Please find below current market scenario, and a case to invest in IIFL Dividend Opportunities Fund.
Key takeaways
- Global equity markets traded higher in December and early January at a two-speed rate due to a combination of economic and political catalysts
- Overall, December has seen a modest reduction in global tail risk with the fiscal cliff agreement, while global equity valuations remain attractive on a relative basis
- With the gap between dividend yields and real bond yields close to the highest level in decades, we maintain our view that current valuations bode well for long term equity market returns
- We maintain our cautiously optimistic approach to 2013 as economies continue their efforts to gradually stabilise and the global recovery appears set to continue
India equities
- The Indian economy is facing macro risks from persistently large current account and fiscal deficits as well as sticky inflation largely due to supply-side constraints and investment bottlenecks
- However, India’s long-term demographics still look positive. The reform announcements, including hikes in energy prices, liberalisation of foreign direct investment, the Cabinet Committee on Investment (CCI) and privatisation of state-owned companies have helped to shrug off the perception of “policy paralysis” and boosted investor sentiment in India
- The reforms are a first step in the right direction, although implementation will be critical. The government’s ability to push forward fiscal consolidation remains uncertain ahead of the election in mid-2014. The Union Budget to be announced at end-February will be important to watch
- India is trading cheap to its own valuation history on a price to earnings basis and by sector discretionary consumption stocks offer value in our view. But relative to other Asian markets, it is fairly valued, especially on a P/B and forward P/E basis, and the average ROE remains one of the highest in the region.
IIFL Dividend Opportunities Index (‘Scheme’) is an open ended Index Fund
Key Highlights
- Maiden mutual fund scheme which will endeavor to replicate a thematic index of high yielding companies listed on NSE
- Diversified across sector and market cap (25 sectors and consists of large cap and mid cap stocks )
- Being an Index Fund -lower expenses being charged as compared to actively managed mutual fund schemes
- Dividend Index has generally outperformed other key representative Indices (e.g. S&P CNX Nifty, CNX 100, CNX Midcap)
About the Dividend Opportunities Index
Dividend Index is a thematic Index owned and managed by India Index Service and Products Ltd (IISL)-(Joint Venture between NSEandCRSIL)
- Top 50 companies falling within IISL’s selection criteria and ranked by annual dividend yield across 25 sectors form part of Dividend Index.
- Companies are selected out of top 300 by average free-float market capitalization and aggregate turnover for the last six months
- Companies should have net profit and positive net worth as per latest annual audited results
- The weightage of the Dividend Index constituents is capped at 8% and may increase up to a maximum of 10% between the rebalancing periods.
- A buffer of 100% of total number of index constituents shall be applied at the time of each review.
Source –NSE website and IISL Fact sheet as on September 28, 2012 .
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