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| Transcript of Chat with Mr.Vikas Sachdeva,(Head - Sales and Marketing,Birla Sunlife Mutual Fund) - Birla Cash Plus declares Dividend. Check out the advantages of BCP dividend - (25/03/2002) |
[04:36:28 PM] => Myiris: Welcome to the live chat session Mr Sachdeva
[04:37:28 PM] => Myiris: Our guest today is Mr. Vikas Sachdeva, Head - Sales and Marketing, Birla Sunlife Mutual Fund.
[04:39:16 PM] => Myiris: Mr. Vikas Sachdeva is the Head - Sales and Marketing, Birla Sunlife Mutual Fund.At the time of this conversation / chat, Mr. Sachdeva may or may not have positions in the stocks mentioned below, although holdings may change at any time. The views expressed by Mr. Sachdeva is based upon information that he considers reliable, but does not represent that it is accurate or complete, and it should not be relied upon as such. Mr. Sachdeva, his company and its affiliates, officers, directors, partners, and employees may, from time to time, have long or short positions in, buy or sell and deal as principal in the securities, or derivatives thereof, of companies mentioned herein and may take positions inconsistent with the views expressed.
[04:40:13 PM] => None of the information contained herein constitutes, or is intended to constitute a recommendation of any particular security or trading strategy or a determination that any security or trading strategy is suitable for any specific person. To the extent any of the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. You should consult with and rely upon your own advisors whether and how to use such information in making any investment decision.
[04:40:55 PM] => Lastly the views expressed by Mr. Sachdeva have no bearing whatsoever with that of IRIS Ltd. IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website www.myiris.com.
[04:42:06 PM] => Myiris: Welcome to the live chat session Mr Sachdeva
[04:42:41 PM] => Priya: Post budget does the investor really have any options since Mutual Funds have become unattractive?
[04:43:56 PM] => VS:On the contrary, MFs have become even more dependable. There are hardly any avenues which can give you safety, liquidity, diversification of portfolio and returns all in one package. Most investment options offer one or more but not all.
[04:44:40 PM] => Besides, with features like Regular Withdrawal Plans, Systematic Investment Plans and Systematic Transfer plans, MFs have shed the skin of just being a tax efficient instrument to being a very efficient one
[04:46:32 PM] => Sapna: Please tell us about the salient features of Birla Cash Plus?
[04:48:25 PM] => VS: Birla Cash Plus (BCP) was the first liquid scheme in the country. It has two major features � capital preservation and liquidity. The composition of the portfolio as well as the average maturity make sure that there is no risk of capital erosion in the fund. Which means that if you have short term inflows (Anything from 2 to 30 days), BCP can serve as an effective parking medium. Also, liquidity is on call � you get your cheque/ credit in your account the next day.
[04:51:59 PM] => Net net, instead of letting your money lie idle in a savings/ current account, you can invest in a fund like BCP.
[04:54:29 PM] => Prabhakar: Interest rates have been cut again. How will senior citizens like me survive? What would be your advise to senior citizens? Please note that we are more concerned with capital preservation than anything else.
[04:58:19 PM] => VS: Mr Prabhakar, there are still investment avenues which are extremely tax efficient and competitive as well.
[05:05:32 PM] => But before that, you will have to understand that there is no investment avenue which is risk free and guarantees capital preservation. What is definitely acceptable is the risk control aspect. The fundamental rule in finance is �Control the risks and the returns will follow�
[05:05:53 PM] => Having said that, I would like to introduce you to the concept of regular withdrawal plans.(RWPs).
[05:06:22 PM] => Investors can fulfill their regular needs by giving standard instructions about the amount to be withdrawn every month. A fixed sum is paid to the investor through Post dated cheques (Upto 75% of the principal invested) - the remaining part of the money continues to earn regular returns.
[05:06:36 PM] => You can opt for 6 or 12 cheques per annum, depending on your cash flow requirements.
