Category: Personal Finance

DSP MF launches Nifty Bank index fund amid banking sector revival: Should you invest?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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DSP Mutual Fund on Wednesday (May 15) announced the launch of the DSP Nifty Bank Index Fund. This is an open-ended scheme tracking the Nifty Bank Index. The fund offers investors an opportunity to get exposure to the 12 most liquid and large Indian banking stocks through a single fund, the mutual fund house said.

The new fund offer (NFO) of the scheme will close on May 27, 2024.

About Nifty Bank Index

The Nifty Bank Index is diversified with a composition of private as well as public sector banks.

Historically, the Nifty Bank Index has delivered much better long-term returns compared to the broader Nifty 50 Index.

Since January 2000, the Nifty Bank Index has grown 67 times compared to the Nifty 50 which grew 21 times over the same period.

However, the Nifty Bank Index is currently witnessing the longest stretch of underperformance compared to the Nifty 50 on a five-year rolling basis which has led to it being relatively better-placed in terms of sector valuations versus their historical averages as well as relative to other sectors.

Key financial metrics for banks like return ratios and capital adequacy have also been improving steadily.

Return on Assets (RoAs) of Indian banks have improved over three times from the lows of 2018.

Non-performing assets (NPAs) are also at one of the lowest levels.

With the sector trading at just a 5% premium to its 10-year average price-to-book multiple, and NPAs now at multi-year lows, it offers a decent entry point for investors to benefit from the banking sector’s likely resurgence.

Investment considerations

Anil Ghelani, CFA, Head of Passive Investments & Products at DSP Mutual Fund, emphasised the importance of a robust banking system for economic growth and development, particularly in a rapidly growing economy like India.

He recommended the DSP Nifty Bank Index Fund to investors with longer time horizons, citing the long-term performance of the Nifty Bank Index.

The favourable outlook for the banking sector further underscores the potential for the DSP Nifty Bank Index Fund NFO.

However, investors must tread cautiously, as the fund’s risk profile is reflected in its ranking on the Standard SEBI Risk-O-Meter as a Very High-Risk Fund.

The predominant exposure to equities, coupled with the concentration on the banking theme, amplifies the fund’s risk profile.

Moreover, there is the added risk of entering the market at all-time high levels.

Additionally, as an index fund, there is the inherent risk of tracking errors.

This could impact the fund’s returns relative to the underlying index.

In conclusion, investors should carefully assess their risk tolerance and investment horizon before considering this fund.

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These two mutual fund houses launch special opportunities funds: Should you invest?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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WhiteOak Capital Mutual Fund and SAMCO Mutual Fund have announced special opportunities funds to capitalise on market dynamics and special situations. While WhiteOak’s NFO is already open, SAMCO’s new fund offer (NFO) is set to open on Friday, May 17, 2024.

Special Opportunities Funds are designed to harness specific market scenarios such as corporate restructuring, regulatory changes, technological disruptions, emerging trends, and other similar instances.

These funds aim for long-term capital appreciation by identifying undervalued or overlooked opportunities.

WhiteOak Capital Special Opportunities Fund

WhiteOak Capital’s offering seeks to generate long-term capital growth by focusing on special situations like mergers, acquisitions, government policy changes, and technological innovations.

Aashish Somaiyaa, CEO of WhiteOak Capital Asset Management emphasised the importance of active management in identifying undervalued stocks and leveraging bottom-up stock selection strategies.

Ramesh Mantri, CIO of WhiteOak Capital Asset Management highlighted the fund’s objective to capitalise on temporary disruptions in stock prices.

“This presents buying opportunities for investors,” Mantri said.

The fund adopts a bottom-up approach to stock selection, aiming for potential alpha generation by maintaining a high active share.

SAMCO Special Opportunities Fund

SAMCO’s offering is built on a proprietary DISRUPTION model consisting of ten distinct sub-strategies.

This model enables the fund to systematically uncover special situations across various themes such as digitization, regulatory reforms, innovation, and emerging sectors.

Viraj Gandhi, CEO of SAMCO Mutual Fund, emphasised the fund’s flexibility, allowing it to pivot across sectors and themes to capture emerging trends.

Umeshkumar Mehta, CIO of SAMCO Mutual Fund, highlighted the tax efficiency and diversification advantages of the SAMCO Special Opportunities Fund.

By managing thematic investments internally and diversifying across sectors and themes, the fund aims to minimise tax implications and mitigate risk concentration.

