`Auto Invest' based on systematic investment planning model

Shailesh Menon

If an investor wishes to opt for a `conservative' style of investment, researchers would make a portfolio wherein a larger portion of the investment is in liquid and balanced mutual funds

Mumbai, Aug. 10

Kotak Securities will offer small-time retail investors with investible surpluses as low as Rs 5,000, a chance to invest in capital markets.

Speaking to

Business Line

, Mr E. Prasanth Prabhakaran, Senior Vice-President, Kotak Securities, said, "Auto Invest, as the scheme is labelled, is a unique product based on the Systematic Investment Planning (SIP) method of investing directly in stocks. It will aid retail investors by advising them on a set of `safe and slow moving' stocks to invest in. The product will open the doors of capital markets to potential investors who dread the risks involved."

Investors can invest in shares through `Auto Invest' by transferring a fixed amount of money every month to the brokerage's Internet trading portal account (kotaksecurities.com). The fund manager at Kotak will invest money as per the investment portfolio created by the investor in close consultation with the brokerage's stock researchers.

To check risk appetite

An investment portfolio is created taking into account the risk appetite of investors. If an investor wishes to opt for a `conservative' style of investment, researchers would make a portfolio wherein a larger portion of the investment is in liquid and balanced mutual funds. The rest would be invested in direct equity (especially in large-cap stocks).

For a `moderate' investor who has reasonable risk appetite, around 70 per cent of the investment would be in liquid, debt-based, balanced and diversified mutual funds. The remaining sum would be invested in consistent large-cap stocks.

Investors aiming for growth will have 40 per cent of their investments in direct equity (across large-cap and mid-cap stocks) and the remaining in a combination of mutual funds.

Investors who are willing to take high risks can opt for an `aggressive' blend of investment options.

In this case, the default would be around 40 per cent in large-cap equities, 30 per cent in mutual funds and the remaining 30 per cent in mid-cap and small-cap equities.

"We will charge normal brokerage charges (0.59 per cent) for every transaction. This will be meagre when you calculate brokerage charges slapped on SIPs in mutual funds," said Mr Prabhakaran.

(This article was published in the Business Line print edition dated August 11, 2006)
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