[05:07:56 PM] => There is no TDS on withdrawals. Besides, if you go through our website, www.birlasunlifeamc.com you will find that this plan is extremely tax efficient � in fact even more tax efficient than conventional dividend plans
[05:08:42 PM] => You can avail of this option in our income plans (Birla Income Plus), Gilt Plans (Birla Gilt Plus) or in our monthly Income plan (Birla MIP). My personal suggestion to you would be to go in for Birla MIP.
[05:09:52 PM] => This is like a conventional income fund with the option of boosting returns through controlled dosages of Equity investments (from 0% to 15%). The dividend payout from this plan last year has been in excess of 11% (In the hands of the investor). More importantly, it has a consistent track record of dividend payout since inception.
[05:11:27 PM] => Sachin: Sir did you find anything attractive in the budget (from the MF industry viewpoint)?
[05:12:08 PM] => VS: Definitely. There are two major positives for the industry.
[05:13:12 PM] => The first being that Mutual Funds are going to be viewed for their pluses on safety, liquidity, diversification of portfolios and risk control rather than just plain vanilla tax efficient avenues. Which effectively means that it is going to be an apple-to-apple comparison of pre-tax returns. This is bound to make MF performance improve further
[05:13:43 PM] => Secondly, a very practical aspect is that there are hardly any good investment avenues left. With the budget making most investment avenues less attractive, MFs stand to gain a lot by investment options like Regular Withdrawal Plans, Systematic transfer plans etc.
[05:14:03 PM] => Kumar: How one should lessen the tax with good investment portfolio for those who is in the 30% tax bracket?
[05:16:50 PM] => VS: Answer is the same as for Mr Prabhakar above
[05:17:00 PM] => KB: What are really the advantages of investing in Birla Cash Plus compared to similar schemes of other funds?
[05:17:59 PM] => VS: BCP as a scheme has the longest track record because of it�s pioneering status. It has conventional benefits like 24 hour liquidity and capital preservation benefits.
[05:18:16 PM] => Over and above that, BCP is available for you through standing instructions to your bankers. This is available through our tieups with sis banks viz HDFC Bank, ICICI Bank, Standard Chartered Grindlays Bank, Citibank, Deutsche Bank and HSBC Bank across the country.
[05:21:48 PM] => More importantly, BCP has just declared a dividend of 25% under it�s dividend plan. This is an excellent, and probably the only opportunity this fiscal to book a tax free income in your books. In the event that the investment is carried forward next fiscal, there is an opportunity to gain stable returns as well as book a short term capital loss
[05:22:02 PM] => Prabhu: Do you predict interest rates falling further next fiscal?
[05:22:22 PM] => VS: Not really. With credit offtake showing visible signs of picking up, the downward pressure on interest rates would be nominal. Having said that, because of the RBI�s commitment to keep interest rates low, we might see a period of benign interest rates for the next one to two quarters
[05:22:32 PM] => Besides, with the US Economy also turning around, the Fed�s signals would be equally critical for the interest rate movement here as well.
[05:23:31 PM] => Kumar: Should one come out of mutual funds and invest directly in the stock market?
[05:23:46 PM] => VS: This is a question which investors have asked the MF industry from time immemorial !! Our answer still remains the same. The MFs offer you investments across a basket of stocks across various sectors. These stocks are selected after painstaking research and monitored even more rigorously.
[05:23:58 PM] => More importantly, to buy each of these stocks, the unit cost is pretty high. In an MF, you can participate in growth stories for a sum which as low as Rs 5000 !! Not to mention the benefits of size a MF offers as compared to direct investments.
[05:24:53 PM] => Also, there are certain tax benefits which are available only to MFs ! As an MF, we do not get taxed on each trade done, the way you would be. Not to mention, no TDS in the growth plans as well.
[05:25:33 PM] => Finally, the clinching analogy is that self-medication helps you off and on. You need to go to a specialist if you have to take care of your health. Why not look at taking care of your wealth the same way ??!!
