Thursday, 26 December 2013

BOGEY

Today's word: BOGEY
Theme for this fortnight: MUTUAL FUNDS


 
The benchmark return that a portfolio or fund manager is compared against, such as the S&P 500. More generally, the target return than an investor is aiming for.
 


Wednesday, 25 December 2013

FOUL WEATHER FUND

Today's word: FOUL WEATHER FUND
Theme for this fortnight: MUTUAL FUNDS


 
A type of mutual fund that performs well or even better than the market as a whole in weak market conditions. The goal of these types of funds is to limit or benefit from downward market effects. Often these funds invest in stocks with lower volatility.
 

Tuesday, 24 December 2013

DISTRIBUTION WATERFALL

Today's word: DISTRIBUTION WATERFALL
Theme for this fortnight: MUTUAL FUNDS

Hierarchy of distribution of an equity fund. This specifies the order of distribution to investors when their investments are sold. For instance, general investors can only receive their share of the fund after preferred investors are given their corresponding shares.
 

Friday, 20 December 2013

COUNTRY BASKET

Today's word: COUNTRY BASKET
Theme for this fortnight: MUTUAL FUNDS
Exchange traded fund composed of stocks in foreign countries combined into one security. A country basket allows an investor to own multiple stocks in his or her portfolio without being subject to multiple transaction costs and/or multiple securities.
 

Sunday, 15 December 2013

ELEPHANT

Today's word: ELEPHANT
Theme for this fortnight: MUTUAL FUNDS

 
Slang for a large institutional investor such as a mutual fund or pension fund. The term comes from the idea that these investors move huge amounts of money into and out of assets and sectors in a herd-like fashion, having a large impact on security prices when they move.
 

Friday, 13 December 2013

CLONE FUND

Today's word: CLONE FUND
Theme for this fortnight: MUTUAL FUNDS

 
A mutual fund started by another mutual fund as a result of the parent fund's large growth and management's assessment that the parent is limited as to the investments it can make. For example, a very large fund would generally be unable to establish investment positions in small or new corporations. Thus, a new, smaller fund with the same goals as the older, bigger fund is started. Although the parent fund and clone fund have the same investment objectives, they purchase different securities and generally operate under different managements.
 

Sunday, 8 December 2013

DELTA ONE

Today's word: DELTA ONE
Theme for this fortnight: MUTUAL FUNDS


 
A category of derivatives for which a change in the value of the underlying asset results in a change of the same, or nearly the same, proportion in the value of the derivative. Some examples of delta one derivatives include equity swaps, forwards, futures, and exchange-traded funds (ETF's).
 

Saturday, 7 December 2013

BEAR FUNDS

Today's word: BEAR FUNDS
Theme for this fortnight: MUTUAL FUNDS

Funds that utilize short-selling methods to quickly make profits during a bear or declining market. These funds are usually made up of hedge funds and mutual funds. They are actively managed, and short individual stocks or inverse-index funds that short entire indexes. Bear funds revolve around the idea of playing with both sides of the market so that gains in the bear fund offset losses elsewhere in an investor's portfolio. Bear funds are considered tactical investments, but usually end up being lousy long-term investments for investors.
 

Saturday, 30 November 2013

DIVIDEND CLAWBACK

Today's word: DIVIDEND CLAWBACK
Theme for this fortnight: DIVIDENDS

An arrangement under which those financing a project agree to contribute, as equity, any prior dividends received from the project to cover any cash shortages.
When there is no cash shortfall, those investors who provided funding are able to keep their dividends. A dividend clawback arrangement provides incentive for a project to remain on budget so that investors do not have to return dividends received prior to a cost overrun.
 

Monday, 25 November 2013

DIVIDEND DRAG

Today's word: DIVIDEND DRAG
Theme for this fortnight: DIVIDENDS


A disadvantage of the dividend structure of unit trust exchange-traded funds (ETFs) that results from SEC rules that stipulate that passively managed ETFs cannot reinvest dividends back into the portfolio. ETFs must instead accumulate the dividends in cash and pay them to holders at periodic intervals. During periods of rising markets, the dividends would be better served being reinvested in securities rather than held in cash. This leads the ETF to lag a portfolio that would be able to reinvest.



