Mutual Funds Updates

The Union Budget 2024 has introduced changes that make Gold Exchange-Traded Funds (ETFs) more attractive compared to Gold Mutual Funds. Under the new tax regime, profits from Gold ETFs held for over a year will be taxed at a long-term capital gains rate of 12.5%. Previously, gains were taxed according to individual slab rates regardless of the holding period. This change positions Gold ETFs as a more tax-efficient investment option starting April 1, 2025. Gold ETFs, such as Nippon India ETF Gold BeES (Gold BeES), are passive mutual funds that invest in standard gold bullion of 99.5% purity and closely track domestic gold prices. In contrast, Gold Mutual Funds are fund-of-funds (FoFs) that invest primarily in gold ETFs. Currently, there are 17 Gold ETFs available, with Gold BeES standing out due to its high liquidity and low tracking error. Customs Duty Reduction Another significant development from the Budget is the reduction in customs duty on gold and silver from 10% to 6%, and the c...

In the Union Budget 2024, the Indian government has reinforced its commitment to Mission Viksit Bharat, aiming to lay a strong foundation for India's development goals by 2047. Prime Minister Narendra Modi emphasized that this Budget will guide the government's agenda for the next five years and support the vision of a developed India. Fiscal Performance and Projections The actual fiscal deficit for 2023-24 was recorded at 5.6% of GDP, slightly better than the 5.8% anticipated in the interim Budget earlier in the year. This lower-than-expected deficit has allowed the government to reduce its borrowing for the current fiscal year, bringing the deficit projection down to 4.9%. Tax Revenue and Reforms Tax collections have exceeded expectations, with gross collections rising by 13.5% of nominal GDP, largely driven by a 9.5% increase in personal income taxes. The government has further expanded tax slabs by Rs 1 lakh to benefit investors, continuing its trend of reducing exemptions ...

Mutual funds that have struggled in recent years are now making strategic moves to boost their performance. By adding stocks with potential for future gains, these funds aim to turn around their fortunes. Here’s a look at some of the notable stocks newly included by funds in the bottom quintile based on 10-year returns. Focus on Revitalization Funds in the bottom quintile have been reassessing their portfolios to find opportunities for improvement. This analysis includes funds across various categories such as large-cap, large & mid-cap, mid-cap, multi-cap, flexi-cap, and small-cap. The study highlights the additions made by underperforming funds like UTI Flexi Cap, Nippon India Vision, Franklin India Bluechip, DSP Midcap, Sundaram Mid Cap, and Aditya Birla SL Small Cap. Key Stock Additions Oil & Natural Gas Corporation (ONGC) Added by: Nippon India Vision, Union Flexi Cap, and others Number of funds adding: 5 Prestige Estates Projects Added by: Union Small Cap, Sundaram Mid Ca...

The Quant Small Cap Fund, with assets under management (AUM) of Rs 21,243 crore, is under scrutiny following recent investigations by the Securities and Exchange Board of India (SEBI). The focus is on whether the fund can handle potential redemption pressures effectively. Liquidity Analysis Recent stress tests reveal that the Quant Small Cap Fund would need about 28 days to liquidate 50% of its portfolio and approximately 14 days to sell 25%. This performance indicates a relatively strong liquidity position compared to peers. For context, SBI Small Cap Fund, which has assets of Rs 28,365 crore, would take 49 days to sell half of its portfolio and 25 days to sell a quarter. Diversification and Large-Cap Exposure Quant Small Cap Fund stands out for its diversification. Its top 10 investors account for only 1.71% of the total fund, suggesting a broad investor base. Additionally, the fund has a significant 28.04% exposure to large-cap stocks, much higher than the industry average of around...

In April 2024, mutual funds significantly increased their holdings in Kotak Mahindra Bank, purchasing shares worth over Rs 8,100 crore. This activity followed a substantial sell-off triggered by the Reserve Bank of India's (RBI) ban on the bank's new customer onboarding via online and mobile platforms, along with a suspension of new credit card issuances. During April, 39 mutual funds collectively acquired approximately 4.62 crore shares of Kotak Mahindra Bank, a notable rise from over 96 lakh shares bought in the previous quarter. This buying spree marked the ninth consecutive month of mutual fund investment in the bank. The RBI's action on April 29 led to a sharp drop in the bank's stock, which fell more than 11% in a single day, wiping out over Rs 40,000 crore in market capitalization. The stock saw a 9% decline in April and has dropped over 15% year-to-date in 2024, contrasting with a 4.4% gain in 2023. As of April, mutual funds held around 30.24 crore shares of Kot...

The Nifty Realty index has delivered impressive returns of 110% over the past year, significantly outperforming other equity indices. This surge is attributed to rising real estate prices, increasing demand, and favorable conditions for realty companies. Deepak Jasani, Head of Retail Research at HDFC Securities, highlights that stable interest rates and growing affordability have boosted residential property sales. Government policies, including up to 100% FDI for townships and the PM Awas Yojana, have further supported the sector. Despite the strong performance, Jasani notes that the demand for office and residential spaces is still unmet, which might lead to a moderation in the index's pace and potential short-term corrections. Stocks Gaining Traction Among Fund Managers Here are the real estate stocks that fund managers have increasingly added to their portfolios in the past three months, according to data as of April 30, 2024: Prestige Estates Projects Active Equity Schemes Add...