Check out Top Value Style Mutual Fund Schemes

Check out Top Value Style Mutual Fund Schemes

Stocks with strong fundamentals and better growth prospects are likely to gain whereas those with weaker fundamentals and poor earnings visibility might face the wrath of investors.

In this scenario, 'stock picking' should emerge as the key differentiator between out-performance and underperformance. The ability of a fund manager to pick winners among stocks will determine the 'alpha' that he is going to produce which will ultimately determine the out-performance and/or underperformance of the scheme.

By definition, value style funds are meant to be better 'stock pickers'. Value investing, as a process, involves better understanding of a company's business and ascertaining its intrinsic value through rigorous research and then looking for an opportunity to buy that stock at a price lower than its intrinsic value. Value investors are not momentum players. They pick stocks that are trading at a considerable discount to their intrinsic value, thereby enhancing the margin of safety.

Value investing has 2 important benefits

▪ Looks to invest in stocks which are trading at a discount to their fair value, it gives margin of safety to the portfolio of the investors over a long term.

▪ It may also help in reducing volatility in the portfolio.

Here, we present an article on Top Value style funds. (See Note and Disclaimer)

Data Source: valueresearchonline



UTI Dividend Yield Fund

The fund in last 1 year has generated an annualized return of 45.58% as on 18th June 2010.

Performance Analysis

The fund has consistently given an above average performance and has also out-performed its benchmark BSE-100 in the periods 3 months, 6 months, 1 year, 2 years, 3 years and 5 years registering an annualised return of 21.17% in last 2 years while in the same period the category average returns is 17.50% and its benchmark has given 6.85% return.

Table I below shows the growth of Rs100000, if invested in UTI Dividend Yield Fund on 18th June 2007.

Return 3 Years
Absolute %	Annualised %
70.33	19.42
Amount Inv 18-Jun-07	Current Corpus 18-Jun-10
100000	170327

Risk Return Analysis

The fund has registered a Sharpe Ratio of 0.53 while the category average is 0.38 which shows the fund's capacity to generate above average returns. It also has a standard deviation of 30.81% which is lower than the category average of 34.62% and has a beta of only 0.83 which shows that it is a low risk and less volatile fund when compared to its peer group. See Table II

Scheme Name	Sharpe	Std Dev	Beta
UTI Dividend Yield	0.53	30.81	0.83
Category Average	0.38	34.62	0.92

It is low risk and low volatile fund coupled with a capacity to generate above average returns. For definition of Sharpe ratio, Standard Deviation and Beta see bottom of the page.

Portfolio Analysis

The fund as per May 2010 has 89.21% exposure to equity in the form of 54 stocks in its portfolio, 1.45% in Debt in the form of short term deposits and holds 9.34% of the portfolio in cash. The fund has diversified its equity portfolio by investing 67.82% in Large Cap stocks, 22.73% in mid cap stocks and 8.87% in small cap stocks.

Its Top 5 stocks include Infosys Technologies Ltd.(6.12%), ICICI Bank Ltd. (4.80%), NTPC Ltd. (4.75%), ONGC Ltd. (4.30%), GAIL (India) Ltd (3.97%).

More @ Check out Top Value Style Mutual Fund Schemes



Src: Economictimes.Indiatimes Via Valueresearchonline

ET:Heard on Street

Heard on Street: Indian Hotels gains 3%

SBI ropes in six i-banks for $1 billion overseas debt

State Bank of India plans to raise $1 billion from overseas markets in July and has identified six merchant bankers for it. Insiders say that it’s not yet clear if the bank plans to raise money in the form of bonds or by issuing medium-term notes. The six merchant bankers include UBS, Bank of America Merrill Lynch, Citibank, Deutsche Bank, Royal Bank of Scotland and HSBC. Insiders say that the bank is likely to raise money for five years and the issue will be in the form of senior debt and not subordinated debt. This will be SBI’s first overseas borrowing this year, after the turmoil in European markets. Many Indian banks are following SBI’s overseas borrowing, since they will plan their overseas borrowing based on the pricing and the response that SBI receives for its forthcoming issue.

Indian Hotels gains 3% as ‘operators’ buy shares

Having taken losses on their trading bets due to the recent market volatility, market operators now seem to have turned to the tried and tested formula of investing blue-chips. The Old Fox of Dalal Street, and the operator who shares his first name with the Union Agriculture minister, are said to be accumulating shares of HLL, ITC and Indian Hotels over the past few sessions. Indian Hotels shares rose 3% to close at Rs 104.80. On the BSE, 5.41 lakh shares were traded, compared to the two-week average daily volume of 1.75 lakh shares.

Domestic funds use rally to book profit in Sesa Goa

Select domestic mutual funds were seen booking profits in Sesa Goa on Thursday. The stock gained close to 1% to Rs 378.95, after touching an intraday high of Rs 385.90. According to dealers, these funds had bought Sesa Goa shares at around Rs 320-325 almost a month back, when the stock was reeling under selling pressure led by a fall in global commodity prices. In the past week or so, the stock has risen roughly 7%. Analysts don’t recommend buying the stock at these levels citing steep valuations.

Contributed by Sangita Mehta, Santosh Nair & Harish Rao



Aqua offers action-packed fare


Aqua Logistics, a recently listed mid-cap player in the logistics sector, is witnessing higher investor interest following the current boom in demand from key user industries including auto, construction and pharma.

The stock touched a 52-week high of Rs 545 intra-day on Thursday before it ended the day at Rs 541.3. Since its listing on February 23, the stock has more than doubled compared to an 8.7% rise in the broader Sensex.

During the same period, the stock of its larger peer Transport Corporation of India gained 32% while Allcargo Global Logistics scrip declined 6.2%.

Apart from the strong growth in the domestic economy, investor sentiment has also been boosted by Aqua Logistics’ recent expansion into the booming East Asian market. As part of this strategy, Aqua Logistics had recently completed the acquisition of a 60% stake in three Hong Kong-based companies for $7.1 million (nearly 32.5 crore). The company via its recent IPO had raised Rs 150 crore and funding this acquisition should not be a problem.

However, Aqua Logistics’ operating margin declined 40 basis points 10.1% in FY10, despite the year-on-year 51% jump in its income from operations. Pressure on its operating margin was due to higher operating expenses. Nevertheless, the company’s net profit increased 84% to Rs 20.5 crore in FY10.

Aqua’s stock may continue to see some more action in the coming days given its plans to split shares. The company’s board is considering the sub-division of its share, from the current face value of Rs 10. It is likely to declare the exact split ratio next week. Though the move will not change its paid-up capital, the number of traded shares will increase, adding to the stock’s liquidity.

In addition, the company plans to seek shareholders’ approval for a fresh issue of shares of a size not exceeding $70 million (nearly Rs 320 crore). Aqua’s stock currently trades at 37.7 times its trailing 12-month earnings. This makes it one of the most expensive stocks in the sector.

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