who are left in the lurch, things seem to be different.
With his eyes set on the top B-schools in the country, Srinath R.P. had prepared hard to bell the Common Admission Test (CAT) this year. His exam was scheduled to be held at R.V. College of Engineering, Bangalore at 10 am on 28 November. But, after reaching the centre, during the process of checking, Srinath got the shock of his life when he was informed by the authorities that his name was not downloading in the Prometric site. 
"The authorities got in touch with Prometric/IIM authorities for more than three hours, but could not solve the problem. Then they told me that I can't take my CAT exam since my name is not downloading into the test site Roster," says Srinath. After the poor response, the authorities gave him Prometric Candidate Care contact number and asked him to call them for rescheduling the exam.
With a shimmer of hope left in his heart to take the exam this time, Srinath tried contacting Prometric, but this didn't put an end to his misery. "Even though I have tried contacting the number more than 20 times. There is no response and it only goes for redialing," says a dismayed Srinath, who is among thousands of candidates facing similar kinds of problem after the CAT went online. The students are also unsure about the rescheduled dates for their exam. The irony is that though India is touted as a technology hub, the dream of one of the prestigious exams in the country to go online is short-lived and the students are left in the dark.
Students who arrived at Garden City College in Bangalore were shocked when officials told them that the test had been called off because of a faulty server. There was complete confusion at the venue as none of the administrative officers knew what was happening and why the server was not working. Students held a dharna inside the exam hall.
Around 5,000 students will now have to take the CAT afresh at new dates throwing the original 10-day schedule into disarray. Technical experts blamed U.S. based Prometric - the agency entrusted with carrying out the first online version of CAT - for underestimating the magnitude of the task. "They didn't even have a Plan B," said a top official of another firm that runs online examinations, on condition of anonymity. Prometric said it has quarantined 50 labs across 14 centres on Sunday, and blamed the fiasco on a virus attack that went undetected.
The agency said that the problem was being sorted out, and the test was being rescheduled for the several affected candidates who would be informed through SMS and emails. A new date however, brings in new set of problems for the aspirants many of whom are employed and find it difficult to reschedule.
The seven IIMs and about 150 top B-schools base their admissions on CAT scores, and this year the exams were moved online hoping that it would speed up the process for the institutes and the 2.4 lakh candidates. IIMs' CAT panel gave the task to Prometrics, which runs online exams like GRE and TOEFL. However, with the situation taking a chaotic turn, IIM directors took stock of the situation and held a video conference on Sunday.
IIM Ahmedabad Director Samir Barua said computer labs were being sanitized. "We need to find out from where the virus attack happened," he said. Around 100 Prometric engineers have been pressed into service, said IIM Bangalore Director Pankaj Chandra.
"We, along with Prometric and NIIT, are trying to figure out where the problem lies. Since these computers were located in institutes, their backbone was used to download the software. In some places there were serious virus attacks. So we blocked some affected centres and others which we felt might get affected to clean up the computer system, remove viruses and reload the software," he said.
With his eyes set on the top B-schools in the country, Srinath R.P. had prepared hard to bell the Common Admission Test (CAT) this year. His exam was scheduled to be held at R.V. College of Engineering, Bangalore at 10 am on 28 November. But, after reaching the centre, during the process of checking, Srinath got the shock of his life when he was informed by the authorities that his name was not downloading in the Prometric site.
"The authorities got in touch with Prometric/IIM authorities for more than three hours, but could not solve the problem. Then they told me that I can't take my CAT exam since my name is not downloading into the test site Roster," says Srinath. After the poor response, the authorities gave him Prometric Candidate Care contact number and asked him to call them for rescheduling the exam.
With a shimmer of hope left in his heart to take the exam this time, Srinath tried contacting Prometric, but this didn't put an end to his misery. "Even though I have tried contacting the number more than 20 times. There is no response and it only goes for redialing," says a dismayed Srinath, who is among thousands of candidates facing similar kinds of problem after the CAT went online. The students are also unsure about the rescheduled dates for their exam. The irony is that though India is touted as a technology hub, the dream of one of the prestigious exams in the country to go online is short-lived and the students are left in the dark.
Students who arrived at Garden City College in Bangalore were shocked when officials told them that the test had been called off because of a faulty server. There was complete confusion at the venue as none of the administrative officers knew what was happening and why the server was not working. Students held a dharna inside the exam hall.
Around 5,000 students will now have to take the CAT afresh at new dates throwing the original 10-day schedule into disarray. Technical experts blamed U.S. based Prometric - the agency entrusted with carrying out the first online version of CAT - for underestimating the magnitude of the task. "They didn't even have a Plan B," said a top official of another firm that runs online examinations, on condition of anonymity. Prometric said it has quarantined 50 labs across 14 centres on Sunday, and blamed the fiasco on a virus attack that went undetected.
