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(IFN) India Fund is a rip-off. Want to buy Indian? Get directly (INFY) Infosys Technologies and (TTM) Tata Motors to avoid an outrageous 30% money waste. May 25, 2006

Posted by deminvest in Blogroll, IFN India Fund, India Investing, INFY Infosys Technologies, investment, Single stocks, stocks, TTM Tata Motors.
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There is so much desire to invest on India stock that IFN INDIA Fund has a reached a terrifying 30% Premium. This is what I call a rip-off: the price of IFN is 30% higher than its Net Asset Value (NAV) this means that if you buy IFN you pay 30% more that the sum of values of all the stocks IFN owns. Moreover you also spend 4% a year expenses to IFN management.


I will give you a lovely hint about the site where you can find valuable information about Closed End Funds: http://www.cefa.com/FundSelector/FundDetail.fs?ID=8775 . Please check the Premium, the Discont and the NAV as basic concepts for that kind of investments.

If you are still interested in Indian markets, you can easily and cheaply buy INFY Infosys Technologies on NYSE, which accounts for 9.2% of IFN investment and TTN Tata Motors on NYSE which accounts for 3.12 % of IFN investment. They are two good companies growing very fast and have reasonable price for their stock.

INFY has: Trailing P/E: 34.52… a bit expensive, but: Forward P/E: 22.02 will make more reasonable next year.

 

What I like the most about it is:
Qtrly Revenue Growth (yoy): 30.30%
Qtrly Earnings Growth (yoy): 19.70%

And in times of rising interest rates… Debt=0 and Total Cash: 1.06B, about half of its yearly revenue, makes it an excellent company.

TATA, being a car company, has lower P/E ratios:

Trailing P/E 20.62
Forward P/E 11.96

 

Not much more data is easily available for TATA, may I will find it later.

If you buy TTN and INFY trough your normal stock trader, you don’t have to pay that outrageous 30% premium for them. Yes your Indian investment will be a little bit less diversified, but I would not pay 30% premium + 4% expenses a year just for sake of diversification… It is too expensive.

Comments»

1. deminvest - May 25, 2006

I just bought 14 INFY at $ 71.24 each for a total sum of $997.36 Let the force be with INFY and with me🙂

2. retirein - May 28, 2006

Why has INFY underperformed Nasdaq for 6 months and 1 year?

Here are the charts:

1 year

http://finance.yahoo.com/q/bc?s=INFY&t=1y&l=on&z=m&q=l&c=%5EIXIC

6 months

http://finance.yahoo.com/q/bc?s=INFY&t=6m&l=on&z=m&q=l&c=%5EIXIC

In any case, the stock should split in the first ten days of July. We should see some severe volatility leading upto the split. And, perhaps, INFY can begin to outperform the Nasdaq and the BSE.

3. deminvest - May 28, 2006

Maybe because INFY did so much better than the Nasdaq before…

Overall 5 years to now Nasdaq was flat, whyle INFY went up 100%.

http://finance.yahoo.com/q/bc?s=INFY&t=2y&l=on&z=m&q=l&c=%5EIXIC
http://finance.yahoo.com/q/bc?s=INFY&t=5y&l=on&z=m&q=l&c=%5EIXIC

4. Bill Kelly - July 23, 2006

I buy IIF for my India fund

5. deminvest - July 24, 2006

Then you will pay 30% more of the value of the companies that you will buy.

6. Georgia Washington - September 2, 2006

guys and women, let me tell you – INFY is for losers. Why would I want to hang my head-scarf on a single IT related company when I can buy the fund that participates in every sector the economy. We know that the IFN and IIFs of this world are going to beat the heck out of INFY just because the funds have many companies in their portfolio and all the CEOs put together can easily beat up INFY’s CEO.

7. deminvest - September 4, 2006

I did buy INFY because IFN is a rip off. I hate to pay 30% more than the Net Asset Value.
It means I would have paid each stock 30% more than its price on the stock market.

INFY is the first stock owned by the fund. That means that fund managers believe it the best stock in India.

I bought INFY at its right price, I didn’t buy it 30% more expensive trough the fund. Also I didn’t like to waste money paying 4% commissions to Fund managers who end up choosing the same stock I chose.

By the way, INFY went up 20 % since I posted this article, and bought it. During the same time span IFN went down 20 %. Please check the Yahoo comparison graph:

http://finance.yahoo.com/q/bc?t=3m&s=IFN&l=on&z=m&q=l&c=INFY

Maybe I was just lucky, but I am very happy that I chose INFY over IFN.

8. repinvest - March 4, 2007

IFN is now trading at a discount – so I guess people truly listen to deminvest and accordingly. I don’t know what we would have done without deminvest amongst our midst. Please boot your broker and get advice from deminvest.

9. deminvest - March 5, 2007

LOL repinvest thank you very much!

I agree with you on “Please boot your broker!”… But I would not advice anybody to “Get advice from deminvest”.

Deminvest is not qualified to give advice. Deminvest is no Guru and no Warren Buffet… I just discuss here investments with some online friends very openly and trying to criticize some fake gurus that prophesize!

Actually if some day I will start writing like a Guru… Please STOP ME and remind me that I KNOW NOTHING and click on “My investing mistakes” to remind me how many lousy investment choices I made over time! Probably I will have to tag my last post https://deminvest.wordpress.com/2007/03/01/i-promised-id-buy-on-march-1th-trina-solar-tsl-is-my-crazy-choice-in-times-of-financial-storms/
as yet another investing mistake, because I could hardly chose a worst time to get a Chinese stock!

Said that… Thank you very much repinvest! Really comments like yours do make me very happy, and do tell me that my efforts are of some use to some nice people sometimes🙂

10. Boni - April 12, 2007

I am inherently suspicious. So while researching IFN, and after coming across this post, I spent a few hours calculating the NAV of IFN. I used the latest SEC filing from IFN as the holdings basis. I have it setup as a portfolio in Yahoo, do not know how I can share it with the rest of you. Here are my findings.

The NAV calculation on http://www.cefa.com is CRAP. The actual NAV of IFN as of NOW (04/12/2007, 11:40AM EST) is $38.05. The CEFA website is listing it as $40.72. Further with this WRONG calculation CEFA says IFN is trading at a 3.24% discount. BULLSHIT!!!

The FACT is IFN is trading at $39.85 which represents a PREMIUM of 4.73%

OBVIOUSLY , CEFA is going by the Blackstone propaganda number and this blog author is nothing but a lazy reseracher!

11. deminvest - April 12, 2007

Boni, thanks for your research job.

You are right about the fact that I am a lazy researcher. I don’t even know where to find those SEC filing? Is it on http://www.sec.gov/ ?

I am just a simple investor who writes down on a blog his thoughts before taking investment decisions that often end up being wrong.

We, non professional investors, need to help each other, so I thank you very much for your interesting findings.

Anyway, as I wrote this Blog I did see the general picture right. IFN was a rip-off! The 30 % (or more) Premium went down to 5% Premium.

That means that a 25% Premium has vanished…

If I had made the mistake of buying IFN I would have seen 25% of my money vanish with the stupid Premium!

12. ravan - April 12, 2007

You are absolutely right about the vanishing premium. Still now note thats its not far from here where IFN may actually be trading at a discount. Thanks to short sighted tools available not professional investors like you and me when researching close ended funds!

-Boni


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