Mutual Funds Newsletter - June 30 to July 04, 2014

Growth was driven by rise in assets of equity funds, short-duration debt funds and fixed maturity plans (FMPs).

July 07, 2014 9:54 IST | India Infoline News Service
Mutual funds average assets post a record rise in June quarter
The uptrend in the Indian mutual fund industry continues. The June quarters average assets under management or AUM (excluding fund of funds) posted a record rise of 9.05%, or by Rs 819.57 bn, to Rs 9.87 trillion, according to the Association of Mutual Funds in India (AMFI). Growth was driven by rise in assets of equity funds, short-duration debt funds and fixed maturity plans (FMPs).

Equity mutual funds saw record absolute rise in average AUM up by Rs 330.07 bn or 16% to Rs 2.36 trillion led by mark to market gains and inflows. The equity funds contribution to the gains in the industry assets was the highest among all categories. The latest gain was also the third consecutive gain for the category, and was primarily led by improvement in sentiment for the underlying asset class on hopes of strong economic reforms by a stable majority government at the centre. The domestic equity market (represented by CNX Nifty index) surged 13.53% in the latest quarter... Read more

Fund managers shy away from IT stocks
Asset management companies investment in IT (information technology) segment declined to Rs. 22,986 crore at the end of May. This drop is the lowest in the past nine months since August 2013. AMCs investment in IT stocks was at Rs. 22,986 crore as on May 31, compromising 10.25% of the total equity assets under management of Rs. 2.25 trillion, according to the SEBI (Securities and Exchange Board of India) data. The total value of the mutual fund investments stood at Rs. 20,284 crore in August 2013. The investment of fund houses in software stocks was at Rs. 24,438 crore in April this year, the data added.
MF asset base at Rs. 9.85 trillion in Q1 FY15
AMFI says the total asset base of mutual funds could reach Rs. 20 trillion in the next four-five years from about Rs. 9.85 trillion currently, according to a media report. The collective AUM of 45 fund houses stood at about Rs. 8 trillion at the end of 2013 and has grown to Rs. 9.85 trillion during the first quarter of the current fiscal. However, the asset base of mutual funds together had touched a record Rs. 10.11 trillion in May.

Investors with inactive a/cs to get statements upon request: SEBI
The SEBI on Tuesday has said that holders of a basic services demat accounts will not receive a physical statement from their depository participant (DP) if they have not transacted for over a year and have zero balance in the account.  SEBI further said that the DPs have to inform the holders that the dispatch of physical statement would be discontinued if they do not pay annual maintenance charges for zero balance accounts even after a year. However, DPs have to send at least one physical statement of holding to a beneficial owner with no transaction and nil balance even after the account has remained in such state for one year... Read more

Our objective is to enlighten stakeholders regarding risks: Preeta Misra
Indian mutual fund industry is reaching new heights having recently crossed Rs 10 lakh crore assets under management (AUM) mark in the 50th year of its anniversary, but so are the risks related to the industry. As a part of its on-going efforts to enhance the knowledge on risk management, Dun & Bradstreet (D&B), the worlds leading provider of business information, knowledge and insight in association with Reliance Mutual Fund which is one of Indias leading mutual funds, organized a roundtable on Mutual Fund Risk Management, a first-of-its kind initiative in the mutual fund industry, in Mumbai... Read more

SEBI chief meets Arun Jaitley ahead of Budget 2014
SEBI Chairman UK Sinha held discussions with Finance Minister Arun Jaitley days ahead of the Union Budget. However no further details have been provided about the highlights of the meeting. SEBI had earlier presented its wish list to FM for the upcoming Union Budget. SEBI had asked government to allow PSUs to invest surplus funds in mutual funds. The regulator had also pushed for tax exemption in mutual fund pension schemes and also to simplify RGESS for retail investors. SEBI would also make presentation on the simplifying tax rules.

US equity funds estimate outflows at $30mn for latest week
Equity funds had estimated outflows of $30 million for the week, compared to estimated outflows of $923 million in the previous week. Domestic equity funds had estimated outflows of $1.31 billion, and estimated inflows to world equity funds were $1.28 billion. Hybrid funds, which can invest in stocks and fixed-income securities, had estimated inflows of $1.25 billion for the week, compared to estimated inflows of $1.06 billion in the previous week. Bond funds had estimated inflows of $3.27 billion, compared to estimated inflows of $4.16 billion during the previous week. Taxable bond funds saw estimated inflows of $2.70 billion, and municipal bond funds had estimated inflows of $562 million.

Interest rates to remain subdued for long time: Gross
Investors pulled $4.5 billion from Grosss Pimco Total Return Fund in June, marking the 14th consecutive month of outflows. Assets in the flagship bond fund at Pacific Investment Management Co. fell to $225.2 billion at the end of June. Pimco founder and CIO, Bill Gross said he sees bubbly pockets in the market. According to Gross, there can be tight conditions which restrict a company in terms of their ability to lever going forward. In his latest investment outlook, Gross said he expects interest rates to remain subdued for a long time, which should limit the risk of a bear market in stocks... Read more

Asia-Pacific ETFs at $170bn in Q1 of 2014: Cerulli
The total assets under management (AUM) of the Asia-Pacific exchange-traded fund (ETF) space hardly budged in the first four months of 2014, staying at around the US$170 billion mark, according to Cerulli report. A US$2.7 billion gain in ETF AUM in Japan in the January to April period was offset by falls of US$2.5 billion, US$0.2 billion, and US$2.2 billion in China, Hong Kong, and Korea, respectively. The sluggish performance in ETF AUM is likely more due to uncertain global market conditions than investors losing faith in ETFs as viable investment options in a portfolio... Read more

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