Investment considerations

Special opportunities funds represent thematic equity schemes with significant flexibility across market capitalisation and sectors.

Unlike many flexicap schemes that exhibit considerable overlap with their benchmarks, special opportunities funds provide diversification benefits to investors.

By incorporating such a fund in their portfolio, investors can enhance diversification and potentially mitigate risk.

However, analysts caution that the high flexibility enjoyed by fund managers in this category may lead to portfolio overlapping with other schemes in the portfolio.

Investors should evaluate their existing holdings to ensure optimal allocation.

Currently, there are three existing funds in this space.

Here are the returns of the existing special opportunities funds:

(Source: Value Research)

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SBI hikes fixed deposit interest rates by up to 75 basis points

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The State Bank of India (SBI) on Wednesday, May 15, raised interest rates on certain fixed deposits (FDs) by up to 25-75 basis points or 0.25%-0.75%. The rate adjustments target deposits below ₹2 crore.

SBI has increased rates across various tenures, including FDs maturing within 46 days to 179 days, 180 days to 210 days and 211 days to less than 1 year.

The revised rates entail 75 basis points (bps) rise for deposits maturing in 46 days to 179 days, now fetching 5.50% interest rate. Similarly, for 180 days to 210 days, the bank has raised rates by 25 bps to 6% interest.

Fixed deposits ranging from 180 days to 210 days will yield increased interest rate of 6.25% after a 25 bps hike.

Here’s a look at SBI’s fixed deposit interest rates:

(Source: SBI)

The development comes after RBI Governor Shaktikanta Das-led monetary policy committee (MPC) in April 2024 kept the repo rate unchanged for the seventh time at 6.5%.

However, the central bank earlier implemented six consecutive rate hikes, totalling 250 basis points, until the pause in April 2023.

Das, in October 2023 policy, emphasised that while the repo rates have been raised by 250 basis points, this increase has not been fully transmitted to bank deposit rates.

During the period when the RBI increased the repo rate, banks gradually followed suit by raising their FD interest rates, although there was some delay in transmission.

Banks that initially delayed raising their FD rates have since been increasing them to catch up with the RBI’s policy actions.

For perspective, when the repo rate increases, FD interest rates follow suit, and when the repo rate decreases, FD interest rates decline as well.

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Gold prices soar above ₹73,000 per 10 grams in India: What lies ahead for the yellow metal

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Gold prices witnessed a rise on Wednesday (May 15) in India. The 24-karat precious metal prices surged by ₹430 to reach ₹73,250 for 10 grams.

Globally, gold prices remained relatively stable amid anticipation surrounding US inflation report, which could provide insights into the Federal Reserve’s future interest rate decisions.

Spot gold held firm at $2,357.35 per ounce, maintaining a narrow $6 range after experiencing a 1% increase on Tuesday.

Similarly, US gold futures saw a modest rise of 0.1% to $2,362.80 per ounce.

The US consumer price index (CPI) data, scheduled for release at 1230 GMT, is expected to reveal April’s core inflation.

The forecast indicates 0.3% month-over-month increase, slightly down from the previous month’s 0.4%.

Kyle Rodda, a financial market analyst at Capital.com, highlighted the significance of this data for gold, stating, “Gold is data-dependent at the moment.”

While speaking to new agency Reuters, he emphasised that gold stands to benefit if the CPI begins to decrease, given its resilience thus far.

However, a higher-than-expected CPI could unsettle markets and confidence in potential rate cuts.

Recent economic indicators have fueled expectations of impending rate reductions by the Federal Reserve, particularly following last week’s lackluster jobs report and softer-than-anticipated US payrolls for April.

Despite Fed Chair Jerome Powell’s reassurance regarding declining inflation through 2024 and the unlikelihood of further interest rate hikes, Tuesday’s data showing a greater-than-expected increase in US producer prices has added to market uncertainty.

Saish Sandeep Sawant Dessai, an Analyst specialising in base metals at Angel One stressed on the potential volatility in the gold market.

Rahul Kalantri, VP Commodities at Mehta Equities suggested that gold may find support at $2345-2328 per ounce, with resistance at $2380-2396 per ounce.

In India, he said that gold sees support at ₹71,410 per 10 grams and ₹71,260 per 10 grams, with resistance at ₹72,080 per 10 grams and ₹72,390 per gram respectively.

