Mutual Fund Newsletter – April 21 to 25, 2014

Assets under management (AUM) in India grew by a healthy 9.2% year-on-year in 2013 to hit Rs 8.1 trillion (US$131.0 billion).

April 25, 2014 7:59 IST | India Infoline News Service
Domestic News

Net investments in MFs fall 30% in FY14: SEBI
Net investments in mutual funds declined 30% to Rs. 537 billion in the financial year 2013-14 from Rs. 765.39 billion in the previous fiscal, according to the SEBI (Securities and Exchange Board of India) data. Prior to that, more than Rs. 220 billion and over Rs. 490 billion moved out of the mutual funds’ schemes during 2011-12 and 2010-11, respectively. At the gross level, mutual funds mobilised over Rs 97.68 trillion during 2013-14, while there were redemptions worth Rs 97.14 trillion during the period. This resulted in a net inflow of Rs 537.82 billion. Of the total net investment made, a huge part of inflows came during April 2013 and January 2014. Mutual funds had mobilised around Rs 1.08 trillion in various schemes in April. The fund houses mobilised Rs. 835.33 billion in various schemes in January. The significant level of fund mobilisation has also helped the total asset under management of mutual funds to grow to Rs 8.25 trillion at the end of March 31, 2014 from Rs 7.01 trillion during fiscal 2012-13.

MF data in India can be double-edged: Cerulli
Assets under management (AUM) in India grew by a healthy 9.2% year-on-year in 2013 to hit Rs 8.1 trillion (US$131.0 billion). This headline data looks healthy, but when you break it down structural cracks are evident. Corporates continued to be the main buyers of mutual funds, accounting for 49.2% of AUM as at end-September 2013. They mainly invest in money market funds and debt funds-together they accounted for more than three-quarters of AUM in the market in 2013. After corporates, high-net-worth individuals (HNWI) accounted for 28.1% of mutual fund AUM at end-September 2013. Finally, retail investors accounted for only 20.3% of AUM at end-September 2013. The share for retail investors is low, and even more worrying is that the share of AUM attributed to them dropped by 3.1 percentage points between September 2012 and September 2013... Read more

Birla Sun Life MF launches Emerging Leaders Fund-Series 1
Birla Sun Life Asset Management Company Limited, a part of Aditya Birla Financial Services Group (ABFSG), and investment manager for Birla Sun Life Mutual Fund (BSLMF), announced the launch of the Birla Sun Life Emerging Leaders Fund – Series 1, a close-ended Equity Scheme with a tenure of 3 years that invests in equity and equity-related securities of companies in the small and mid-cap segment that have a potential to appreciate in the long run. The primary objective of the scheme is to generate long-term capital appreciation by investing predominantly in equity and equity related securities of such companies.

Speaking on the launch of the scheme, A. Balasubramanian, CEO, Birla Sun Life Asset Management Company Limited said, “The Indian economy is on the road to recovery. We expect steady improvement in macro-stability with a gradual acceleration in GDP growth. Small and Mid-caps which may be volatile in short term, tend to do very well in periods of rising economic growth and may be expected to bounce back strongly over the next 2-3 years. Our NFO thus looks to provide investors a good opportunity to make the most of this growth phase over the 3-year horizon.”...
Read more

Franklin Templeton India launches a feeder into European Growth Fund
Franklin Templeton Investments (India) is launching an open end fund-of-funds scheme called Franklin India Feeder–Franklin European Growth Fund (FIF-FEGF). The fund will invest into the Luxembourg-domiciled Franklin European Growth Fund (underlying fund), an overseas equity fund which primarily invests in securities of issuers incorporated or having their principal business in European Countries. Launched in December 2000, the underlying fund looks to invest in European companies across market-cap and sectors that can potentially generate alpha through various economic cycles by focusing on undervalued high-quality, financially robust companies with limited downside risk. The New Fund Offer will close on May 09, 2014 during which units will be available at Rs. 10 per unit.

Vivek Kudva, Managing Director, India and CEEMEA, Franklin Templeton Investments, said, “International diversification is a key ingredient for long-term success of an investment portfolio, but Indian investors have traditionally had low exposure to funds investing overseas. This is however starting to change and we are seeing increased acceptance of our international range of funds – for example, our FT India Feeder – Franklin US Opportunities Fund has witnessed good response and assets under management have increased from Rs. 104 crore at the time of its launch to around Rs. 758 crore as of March 2014.”... Read more

L&T Mutual Fund launches Emerging Businesses Fund
L&T Mutual Fund announced the launch of L&T Emerging Businesses Fund. The fund is a two-year closed-ended scheme with automatic conversion into an open-ended equity scheme after the completion of two years from the date of allotment. The aim of the fund is to generate long term capital appreciation from a diversified portfolio of predominantly equity and equity related securities including equity derivatives in the Indian markets. The key theme is to invest in “Emerging Businesses” - that is in companies which are in the early stage of development and have the potential to grow their revenue and profits at a higher rate as compared to broader market. The new fund offer (NFO) will close on May 6, 2014... Read more

SBI Mutual Fund launches Dual Advantage Fund Series II
SBI Mutual Fund has launched SBI Dual Advantage Fund – Series II, a 36-month close-ended debt-oriented hybrid fund. The scheme under a normal circumstances, will invest 5% to 25% of the assets in Equity & Equity-related instruments and 50% to 95% in Debt and 0% - 25% in Money Market instruments. Under this scheme, Investor can also avail indexation benefits & thereby potential tax efficient returns as per current tax law. The NFO period of SBI Dual Advantage Fund Series II will close on May 5, 2014. The investment strategy of SBI Dual Advantage Fund Series II is to invest in the entire range of debt instruments with AA and above rated securities... Read more

Edelweiss MF announces dividend for two schemes
Edelweiss Mutual Fund announces dividend in Edelweiss Short Term Income Fund & Edelweiss Absolute Return Fund. Edelweiss Trusteeship Company Limited, Trustee to Edelweiss Mutual Fund, has approved declaration of dividend under Edelweiss Short Term Income Fund, an open ended income Scheme and Edelweiss Absolute Return Fund, an open-ended equity-oriented Scheme.
The record date for the dividend is April 25, 2014 and any purchases on or before this date will be eligible for the dividend. Under the Dividend Reinvestment Option, the dividend declared will be reinvested in the respective Dividend Option at the NAV of April 25, 2014 and unit holders will be allotted additional units for the dividend amount.

