Mutual Fund Newsletter - October 28 to November 01, 2013

SEBI chairman UK Sinha said that we are now asking mutual funds to select and adopt districts. This may help increase the penetration of mutual funds.

November 01, 2013 3:20 IST | India Infoline News Service
Top Stories

MFs offload equities worth Rs. 2,801 cr in Sept 2013
Mutual funds made net investment of Rs. 79,169 crore in the secondary market in September 2013 compared to net investment of Rs. 5,359 crore in August 2013, according to SEBI (Securities and Exchange Board of India) data. 

Mutual funds sold Rs. 2,801 crore in equity September 2013 compared to Rs. 1,607 crore invested in August 2013. Mutual Funds invested Rs. 81,970 crore in debt market in September 2013 as against of Rs. 3,752 crore invested in August 2013... Read more

MFs report net outflow of Rs. 33,910 cr in Sept 2013
During September 2013, mutual funds saw a net outflow of Rs 33,910 crore as compared to outflow of Rs. 23,713 crore during August 2013, according to SEBI (Securities and Exchange Board of India) data.

The private sector outflow was Rs 28,235 crore, while public sector mutual funds reported outflow of Rs 5,674 crore in September 2013, SEBI added.

In the financial year 2013-14 so far, mutual funds net mobilised Rs. 35,342 crore as compared to Rs. 1,01,875 crore mobilized in corresponding period of 2012-13.

The market value of assets under management stood at Rs. 7,45,969 crore as on September 30, 2013 as compared to Rs. 7,66,103 crore as on August 30, 2013, indicating a decrease of 2.6 percent.

SEBI tells MFs to adopt districts
In order to increase the penetration of mutual funds in various districts, Securities and Exchange Board of India has asked mutual funds to adopt different districts.

SEBI chairman UK Sinha said that we are now asking mutual funds to select and adopt districts. This may help increase the penetration of mutual funds.

Sinha was speaking at a conference on investor protection in capital markets in Mumbai on Monday.

According to a Crisil report, quoting AMFI data, the top five cities contribute 74 per cent to the pie, with the remaining 26 per cent distributed among other cities.

Reactions to RBI policy

Any rate hike in future may disturb liquidity easing measures
Commenting on RBI policy, Vidya Bala, Head-Mutual Funds Research, FundsIndia.com, said: The MSF rate cut and measures to ease liquidity will further ease rates in the short-end of the yield curve. As acknowledged by RBI, between mid-September and October, money market rates fell by 125 basis points. The latest cut together with liquidity easing measures would mean a price rally in short-term debt instruments for some more time... Read more

Short term rates to ease due to cut in MSF rates: FTI
Commenting on RBI policy, Santosh Kamath, CIO-Fixed Income, Franklin Templeton Investments-India, commented, “We expect short term rates to ease in response to the cut in MSF rates and expansion of term repo facilities, and the yield curve to steepen. Going forward, the utilization of MSF window is likely to reduce progressively.”... Read more

RBI policy move came on expected lines: Kotak MF
Commenting on RBI policy, Lakshmi Iyer, Sr Vice President and Head, Fixed Income, Kotak Mutual Fund, said: The policy move by RBI came on expected lines and indicated a return to the normalcy of the pre-June 2013 period.  It is evident from the stance that improving systemic liquidity and managing inflation are now the key policy objectives driving the central banker’s decision... Read more

RBI is done with its brief rate tightening stance: ICICI Pru MF
Commenting on RBI policy, Nimesh Shah, MD & CEO, ICICI Prudential Mutual Fund, said: "Short term rates are expected to respond positively to RBI’s policy stance as the MSF rate cut and additional liquidity through term repo may reduce the overall cost of funds for the banking system. Taking this into account, overnight rates should moderate and may gradually move closer to the repo rate based on the daily liquidity conditions in the system. Though the MSF rate still remains the operative rate, RBI’s further steps to improve liquidity will finally make repo as the operative rate.”... Read more

RBI may hold off aggressive rate hikes: Axis MF
Commenting on RBI policy, Axis Mutual Fund, said, Two trends have driven the RBI policy recently. First the need to exit the emergency liquidity tightening measures implemented since mid-July; and second a shift from WPI to CPI as the inflation benchmark... Read more

Domestic News

41% Indians consider buying jewellery a form of saving: Survey
Indian and Chinese employees and workers are at risk of not saving sufficient for a comfortable retirement as they often invest their money in short-term instruments that may not serve as a long-term hedge to inflation, according to a survey by Towers Watson.

Employees in both countries are facing challenges accompanying increased life expectancies and post-retirement days, and they are at risk of not saving enough for a comfortable retirement, Towers Watson's Savings Attitudes Survey (India and China) added...
Read more

RBI closes special window for mutual funds
In order to enhance liquidity, the Reserve Bank of India on Tuesday decided to close the special window for commercial banks to meet the cash requirements of mutual funds (MFs) with immediate effect.

“With the normalisation of exceptional measures and taking into consideration the improvement in liquidity conditions since then, it has been decided to close this window with immediate effect,” RBI Governor Raghuram Rajan said in the second quarter monetary policy review.

The central bank had opened a special borrowing window of Rs. 250 billion in July to improve the liquidity of funds in mutual fund sector.

Bullion India launches Unit Systematic Plan
Bullion India launched an investment plan Unit Systematic Plan (USP), which helps customers accumulate physical gold and silver conveniently in small amounts through periodic systematic investments.

