Mutual Funds Newsletter - April 28 to May 02, 2014

India Infoline News Service | Mumbai |

CRISIL’s Mutual Fund Ranking for the quarter ended March 2014 shows short-term debt categories delivering the highest returns.

Top Stories

MFs lost 88 lakh investor accounts in past 5 yrs
Mutual Funds lost about 33 lakh individual accounts or folios in the financial year 2013-14, according to SEBI (Securities and Exchange Board of India) data. Folios are numbers given to individual investor accounts, although one investor can have multiple folios. At present, there are 44 fund houses. The number of folios fell to around 3.95 crore at the end of 2013-14, from 4.28 crore in the last fiscal (2012-13)—a decline of 33 lakh investor accounts. In the past five financial years till 2013-14, the Mutual Fund industry had lost more than 88 lakh investor accounts. The Mutual Fund sector, which held 4.75 crore folios at the end of financial year 2008-09, saw increase of 3.66 lakh new investors account to 4.8 crore in 2009-10. However, later the number of folios tumbled to 3.95 crore during the past financial year.

In debt, short-term categories have returned more: CRISIL
CRISIL’s Mutual Fund Ranking for the quarter ended March 2014 shows short-term debt categories delivering the highest returns. Debt funds are represented by four unique indices – the CRISIL – AMFI Short-Term Debt Fund Performance Index, the CRISIL – AMFI Money Market Fund Performance Index, the CRISIL – AMFI Income Fund Performance Index and the CRISIL – AMFI Gilt Fund Performance Index.
 
A much-touted investment maxim says long-term investments yield higher than short-term, but elevated interest rates of the last three years have inverted the thesis. In this period, yields on 10-year government security increased from 7.98% to 8.80%, peaking at 9.23% in December 2013. On the other hand, the 1-year certificate of deposit yielded 9.37% on an average over the same period -- helping short-term debt schemes which typically follow an accrual strategy in times of rising interest rates. Long-term debt funds, on the other hand, were impacted by mark-to-market losses...
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Special Stories

FDI inflows rise 12% to $2bn in Feb
Foreign direct investment into India increased 12.29% to $2.01 billion in February 2014 from $1.79 billion in February 2013, according to the data by the Department of Industrial Policy and Promotion. FDI inflows declined 0.6% to $20.76 billion during the April-February period of the last fiscal from $20.89 billion during the first 11 months of 2012-13. The highest FDI came in services ($2.18 billion), followed by automobiles ($1.28 billion), pharmaceuticals ($1.27 billion) and construction development ($1.05 billion) in the 11 months of 2013-14.

SEBI settles only 36 cases through consent orders in FY14
The SEBI (Securities and Exchange Board of India) said that it has settled 36 cases through consent settlement mechanism in the last fiscal (FY14) as against 52 cases during the preceding financial year 2012-13. The regulator has collected about Rs. 4.15 crore as charges and fees through the consent settlement in 36 cases, whereas it had collected around Rs. 12.62 crore through settlement in FY13. The decline in the settlement cases is due to the strict norms imposed by SEBI. According to the new regulations, entities charged with serious offences like illegal money pooling, insider trading and fraudulent trades have been excluded from the settlement process. These norms were notified with retrospective effect from April 20, 2007 -- the day when SEBI's existing consent settlement system was introduced... Read more

Domestic News

BSL MF declares dividend for Banking And Financial Services Fund
Birla Sun Life Mutual Fund have approved Friday, May 02, 2014, as the record date for declaration of dividend for Birla Sun Life Banking And Financial Services Fund. The NAV of the scheme, pursuant to pay out of dividend would fall to the extent of the payout and statutory levy (if applicable). All unitholders whose names appear in the Register of Unitholders under the dividend option/plans of the said scheme as at the close of business hours on the Record Date shall be eligible to receive the dividend so declared.

