Mutual funds liquid schemes violate rules
The audit team appointed by SEBI (Securities and Exchange Board of India) has suspected the way several fund houses sell their liquid schemes. According to the audit team, many asset management companies (AMCs) are giving better deals to their select customers by suggesting them to divide their investments into smaller amounts and benefit from the possible price advantage.
Liquid schemes invest in short-term debt instruments with maturities of less than one year. They invest in money market instruments, short-term corporate deposits and treasury. The maturity of instruments held is between three and six months. A liquid fund provides good liquidity, low interest rate risk and the prevailing yield in the market… Read more
SEBI against reintroduction of entry load
Market regulator SEBI (Securities and Exchange Board of India) has told the finance ministry that it is against the reintroduction of commissions paid by fund houses to distributors. According to SEBI, investors won’t benefit if entry loads are reintroduced.
Fund houses launch mutual fund schemes which are sold by intermediaries like independent financial advisors, financial planners and banks. Commissions to distributors and marketing expenses were met by the fund house by charging an entry load of 2.25% from investors. In 2009, SEBI banned the entry load which dried up inflows into mutual funds. As a result, in the past two-three years commercial interest of distributors has come down, and they are not motivated to sell mutual funds… Read more
Consumers to bear service tax burden: AMFI
AMFI (Association of Mutual Funds of India) chief executive HN Sinor said, consumers should bear the burden of 12% service tax on purchase of schemes. Mr Sinor has also asked an increase in the expense ratio to 2.25% from 2.20%—of which 2% is administrative expense and 0.20% is the exit load.
Mr Sinor said after the meeting of the representatives of the mutual fund industry with the government officials. The meeting was called to discuss how to increase retail participation. Mr Sinor has asked the government to increase the total expense ratio to 25 basis points and also allow them to credit the exit load directly to the schemes of the asset management companies so that the MFs do not have to pay it. Expense ratio mostly refers to administrative expenses… Read more
ICICI Pru MF enters into a partnership with Nordea AM
ICICI Prudential Asset Management Company has entered into a partnership with Nordea Investment Management AB, Sverige (Nordea AM) the asset management entity of the Nordea Group, a leading financial services group with market capitalization of EUR 24 billion ($30 billion).
Its asset management arm is the second fastest growing asset manager in Europe over the last six years. This exclusive partnership between ICICI Prudential AMC and Nordea AM allows both entities to capitalise on each other’s respective strengths in distribution and investment expertise in the Indian and International markets.
Fund Managers’ Speak
The next frontier: Mark Mobius
Just a few decades ago, China and India were considered frontier markets, and when I began my investment career Japan was considered an emerging market. So, you can see how economic progression and market development often go hand in hand… Read more
SEBI to introduce steps for MF industry in August
Market regulator SEBI (Securities and Exchange Board of India) will introduce a number of measures in August to motivate the mutual fund industry to move into smaller cities—tier II & tier-III.
Rajeev Kumar Agarwal, full-time member, SEBI said at a Capital Market Summit organised by Assocham in New Delhi on 6th July. SEBI is also in the process of coming up with an e-ipo scheme to give a boost to the primary market.
AMFI gets SEBI approval to launch MF Utility
The Association of Mutual Funds in India (AMFI) has got Securities and Exchange Board of India (SEBI) approval for setting up a mutual fund transaction platform called MF Utility.
The MF Utility—an online service—will facilitate efficient and cost effective transaction processing. This facility will help customers, distributors and financial advisors to transact mutual fund schemes across all asset management companies (AMCs), at one place. The AMFI is planning to launch the service in April next year. There are various benefits that the platform will provide to investors… Read more
Mutual fund AUM rises for 1st time in 4 quarters: CRISIL
The Indian mutual fund industry recorded growth in quarterly average assets under management (AUM) for the first time in the past four quarters. AUM rose by 4% (or Rs. 274 billion) to Rs. 6.92 trillion in the April-June 2012 quarter from Rs. 6.65 trillion in the previous quarter (excluding domestic FoFs) as per the latest numbers announced by the Association of Mutual Funds in India (AMFI).