Reliance Life launches Online Term
Reliance Life Insurance Company (RLIC), part of Reliance Capital Limited, announced the launch of ‘Reliance Online Term’, an online life cover plan at an affordable premium.

This is one of the most competitive online life insurance plans currently available in the industry, which offers Rs. 1 crore of life cover for as low as Rs 15 per day (for a 25 year-old healthy male).
The unique proposition of Reliance Online Term is that it offers higher life protection up to the age of 75 years through a transparent and hassle-free online process and provides the convenience of medical tests/check-ups, if any, at the customer’s residence.

“Reliance Online Term is a simple life protection product that is based on two strong beliefs: one, adequate insurance cover should be within every Indian’s reach and two, people should be able to buy it with ease. Our new offering empowers customers to make an informed choice vis-à-vis their liabilities and family responsibilities and protect their family’s financial future at a minimal cost. With this, we aim to provide the most affordable online term life insurance plan to our customers,” said Mr. Anup Rau, CEO, Reliance Life Insurance... Read more

Special Stories

Banks must review operations of BCs every 6 months: RBI
The Reserve Bank of India (RBI) said that banks must review the operations of BCs (business correspondents) at least once every six months with a view to ensuring that requirement of prefunding of Corporate BCs and BC Agents should progressively taper down with the passage of time.

Ideally in all normal cases the prefunding should progressively come down in such a manner so as to reach around 15% of the limits fixed for each BC/CSP in case of deposits and 30% in case of Bank Guarantees, etc. in say 2 years from the time a BC starts operations, the RBI said in a notification on Tuesday.

The Board should also review the position of payment of remuneration of BCs and should also lay down a system of monitoring by the top management of the Bank. The issue of allowing BCs to handle deposit and payment transactions of various credits, remittance, overdraft and other products of banks must also be examined by the Board from time to time. Complaints redressal system in this regard should also be laid down by the Board.

As the cash handled by BCs is Bank’s cash, the responsibility for insuring this cash should rest with the banks... Read more

International News

MF assets fall by $5.60bn to $907bn in latest week
Total money market fund assets increased by $7.32 billion to $2.58 trillion for the week ended Wednesday, April 23, the Investment Company Institute reported.

Among taxable money market funds, treasury funds (including agency and repo) increased by $7.68 billion and prime funds increased by $4.42 billion. Tax-exempt money market funds decreased by $4.78 billion.

Retail: Assets of retail money market funds decreased by $5.60 billion to $907.28 billion. Treasury money market fund assets in the retail category decreased by $1.04 billion to $200.45 billion, prime money market fund assets decreased by $1.80 billion to $518.22 billion, and tax-exempt fund assets decreased by $2.76 billion to $188.61 billion... Read more

Gatekeepers anticipate defined benefit plans will increase alternative investments
According to new research from global analytics firm Cerulli Associates, gatekeepers anticipate defined benefit plans will increase their proportion of alternative investments during the next year.
"The 2008 financial crisis left institutions in search of more consistent portfolio returns across different economic environments," states Michele Giuditta, associate director at Cerulli. "There is new thinking around portfolio construction, leading institutions to reevaluate their models for governance, asset allocation, and implementation."
In the second quarter issue of The Cerulli Edge - Institutional Edition, Cerulli examines institutional portfolios, taking a close look at asset allocation and risk factors... Read more

US money market fund assets fall by $35bn in latest week
Total money market fund assets decreased by $35.02 billion to $2.58 trillion for the week ended Wednesday, April 16, the Investment Company Institute reported on Thursday.
Among taxable money market funds, treasury funds (including agency and repo) decreased by $11.37 billion and prime funds decreased by $18.54 billion. Tax-exempt money market funds decreased by $5.11 billion.

Retail: Assets of retail money market funds decreased by $5.33 billion to $912.96 billion. Treasury money market fund assets in the retail category decreased by $1.21 billion to $201.49 billion, prime money market fund assets decreased by $1.51 billion to $520.10 billion, and tax-exempt fund assets decreased by $2.61 billion to $191.37 billion... Read more

New Appointments

Baroda Pioneer AMC appoints Mahmood Basha as Head of Sales
Baroda Pioneer Asset Management Company Limited has announced the appointment of Mahmood Basha as Head of Sales effective 15th April 2014. In Baroda Pioneer AMC, Mr. Basha will be responsible for the entire sales and distribution strategy of the company.

Mr. Basha brings with him over 18 years of experience. Prior to joining Baroda Pioneer AMC, he was the National Sales Head for PineBridge Investment Asset Management Company. He has also worked for Franklin Templeton Investments and Karvy Consultants.

Commenting on this development, Jaideep Bhattacharya, Managing Director, Baroda Pioneer AMC said, “We are pleased to have Mahmood Basha on board. He brings with him wealth of knowledge, expertise and necessary leadership that will be invaluable to continue to drive the growth of Baroda Pioneer AMC.”

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