Deutsche Asset Management India launches FMP–Series 68 and 69
Deutsche Asset Management India has launched fixed maturity plans. DWS FMP – Series 68 NFO will close on 12 May 2014 and DWS FMP–Series 69 NFO will open for subscription on 9th and will close on 19th May 2014. The objective of the above schemes is to generate income by investing in debt and money market instruments maturing on or before the date of the maturity of the Scheme. The schemes will invest predominantly in Non Convertible Debentures (NCD)/Bonds. The benchmark, minimum investment and entry & exit load are the same for all above mentioned schemes. The benchmark is CRISIL Short Term Bond Fund Index. Minimum investment: Rs. 5000 per application. There is zero Entry and Exit Load during the NFO period... Read more

DSP BlackRock MF launches FMP-Series 164–12M on May 6
DSP BlackRock Investment Managers Pvt Ltd will launch FMP-Series 164–12M on May 6. The scheme will close on May 7. The primary investment objective of the Scheme is to seek to generate returns and capital appreciation by investing in a portfolio of Debt and Money Market Securities. The Scheme will invest only in such securities which mature on or before the date of maturity of the Schemes. The cumulative gross exposure through Debt and Money Market securities will not exceed 100% of the net assets of each Scheme... Read more

International News

Online platforms stir China's distribution landscape
Online platforms have emerged as an important channel in China's distribution landscape. This has been famously led by Yu E Bao, or Lost Treasure, an online funds platform launched by Alipay that sells a short-term money market fund. By end-2013, Yu E Bao had reportedly reached an asset size of RMB185 billion. It single-handedly lifted Tianhong Asset Management, the manager of the fund, from obscurity to become the second largest fund management company in China by the end of last year. But the success of Yu E Bao can't mask some unique challenges that online platforms face, as we presented in Cerulli Associates' Asset Management in China 2013 publication that assesses the state of the asset management industry in the country... Read more

Assets of US mutual funds fall by$1bn in March: ICI
The combined assets of US mutual funds decreased by $1.0 billion, or 0.0 percent, to $15.23 trillion in March, according to the Investment Company Institute’s official survey of the mutual fund industry. In the survey, mutual fund companies report actual assets, sales, and redemptions to ICI. Long-term funds—equity, hybrid, and bond funds—had a net inflow of $26.83 billion in March, versus an inflow of $32.65 billion in February. Equity funds posted an inflow of $10.42 billion in March, compared with an inflow of $19.19 billion in February. Among equity funds, world equity funds (U.S. funds that invest primarily overseas) posted an inflow of $8.53 billion in March, versus an inflow of $9.76 billion in February. Funds that invest primarily in the United States had an inflow of $1.90 billion in March, versus an inflow of $9.43 billion in February... Read more

Eastern Europe's Double Whammy
As recently as the middle of last year, Eastern Europe appeared to have put its lengthy spell in the investment doldrums behind it: Russian President Vladimir Putin was making encouraging noises about infrastructure investment, the Winter Olympics loomed, and many investors saw increasingly positive signs emerging from Turkey. Since then, funds have suffered a double blow, according to the April edition of The Cerulli Edge-European Monthly Product Trends. Russia's foray into Ukraine has drawn international ire and now, sanctions. Putin admits that the latter is likely to result in a capital outflow of US$70 billion (€51 billion) in the first quarter of the year-more than initially expected. The other major stumbling block has been Turkey. Its problem stems from the withdrawal of quantitative easing by the U.S. Federal Reserve... Read more

Infrastructure funds may be poised for rapid growth
The April 2014 issue of The Cerulli Edge-US Monthly Product Trends, analyzes product strategy and development. The April Monthly Spotlight features fund rationalization. Close to half (47%) of North American institutional investors surveyed in 2014 intend to increase their allocation to infrastructure, according to Preqin. For retail investors, infrastructure funds, including those that use in master limited partnership (MLP) funds to invest in oil and gas infrastructure, offer attractive yields and can operate as a hedge against inflation. Infrastructure funds may be poised for rapid growth-flows for the category were $2.7 billion in 2013 compared to only $892 million in 2012. According to Cerulli's 2014 product development survey, small-cap strategies are on asset managers' radars for both the retail and institutional space. Product developers report that close to one-quarter of retail U.S. equity product plans will be focused on small caps and 11% on institutional... Read more
 

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