Vidya Bala, Author at PrimeInvestor

Mutual funds & ETFs

What to do if your MF holds perpetual bonds?

Perpetual bonds have caused some sleepless nights for fund managers after SEBI’s circular earlier this month. On March 10th, SEBI issued a circular capping the debt scheme exposure to perpetual bonds at 10% and also laying down new rules how these bonds should be valued in debt scheme portfolios. We wrote a short take on it last week suggesting that you wait for clarity. SEBI has now come up with one more circular offering some clarification.

Vidya Bala March 23, 2021 8 Comments

Mutual funds & ETFs

2 target maturity government bond fund NFOs – Should you invest?

Target maturity funds invest with a stated maturity and pay you back when the maturity is reached. You can call them an FMP but one that is open-ended and takes fresh inflows and outflows.
With yields beginning to move up, more funds are now beginning to talk about ‘roll down strategy’ or a strategy where a maturity date is fixed thereby ensuring that the portfolio’s average maturity steadily falls as it nears maturity. For example, a 2027 target date fund will have a 6-year maturity now and a 5-year maturity in 2022 and so on, until the maturity reduces to near zero in 2027.

Vidya Bala March 18, 2021 12 Comments

Stocks

Suryoday Small Finance Bank IPO – Invest or avoid?

Small finance banks, with their focus on small ticket loans for urban and semi-urban India, are a play on the underpenetrated market for financial products in India. Yet, after stellar performances soon after their IPOs many of these stocks have seen their valuations levelled. So, when a new candidate – Suryoday Small Finance Bank IPO (Suryoday) comes out in an overcrowded primary market, how should it be judged? Read on.

Vidya Bala March 16, 2021 4 Comments

Short Takes

Short take: What the SEBI’s circular on perpetual bonds means

SEBI’s recent circular on restrictions on both valuations and holdings of perpetual bonds by mutual funds has created a storm – not just among the fund manager community but all the way up to the Ministry of Finance.

Vidya Bala March 13, 2021 No Comments

Commentary

Hybrid funds: Should you invest in them?

“Can I invest in hybrid funds” is a question that we often get. Ranging from the aggressive equity-oriented funds to arbitrage funds, the broad term is ‘hybrid’. We have already discussed some of the key categories of hybrid funds in our earlier articles.
However, this one will cover all of them in a single essay and let you know when and whether you need them.

Vidya Bala March 11, 2021 8 Comments

Recommendations

Prime Recommendation: 2 Debt funds to limit current market volatility

For those of you spooked by the continuing volatility in debt funds, our earlier article would have explained why these ups and downs prevail now. If you have money to be deployed or profits booked out of equities and waiting in the sidelines, you may hesitate to deploy it in this debt market condition.
To speak the truth, there are no categories other than overnight and liquid that are spared from the current volatility. However, if one looks at it on a relative basis, select funds from ultra-short, low duration and money market have held on, notwithstanding the see-saw.

Vidya Bala February 28, 2021 16 Comments

Stocks

8 things you need to know about Reliance Industries’ demerger plan

Reliance Industries (RIL) put out more details of the proposed demerger of its Oil to Chemicals (O2C) business that it announced earlier in 2020. The company now seeks approval from shareholders, creditors, regulatory authorities, Income Tax authority, and the NCLTs in Mumbai and Ahmedabad to demerge and set up a fully owned subsidiary for the O2C business.
This article will simply seek to explain the contours of this demerger and any immediate impact if you are a shareholder in the company, in the form of a Q&A.

Vidya Bala February 23, 2021 4 Comments

Where to invest your Franklin debt fund proceeds?

You would have started getting the locked money from 5 of the 6 debt schemes of Franklin India Mutual after a stressful 10 months. Now that the money has started flowing in, where should you invest?

Vidya Bala February 16, 2021 No Comments

Mutual funds & ETFs

Why your debt funds have negative returns and what to do

Most of you are now comfortable with the fact that gilt funds can deliver negative returns in the short to medium term when rates move up. We have also written about it here. But the negative return prevalent in the past month or so, across most debt fund categories has troubled many of you.

Vidya Bala February 14, 2021 48 Comments

Recommendations

Prime Recommendation: A debt fund for the new rate scenario

Two events have set the stage for a rise in yields, whether the RBI pauses or hikes rates. One, a few weeks ago, the RBI closed the tap that pumped liquidity into the system. That meant no more excess supply of money. This caused an immediate rise in short-term yields, causing mark-to-market losses in some funds over a week or two. In just 2 months, the 3-month government bond moved from 2.9% in December beginning to 3.36% now. This is a sharp move for a shorter tenure bond.
Two, Budget 2021 has decided to retain its market borrowing at Rs 12 lakh crore, same as the pandemic-hit year. It has also provided many novel measures to tap the debt market for infrastructure financing. The 10-year gilt yields climbed sharply as the budget was announced.

Vidya Bala February 2, 2021 26 Comments

Stocks

Stock recommendation: Stock to ride the IT transformation

The COVID-19 pandemic has increased the urgency of digital transformation for enterprises across the globe. And this has positioned the IT sector well to catapult growth over the next 2-3 years. This is our preferred IT stock pick.

Premium article available only to subscribers.

Vidya Bala January 19, 2021 No Comments

Prime stock recommendation - a gas distributor at attractive valuations

Stocks

Prime stock recommendation: A gas distributor at attractive valuations

Why we prefer this gas distributor over its peer.

Premium article available only to subscribers.

Vidya Bala January 14, 2021 No Comments

PrimeInvestor - Articles and Reports

What to do if your MF holds perpetual bonds?

2 target maturity government bond fund NFOs – Should you invest?

Suryoday Small Finance Bank IPO – Invest or avoid?

Short take: What the SEBI’s circular on perpetual bonds means

Hybrid funds: Should you invest in them?

Prime Recommendation: 2 Debt funds to limit current market volatility

8 things you need to know about Reliance Industries’ demerger plan

Where to invest your Franklin debt fund proceeds?

Why your debt funds have negative returns and what to do

Prime Recommendation: A debt fund for the new rate scenario

Stock recommendation: Stock to ride the IT transformation

Prime stock recommendation: A gas distributor at attractive valuations

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