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This is India’s first insurance portfolio management platform: How to open your digital account using it

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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SBI General Insurance has recently collaborated with Bima Central, developed by CAMS Insurance Repository. Bima Central is industry’s first policyholder servicing platform that allows customers to aggregate their insurance portfolio through an electronic Insurance Account (eIA).

This platform serves as a centralised hub where individuals can consolidate their insurance policies and access other services too.

It must be noted that it is mandatory for policyholders to hold new insurance policies in electronic format (e-Policy) in an e-Insurance Account (eIA) since April 2024.

Similar to how investors open demat accounts to manage their shares, policyholders need to establish an e-Insurance Account (eIA) to store and access their insurance policies electronically.

With all insurance policies eligible for electronic storage and accessible through an e-insurance account, managing insurance plans becomes more streamlined and efficient.

How does Bima Central benefit policyholders?

Bima Central offers policyholders a single window, integrated access to their aggregated insurance benefits.

This provides a consolidated view of their protection and investment.

Further, customers can gain direct access to their insurance portfolio through the SBI General Insurance mobile app after the recent collaboration.

The platform allows users to add beneficiaries, nominees, and family members too.

How to use Bima Central?

Existing CAMS Insurance Repository users can directly log in to Bima Central using their registered mobile/email/PAN/eIA to access their eIA account and get all the benefits.

Additionally, new users can sign up for an eIA account on Bima Central free of cost.

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Tata Banking & PSU Debt Fund to merge with Tata Corporate Bond Fund from June 15

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Tata Mutual Fund has unveiled plans for the merger of Tata Banking & PSU Debt Fund with Tata Corporate Bond Fund, set to take effect from June 15, 2024.

In a move aimed at streamlining its offerings, Tata Corporate Bond Fund will be the surviving scheme post-merger.

From June 15 onwards, Tata Banking & PSU Debt Fund will be dissolved, and its unit holders will transition to becoming unit holders of Tata Corporate Bond Fund.

As part of the merger arrangement, mutual fund investors are provided with an exit option, allowing them to redeem their investments at the prevailing Net Asset Value (NAV) without incurring any exit load.

This exit window is available till June 14, enabling investors to make decisions regarding their holdings.

Investors in the Income Distribution cum Capital Withdrawal Option (IDCW) of Tata Banking & PSU Debt Fund will be allotted units in the corresponding IDCW option of Tata Corporate Bond Fund.

Similarly, investors in the growth option of Tata Banking & PSU Debt Fund will receive units in the growth option of Tata Corporate Bond Fund, based on the closing net asset value (NAV) of the record date.

Those who opt to retain their investments post-merger will be subject to the load structure of Tata Corporate Bond Fund prevailing on the record date.

Additionally, existing Systematic Investment Plans (SIPs), Systematic Transfer Plans (STPs), and Systematic Withdrawal Plans (SWPs) in Tata Banking & PSU Debt Fund will be discontinued post-merger, with investors having the option to register for fresh plans in Tata Corporate Bond Fund.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

EPFO may now settle withdrawal claims in three days under these circumstances

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Employees’ Provident Fund Organisation (EPFO) has introduced auto-mode settlement for advance claims related to medical, education, marriage, and housing purposes. This initiative will eliminate human intervention in the processing of claims and streamline operations.

EPFO usually takes some time to process a claim.

This is basically due to the EPFO checking the eligibility of the EPF member, documents submitted (if any) for claim processing, KYC status of the EPF account, valid bank account details, etc.

However, with the new rules in place, the entire process will be IT system-driven.

Any claim with KYC, eligibility and bank validation will be processed for payment by IT tools automatically.

With this, EPFO members can expect their claims to be processed in 3-4 days.

One of the standout features of the auto-settlement system is its approach to claims management.

Unlike conventional methods where unvalidated claims are often returned or rejected, the automated system subjects them to a second level of scrutiny and approval, leaving no claim unaddressed.

Under Rule 68J, medical claims require a certificate signed by an employer or doctor, offering flexibility for withdrawals at any time, irrespective of tenure with the EPF scheme.

For marriage or higher education purposes, Rule 68K mandates a minimum of 7 years with EPFO, with withdrawals permissible thrice during the tenure, accompanied by varying documentation requirements.

Similarly, Rule 68B outlines the eligibility criteria for housing advances, requiring a minimum of five years with EPFO and providing provisions for withdrawals for the purchase, construction, or renovation of a house.

