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Fund overview
•The primary investment strategy of the SBI Banking & Financial Services Fund is to acquire equity and equity-related securities of companies that are engaged in banking and financial services. The fund’s objective is to offer investors opportunities for long-term capital appreciation.
•A minimum of 80 percent of the Fund’s assets are held in the stock of companies engaged in providing banking and financial services.
•The SBI Banking & Financial Services Fund is able to invest up to 20 percent of its total assets in equity securities that are not issued by companies engaged in the provision of banking and financial services as well as in debt and money market instruments.
•The indicative list of industries included in the banking and financial services segment includes companies that provide housing finance, micro finance, stock broking and allied services, wealth management, rating agencies, asset management companies, insurance companies, stock/commodities exchange, other non-bank financial companies, and any other business that derives 70 percent or more of its revenue from businesses that provide financial services.
Macro trends
The ability of macroeconomic trends to influence both risk aversion and risk-neutral valuations of securities makes them potent asset return factors. It would appear that the influence of macroeconomics is greatest over more extended time horizons. An updatable time series that represents a meaningful economic trend and that can be mapped to the performance of tradable assets or derivatives positions is an example of a macro trend indicator. This type of indicator can be defined as follows: It is possible for it to be based on three types of information that are complementary to one another: economic data, financial market data, and expert judgement. Market data inform on the state of financial markets and economic trends that are not (yet) incorporated in economic data, and expert judgement is essential for formulating stable theories and selecting the appropriate data sets. Economic data establish a direct link between investment and economic reality.
The significance of long-term macro trends
Why watching macroeconomic trends is important
For two distinct reasons, macroeconomic trends influence the prices of assets. They have an effect on the attitudes that investors have toward risk, as well as the risk-free expected payoff of various securities. The rise in risk aversion that occurs during economic recessions, when cash flows and incomes fall to critical thresholds, is an illustration of the first phenomenon. Examples of the second include the influence that economic growth and relative price-wage trends have on the earning prospects of stocks, the effect that financial conditions have on the default risk of credit, and the relation between external balances and the dynamics of exchange rates.
The majority of investors pay attention to the release of economic data and work with economists to analyse it because of the pervasive influence that macroeconomic trends have. Studies based on empirical evidence suggest that days with significant data releases are more likely than other days for bond and equity markets to experience large price movements (view post here). However, the magnitude of impact that economic data has on shifts in market prices is proportional to the length of the time horizon that is taken into account. This is due to the fact that changes in the economy are typically more persistent than factors that are not fundamental. As a result, they are an important variable in the explanation of price trends over the medium to long term.
Investing In The Primary Share Market
An initial public offering is the means by which an investment is made in the share market for the first time (IPO). After the company has received and tallied the applications for the initial public offering (IPO), investors are given shares in accordance with the level of demand and the number of shares that are available.
Application for an initial public offering can be completed quickly and easily through your online banking platform using a feature called Application Supported by Blocked Amount (ASBA). If you have applied for shares that are worth one lakh rupees, for instance, the amount of one lakh rupees that you are entitled to will be held in escrow in your bank account rather than being transferred directly to the company.
After your shares have been distributed, the precise amount will be deducted from your account, and the remaining funds will be made available. This procedure is required to be followed by any and all applications submitted to the IPO. After the shares have been distributed, they will be listed on the stock exchange, and you will be able to start trading them within a week of the listing.
Conclusion
The primary investment strategy of the SBI Banking & Financial Services Fund is to acquire equity and equity-related securities of companies that are engaged in banking and financial services. The fund’s objective is to offer investors opportunities for long-term capital appreciation.A minimum of 80 percent of the Fund’s assets are held in the stock of companies engaged in providing banking and financial services.An updatable time series that represents a meaningful economic trend and that can be mapped to the performance of tradable assets or derivatives positions is an example of a macro trend indicator.An initial public offering is the means by which an investment is made in the share market for the first time (IPO). After the company has received and tallied the applications for the initial public offering (IPO), investors are given shares in accordance with the level of demand and the number of shares that are available.