The agency said that the problem was being sorted out, and the test was being rescheduled for the several affected candidates who would be informed through SMS and emails. A new date however, brings in new set of problems for the aspirants many of whom are employed and find it difficult to reschedule.
The seven IIMs and about 150 top B-schools base their admissions on CAT scores, and this year the exams were moved online hoping that it would speed up the process for the institutes and the 2.4 lakh candidates. IIMs' CAT panel gave the task to Prometrics, which runs online exams like GRE and TOEFL. However, with the situation taking a chaotic turn, IIM directors took stock of the situation and held a video conference on Sunday.
IIM Ahmedabad Director Samir Barua said computer labs were being sanitized. "We need to find out from where the virus attack happened," he said. Around 100 Prometric engineers have been pressed into service, said IIM Bangalore Director Pankaj Chandra.
"We, along with Prometric and NIIT, are trying to figure out where the problem lies. Since these computers were located in institutes, their backbone was used to download the software. In some places there were serious virus attacks. So we blocked some affected centres and others which we felt might get affected to clean up the computer system, remove viruses and reload the software," he said.
Create 10 jobs in U.S., get green card for family
New Delhi: The Obama administration extended the regional centre investment EB-5 program, which entitles investors who put in $1 million into regional centre real estate projects and create at least 10 jobs in the U.S., to green cards along with their families.
Simply put, this program allows investors a fast-track to U.S. green cards and permanent residency. If investors are willing to put money into a business carried out on in a designated backward area, the investment required is even lower at $500,000, reports Economic Times. 
The EB-5 program is attracting a large number of hospitality entrepreneurs from Gujarat who are keen on setting up shop in the U.S. Many of the Gujarati hotel entrepreneurs also have strong family links in the U.S.
"The falling dollar has increased the number of applications in the EB-5 category in addition to access to branded hotel deals that are trading at 30-40 percent discount. This is definitely the time to buy as the U.S. real estate market is slowly recovering," says Sachin U Patel, Managing Principal of real estate development company American Life, which operates the EB-5 regional centres in Seattle, Tacoma, and Everett.
The regional centres are diversified funds or private business development projects that allow EB-5 investors to infuse the required funds and in return acquire a small ownership interest.
Most immigration experts are seeing a growing interest in the EB-5 category of visas. Mumbai-based Immigration Attorney Sudhir Shah says, "This is certainly a good time to apply for the EB-5 programme. There are several schemes on offer wherein you merely have to invest money and in return you get a green card without having to actively participate in the business. For those who are looking at moving to the U.S. to run a motel or store there, the reduced property prices are a big attraction too, as they can get more value for their dollar investments."
The EB-5 scheme, though proving to be very attractive, is however not without glitches. Proving that the funds available for investment are from lawful sources can be a challenge for some Indian investors.
Simply put, this program allows investors a fast-track to U.S. green cards and permanent residency. If investors are willing to put money into a business carried out on in a designated backward area, the investment required is even lower at $500,000, reports Economic Times.
The EB-5 program is attracting a large number of hospitality entrepreneurs from Gujarat who are keen on setting up shop in the U.S. Many of the Gujarati hotel entrepreneurs also have strong family links in the U.S.
"The falling dollar has increased the number of applications in the EB-5 category in addition to access to branded hotel deals that are trading at 30-40 percent discount. This is definitely the time to buy as the U.S. real estate market is slowly recovering," says Sachin U Patel, Managing Principal of real estate development company American Life, which operates the EB-5 regional centres in Seattle, Tacoma, and Everett.
The regional centres are diversified funds or private business development projects that allow EB-5 investors to infuse the required funds and in return acquire a small ownership interest.
Most immigration experts are seeing a growing interest in the EB-5 category of visas. Mumbai-based Immigration Attorney Sudhir Shah says, "This is certainly a good time to apply for the EB-5 programme. There are several schemes on offer wherein you merely have to invest money and in return you get a green card without having to actively participate in the business. For those who are looking at moving to the U.S. to run a motel or store there, the reduced property prices are a big attraction too, as they can get more value for their dollar investments."
The EB-5 scheme, though proving to be very attractive, is however not without glitches. Proving that the funds available for investment are from lawful sources can be a challenge for some Indian investors.
Major Events
- HDFC Ltd. launched a dual rate home loan product where it offers fixed rate of interest of 8.25% valid for two years (i.e. upto March 31, 2012) and thereafter applicable floating rate for the balance term.
