Mutual Funds Newsletter – March 31 to April 04, 2014

India Infoline News Service | Mumbai |

Birla Sun Life Mutual Fund aims to increase its equity assets by 40% to Rs. 6,000 crore in the next financial year from Rs 4,300 crore, according to a media report

Top Stories

MFs’ average assets cross Rs 9 trillion mark: CRISIL
The Indian mutual fund industry reached another milestone in the quarter ended March 2014. Its average assets under management or AUM (excluding fund of funds) rose over 3%, or by Rs 277 bn, to Rs 9.04 trillion, according to the Association of Mutual Funds in India (AMFI). Growth in the latest quarter was driven by inflows into fixed maturity plans (FMPs), money market and equity funds. For the financial year 2013-14, the industry’s assets increased 11% or Rs 876 bn vis-à-vis 23% growth seen in the previous financial year. Equity mutual funds’ average AUM rose for the second consecutive quarter and regained the Rs 2 trillion mark after a gap of three quarters. The assets rose by 4% or Rs 71 bn to Rs 2.03 trillion led by inflows in January and February (as per latest data available from AMFI) and mark to market (MTM) gains in the quarter. The underlying market, represented by the CNX Nifty, gained 6% during the quarter, led by encouraging domestic economic indicators, positive global sentiment and strong buying by foreign institutional investors (FIIs)... Read more

MFs offload equities worth Rs. 1,345 crore in Feb
Mutual funds made net investment of Rs. 60,669 crore in the secondary market in February 2014 compared to net investment of Rs. 42,900 crore in January 2014, according to SEBI (Securities and Exchange Board of India) data. Mutual funds sold Rs. 1,345 crore in equity in February 2014 compared to Rs. 2,515 crore sold in January 2014. Mutual Funds invested Rs. 62,015 crore in debt market in February 2014 as against of Rs. 45,415 crore invested in January 2014. As on February 28, 2014 there were a total of 1,538 schemes under mutual funds of which Income / Debt oriented schemes were 1,089 (70.8%), equity oriented schemes were 353 (23%), Exchange traded Funds were 39 schemes (2.5%), Balanced schemes were 30 (2%) and Fund of Funds investing Overseas schemes were 27 (1.8%)... Read more

Leader Speak

There is no leadership in the current rally: IDBI MF
“With the economy expected to do well in the next three years, sectors like banking, automobiles, engineering and pharmaceuticals can be looked at with a neutral view on IT and FMCG sectors,” V Balasubramanian, Head-Equity & Fund Manager–Equity & Gold, IDBI Asset Management Ltd, says... Read more

Domestic News

ICICI Pru MF's assets cross Rs. 1 trillion in March quarter
Out of the 43 fund houses that have declared their average AUM, 30 posted a rise in their assets in the quarter ended March 2014, according to the Association of Mutual Funds in India (AMFI). ICICI Prudential Mutual Fund registered the highest growth in assets in absolute terms, up by Rs 96 bn to Rs 1.07 trillion, followed by Birla Sun Life Mutual Fund, whose assets rose by Rs 41 bn to Rs 891 bn. In percentage terms, JPMorgan Mutual Fund saw the highest rise of 26% in assets to Rs 162 bn. HDFC Mutual Fund retained its top position across fund houses in the March quarter. The fund’s average AUM was up by around 4% or Rs 40 bn to Rs 1.13 trillion... Read more

LIC Nomura MF average assets rise 47.32% in March quarter
LIC Nomura Mutual Fund Average Assets Under Management (AAUM) stood at Rs. 71.84 billion for the quarter of January-March 2013 which has witnessed a significant rise for quarter January-March 2014 to Rs. 105.84 billion. This has led to a growth in the asset base of 47.32% vis-a-vis the industry growth of 10.73%. In February, LIC Nomura launched ‘Rajiv Gandhi Equity Savings Scheme Fund- Series II’ (RGESS), a close ended equity oriented scheme investing in BSE 100 AND CNX 100 stocks. It also provides tax benefits under Section 80CCG for the investors and is aimed to inculcate retail participation in the domestic market. LIC Mutual Fund was set up by the Life Insurance Corporation of India on 20th April 1989 to engage in the business of Mutual Fund.

Birla Sun Life MF to increase equity investor base
Birla Sun Life Mutual Fund aims to increase its equity assets by 40% to Rs. 6,000 crore in the next financial year from Rs 4,300 crore, according to a media report. At present, the average assets under management of the fund house stand at Rs. 90,000 crore. Equity asset base of the MF industry constituted only around 20% of their total AUMs of Rs 9.16 trillion as of end February with the rest coming in from the debt segment, the report added. The private MF house is looking at increasing equity investor base by turning the inactive folios into active ones. The fund house is opening zero account folios of investors who can invest in MF schemes in future.

