The article on hows and whys of investing abroad was an eye opener (Global Investing, 10 January). How can I start with a corpus of just Rs 1 lakh?
— Shashank Arora, Delhi
As a beginner, start by investing in an Indian mutual fund that invests in global stocks (see Why and How to Go Global, 15 November). As your confidence grows, so will your exposure to global markets.
I am a regular reader of MONEY TODAY. In the article, “Collateral Advantage”, (published in MONEY TODAY, 13 December), it was reported that Kotak Securities gives loan against shares. However, when I approached Kotak Securities, they denied having such a service. I then visited Kotak Mahindra Bank, they told me that they give loans only against shares worth Rs 2 crore and that it was a service for high networth individuals only. I need a loan against securities. Please advise.
— Santosh R. Mhamunkar, e-mail
Broking firms such as Kotak Securities provide loans only to clients whose portfolios they manage. This comes under the heading “margin trading” as mentioned in the story. For loans against securities or shares please approach a bank rather than a broking firm. The forerunners in this area are ICICI Bank, HDFC Bank, Axis Bank and the State Bank of India. Usually the amount of loan is equivalent to 50% of your portfolio in case of shares and can go up to 80% in case of fixed-income instruments.
The article on Prabir Jha (From Babu to Corporate Honcho, 27 December) was quite interesting, but I found a contradiction. It was written that Jha was 30 years old in 1999, when he resigned as works manager from Ordnance Factory Khamaria, Jabalpur. But his age at present has been mentioned as 50 years, which is not possible.
— B Phani Babu, Pune
Thank you for pointing out the error. Jha’s correct age in 1999 was 32 years.
According to a Sebi notification, the entry load has been waived for direct mutual fund investments. While this is a good move, I wonder if they have thought through the issue of trailing commissions. When a distributor brings in money to a fund, he gets an initial commission as well as a recurring commission every year. The recurring commission is part of the fund’s annual expense ratio. This expense is taken from the fund’s NAV, which is lowered to that extent. Now that some investors will come through distributors and some directly, this arrangement is unfair to those who come directly. To correct this anomaly, instead of lowering the NAV, funds should liquidate an equivalent number of units for those investors who came via distributors.
— Sumant Sarkar, Bengaluru
Now that entry load on direct buying has been scrapped, doing away or substantially lowering the annual management fee seems to be the next logical step. Yet, keeping the distributors interests in mind, Sebi is perhaps taking one step at a time, which is right.