Sunday, 24 November 2013

SYNTHETIC DIVIDEND

Today's word: SYNTHETIC DIVIDEND
Theme for this fortnight: DIVIDENDS




A type of incoming cash flow that an investor creates with certain financial securities to produce a dividend-like payment stream that resembles the periodic cash receipts from a dividend-paying stock.
For example, suppose an investor owns shares in a company that does not pay a quarterly dividend. In order to create a cash-flow stream from the shares, the investor could write covered call options on the underlying stock. By doing so, he or she would receive the option premiums as an incoming cash flow, but would be obligated to sell the shares to the option-buyer should that person choose to exercise the options.
This situation, while limiting the potential price appreciation the investor can realize from his or her own shares, creates a dividend-like cash flow stream.
   
 

Thursday, 21 November 2013

SPILLOVER DIVIDEND

Today's word: SPILLOVER DIVIDEND
Theme for this fortnight: DIVIDENDS   

A type of dividend in which the payment year and the taxable year occur at different times. Most often, this occurs when the dividend has been declared near the end of the calender year (during the fourth quarter), but the actual distribution date of the dividend payment does not occur until the first quarter of the following year.
 

Tuesday, 19 November 2013

LOOK THRU

Today's word: LOOK THRU
Theme for this fortnight: DIVIDENDS

 
A complex provision defined in section 954(c)(6) of the U.S. Internal Revenue Code that lowered taxes for many U.S. multinational companies. The look thru rule gave qualifying U.S. multinationals a lower global effective tax rate by providing a special accounting method for calculating taxes owed on income from controlled foreign corporations. The rule was originally effective from Jan. 1, 2006 through Dec. 31, 2009, but the 2010 Tax Relief Act extended the rule through Dec. 31, 2011.

Saturday, 16 November 2013

DIVIDEND PUZZLE

Today's word: DIVIDEND PUZZLE
Theme for this fortnight: DIVIDENDS

The question concerning why companies pay dividends. According to some theorists, investors should not need dividends as an incentive to purchase stock in a company. Thus the question of why some firms pay dividends is a puzzle.
 

Wednesday, 13 November 2013

HOMEMADE DIVIDEND

Today's word: HOMEMADE DIVIDEND
Theme for this fortnight: DIVIDENDS

A form of investment income that comes from the sale of a portion of shares held by a shareholder. This differs from dividends that shareholders receive from a company according to the number of shares the shareholder has.
The existence of homemade dividends is the reason some financial analysts believe that looking at a companies dividend policy is not important. If investors desires an income stream they will either sell their shares when they want the income or they will invest in other income-generating assets.

Tuesday, 12 November 2013

CUTTING A MELON

Today's word:  CUTTING A MELON
Theme for this fortnight: DIVIDENDS

A slang term used to describe when a board of directors declares an additional dividend in addition to the regular distribution. The additional dividend can be in the form of cash, stock or property. The board of directors (BOD) is responsible for deciding how it will share the company's earnings with shareholders in the form of dividends. In most cases, dividends are issued in accordance to a set policy and are paid on preset schedule, such as annually or quarterly.
                The BOD is cutting a melon when the company has earned additional income, this is the melon and distributes a portion of it to shareholders. The bigger the melon, the sweeter it tastes to investors!
 

Sunday, 10 November 2013

VRITTAM (03 NOV 2013 - 09 NOV 2013)

THE WEEKLY FINANCIAL NEWS 

Twitter stock slipped 7.24 percent to close at $41.64 -- a day after a stunning gain of 72.69 percent on its first day of trading on the New York Stock Exchange after a $1.8 billion initial public offering. Some analysts said the debut was helped in part by a shortage of Twitter stock, and that most of the 70 million shares were reserved by the underwriters. 


Twitter's market capitalization, based on its stock price, fell back to around $22.6 billion after topping $24 billion on Thursday.

How's QE tapering a bad thing for Indian markets? Well, it would dry up liquidity, which means FIIs would be pulling out, leaving investors run for cover. However, analysts are of the view that even if the US tapers $85-billion-a-month bond purchase programme, it'll be to the tune of $10-20 billion, something that does not contribute to drying up of liquidity from the market. Amidst chances of QE tapering next year, big domestic event to unfold would be general election results, which may give big sentimental boost to the markets on a favourable outcome.

It is not clear if Zomato will live happily ever after but, right now, this company, which lists restaurants city- and locality wise and counts on restaurant advertisements for its revenues, is in the midst of a fairy tale. In five years' time, its founders, a couple of young graduates from the Indian Institute of Technology, Delhi, have created a company valued at Rs900 crore. It has produced huge value for the entrepreneurs and the fund that backed them and created 600-odd jobs. It is expanding to other geographies at a breakneck speed. And it has created this value on the basis of a service of rising utility to urbanising, ever more prosperous Indians. 

