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NFO : ICICI Prudential Value Fund Series-9

ICICI Prudential Mutual Fund has come up with New Fund Offer – ICICI Prudential Value Fund Series-9 with an objective to provide capital appreciation by investing in well diversified portfolio through fundamental analysis.

Details of NFO – ICICI Prudential Value Fund Series-9 are as follows:

1. NFO Open date:Oct 15, 2016.

2.NFO Close date:Oct 28,2016.

3.Type of Fund:Close ended.Means premature exit is not possible through this fund.

4.Fund Tenure:1099 Days.

5.Minimum investment: Rs.5000.

6.Benchmark:S&P BSE 500.

7.Options: Unlike to previous NFOs where only dividend option was available,both Growth and dividend options are available for this NFO.

Fund will be managed by managers who are managing other closed ended value funds as well other top schemes.As name suggests,fund will choose the stocks which are available at fair valuations.Chances are quite high that investment will be predominantly in Small Cap stocks which is considered as most volatile class.So suggestion is to check risk profile from your adviser before investing in this fund.

Disclaimer: Information provided on this blog is for informational purpose only.It should not be considered as an investment advice.

Arbitrage Funds : Benefits & Risks

Arbitrage funds are slowly gaining popularity among investor.At least increasing Assets under arbitrage funds suggests so.Today,we will take view of arbitrage funds,benefits & associated risks.

Arbitrage fund generates income by taking advantage of arbitrage opportunities(simultaneous buy-sell mis-prized securities) that exists between Cash & derivative market.

Most of the asset management companies have arbitrage funds and few are as listed below:

Returns (CAGR)of last 01 year  and if investor have entered before 05 years…indicates reducing returns with time.

Arbitrage Funds Returns,Risks & Benefits


What is risk associated with arbitrage opportunities:

1.Reducing arbitrage opportunities:If arbitrage funds continuously  get high inflows,arbitrage opportunities may get reduced with time & it can impact the returns.If you have checked above table,returns of last year are much lower.Arbitrage funds are virtually risk free but may not be in reality.

2.Higher turnover :Due to simultaneous buy-sell transaction,arbitrage funds can have a high transaction cost which can impact the returns.

Benefits of arbitrage funds:

1.Tax free Redemption:Arbitrage funds have taxation similar to equity.So as per current taxation laws,if units are held for more than one year, capital gain tax will be nil.

2.Low volatility: NAVs are less volatile and standard deviations may be around there are less chances of capital erosion if held for period like one year.

Arbitrage funds can be good idea for high tax bracket individuals.Investor can get tax benefits but it will not generate any significant returns.For Investors who are in low tax brackets,arbitrage funds are not suitable & they can prefer to invest in liquid or ultra short term funds.

Indiabulls Housing Finance NCD Sept 2016:

One of leading private, housing finance company Indiabulls Housing Finance has come up with an issue of Secured & Unsecured issue of NCDs of worth Rs.3500 crore with an option to retain the over subscription of same amount,aggregating to issue size of Rs.7000 crore.

Indiabulls is non-deposit taking housing finance company registered with NHB.It offers housing loans and loan against property to salaries , self employed individuals,small-medium sized entrepreneurs.Company focuses more on long term,secured,mortgage backed loans.It also offers mortgage loans to real estate developers for residential and commercial purposes.

This is maiden public issue Indiabulls Housing Finance.

Details of Indiabulls Housing Finance NCD issue are as follows:

Imp Dates:

1.Issue Open Date:Sept 15, 2016.

2.Issue Close Date:Sept 23, 2016.(Issue has been closed on Sept 16, 2016 due to over subscription.)

Credit Rating : “AAA” from CARE & Brickwork which indicates very low credit risk.

Security: This NCD issue carries both secured and unsecured debentures.Investors of secured NCDs will receive cover against debentures while no security cover is against unsecured debentures but investors will be compensated with some higher coupon rates.

Following types of investors can apply:

Category I:Institutional investors (20% issue size reserved).

Category II: Non-institutional investors (20% issue size reserved).

Category III : HNIs (Resident individual / Karta of HUF applying for more than 10 Lakh).

Category IV : Resident individual applying for 10 Lakh or less.

Coupon Rates for Category IV Retail individual investors:

Coupon rates depends on tenure, interest payment frequencies and type of investor.Here NCDs have classified as per interest payment frequency – Monthly,Annual and Cumulative.

Monthly Interest Payment:

Indiabulls Housing Finance NCD Sept 2016 Monthly Interest

Annual Interest Payment:

Indiabulls Housing Finance NCD Sept 2016 Annual Interest

Cumulative payment Option:

Principal & interest on cumulative basis will be paid at maturity.

Indiabulls Housing finance NCD Sept 2016 Cumulative

Please note: 0.10% higher coupon rate for Category IV Senior Citizens.

PAT & NPA of  Indiabulls Housing finance:

Indiabulls housing ncd profit npa details


Other details:

1.Investor can apply in physical or demat mode.

2.Senior citizens applying for Rs.10 Lakh or less will get 0.10% higher coupon rates.

3.Taxation: Interest will be added in investors total income and taxed accordingly.Tax will not be deducted at source if NCDs are held in demat mode but it will be payable.

4.Allotment will be on first cum first served , on daily basis.

Should you invest or not:

Due to lower side interest rates from banks, risk appetite of retail investor for private NCDs is quite high.Especially,NCDs related to retail side lending are in high demand.Though interest rates are little lower as compared to DHFL or SREI Infra NCD, commensurate risk looks lower in this issue.So this NCD issue may also witness good demand .This issue has highest credit rating,low credit risk &  its maiden public issue of this invest some part of fixed income as per credit risk profile.

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