Debt-oriented funds were the key contributors to the rise. Assets of money market funds or liquid funds grew by Rs. 169 billion, ultra short term debt funds by Rs. 69 billion, fixed maturity plans (FMPs) by Rs. 29 billion and other debt-oriented funds by Rs. 58 billion over the past quarter. Equity funds witnessed a decline of Rs. 53 billion in AUM owing to weak sentiments prevailing in the asset class in the quarter gone by… Read more
Diversified equity funds register strong performance in June
Diversified equity funds, which form the largest category of Indian mutual funds in terms of number and assets, recorded an average 6.01% in June, according to the data from fund tracker Lipper, a Thomson Reuters service. These funds had declined 5.65% in May.
Improving global sentiment and expectations that domestic reforms will be reviewed, led these funds report their strongest performance in five months in June compared to their negative returns in May. New measures to ease the eurozone crisis, expectations that the government may review economic reforms and efforts to provide clarity on a tax proposal helped the benchmark BSE Sensex gain 7.5% in June… Read more
ICICI Bank offers online PPF scheme
ICICI Bank has launched an online Public Provident Fund (PPF) account through which customers can access their PPF accounts online.
This is for the first time that customers can open a PPF account from a private player or private bank. Earlier, customers could open their PPF accounts only through the post office or State Bank of India (SBI). Investments made in PPF are exempt under Section 80C of Income Tax. PPF offers tax free interest rate of 8.8%. Previously, to open a PPF account customers had to visit either an SBI branch or post office in person. The service was offered offline… Read more
CAMS Investor Services gets SEBI nod to launch KYC Registration Agency
In its vision to harmonise the KYC process across capital market players, SEBI has accorded license to CAMS Investor Services Pvt. Ltd, a wholly-owned subsidiary of CAMS, to serve as a KYC Registration Agency.
The KRA initiative is aimed to eliminate duplication of KYC efforts which an investor has to undergo while dealing with multiple intermediaries like Mutual Funds, PMS, PE Funds, Brokers, Depository Participants, etc.
CAMSKRA shall obtain and store KYC documents of customers from intermediaries and their authorized agents. It will facilitate reliable and quick information update to all intermediaries that avail of the services to avoid duplication of KYC process… Read more
Govt to engage MF industry, SEBI to boost retail participation
The Central Government would continue to engage with the Mutual Fund (MF) industry and SEBI to make MFs more competitive and attract greater retail participation through innovative financial literacy programmes. Besides it, special emphasis would be given to improve penetration of MF products in Tier II and Tier III cities/towns and to redress the grievance of investors. This was emphasized by Shri R.Gopalan, Secretary, Department of Economic Affairs, Ministry of Finance during his meeting here today with the representatives of the Mutual Fund Industry and Financial Advisors’ Association to evolve a common strategy to re-energize the Mutual Fund (MF) Industry. The meeting was also attended among others by the senior officials of the Ministry of Finance and Securities and Exchange Board of India (SEBI)… Read more
SBI Debt Fund Series-366 Days-8 floats on
SBI Mutual Fund has unveiled a new fund named as SBI Debt Fund Series - 366 Days - 8, a close ended debt scheme with the duration of 366 days. The New Fund Offer (NFO) price for the scheme is Rs. 10 per unit. The new issue will be open for subscription from 9 July and close on 11 July 2012.
The investment objective of the scheme is to provide regular income, liquidity and returns to the investors through investments in a portfolio comprising of debt instruments such as Government Securities, PSU & Corporate Bonds and Money Market Instruments maturing on or before the maturity of the scheme… Read more
ICICI Prudential MF declares dividend under schemes
ICICI Prudential Mutual Fund has announced 10 July 2012 as the record date for declaration of dividend under the dividend option of the following schemes… Read more
ICICI Pru MF extends NFO closure date of FMP-Series 64-367 Days Plan G
ICICI Prudential Mutual Fund has announced the extension of new fund offer (NFO) Period of ICICI Prudential Fixed Maturity Plan-Series 64-367 Days Plan G, a close-ended debt scheme. The NFO period of the scheme has been extended till 16 July 2012… Read more
HDFC MF declares dividend for HDFC FMP 370D July 2011 (1)
HDFC Mutual Fund has announced 10 July 2012 as the record date for declaration of dividend on the face value of Rs. 10 per unit under normal and quarterly dividend options of HDFC FMP 370D July 2011 (1), a fixed maturity plan under HDFC Fixed Maturity Plans-Series XVIII, a closed ended income scheme. The amount of dividend will be distributable surplus, as reduced by applicable statutory levy as on the record date.