Zomato, which lists restaurants city- and locality wise and counts on restaurant advertisements for revenues, is currently valued at Rs900 cr.

Standard & Poor's today affirmed 'BBB-' long-term and 'A-3' short-term unsolicitedsovereign credit ratings on India, keeping outlook on long-term rating negative.The news came as a grinch on Dalal Street, with the Sensex losing more than 300 points from its intraday high.The markets may have reacted negatively to the news, and some experts may start to raise red flags on India's long-term story, but then there's another take on it.



The S&P’s negative outlook is marginally positive, as the rating agency has almost ruled out a downgrade before the elections

In times of unpredictability, though with a positive standpoint, here's a bad news. The rate of interest that you pay for your home and auto loans is now a tad higher. The State Bank of IndiaBSE -3.40 % (SBI) today raised its base rate by 20 basis points to 10% per annum from the earlier figure of 9.8%.HDFC Bank hiked its base rate by 20 basis points to 10 per cent. This automatically translates into a hike in consumer loans, though earlier banks used to come out with a separate release announcing the rate hike for consumers. Other banks are likely to follow suit. 

India is likely to become the third largest economy by 2030 behind China and the USA, a Standard Chartered report said while projecting that the world is in the midst of an economic "super-cycle". A super-cycle is a period of historically high global growth, lasting a generation or more, driven by opening up of new markets, increasing trade, high rates of investment, urbanisation and technological innovation. India is likely to be the third largest economy with a GDP size of USD 15 trillion by 2030, says Standard Chartered's Super-Cycle Report. China with a GDP of USD 53.8 trillion is projected as the biggest economy, followed by the US at USD 38.5 trillion. 

Benchmark indices have failed to gather momentum at higher levels and have consolidated in a narrow range so far in this week. The 50-share Nifty has slipped below its psychological level of 6,300, whileSensex struggled to hold onto 21,000 levels. According to analysts, markets are consolidating at this point in time and there is a 50-50 chance that the market rally is over.
Most analysts see levels of 6,080 on the Nifty as a make-or-break for the index.


 
EXPERT VIEW

By Saurabh Tripathi 

Unless government musters the will to push through some bold reforms, they could lose value irredeemably.

A SNEAK PEAK INTO THE WORLD OF FINANCE

To know how economic indicators can affect your financial life,click on the slide show below



Monday, 4 November 2013

BIRD IN HAND

Today's word:  BIRD IN HAND
Theme for this fortnight: DIVIDENDS
 
The belief that investors prefer stocks that are currently paying dividends to stocks whose value may grow through capital appreciation. The belief is based on the assumption that most people prefer certainty (dividends) to speculation (capital appreciation).
 

Thursday, 31 October 2013

PIPELINE

Today's word:  PIPELINE
Theme for this fortnight: VENTURE CAPITAL 

An investment company whose purpose is to collect investment funds from a pool of individual investors and invest them in financial securities. It is the flow of upcoming underwriting deals.
 

Wednesday, 30 October 2013

INCUBATOR

Today's word:  INCUBATOR
Theme for this fortnight: VENTURE CAPITAL 

A firm engaged in the business of fostering early-stage companies through the developmental phases until such time as the company has sufficient financial, human and physical resources to function on its own.
                The firm can be either a non-profit or a for-profit entity, and it can provide assistance via any or all of the following methods: 1. access to financial capital through relationships with financial partners, 2. access to experienced business consultants and management-level executives, 3. access to physical location space and business hardware or software and 5. access to informational and research resources via relationships with local universities and government entities.
 

Monday, 28 October 2013

VRITTAM (20 OCT 2013 - 26 OCT 2013)

THE WEEKLY FINANCIAL NEWS

Festive season: Discounts, freebies galore as cos try to woo consumers

As the festive season sales peaks, consumers are spoilt for choices as companies and service providers flood the market with discount and freebies. Consumer durables makers have come with offers as assured gifts, cash backs and special packages as free installation, discount on annual maintenance cost, free insurance etc to boost up their sales festive season. South Korean major LG is storming the market with offers like free 3D Blue Ray Home Theater with selected high end televisions, free LED TV 24 and 22 inch, with the purchase of designated high end television models and an assured Magic Motion Remote with the purchase of selected smart TV models.

 

Consumer durables makers have come with offers as assured gifts, cash backs and special packages as free installation etc to boost up their sales festive season.

