Tuesday, March 29, 2011

Enhanced Index Fund

A fund that aims to track an index, but also attempts to boost returns by straying from the index in order to take advantage of market timing, specific stock selections, and/or leverage. This is an index fund which has been modified by either adding value or reducing volatility through selective stock-picking.
Enhanced index funds trade with the "index fund" title, but to be fair, that's where the similarity usually ends. True index funds have consistently lower fees, lower turnover and passive management. Enhanced index funds, on the other hand, are actively managed to beat the return of the tracking index. This approach causes relatively higher fees and turnover than the traditional index fund. While proponents of enhanced index funds cite better total return performance as a plus for this type of fund, investors need to be aware that using leverage and active management also increases risk, at least as compared to a conventional index fund.

Friday, March 25, 2011

Index Fund

A type of mutual fund with a portfolio constructed to match or track the components of a market index. An index mutual fund is said to provide broad market exposure, low operating expenses and low portfolio turnover. An index fund is a mutual fund that aims to replicate the movements of an index of a specific financial market. An Index fund follows a passive investing strategy called indexing. It involves tracking an index say for example, the Sensex or the Nifty and builds a portfolio with the same stocks in the same proportions as the index. The fund makes no effort to beat the index and in fact it merely tries to earn the same return.
Index funds first came into being in the US in the 1970s. In the US the research established the efficient markets concept which says that stocks are mostly priced accurately and that it is not possible to beat the market in a systematic way. Though a few actively managed mutual funds may beat the market for a while, it is very rare for active funds to beat the market in the long run.
Advantages of Index Funds: As per efficient markets concept index funds provide optimum returns in the long run. An index fund doesn't have to pay for expensive analysts and frequent trading. Index funds track a broad index which is less volatile than specific stocks or sectors, thereby lessening the risk for investors.

In the Indian market scenario index funds may not be the best option. The basic principle of indexing is - the more the number of stocks comprising an index the better is the diversification and price discovery. Indian indices like the Sensex (30) and the Nifty (50) cover a relatively small number of stocks and ignore many opportunities in the mid-cap sector. Also, unlike the capital markets in developed countries, Indian markets haven't been thoroughly researched and there is enormous scope to beat the market by sound research.

Friday, March 18, 2011

List of Banks in India

Central Bank:
• Reserve Bank of India
State Bank of India & 7 Associates:
• State Bank of India
• State Bank of Bikaner & Jaipur
• State Bank of Hyderabad
• State Bank of Indore
• State Bank of Mysore
• State Bank of Patiala
• State Bank of Saurashtra
• State Bank of Travancore
Nationalized Banks:
• Bank of India
• Bank of Baroda
• Canara Bank
• Corporation Bank
• Indian Bank
• Indian Overseas Bank
• Punjab & Sind Bank
• Punjab National Bank
• Syndicate Bank
• Vijaya Bank
• Central Bank of India
• Allahabad Bank
• United Bank of India
• Bank of Maharashtra
• Andhra Bank
• Dena Bank
• Oriental Bank of Commerce
• UCO Bank
• Union Bank of India
Major Private Banks
• Axis Bank
• HDFC Bank
• ICICI Bank
• IDBI Bank
• Kotak Mahindra Bank
• Dhanalakshmi Bank
• Federal Bank
• Catholic Syrian Bank
• South Indian bank
• IndusInd Bank
• ING Vysya Bank
• Karur Vysya Bank
• Lakshmi Vilas Bank
• Yes Bank
• Centurian Bank of Punjab
• G.S.B. Bank of Commerce
• J&K Bank Ltd

Foreign Banks Operating in India:
• Abu Dhabi Commercial Bank
• American Express Bank
• BNP Paribas
• Citibank India
• DBS Bank
• Standard Chartered Bank
• Deutsche Bank
• Barclays Bank

And innumerable of Cooperative Banks

Sunday, March 13, 2011

Mid Cap Funds

Mid cap funds are those mutual funds, which invest in small / medium sized companies. A company's size is determined by its market capitalization. Each mutual fund has its own way to determine small and medium sized companies. Generally, companies with a market capitalization of up to Rs 500 crore are classified as small. Those companies that have a market capitalization between Rs 500 crore and Rs 1,000 crore are classified as medium sized. Big investors like mutual funds and Foreign Institutional Investors are increasingly investing in mid caps nowadays because the price of large caps has increased significantly. Small / midsized companies tend to be under researched thus they present an opportunity to invest in a company that is yet to be identified by the market. Such companies offer higher growth potential going forward and therefore an opportunity to benefit from higher than average valuations. Mid cap companies are looked upon as wealth creators and have the potential to join the league of large cap companies.
But mid cap funds are very volatile and tend to fall like a pack of cards in bad times. So, caution should be exercised while investing in mid cap mutual funds. Mid cap funds are a good option in case the investor wants to add some diversity to his portfolio.
Top Mid Cap Funds in India:
* Sundaram BNP Paribas Select Midcap
* Franklin India Prima Fund
* HDFC Capital Builder
* Kotak Indian Mid Cap Fund
* HSBC Midcap Equity Fund

Thursday, March 10, 2011

Large Cap Funds

Large cap funds are those mutual funds, which seek capital appreciation by investing primarily in stocks of large blue chip companies with above-average prospects for earnings growth. Different mutual funds have different criteria for classifying companies as large cap. Generally, companies with a market capitalization in excess of Rs 1000 crore are known large cap companies. Investing in large caps is a lower risk-lower return proposition because such companies are usually widely researched and information is widely available.
Large cap funds invest in those companies that have more potential of earning growth and higher profit. One of the major advantages of large cap funds is that they are less volatile than mid cap and small cap funds and the near term prospects of large cap funds can be more accurately predicted. On the flip side, the large cap funds offer lower returns than mid cap or small cap funds. But when compared in totality, large cap funds outperform all other funds. These funds come under low risk low return category. In volatile times it is advisable to invest in large cap funds. Large Cap Funds in India are a kind of mutual fund that looks for appreciation of capital by investing mainly in the shares of companies that are big blue chip. The big blue chip companies in which Large Cap Funds in India make their investments have above- average potential for growth in earnings. This ensures that the investments of the investors are relatively safe.
Top Large cap Funds in India
·         HDFC Top 200
·         UTI Large Cap Fund
·         Franklin India Blue Chip
·         Kotak 30
·         DSPML Top 100 Equity
·         Principal Large Cap Fund
·         Reliance Growth Fund