- The National Stock Exchange’s (NSE) Mutual Fund Service System (MFSS) started on Monday – November 30, 2009 with UTI schemes making its debut onto the new mutual fund trading system with a turnover of Rs 78 lakh. Birla Sunlife Mutual Fund was the second one to join the NSE’s MFSS platform. The rest of the fund houses are expected to join later since they are in the process of creating their technology infrastructure to list their schemes on the exchange.
- The Bombay Stock Exchange (BSE) launched its mutual fund trading platform today (Friday – December 4, 2009) named BSE StAR MF (Bombay Stock Exchange Platform for Allotment and Redemption of Mutual Fund units), with Tata Mutual Fund schemes making its debut onto the mutual fund trading system from Friday. Big fund houses such as HDFC, ICICI Prudential, DSP BlackRock too have signed up for this platform.
- The start of the tax saving season has seen some of the mutual fund companies stepping up commissions. Some of the mutual fund companies are offering as high as 5% commissions to distributors, which are mostly on tax saving schemes. This initiative by the mutual fund companies is despite the fact that SEBI banned commissions to be deducted from investors’ money.
- The Pension Fund Regulatory & Development Authority (PFRDA) unveiled its Tier II account for its New Pension Scheme. Under this account investors will be allowed to enter and exit at will (just like savings account). However, the account will be available for investors of NPS who already hold Tier I account.
- With gold making waves, it is turning out to be an important asset for wealth managers. Religare Mutual Fund has sought the approval from SEBI to launch a gold Monthly Income Plan (MIP). The fund will be a first of its kind in the country.
- Gold prices hit a record high breaching the Rs 18,000 mark. In the Mumbai market standard (99.5 purity) gold closed at Rs 18,220 (for 10 gm) on Wednesday, Dec 2, 2009.
- Employers may soon be required to make mandatory provident fund contribution to their employees with a salary upto a sum of Rs 15,000 a month, instead of Rs 6,500 at present.
SMS tariff war
The battle continues - will the customer win the war? The tariff war in the mobile telecom industry has now extended and shifted its focus to the Short Messaging Services (SMSes). Dual technology player Reliance Communications (RCom) has triggered a tariff war in the SMS segment. The company has launched two SMS plans which are available to both pre-paid and post paid users of the GSM and CDMA service.
SMSes under one plan will be charged at 1 paisa per SMS, but in order to avail of the same, users would have to pay a monthly fee of Rs 11. In another plan the users can avail of 15,000 SMSes free, by paying Re 1 per day as a fee. In other words it means 500 SMSes per day for a rupee charged; a great offer.
The above plans will be appealing to customers with high SMS usage – typically youth and professionals across India.
The tariff war is likely to continue till consolidation sets in the mobile telecom industry.
Since the mobile telecom industry is more voice driven, the move may not have too much impact on the industry. However, it will indeed be pro-customer as it will lead to increase in savings.
SMSes under one plan will be charged at 1 paisa per SMS, but in order to avail of the same, users would have to pay a monthly fee of Rs 11. In another plan the users can avail of 15,000 SMSes free, by paying Re 1 per day as a fee. In other words it means 500 SMSes per day for a rupee charged; a great offer.
The above plans will be appealing to customers with high SMS usage – typically youth and professionals across India.
The tariff war is likely to continue till consolidation sets in the mobile telecom industry.
Since the mobile telecom industry is more voice driven, the move may not have too much impact on the industry. However, it will indeed be pro-customer as it will lead to increase in savings.
IPO subscription to be made easy for HNIs & firms
From January 2010, HNIs and firms will be eligible to use the banking channel called Application Supported by Blocked Amount (ASBA) to buy stocks in the primary (IPO) market.
Under this channel, when an investor applies to an IPO, the funds do not immediately flow out from his account. The bank blocks the value of the shares applied for and the funds are not disbursed till the shares are allotted. Customers cannot use this money, since it is blocked.
Earlier in July 2008, SEBI allowed only retail investors to subscribe to IPOs through this channel, but capped the maximum amount of bid at Rs 1 lakh.
As a second phase, the channel will now be thrown open to a wider group of investors who will be able to make multiple applications at different prices within the price band of an IPO.
SEBI has asked banks to be ready with their software and to make necessary changes in their software.
We believe that the move will reduce the time taken between the public issue and listing. This will be in the interest of investors as it will make IPO subscriptions easy and ensure hassle-free transactions. Investors will no longer have to wait for the receipt of refund cheques.