IDFC MF Declares Dividend for IDFC FMP QS-75
IDFC Mutual Fund has announced 10 July 2012 as the record date for declaration of dividend on the face value of Rs. 10 per unit under the dividend option of IDFC Fixed Maturity Plan - Quarterly Series 75 (IDFC FMP QS - 75).
The quantum of dividend will be entire distributable surplus as on the record date (Dividend distribution tax & other statutory levies shall also be paid out of such distributable surplus).
UTI MF declares dividend for Fixed Income Interval Fund
UTI Mutual Fund has announced 11 July 2012 as the record date for declaration of dividend on the face value of Rs 10 per unit under the dividend option of UTI Fixed Income Interval Fund-Monthly Interval Plan II. The quantum of dividend will be 100% of distributable surplus as on record date.
In Focus Stories
Fund houses take alternative route to raise funds
In May 2012, capital market regulator SEBI (Securities and Exchange Board of India) notified alternative investment funds (AIFs) regulations to monitor unregulated funds, encourage formation of new capital and consumer protection.
The regulator had classified private pool of capital into three categories such as venture capital, private equity and hedge funds. Besides making the unregulated funds more transparent for investors, SEBI aims to keep a watch on the growing fund pools with exposures to real-estate business which, regulators perceive, carry a higher risk.
But now at least two asset management companies (AMCs) with the guidance of law firms are raising money without applying for SEBI registration under the new AIF regulations, according to media reports.
While the offerings of these fund houses essentially refer to AIFs, the products pretend to be as the portfolio management schemes (PMS) sold by stock brokers and mutual funds, the reports added… Read more
Average AUM of MF Industry grew 4.12% in June 2012 quarter
Average assets under management (AAUM) of the mutual fund (MF) industry climbed up 4.12% (by Rs. 273.88 billion) to Rs. 6.92 trillion during the quarter ended June 2012 against Rs. 6.64 trillion registered during the quarter ended March 2012. AAUM that was dipping during the previous three quarters, improved during the latest quarter due to inflows into liquid and income funds and also due to mark-to-market gains.
Of the top five fund house based on AAUM, average assets of Birla Sun Life MF increased the most by 9.92% (by Rs. 60.63 billion) to Rs. 672.05 billion, it was followed by ICICI Prudential MF by 6.30% (by Rs. 43.31 billion) to Rs. 730.49 billion, UTI MF by 3.40% (by Rs. 20 billion) to Rs. 609.22 billion, Reliance MF by 3.31% (by Rs. 25.82 billion) to Rs. 806.94 billion and HDFC MF by 3.05% (by Rs. 27.45 billion) to Rs. 926.24 billion… Read more
Principal MF announces change in fund managers’ responsibilities
Principal Mutual Fund has announced change in fund managers’ responsibilities for certain schemes from 2 July 2012.
Accordingly, Principal Services Industries Fund will be man
aged by Anupam Tiwari, Principal Income Fund-Short Term Plan and Principal Bank CD Fund will be managed by Gurvinder Sigh Wasan. Further, from 2nd July Anupam Tiwari and Gurvinder Sigh Wasan shall cease to be assistant fund manager(s) to Principal Debt Savings Fund and Principal Debt Opportunities Fund (including plans thereunder) respectively. Accordingly, Principal Debt Savings Fund-Monthly Income Plan and Principal Debt Savings Fund-Retail Plan will be managed by Rajat Jain and Pankaj Jain, Principal Debt Opportunities Fund will be managed by Pankaj Jain.
LIC Nomura MF announces change in fund manager
LIC Nomura Mutual Fund has announced that LIC Nomura MF Balanced Fund, LIC Nomura MF MIP, LIC Nomura MF Unit Linked Insurance Scheme, LIC Nomura MF Children's Fund and LIC Nomura MF Floater MIP, is being managed by Surendra Jalani from 23 May 2012.
Reliance MF announces retirement of key personnel
Reliance Mutual Fund has announced that Geeta Chandran-head-operations has retired from the services of Reliance Capital Asset Management Ltd from 30 June 2012 and hence, she ceases to be a key personnel of the company.