[05:26:08 PM] => Neeraj: What are the specific budget provisions regarding taxation that will impact the fixed income funds investor?
[05:26:35 PM] => VS: As is evident, the taxes free status of dividends will not be there, post this fiscal. We have made a ready reckoner, if you may, of the status each investor would have post March 31st 2002 as well as inputs on what could be done. You could e-mail me on [email protected] and I would be happy to give you this information. However, please make sure your Chartered accountant/ Financial advisor is consulted before you make an investment decision.
[05:27:00 PM] => Niranjan: Please advise us the tax saving opportunities for people who fall in the income net between Rs 1 lakhs to Rs 1.50 lakhs?
[05:27:26 PM] => VS:There are two opportunities you can avail of next fiscal. These are:
[05:28:14 PM] => A] Sec 88 benefits. You can invest in Sec 88 investment avenues and avail of a 20% rebate in this bracket. Birla Equity Plan (BEP), which is an Equity Linked Savings Scheme is one in which you can avail of this benefit. This avenue will not only help you get a tax rebate, but will also help you participate in the growth story which only equity offers. You can access more details on BEP on our website www.birlasunlifeamc.com
[05:28:33 PM] => B] Regular withdrawal Plans : As per the discussions above. Details also available on the website
[05:28:51 PM] => Ashok: Does Birla MF have any plans to launch pension products? If so when?
[05:29:57 PM] => VS: We are looking at the opportunities available very closely. At the moment, we have a clutch of products we are looking at launching in the near future - a pension fund is one of those. We shall keep you posted through our website
[05:30:15 PM] => Shradha: After dividend is going to be taxed at the hand of investor, what has been the redemption pressures that Birla MF has faced?
[05:30:46 PM] => VS: March is typically a month which sees a lot of outflows and inflows in the MF industry. To that extent we have seen a fair bit of movement. However, there are no redemption obligations which would be perceived as pressure
[05:31:07 PM] => Having said that, we are witnessing inflows because of the declaration of a 25% dividend in BCP.
[05:31:43 PM] => In terms of investment options, investors are steering towards the growth plans of Fixed income schemes like Birla Cash Plus and Birla Bond Plus (Our short term plan). With the paucity of other investment avenues, most institutional investors would continue parking their money with us
[05:32:09 PM] => Naik: Birla Cash plus declares dividend. Congratulations. Now tell us how you managed this? I mean what did you know about the market that other MFs did�nt know?
[05:32:38 PM] => VS: BCP is a money market scheme which invests in fixed income securities and pays out regular dividends. Over the last few years, it has managed to accrue a sizeable amount of surpluses which is being distributed now. Why are we doing that ? Simply because, post this fiscal, receipt of dividends will no longer be as attractive.
[05:32:56 PM] => We disclose our entire portfolio on a monthly basis. Having said that, once in a while, it is good to find someone with a pungent sense of humour
[05:33:27 PM] => Amit: Congratulations on declaring a special dividend in Birla Cash Plus. Now tell us whether the fund or the investor will be paying tax on this dividend?
[05:34:44 PM] => VS: The dividend is tax free in the hands of the investor. Tax @ 10.2% will be taken out of the NAV. That means that since BCP is declaring a dividend of 25%, the investor will receive a tax free income of 22.69% in his hands
[05:35:02 PM] => Menoka: Does investment in Birla Cash plus carry any money market risk?
[05:35:36 PM] => VS: The average maturity of the portfolio of BCP is around 80 days. There are no investments in G-Secs. There are negligible investments beyond 6 months which means that there is no mark to market risk. Hence, technically speaking, in the above context, BCP is risk free.
[05:35:48 PM] => One might also want to note that the investment pattern is by and large the same across various time spans
[05:36:27 PM] => Patil: What is the total corpus of Birla Cash Plus?