Dubai debt trap
Dubai, which is seen as the global financial hub, got into a debt trap with Dubai World struggling with liabilities to the tune of USD 59 billion. The Dubai Government too hasn’t guaranteed the debt of Dubai World. As per a government statement, the company has received financing based on a project schedule basis and not on government guarantees.
This sent shock waves across the financial markets, significantly impacting stock prices across the globe. S&P too has cut the credit ratings of six Dubai government-linked companies, including ports operator DP World, to junk status. S&P also placed the ratings of four Dubai-based banks on negative outlook, due to their exposure to Dubai World.
This sent shock waves across the financial markets, significantly impacting stock prices across the globe. S&P too has cut the credit ratings of six Dubai government-linked companies, including ports operator DP World, to junk status. S&P also placed the ratings of four Dubai-based banks on negative outlook, due to their exposure to Dubai World.
Banning insurance commissions
The panel constituted last year, chaired by D Swarup, the Chairman of the Pension Fund Regulatory and Development Authority (PFRDA) presented its report to the Government. The panel was asked among other things:
- How to stop mis-selling of financial products
- How to raise financial literacy among citizens
With respect to the insurance industry, the panel has recommended in its report, that the up-front commissions embedded in the premium should be done away in a phased manner as under:
| Year | Commissions |
| 2009 | 15% |
| 2010 | 7% |
| 2011 | 0% |
The main intention of the panel is to stop mis-selling of products as agents and financial advisors often push financial products where they can earn more, without the investors in mind.
The move has been opposed by the Insurance Regulatory & Development Authority (IRDA) and Life Insurance Council, the industry lobby for the insurance sector.
We believe that if the recommendations to do away with insurance commissions go through government approvals, it will be in the interest of the investors.
Banking made easy?
PersonalFN Impact Indicator
In a move to make banking transactions more easy and convenient, the Reserve Bank of India (RBI) permitted banks to adopt the ‘Business Correspondents Model’ from Monday – November 30, 2009.
It means banks will now be able to appoint ‘Business Correspondents’ (BCs) enabling them (banks) to deepen the banking system. RBI has allowed entities like individual kirana/medical/fair price shop owners, PCO operators, agents of government-sponsored small savings schemes, insurance agents, petrol pumps owners and retired teachers to act as BCs of banks.
The principle for appointing such BCs are:
- Experience of these individuals in cash handling (cash inflow and outflow)
- Being residents of the area in which they propose to operate
According to RBI, the charges for services provided by the BCs, will be levied in a transparent manner and BCs will not be allowed to charge customers directly.
The model has evolved after experiencing limitations in the traditional ‘brick and mortar' banking model. As per RBI notification, the new model (Business Correspondents Model) will enable banks to accelerate their goal of financial inclusion.
However, we believe that though the move seems to make banking easier and convenient, there are some serious operational glitches like cash management, security and technology, which need to be considered for safe banking.
India's GDP beats forecast
The Gross Domestic Product (GDP) expanded during the second quarter (July – September) of the fiscal year 2010 by 7.9%. The key drivers for this strong figure are:
- Pickup in manufacturing sector
- Increased government expenditure
- Robust investments
- Lower interest rates
- Higher government salaries & pay commission arrears
- Increased incomes especially in the rural areas due to greater social spending and high farm goods prices
- Modest growth in farm output despite drought
In the first quarter (April – June) of the present fiscal year, the economy had expanded 6.1%. Interestingly now, the growth is close to the same level (i.e. 7.7%), of the second quarter (July – September 2008) of the fiscal year 2009, thus indicating that the economy is back on the health track. The stock market too has cheered this news during the week.
Given the attractive GDP numbers, we believe there are likely chances of:
- Government withdrawing stimulus – certainly beginning the phasing out over next few months
- RBI tightening interest rates soon
How to select a mutual fund?
Mutual funds offer the most convenient way of investing in equity, debt and money markets. The increased participation of Indian investors bears testimony to the fact that there is a widespread realisation of the same. Also over the years, the Indian mutual fund industry has grown manifolds, not only in terms of size but also in terms of offerings. While on one hand that is good; the increased number of offerings has also given rise to a state of dilemma in the mind of investors. They often get confused when it comes to selecting the right fund from the plethora of funds available. And even worse, many investors think that 'any' mutual fund can help them achieve their desired goals.
The fact is, not all funds are the same. There are various aspects within a fund that an investor must carefully consider before short-listing it for making investments. In this article we highlight some of those aspects.
- Performance: The past performance of a fund is important in analysing a mutual fund. However, one must remember that simply because a fund has performed well in the past does not mean that it will perform well in the future as well. It simply indicates the fund’s ability to clock returns across market conditions. And if the fund has a well-established track record, the likelihood of it performing well in the future is higher than a fund which has not performed well.