The Unit Systematic Plan is available online on the website and interested customers can register online and upload their KYC details. Customers can also register and apply for the plan through the agent and broker network of Bullion India The customer can invest in systematic investment options ranging from minimum 6 months to 36 months... Read more

DSP BlackRock MF launches Plan F: Your Financial Fitness Plan
DSP BlackRock Mutual Fund, one of the premier asset management companies in India, has launched Plan F: Your Financial Fitness Plan, a unique TV investor education initiative in association with CNBC TV18. Plan F is a 10-episode weekly series, which will showcase investors from across the country and their savings and investment experiences - good moves, bad calls and the impact of each decision on their families as well.

The aim of ‘Plan F’ is to provide simple and effective savings and investment lessons and advice to audience, so that they can start making well informed financial decisions as well as learn the right way of investing. A panel of investment experts shall evaluate and rate the fitness of the financial plans during the show... Read more

Special Stories

Installment under reverse mortgage would be tax exempt: NHB
In order to make the reverse mortgage scheme more attractive for senior citizens, the government has decided to give tax break on installment earned by pledging their residential property.

The reverse mortgage scheme is operated by National Housing Board and housing finance companies, banks and insurance companies.

It has been decided that installment under the reverse mortgage scheme would be tax exempt, NHB said.

Besides income tax benefit, the installment income or annuity is expected to increase at least three times to the benefit of retired person, NHB added.

SEBI relaxes share transfer norms for deceased holders' accounts
Capital market regulator SEBI (Securities and Exchange Board of India) has simplified the procedure for transfer of securities from the account of a deceased person and raised the threshold limit for such transactions in demat format to Rs. 5 lakh.

Transmission means to the transfer of securities from the account of a deceased holder to that of surviving joint holder, nominee or legal heir.

In case of transmission of securities in dematerialized mode, where the securities are held in a single name without a nominee, the existing threshold limit of Rs. 1 lakh per beneficiary owner account has now been revised to Rs. 5 lakh, SEBI said in a notification on Monday... Read more

Stock exchanges to include list of active clients in report: SEBI
Capital market regulator SEBI (Securities and Exchange Board of India) has directed stock exchanges to include information on the number of active clients of each broker and the percentage of complaints received against active clients in their reports on their Web sites.

The objective is to bring more transparency in the disclosure of complaint redressal status of the stock brokers on the website of stock exchange, in consultation with the stock exchanges and the associations of stock brokers, SEBI said in a notification on Monday.

Active clients are those who have traded at least once in the last year, said SEBI. This would ascertain the efficiency and increase transparency of the grievance redressal process at the broker and stock exchange levels... Read more

SEBI simplifies issuance and listing of debt securities
Securities and Exchange Board of India (SEBI) on Tuesday notified Regulations for Issue and Listing of Debt Securities to provide for simplified regulatory framework for issuance and listing of non-convertible debt securities (excluding bonds issued by Governments) issued by any company, public sector undertaking or statutory corporations.

The Regulations will not apply to issue and listing of, securitized debt instruments and security receipts for which separate regulatory regime is in place.

Cash flows emanating from the debt securities shall be mentioned in the Prospectus/Disclosure Document, by way of an illustration, SEBI said in a notification... Read more


Know what is trigger facility in mutual funds
The trigger option provided by various asset management companies (AMCs) ensures that investors are able to complete the sale or redemption of their mutual fund units smoothly and without any disruption. The trigger facility helps investors not to miss an opportunity and make the most of market movements without the hassle of constant tracking... Read more

International News

Europe's incredible shrinking pension funds landscape
The move to fewer, larger pension funds in key markets such as the Netherlands and United Kingdom could work to the advantage of asset management groups, according to the November issue of The Cerulli Edge-Global Edition.

A trimming of pillar II pension funds-many defined benefit but also some defined contribution-is well underway in Europe. Switzerland's pension landscape, for example, shrunk from more than 2,700 vehicles six years ago to about 2,100 now. Cerulli understands that in three years there will be just 1,500.

The Dutch pension watchdog is even more ambitious with a target of 100 funds. There were 672 pension schemes in the Netherlands in 2012... Read more

MF-owning households’ willingness to take investment risk remains subdued
An annual survey of U.S. households by the Investment Company Institute found that mutual fund–owning households’ willingness to take investment risk remained at the same subdued levels seen since the 2008 financial crisis. Three in 10 mutual fund–owning households were willing to take substantial or above-average risk for financial gain in May 2013, compared with 36 percent in May 2008. Older investors continued to report a much lower tolerance for investment risk overall when compared with younger investors.

“The dramatic stock market decline from October 2007 to March 2009 appears to still linger in investors’ minds,” Sarah Holden, ICI senior director of retirement and investor research said on Thursday. “Nevertheless, equity mutual funds continue to be the most commonly owned type of fund, held by 86 percent of mutual fund–owning households.”... Read more

Direct-to-investor assets nearly doubled since 2008
According to new research from Cerulli Associates, a Boston-based global analytics firm, direct-to-investor assets have nearly doubled since 2008 and the growth has outpaced advisor-intermediated investing.

"We've seen tremendous growth in direct-to-investor distribution models, predominantly discount trading platforms that are transforming into comprehensive advice providers," comments Roger Stamper, senior analyst at Cerulli... Read more

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