[05:37:40 PM] => VS: The corpus of BCP is around Rs 925 crores (As of 28th February 2002)
[05:39:34 PM] => Bhaskar: What will be the record date for determining the unit holders eligible for dividend?
[05:41:18 PM] => VS: The record date for the special dividend is 28th March 2002. We would expect cheques to reach us by 10:30 am since there would be no working days in the week after that
[05:42:03 PM] => Swetha: How much inflow has BCP received since its launch?
[05:43:04 PM] => VS: BCP has seen gross inflows of over Rs 4500 crores since it�s launch in June 1997
[05:43:54 PM] => Ulhas: What are the instruments in which Birla Cash Plus normally parks its investments?
[05:46:06 PM] => VS: The instruments are PSU/ FI Bonds/ Bank instruments, Corporate Debt, Money market investments, Securitised Debt and Call. You can see the exact proportion of these investments on our website.
[05:46:55 PM] => Dinesh: Small investors seem to have quit equity markets in a hurry? Have they reacted in the right way? What is your advice to them?
[05:49:06 PM] => VS: Any investor should look at the systematic investment plans we offer. These plans allow an investor to invest small amounts of money in a disciplined, regular fashion.
[05:50:00 PM] => It is a known fact that time, not timing matters in equity investments. Such an investment, over a period of time will smoothen out the peaks and troughs of the market to create wealth for the investor
[05:50:56 PM] => An example comes to my mind. Recent studies have proved that the difference between an investor who had come during a bullish phase and an investor who had come during a bearish phase and have invested systematically over a period of 10 years have inconsequential differences in the overall returns to them. I can send you that study if you e-mail me on [email protected]
[05:51:31 PM] => Business mind: Does Birla MF plan to launch any new products in the near future?
[05:52:17 PM] => VS: Already answered
[05:52:44 PM] => Alpana: What do you think about the over exposure to the pharma sector by Birla Advantage fund?
[05:53:35 PM] => VS: I beg to differ. Birla Advantage Fund has invested in 4 top class pharma companies viz Dr Reddy�s, Ranbaxy Labs, Pfizer and Cipla Ltd. Together, these 4 companies account for 23% of the corpus. Individually, none of these stocks are more than 10% of the corpus. In fact, DRL, which is the no.1 scrip in the fund is only 9.17% of the fund !
[05:54:49 PM] => Also, please realize that we follow a bottom up stock picking approach. We believe in the credentials of a Company, its� products, it�s management on a stand alone basis. The industry analysis and economic variables come into the picture much after the Company is okayed by us.
[05:55:39 PM] => Neyha: What is the future of the Indian Mutual fund industry?
[05:56:08 PM] => VS: Simple Answer. Very Bright !
[05:56:52 PM] => If you look at the growth of the US MF industry, it started of a decade and a half ago by being 10% of the banking industry. The scorching pace of technological development of the banking industry has ensured that the MF industry could piggy ride aggressively. Today, the MF industry is 110% of the banking industry.
[05:57:16 PM] => I see a similar pattern emerging here as well
[05:57:46 PM] => Brian Pinto: What factors should the investors keep in mind while selecting distributors?
[05:58:39 PM] => VS: First and foremost, a distributor should be AMFI certified. Being one of the pioneering open end funds in the industry, we have always stressed on the quality of intermediaries.
[05:59:41 PM] => In fact, Mr SK Mitra, our Managing director was a founder member of AMFI and a passionate advocator of the fact that there should be a minimum threshold level of understanding among distributors
[06:00:01 PM] => Quality of advice and track record of the intermediary are two other factors you should be careful about.
[06:01:37 PM] => Myiris : That�s the end of the chat session for today
[06:02:04 PM] => Myiris : We thank you all for logging on
[06:02:21 PM] => Myiris : Our thanks to Mr Sachdeva for sparing time to come on the chat session
[06:02:34 PM] => Myiris : We�ll bring you more on Myiris chat masala
[06:03:45 PM] => Myiris : Till then its bye from us
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