Portfolio Leveraging
The concept of borrowing funds through mutual fund (MF) ‘portfolio leveraging’ has recently started gaining ground. An increasing number of high net worth individuals (HNIs) having size able holdings in mutual funds, are borrowing money through portfolio leveraging.
Investors prefer non banking financial firms (NBFCs) over banks to raise money since banks cannot lend more than Rs 20 lakh with MF portfolio as collateral. NBFCs sanction up to 70% of the portfolio as a loan which investor again invests more often buying out MF units and not stocks! It is mostly risk averse investors who invest in mutual funds. It is strange to see why such a conservative investor wants to take an additional risk by leveraging his portfolio.
For portfolio leveraging to be attractive, the rate of return an investor is making through MFs or stocks in which he has invested borrowed funds should cover smoothly the cost of leveraging. For instance, if the investor is borrowing money at 15%, he should at least be making 20-22% plus on those borrowed funds!!
When market stages near one sided rally, portfolio leveraging seems to be the easiest way to maximize returns. With present uncertainty in sustenance of current government, turmoil in the global equity markets and when oil & energy prices set to shoot up, making money through leveraged positions didn’t remain a one-way street………………..
Investors prefer non banking financial firms (NBFCs) over banks to raise money since banks cannot lend more than Rs 20 lakh with MF portfolio as collateral. NBFCs sanction up to 70% of the portfolio as a loan which investor again invests more often buying out MF units and not stocks! It is mostly risk averse investors who invest in mutual funds. It is strange to see why such a conservative investor wants to take an additional risk by leveraging his portfolio.
For portfolio leveraging to be attractive, the rate of return an investor is making through MFs or stocks in which he has invested borrowed funds should cover smoothly the cost of leveraging. For instance, if the investor is borrowing money at 15%, he should at least be making 20-22% plus on those borrowed funds!!
When market stages near one sided rally, portfolio leveraging seems to be the easiest way to maximize returns. With present uncertainty in sustenance of current government, turmoil in the global equity markets and when oil & energy prices set to shoot up, making money through leveraged positions didn’t remain a one-way street………………..
posted by rahul kulkarni at
12:05 AM
2 Comments:
Oi, achei seu blog pelo google está bem interessante gostei desse post. Gostaria de falar sobre o CresceNet. O CresceNet é um provedor de internet discada que remunera seus usuários pelo tempo conectado. Exatamente isso que você leu, estão pagando para você conectar. O provedor paga 20 centavos por hora de conexão discada com ligação local para mais de 2100 cidades do Brasil. O CresceNet tem um acelerador de conexão, que deixa sua conexão até 10 vezes mais rápida. Quem utiliza banda larga pode lucrar também, basta se cadastrar no CresceNet e quando for dormir conectar por discada, é possível pagar a ADSL só com o dinheiro da discada. Nos horários de minuto único o gasto com telefone é mínimo e a remuneração do CresceNet generosa. Se você quiser linkar o Cresce.Net(www.provedorcrescenet.com) no seu blog eu ficaria agradecido, até mais e sucesso. If is possible add the CresceNet(www.provedorcrescenet.com) in your blogroll, I thank. Good bye friend.
Hello. This post is likeable, and your blog is very interesting, congratulations :-). I will add in my blogroll =). If possible gives a last there on my blog, it is about the Impressora e Multifuncional, I hope you enjoy. The address is http://impressora-multifuncional.blogspot.com. A hug.
Post a Comment
Subscribe to Post Comments [Atom]
<< Home