In a recent development, EPFO has also increased the eligibility limit of auto claim settlements under Paragraph 68J to ₹1 lakh from ₹50,000.

Here are the steps to initiate an EPF claim online via EPFO’s website:

Step 1: Log in to EPFO portal – unified portal-mem.epfindia.gov.in using UAN and password. The UAN is an identification number mentioned in the monthly salary slip of an employee.

Step 2: Go to ‘online services’ and select the ‘claim’ section.

Step 3: Verify the bank account number.

Step 4: Upload a scanned copy of a cheque or the passbook.

Step 5: Select the reason for submitting the advance. Partial withdrawal from EPF accounts is allowed for the purchase/construction of a house, repayment of a loan, non-receipt of the wage for two months, the marriage of self/daughter/son/brother, for medical treatment of family members, an outbreak of a pandemic, etc, according to EPFO.

Step 6: Generate an Aadhaar-based OTP. Once the claim is processed, it will be forwarded to the employer for approval. The subscriber can check the ‘claim status’ by selecting the option under ‘online service’.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Early access to IPL playoffs and final tickets for RuPay card customers

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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National Payments Corporation of India (NPCI) on Tuesday (May 14), announced early access to purchase forthcoming Indian Premier League (IPL) playoffs and final match’s ticket for RuPay card holders. 

Through this offer by NPCI, RuPay card customers will have the chance to book tickets for the Qualifier 1, Eliminator and Qualifier 2 scheduled for May 21, May 22 and May 24, respectively on Tuesday, May 14 at 6 pm. For the IPL Final, the exclusive ticket window for RuPay customers will open on May 20 at 6 pm. The offer provides RuPay customers a chance to book tickets, a day ahead of the ticket window opening for non-exclusive customers.

“For the third consecutive year, backed by strong and overwhelming demand in previous seasons, this privileged ticketing window exemplifies RuPay’s commitment to providing unparalleled benefits to its cardholders,” NPCI said in a release.

The initiative provides a hassle-free and secure ticket-purchasing experience via Paytm Insider, NPCI added.

Ramesh Yadav, Chief of Marketing, NPCI said, “RuPay has always believed in delivering exceptional and tailored experiences to our cardholders. Our commitment extends beyond transactions; we actively support sports, celebrating the passion and excitement it brings.”

“This initiative is a testament to our ongoing endeavour to deliver extraordinary benefits and privileges to our valued customers, reinforcing our dedication to their satisfaction and delight,” Yadav added.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

How can Gen Z start investing in mutual funds

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Given the current market landscape, understanding risks and assessing one’s investment appetite is paramount. So, where should Gen Z kickstart their investment journey?

Should they lean towards mutual funds, SIPs, or perhaps consider gold?

Let’s delve deeper.

According to Shweta Rajani, Senior Vice President & Head of Mutual Funds at Anand Rathi Wealth, the first step is setting clear objectives

Defining both short and long-term financial goals lays the groundwork for effective financial planning.

Whether it involves purchasing a home or preparing for retirement, taking the time to contemplate your aspirations is crucial.

Following goal setting, Rajani advocates for strategising, which encompasses budget allocation, determining the optimal asset mix between equity and debt, and selecting appropriate investment avenues.

She highlights the significance of commencing investments early to harness the benefits of compounding.

Advisably, initiating investments upon receiving the first paycheck is prudent.

Time serves as a critical factor in facilitating the exponential growth of investments.

Understanding the nuances of various investment products, such as mutual funds, is imperative for making well-informed decisions.

In terms of dos and don’ts, Rajani offers these guidance:

Dos:

• Employ technology wisely for research and investment monitoring.
• Clearly define objectives before committing to investments.
• Establish an emergency fund to navigate financial uncertainties.
• Ensure the presence of insurance or a retirement plan.
• Practice consistent investing and exercise patience.

Don’ts:

• Avoid blindly chasing trends solely because they are popular.
• Refrain from excessive trading despite the ease of technological access.
• Keep insurance needs separate from investment endeavors.

Rajani also highlights the trend of many do-it-yourself (DIY) Gen Z investors.

However, she cautions that this approach may not be ideal, especially considering that beginners often possess a limited level of knowledge in the field.

Watch this video for more.

Also Read | Unlocking financial growth: Anand Rathi Wealth’s investing tips for Gen Z

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow