DSP Mutual Fund has launched a new fund offer (NFO) for DSP Quant Fund. The new scheme proposes to select stocks based on pre-determined rules and eliminate fund manager bias in the stock selection process. The NFO, which was launched on 20 May, will remain open till 3 June. Since the fund is open ended, you can also invest after the NFO closes. The fund will be benchmarked to BSE 200 (Total Returns Index).
The fund will eliminate companies which are highly leveraged, highly volatile, where management incentives are misaligned or where there is poor earnings quality. The fund will also apply quality, growth and value parameters such as earnings growth, return on equity (RoE) and dividend yield to narrow down the list. The fund will restrict exposures to single stocks and single sectors at 10% of assets.
It will follow semi-annual rebalancing to minimize turnover (which increases costs and eats into returns).
The fund house has back-tested its model. The results indicate that the fund will do well in some types of markets and underperform in others (for example, it will underperform in overheating markets).
Livemint recommends wait and watch. The article is worth reading for the common critiques of quant funds that it offers.
I understand the basic differences in the growth and dividend reinvestment MFs but I don't understand the tax implications of the dividend reinvestment. If no taxes are being attracted on dividend reinvestment (the case would be the same with growth), isn't it better to buy more units rather than have the NAV value go up since the CAGR growth in terms of the fund value is the same? Or am I missing something?
I've been holding tata motors for some years now and its dropped almost 60% in that time. The fundamentals are screwed up, negative ROCE, Low revenue growth etc but the promoter holding seems steady ans they keep expanding well into the passenger segment while the commercial vehicle segment is supposed to do well also. What is a good steo to take, hold or sell?
An insightful interview with Professor Aswath Damodaran, author of several widely-used text books on Valuation, Corporate Finance and Investment Management.
Contains his views on some of the most passionately debated topics in investing today, from the rise of indexing and what it means for market efficiency, to the origins and theoretical underpinnings of factor investing, to why investors ignore momentum at their peril.
Although he talks about the US market - there are lessons for all investors. I feel all of us can learn a lot from his views about the ‘Equity Risk Premium’ or ‘stocks always win in the long run’ theory.