Structured Products next?

ULIPs will cease to be very attractive for distributors from September 1, 2010 considering the new guidelines. In the past we have seen that whenever one vehicle becomes unattractive to distributors they immediately latch on to another vehicle. We have seen this in the mutual fund space where investments would be churned out of an existing scheme and re-routed to a new fund offer to get the upfront commissions. Later when entry loads were abolished on mutual funds we saw investments shifting to ULIPs.

Now that ULIP commissions have been reduced and lock-in period increased, one could see distributors shifting focus to Structured Products in the form of equity linked debentures. Structured Products are products which do not fall directly within the purview of either RBI or SEBI. The margins to the distributors are also opaque to the investor. In short, all the ingredients for increased volumes are there!

PPFAS Investment Seminar Presentations and Video

The links for presentations given at the Investment Seminar held for PPFAS’s clients are given below 

http://www.ppfas.com/pdf-docs/b-finance/Investment-Decisions-and-Investors-Behavioral-Biases.zip

http://www.ppfas.com/pdf-docs/b-finance/Return-Free-Risk.zip

The link for the video recording (streaming video uploaded on Google Video) is given below. The recording for the seminar is in two parts 

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Where will the $ 3.8 trillion go?

Financial Times has an interesting article today. It is about the difficulties being faced by Money Market Mutual Funds. There are approximately $ 3,800 billion worth of funds in this category and the returns are essentially ZERO. The Asset Management Companies are not able to make any significant money managing these funds and neither are the investors. Many are contemplating closing down the funds.

An interesting comment was  “The Fed is trying to force investors out of a low-risk environment” Hence if the money market fund is closed, what option does the investor have? If an investor is keeping money with Citi or Bank of America he / she is anyway exposed to credit risk. Why not start looking at say a commercial paper of GE.

All the investment gurus who recommend holding cash in this environment will also have to specify where to stash all that cash. Mattresses anyone?