RBI policy: Need to look at medium term trends, FTI says
Although wholesale price index (WPI) inflation has edged towards RBI’s comfort zone of 5%-5.5%, headline and core CPI inflation still remain at elevated levels (near 8%). Also, in an election year, dole outs might end up in fiscal pressures and increased consumption that could be inflationary in nature. We need to also keep in mind that fuel prices in India are still not fully aligned to global price movement, and there is seasonality in vegetable prices. These risks could keep policy rates at current elevated levels for an extended period of time. We therefore need to look at medium term trends rather than near term data points, Santosh Kamath, CIO-Fixed Income, Franklin Templeton Investments-India, said... Read more

International News

Asset managers across Asia look for new channels to boost MF sales
Frustrated by the dominance of banks and securities houses across the distribution landscape in Asia, asset managers are increasingly looking to differentiate their mutual fund sales approaches. Online money market fund platforms in China are a prominent example, and other alternative distribution channels include open-architecture direct sales platforms in Hong Kong, mobile phones in India, and working with regional banks in Japan. Such distribution initiatives are in their early stages of development and should not cause sleepless nights yet for banks and securities firms. Still, Cerulli believes it takes courage to attempt something different in the asset management industry in Asia... Read more

Equity funds estimated inflows of $1.23bn for latest week: ICI
Total estimated inflows to long-term mutual funds1 were $3.48 billion for the week ended Wednesday, March 26, 2014, the Investment Company Institute reported. Equity funds had estimated inflows of $1.23 billion for the week, compared to estimated outflows of $962 million in the previous week. Domestic equity funds had estimated outflows of $267 million, while estimated inflows to world equity funds were $1.50 billion. Hybrid funds, which can invest in stocks and fixed income securities, had estimated inflows of $966 million for the week, compared to estimated inflows of $1.82 billion in the previous week... Read more

Mutual fund assets increased 4% at the end of Q4 FY13
Mutual fund assets worldwide increased 4% to US$30.05 trillion, an all-time high, at the end of the fourth quarter of 2013, and rose US$3.2 trillion over the year due primarily to strong capital appreciation in equity and balanced/mixed fund categories. Worldwide net cash flow to all funds was US$252bn in the fourth quarter, compared to US$191bn of net inflows in the third quarter of 2013. Flows into long-term funds increased to US$203bn in the fourth quarter from an inflow of US$90bn in the previous quarter, and long-term mutual funds received a record inflow of US$955bn in 2013. Equity funds worldwide had net inflows of US$145bn in the fourth quarter, up from US$77bn of net inflows in the third quarter. Outflows from bond funds totaled US$15bn in the fourth quarter, down from net outflows of US$55bn in the third quarter. Inflows into money market funds were US$49bn in the fourth quarter of 2013, somewhat lower than the US$101bn inflow recorded in the third quarter of 2013... Read more

Evolving with a changing asset management industry
Cerulli cautions that product providers must understand the dynamics affecting each possible distribution outlet to protect and grow their marketshare. Spurred by readers and Cerulli's research engine, the Edge that almost wasn't celebrates its 200th issue. Cerulli Associates has launched the 200th issue of its flagship periodical, now known as The Cerulli Edge - U.S. Asset Management Edition. In this special issue, Kurt Cerulli, founder and principal of Cerulli Associates reflects on the state of the industry via a 'look back' to the inaugural issue published 17 years ago. "There was almost no Cerulli Edge, because my first reaction to the suggestion back in 1997 that we add a monthly publication was quite negative," states Kurt Cerulli. "Since then, we have witnessed amazing things."... Read more

European flexible bonds have nowhere to flow
With the Fed tapering its monthly bond purchases and investors gearing up for interest rate hikes, money flooded into flexible and unconstrained bond funds. Many decided to flee traditional bond funds in favor of those less exposed to interest rate risk, according to the March edition of The Cerulli Edge-European Monthly Product Trends. In 2013, €23.5 billion (US$32.6 billion) flowed into flexible European bond funds, more than 30% of their total assets under management at the end of 2012. That compares with €73 billion for conventional bond funds, a flow rate of just 4.1%... Read more

Learning

What are foreign currency exchangeable bonds
The Union Finance Minister in his budget speech of 2007-08 had proposed the introduction of foreign currency exchangeable bonds (FCEBs). Pursuant to the announcement, the RBI (Reserve Bank of India) initially issued guidelines with respect to such bonds in form of a scheme being the issue of Foreign Currency Exchangeable Bonds Scheme, 2008 (Scheme). Thereafter, the Scheme was notified in February 2009 by amendments to the Foreign Exchange Management Regulations with retrospective effect from September 2008... Read more
 

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