📄 New framework for multi-cap MFs & Fed’s new inflation policy.

Orowealth Weekend Reads: September 20, 2020

LAST WEEK MARKET MOVES

INVOICE DISCOUNTING

Earn up to 12.00% returns!

Introducing Invoice Discounting
Orowealth provides a unique opportunity of discounting invoices raised on big players in the consumer space. The vendors have to wait for 30-90 days to receive the money from the companies, so you can provide liquidity to vendors and earn an attractive yield.

Offer Details
Invest with a minimum ticket size of INR 50K, and earn an annualized return of upto 12.00% on Invoice discounting deals. For example, when you make an investment of 50 thousand @12.00% p.a, you will get back 51.43 thousand ( approx) after 90 days.

Why should you invest?
Orowealth has tied up with some exclusive liquidity providers on the TradeCred platform to provide a timely exit for Oro-labelled transactions on due dates*.
This opportunity is exclusive for Orowealth investors.
* Orowealth deals are fully liquid with the settlement cycle of T+3 days.
* For Non-Orowealth deals, liquidation is purely based on the bidding system. For any premature redemption, liquidity cost may be deducted from interest earned on the investments.

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NEWS WE HAVE BEEN FOLLOWING

#MulticapMF
The Securities and Exchange Board of India (SEBI) issued a clarification on a circular it had released pertaining to the asset allocation requirements for multi-cap mutual funds. It said the funds have several options to adhere to the criteria set out by it regarding the way invested money is allocated for multi-cap schemes. Fund houses could rebalance the portfolio to meet the requirements or could merge a multi-cap scheme with a large-cap scheme. They could allow unitholders to switch to other schemes or could reassign a multi-cap scheme to another category like a large cum mid-cap scheme. The capital markets regulator felt the need to issue this clarification for a circular issued in the previous week which had mandated fund houses to allocate 25% of the assets invested in multi-cap schemes to each of large, mid, and small-cap stocks; fund managers were free to invest the remaining 25% as they pleased. The regulator noted that this circular had led to different views and conclusions, leading it to issue this clarification. SEBI had to issue the guidelines as it had observed that even after being labeled as multi-cap schemes, several funds were skewed towards large-cap stocks with minimal or no exposure to small-cap stocks thus defeating the purpose of a multi-cap scheme.

Takeaway –
SEBI has given fund houses until January 31, 2021 to comply with its guidelines and rebalancing the portfolio is just one of the ways to ensure compliance.

#InflationPolicy
In its post monetary policy meeting statement, the US Federal Reserve said that it would not raise interest rates at least through 2023. Stocks rose after the release, but gave up their gains as Chairman Jerome Powell described the central bank’s guidance as “powerful”. The central bank also decided to continue its asset purchases at current levels dampening expectations of an increase in Treasury bond buying. The economic forecasts, which were also released after the meeting, showed that the central bank expects core inflation to remain below its 2% target until 2023. Simultaneously, it expects the unemployment rate to decline to 4% in 2023, below the long-run rate of 4.1%. In light of these projections, the Fed’s guidance was read as dovish by market participants, thus leading to stocks giving up gains. The central bank recently tweaked its monetary policy stance when it decided to let inflation remain above the 2% target for some time before it acts to contain it. And going by its forecasts, it expects the personal consumption expenditure inflation to reach 1.9% to 2% range only in 2023.

Takeaway –
While some market participants were worried that inflation could become a problem; the Fed has expressed concerns about disinflation instead.

FROM OUR BLOG SECTION

Importance of Mutual Funds

Mutual funds are created as baskets of investments, which invest in financial instruments like stocks and bonds according to their defined investment objectives. Investing in them allows an investor to gain access to asset classes like equities, bonds or fixed income securities, commodities, and even bullion.

QUOTE OF THE WEEK

“I believe that in life you should always take the serious things lightly and the light things seriously”. – Zsa Zsa Gabor (a Hungarian-American actress)
Chosen by Pankaj – Orowealth.