By Stephen Spratt Investors fleeing risk have boosted the global mountain of negative-yielding bonds to almost $17 trillion. Putting money into assets guaranteed to return less than their face value seems like a fool’s errand -- but there are ways they can be traded for a profit. The most simple is to hope the price keeps going up, but there are a number of more sophisticated trading strategies. Most of these revolve around ensuring the cost of funding is even lower than that of the yields, for example, by using swap markets or currency forwards. In many cases, the shape of the curve is just as important as the outright yield level. Here are three of the ways traders are making money in a negative-yielding world: Borrowing over a relatively short time period and putting the money in longer maturities where yields are typically higher is one strategy to produce returns even when rates are below zero. The way to maximize returns from doing this is to use a “carry and … [Read more...] about Ways to profit from $17 trillion of negative-yielding debt
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Mutual funds are likely to extend the September 30 deadline for Essel Group to repay the remaining debt, according to three people familiar with the matter. After repaying about Rs 2,300 crore last week, Essel group have to settle the remaining debt by September 30 as per the agreement. Essel Group sold 11 per cent in its media unit, Zee Entertainment, to Invesco Oppenheimer for Rs 4,224 crore and repaid Rs 2,300 crore to six mutual fund houses. “As the Essel Group has genuinely made efforts to repay the debt and paid 50 per cent already, consortium of lenders could extend the time by another three months” said a source. The group had told funds holding the pledged shares that it could offload a further 10 per cent in Zee to repay the balance of what it owes by September 30. Essel Group didn’t respond to ET’s mailed queries. Various debt mutual fund schemes of Aditya Birla Sun Life Mutual Fund, ICICI Prudential Mutual Fund, SBI Mutual Fund, Kotak Mutual … [Read more...] about Mutual funds likely to extend Essel Group’s deadline for repaying remaining debt
MUMBAI: Subhash Chandra’s Essel Group has repaid more than half its debt to mutual funds and non-banking finance companies, said a person familiar with the matter. Last month, the Essel Group had raised ₹4,200 crore by selling an 11% stake in Zee Entertainment to global fund Invesco Oppenheimer. Nearly ₹3,700 crore has been transferred to mutual funds and NBFCs on Friday, said the person. An Essel Group spokesperson declined to comment. About half a dozen fund houses have a total exposure of nearly ₹6,300 crore to the group, with shares of companies such as Zee, Dish TV and Essel Infrastructure as collateral. Essel’s promoters had entered into an agreement with mutual funds, getting time till September 30 to repay debt. This agreement prevented the funds from selling the shares held as collateral. The agreement had affected pay-outs in the fixed maturity plans of Kotak Mahindra Asset Management Company and HDFC AMC. Aditya Birla MF has the highest … [Read more...] about Essel Group repays half the debt to MFs & NBFCs
Hanoi: Some families of the 39 Vietnamese people found dead in a truck in Britain last month will borrow money from the government to repatriate their relatives' remains, they told AFP Tuesday. Vietnam's foreign ministry said they would help to bring either the ashes or the bodies of the victims back — but that families would have to cover the cost of repatriation. The price to bring ashes back in a jar was $1,774, while the fee to repatriate a body was $2,858, according to an official document shared with the families and seen by AFP. Families in central Vietnam, where many of the 39 victims come from, said they were desperate to bring their loved ones back nearly four weeks after the tragedy, despite the steep loans they will have to take on. "We're in deep pain, we just want him back soonest," said Le Minh Tuan, whose 30-year-old son was among the victims found on October 23 in a refrigerated container in Essex. "We'll pay any price, whether I have to sell my house or my … [Read more...] about Buried Under Debt, UK Truck Victim Families Take on Loans to Repatriate Remains to Vietnam
It is a theory that is gaining currency among mutual fund investors: avoid smaller funds houses with modest assets under management or AUM; stick to larger fund houses, only they can survive a huge setback in troubled times. Some mutual fund advisors have started speaking about the benefits of sticking to larger fund houses after many mutual fund houses were hit by a series of defaults and downgrades in the last year. Even otherwise, it was an unwritten rule to choose larger AMCs while investing in debt mutual funds. The fiascos only reinforced the rule. However, slowly it is becoming a standard rule even while investing in equity mutual fund schemes. Mutual fund advisors say that there are no clear cut answers to this question. However, there are certain factors investors need to keep in mind when they choose schemes from certain AMCs. There are 44 AMCs in the industry and the smallest AMCs also have certain AUM, which means investors do bet on their schemes. However, mutual fund … [Read more...] about Should you invest in schemes from smaller mutual fund houses?