India to build $300 billion forex chest to counter a slimmer QE figure

India hopes to have a $300-billion war chest ready by the end of the year as a frontline defence against tapering by the US Federal Reserve, which is now expected to begin sometime early next year. The finance ministry expects $30 billion to be added to its foreign exchange reserves, currently estimated at $251 billion, by the end of November.

Post offices, cooperative banks the next Amul success story in banking?

When there are nearly 96,000 co-operative banks spread over thousands of villages and post offices located in 2.38 lakh panchayats, is there a need for a fresh set of institutions to harness the savings of people in rural India? This may be the turn of financial services to have its own Amul, the milk co-operative that has delivered prosperity to millions of rural folk, and proved that it could still be a business model.

US QE tapering: FM P Chidambaram wants regulators to take preventive steps

Finance Minister P Chidambaram today asked financial sector regulators, including RBI and Sebi, to take preventive steps to neutralise the impact of US Federal Reserve's monetary stimulus tapering that is likely early next year. Chidambaram, according to sources, asked regulators at FSDC meeting to work out preventive measures. The Financial Stability and Development Council (FSDC) members include heads of regulatory bodies like RBI, Sebi and IRDA. 

Tata-Singapore Airlines aviation venture gets FIPB nod without any riders

The Foreign Investment Promotion Board (FIPB) has approved Tata group's proposal to set up a full service airline in partnership with Singapore Airlines, paving the runway for the high-profile aviation venture to take to the skies in the months ahead. The board has not imposed any rider on the venture. All departments and ministries had cleared the proposal. An earlier proposal by the Tata group to set up a low-cost airline together with Malaysia's Air Asia had encountered some problems a few months ago. 

Final costs of US shutdown could tally in billions

The government shutdown that ended this week will cost the U.S. economy several billion dollars, according to estimates by economic research firms. But the affiliated damage - like the undermining of consumer and business confidence - will be far greater, economists said, especially combined with the financial effects of the near-breach of the country's statutory debt ceiling. When the federal government shut down Oct. 1, permit offices across the country stopped accepting fees, contractors stopped receiving checks and research projects were put on hold. Such disruptions come with a price tag, although it will be small in the context of the $3.5 trillion the federal government spends every year.

Income Tax department puts HRA exemption under scanner

As if the additional information required in tax returns was not enough, there's more bad news for tax evaders. Salaried taxpayers who claim HRA exemption will now have to report their landlord's PAN if the total rent in a year exceeds Rs 1 lakh. "In case the landlord does not have a PAN, he must submit a declaration to this effect from the landlord along with the name and address of the landlord should be filed by the employee," says a circular issued by the Central Board of Direct Taxes last week.Till now, if the total rent paid was less than Rs 15,000 a month, there was no need to submit the landlord's PAN details. The new rule effectively reduces this limit to Rs 8,333 a month.

Special RBI measures got India $ 9.6 bn in forex: P Chidambaram

India has received over nine billion dollars from two foreign schemes, which were announced in September to attract foreign funds and help the country to bridge the widening current account deficit(CAD). Soon after taking over as RBI Governor on September 4, Raghuram Rajan had announced opening of a swap window facility to encourage banks to lure NRI funds. 
Under the facility, banks are permitted to swap fresh FCNR(B) dollar funds, mobilised for a minimum tenor of three years, at a fixed rate of 3.5 per cent per annum for the tenor of the deposit.
 Also, he had relaxed norms for banks and allowed them to raise capital abroad to the tune of 100 per cent of their Tier I (equity) capital. tic staff

India's mobile economy to contribute $400 billion to GDP by 2020

Mobile economy in India, world's second largest market by subscribers, will contribute around USD 400 billion to the country's GDP and create 4.1 million jobs by 2020, a report by the global mobile operators industry body GSMA said. Mobile economy will also lead to investments of USD 9 billion in telecom infrastructure, said the 'Mobile Economy India 2013' report prepared in collaboration with consulting firm Boston Consulting Group. 

Government for minimum 6 pc of vehicle price as registration tax

The government has favoured a levy of a minimum 6 per cent of the sale price of the vehicle as a lifetime tax by various states. Ministry of Road Transport and Highways recommended all the states should levy a lifetime tax at floor rate of 6 per cent of the sale price of the 2-wheelers, cars and LMVs ( light motor vehicles).

EXPERT VIEW
Gold coin not a gift option anymore this Diwali
By Sutanuka Ghosal, ET Bureau

 

A SNEAK PEAK INTO THE WORLD OF FINANCE

To know the five mistakes people make while setting financial goals, click on the slideshow below.