| Author |
Message |
basant
Admin Group
Joined: 01/Jan/2006
Location: India
Online Status: Offline
Posts: 18403
|
   Topic: Morgan Stanley Growth Fund –Invest in sensex@9200
Posted: 09/Aug/2006 at 9:34am |
Morgan Stanley– Invest in sensex @9200
Morgan Stanley Growth fund (Rs 34.70) was launched in 1994. Since then the fund manager has done little to be evaluated with his Indian counterparts. While during this period the better known Indian mutual funds like Reliance Growth and Franklin India Prima fund have multiplied wealth by over 15 times Morgan Stanley has done so by only 4 times.
The fund comes up for redemption in 2008 and that makes it more interesting. because redemptions will be on NAV prices. SO an investor buying the fund units today will see a notional appreciation of 20.83% in his portfolio which will be realized in 2008. The NAV (Rs 41.99) is at premium of 20.83% to the market price.(Rs 34.70). This means that a person buying into Morgan Stanley Growth fund would be getting into an index level of 9200.The fund units are normally traded in the exchanges and can be bought like any other stock.
The key highlights for this fund are:
- Available at a significant discount to its NAV.
- The discount cuts down the downside risk for an investor
- Fund holds a portfolio of excellent blue chips.
- Investment into MSGF is recommended for any large cap investor who wishes to hold a diversified large cap portfolio.
- Presently the fund is very aggressively invested holding only about 4% in cash and debt.
- The portfolio is well diversified across various sectors.
|
Launch Date |
January 2004 |
|
Latest NAV |
Rs 41.99 |
|
CMP |
Rs 34.70 |
|
Premium of NAV to market price |
20.83%% |
|
Net Assets |
Rs 2418 crores |
|
Return – year till date |
8.65% |
|
1 year |
38.22% |
|
3 years |
42.86% |
|
5 years |
34.45% |
|
since launch |
14.67% |
|
Sharpe ratio |
0.39 |
|
Average market Capitalization |
Rs 13,997 crores |
|
Portfolio PE |
29.92 |
|
Portfolio Price/Book value |
7.7 |
|
Portfolio holding |
Spread across all large cap blue chips |
Portfolio as on June 30, 2006
BHEL
Siemens
HLL
ABB
ITC
Infosys Technologies
Hindustan Construction
HDFC Bank
HDFC
M&M
Cipla
ACC
HCL technologies
Wipro
PNB
Aban Lloyd
Concor
NTPC
Hotel Leela
UTI Bank
Aventis
Gammon India
Rico Auto
Marico
Pantaloon Retail
NDTV
Sector Weightage (%)
Basic/Engineering 22.44
FMCG 12.85
Financial Services 12.64
Technology 11.97
Construction 9.64
Automobile 5.81
Services 5.76
Health Care 5.30
Energy 4.41
Metals & Metal Products 1.61
Textiles 1.28
Chemicals 0.85
Automobile 5.81
Services 5.76
Recommendation: Morgan Stanley is a classic case where investors would be betting more on the fund redemption date rather then the fund manager’s investing skills. The Sharpe ratio (0.39) for the fund is well below the sector leaders and the annualized return since inception is also quite inferior when compared to the better boys in business. Never the less the unit offers excellent scope for an investor with a two year perspective and he could do well by shifting more then 20% of his large cap portfolio into this stock.
Source: Media reports and valueresearchonline.
Edited by basant - 16/Aug/2006 at 10:25pm
|
|
'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
|
 IP Logged |
|
|
|
 |
|
go4lalit
Senior Member
Joined: 27/Aug/2006
Online Status: Offline
Posts: 135
|
Posted: 28/Aug/2006 at 11:14am |
In the market, there is reason for everything. If a stocks trades at high PE, there is high optimism and if a stock does not move there is a reason. Like HPCL/BPCL.. If a stock trades at a discount, there is a reason. We make money when we cross the expectations.
The point I am trying to make is, what can be the reasons the "Morgan Stanley Growth Fund" trades at such a discount, when they have visibility.
|
|
IP Logged |
|
|
|
basant
Admin Group
Joined: 01/Jan/2006
Location: India
Online Status: Offline
Posts: 18403
|
Posted: 28/Aug/2006 at 11:42am |
Morgan Stanley has been a disaster when it has come to managing the fund. Over the past 13 years this fund has grossly under performed its peers. So while Reliance Growth Fund Reliance Vision Fund and Franklin India Prima Fund have multiplied wealth 22 times, 16 times and 18 times respectively Morgan Stanley has been able to do it only four and a half times. The historical baggage weighs heavily on its shoulder.