The following factors should be considered while evaluating a fund’s performance:
1) Comparisons: A fund’s performance in isolation does not indicate anything. Hence, it becomes crucial to compare the fund with its benchmark index and its peers, so as to deduce a meaningful inference. Again, one must be careful while selecting the peers for comparison. For instance, it doesn’t make sense comparing the performance of a midcap fund to that of a largecap.
‘Don’t compare apples with oranges’
2) Time period: It’s pertinent for investors to have a long term (atleast 3-5 years) horizon if they wish to invest in equity oriented funds. Hence, it becomes important for them to evaluate the long term performance of the funds. This does not imply that the short term performance be ignored. Performance over the short term should also be evaluated; however, the focus should be more on the long term performance. Besides, it is equally important to evaluate how a fund has performed over different market cycles (especially during the downturn). During a rally it is easy for a fund to deliver above-average returns; but the true measure of its performance is when it posts superior returns than its benchmark and peers during the downturn.
Choose a fund like you choose a wife – one that will stand by you in sickness and in health
3) Returns: Returns are obviously one of the important parameters that one must look at while evaluating a fund. But remember, although it is one of the most important, it is not the only parameter. Many investors simply invest in a fund because it has given higher returns. In our opinion, such an approach for making investments is flawed. In addition to the returns, investors must also look at the risk parameters, which in-turn explain how much risk the fund has taken to clock higher returns.
4) Risk: Risk is normally measured by Standard Deviation. It signifies the degree of risk the fund has exposed its investors to. Higher the Standard Deviation, higher the risk taken by the fund to clock returns. From an investor’s perspective, evaluating a fund on risk parameters is important because it will help them to check whether the fund’s risk profile is in line with their risk profile or not. For example, if two funds have delivered similar returns, then a prudent investor will invest in the fund which has taken less risk.
5) Risk-adjusted return: This is normally measured by Sharpe Ratio. It signifies how much return a fund has delivered vis-ร -vis the risk taken. Higher the Sharpe Ratio, better is the fund’s performance. From an investor’s perspective it is important because they should choose a fund which has delivered higher risk-adjusted returns. Infact, this ratio tells us whether the high returns of a fund are attributed to good investment decisions, or to higher risk.
6) Portfolio Concentration: Funds that have a high concentration in particular stocks or sectors tend to be very risky and volatile. Hence, investors should invest in these funds only if they have a high risk appetite. Ideally, a well diversified fund should hold no more than 40% of its assets in its top 10 stock holdings.
Make sure your fund does not put all its eggs in one basket
7) Portfolio Churning: The portfolio turnover rate measures the frequency with which stocks are bought and sold. Higher the churning, higher the volatility. The fund might not be able to compensate the investors adequately for the higher risk taken.
Invest in funds with a low turnover rate
- Fund Management: The performance of a mutual fund scheme is largely linked to the Fund Manager and his team. Hence, it’s important that the team managing the fund should have considerable experience in dealing with market ups and downs. Also, investors should avoid fund’s that owe their performance to a ‘star’ fund manager. Even if the fund manager is present today, he might quit tomorrow, and then the fund will be unable to deliver its ‘star’ performance without its ‘star’ fund manager. Therefore, the focus should be on the fund houses which are strong in their systems and processes.
Fund house should be process-driven and not 'star' fund-manager driven
- Costs: If two funds are similar in most contexts, it might not be worth buying the high cost fund if it is only marginally better than the other. Simply put, there is no reason for an AMC to incur higher costs, other than its desire to have higher margins.
The two main costs incurred are:
1) Expense Ratio: Annual expenses involved in running the mutual fund include administrative costs, management salary, overheads etc. Expense Ratio is the percentage of assets that go towards these expenses. Every time the fund manager churns his portfolio, he pays a brokerage fee, which is ultimately borne by investors in the form of an Expense Ratio. Therefore, higher churning not only leads to higher risk but also higher cost for the investor.
2) Exit Load: Due to SEBI’s recent ban on entry loads, investors now have only exit loads to worry about. An exit load is charged to investors when they sell units of a mutual fund within a particular tenure; most funds charge if the units are sold before a year. As exit load is a fraction of the NAV, it eats into your investment.
Try investing in a fund with a low expense ratio and stay invested in them for longer duration.
Among the factors listed above, while few can be easily gauged by investors, there are others on which information is not widely available in public domain. This makes analysis of a fund difficult for investors and this is where the importance of taking the help of a mutual fund advisor comes into fore. At Personal FN, we spend a lot of time and effort in short-listing funds which are best for investors, by using various qualitative and quantitative techniques.
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