P/E - A theme for Asset Allocation

P/E as a theme for asset allocation is something attempted for a long time ever since capital markets got functioning.

In India there used to be three MFs already offering P/E as a declared asset allocation theme. They are

1. F T india P E ratio Fund
2. ICICI Pru dynamic Equity Fund
3. Tata equity P/E
   

Now the league is joined byPrincipal SMART Equity Fund. Between 16 - 28 P/E of S&P CNX Nifty, it will operate with decreasing Equity component on a graded manner. at 28 P/E level of Index it will have no equity component. This plan intend to use 50% in derivatives and 50% in Stock Lending. This feature makes it risky and therefore careful evaluation of portfolio is essential both while entering and after entering.

Benchmarked against CRISIL balanced Index, intended to hold large cap stocks with same market capitalisation as that of BSE 100 members.

Please remember, P/E is not good strategy in volatile market situations. But having both P/E and D/Y funds will make you have a completed portfolio in the sense of diversification.



happy investing

Greece, Portugal and Now, Ireland....

Recently the US Govt. redeemed $900 billion bonds by infusing fresh money into the system. Now they are operating the way the MARXIST economic policy which they rejected during the cold war days. As protectionism grow in more and more economies, it is time for sitting up drawing a proper financial planning exercise. Japanese savings rate has deteriorated. There are news that Ireland is issuing Govt bonds... All these monies will cause sudden spurt and price rises finally catching up with the consumer.


Though nobody want another October 2008 situation to happen in India, the bursting of govt or private payment capacities affect us wherever it happens in the globe.


The highly volatile stock market frightens the timid and causes panic preventing long term savings. today hardly 1.4% of Household Savings in GDP reach the capital markets. Though the Indian's savings rate has been growing in Financial assets, it has not grown enough. But the way capital markets turns out to be there are no safe heavens any more for investors. The bold takes long term positions in the equity markets and earmark them for retirement planning at early stages of employment.

So PIIGS (Portugal, Italy, Ireland, Greece, Spain) are on rampage.


Take care