The NAV value is real but investors cannot encash it (it will be redeemed in 2008) but unlike a Tata Investment which will never sell its holdings Morgan Stanley will have to redeem at NAV based prices.
|
Morgan Stanley below the average diversified fund on a 3 – 5 year period |
|
Duration |
Average Diversified Fund |
Morgan Stanley |
|
3 years |
46.74% |
40.96% |
|
5 years |
40.32% |
35.68 |
Now if the market were to continue its one sided uptrend people might not make an incremental return in Morgan over the best Indian mutual funds since the fund's past history shows little in this regard. A combination of these plus general investor allergy for lock in funds makes up for the discount. But since the whole 17% NAV premium to Market price cannot be answered there lies the opportunity for the patient long term investor.
source: valueresearchonline
Edited by basant - 28/Aug/2006 at 11:43am
|
|
'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
|
|
IP Logged |
|
|
|
go4lalit
Senior Member
Joined: 27/Aug/2006
Online Status: Offline
Posts: 135
|
Posted: 29/Aug/2006 at 12:28pm |
Even if it trades at 17% discount, It makes sense if someone beleifs that other fund manager will not outperform Morgan Stanley Growth Fund by more than 17% in Two years.
Also here we are trying to time the market, If the month where the redemtion is to be done becomes like May/06, it will be disaster to investors. Also redemption of 2400 crores will have some impact on the stocks. This is the disadvantage of all close ended funds.
These are reasons for this to trade at discount. This discount will narrow down as the fund move towards redemtion.
|
|
IP Logged |
|
|
|
basant
Admin Group
Joined: 01/Jan/2006
Location: India
Online Status: Offline
Posts: 18403
|
Posted: 29/Aug/2006 at 12:41pm |
Generally the stocks are not sold and the fund just becomes open ended so ther redemption pressure is curtailed to a very large extent. Also the fund managers need not sell the full Rs 2400 crores in one day they would start selling 2 months ahead so it would work out to Rs 50 crores a day which any large cap stock can absorb.
Now if that month is like May 2004 then either investors can just hang about or buy other stocks with that money since everything else will fall in value. Actually if it is like May 2004 the 17% premium will work in your favour in capping the downside.
The discount will narrow down but investors who have sufficently large exposure to large caps can move 20% of their large cap portfolio into this fund.
|
|
'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
|
|
IP Logged |
|
|
|
reetesh
Senior Member
Joined: 01/Sep/2006
Location: India
Online Status: Offline
Posts: 793
|
Posted: 09/Sep/2006 at 2:03am |
|
I am sorry about my stupidity, I should have posted my ABN view on that discussion only... But Mr. Basant suppose market is at 8000 or any index level which is below then what it is today even then they will redem it at 40.9 level if that be the case then sounds good but if it is not the case then I dont think it makes that much of sense..
|
|
When going gets tough, that’s when tough (people) gets going.
|
|
IP Logged |
|
|
|
basant
Admin Group
Joined: 01/Jan/2006
Location: India
Online Status: Offline
Posts: 18403
|
Posted: 09/Sep/2006 at 8:29am |
No when the market falls the NAV will also fall but investors would have bought it at Rs 34.70 or eabouts so there is a greater cushion for the NAV since an investor who waits for 2 years gets that premium discount which ensures that he shall break even even if the market falls by 15- 18%. On the upside he will take in all the gains.
MSGF has gone up in the past 3 weeks!
|
|
'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
|
|
IP Logged |
|
|
|
kulman
Senior Member
Joined: 02/Sep/2006
Location: India
Online Status: Offline
Posts: 9319
|
Posted: 24/Jan/2007 at 11:58pm |
Basant jee
If one is bullish on India as an economy and also the markets, should one invest in MSGF even at current level of 46 to 47?
Would you kindly take out some time and study their latest portfolio to post your updated views.
|
|
Life can only be understood backwards—but it must be lived forwards
|
|
IP Logged |
|
|
|
Active Topics
Memberlist
Calendar
Search
Help
Register
Login
