Mutual Fund Newsletter – August 04 to 08, 2014

India Infoline News Service | Mumbai |

The RBI has maintained status quo as per our and consensus expectations, according to Kunal Shah, Fund Manager-Debt, Kotak Mahindra Old Mutual Life Insurance Ltd

News this week

AMCs appoint KPMG to meet US Fatca norms
Asset management companies (AMCs) have hired global consultant KPMG to help them meet the complex requirements under the Foreign Account Tax Compliance Act (Fatca), a new anti-tax avoidance law in the US, according to a media report. Fatca, which is expected to be implemented in India by the end of the year, aims to track investments made by US citizens outside the US and bring it under the US tax-net, the report added. Financial institutions such as mutual funds receiving money from US investors will have to make extensive disclosures about the investors and the investments made to the US tax authorities.

RBI appears to be cautious on the inflation front
We believe that the RBI’s Monetary Policy bias was “neutral” in Tuesday’s Policy Statement although the tone appeared to be a bit hawkish than the June 3, 2014 Policy Statement. The SLR reduction by 50 basis points is a repeat of the RBI’s measure announced in the previous Policy on June 3, 2014. However, a reduction of 50 basis points in Banks’ HTM category has surprised a section of market participants. The RBI has categorized these reductions as “resource mobilizing measures” for the private sector as and when economic conditions may require credit demand.

The RBI has also clarified during their interaction with media after the Policy Statement that the primary factor for SLR reduction was the government’s fiscal space while the secondary factor was the banking system’s liquidity needs. Based on that, we believe that more reductions in both SLR and HTM category could be possible over the next few monetary policy announcements... Read more

ICICI Pru AMC comments on RBI policy
The third bi-monthly monetary policy by RBI, more on expected lines has been neutral and balanced, whereby, the central bank has kept the policy rates unchanged, Rahul Goswami, Chief Investment Officer-Fixed Income, ICICI Prudential AMC, said. However, to enhance the credit availability to productive sectors of the economy, RBI has increased flexibility for banks by reducing the statutory liquidity ratio (SLR) of scheduled commercial banks by 50 basis points from 22.5% to 22.0% of their NDTL.

RBI has acknowledged the moderation in retail inflation, indicating that broad based moderation is accompanied by deceleration in the momentum as well. We expect the CPI inflation coming much lower than RBI’s expectation of 8%, panning out closer to 7.5% by Jan 2015. On the growth projections, we continue to believe that there is high probability of GDP close to 5.50%, with somewhat downside risk because of lower monsoon impacting agricultural production... Read more

RBI policy: Disinflation process to continue
The RBI has maintained status quo as per our and consensus expectations, according to Kunal Shah, Fund Manager-Debt, Kotak Mahindra Old Mutual Life Insurance Ltd. RBI highlights that risk to inflation is more balanced than the situation in June, however re-iterated that the risk to target of 6% by 2016 are on upside. Policy appears to be hawkish than June statement but in near term it will align the expectation of early rate cuts to gradual ones. RBI has reduced SLR & HTM by 50bp as a plan to gradually reduce the reserve requirement overtime to help banks fund credit requirement of the economy. We expect current disinflation process to continue and core inflation to moderate further however sharp fall is unlikely in short-term given weak start of monsoon... Read more

Religare Invesco declares dividend under Mid N Small Cap Fund
Religare Invesco Mutual Fund has announced dividend in Religare Invesco Mid N Small Cap Fund. The quantum of dividend is Rs. 2.50/- per unit under the dividend option, while it is Rs. 2.55/- under the Direct Plan – Dividend Option on the face value of Rs. 10 per unit. The record date of dividend is August 8, 2014. All investors under the dividend option, whose names appear on the register of unit holders as on August 8, 2014 would be eligible for dividend... Read more

US Alternative Mutual Fund Assets expected to double
According to new research from global analytics firm Cerulli Associates, alternative mutual fund assets are expected to double their share of total mutual fund assets."Alternative assets are expected to grow with robust momentum, and double their share of total mutual fund assets in the next two years," states Michele Giuditta, associate director at Cerulli.

This research comes from Cerulli's latest report, Alternative Products and Strategies 2014: Identifying Opportunities in a Dynamic Investment Landscape, a comprehensive sourcebook focused on the U.S. retail and institutional alternative product landscape, including distribution and product development trends... Read more

Learning

Cash crunch? How to prioritize payments?
It sometimes happens that we are short of cash. Some unexpected expense or sudden loss of income is something that all of us face at some point of time. If you ever find yourself in such a situation and have to prioritise your payments, here is a list:

Mortgage: A roof above your head is the biggest security you can get. Make sure you and your family has it all the while. So, do not miss your home loan EMI. Missing an EMI on your home loan could also affect your Cibilreport. Cash crunch is a temporary phase, but an impact on Cibil score could last longer... Read more
 

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