Mutual Funds Newsletter - November 05 to 08, 2013

However, the actual number of mutual fund holders closing the schemes would be much lower than the number of folios due to duplication of around 25% of folios.

November 09, 2013 10:20 IST | India Infoline News Service
Top Stories

MFs avg AUM falls by 4.5% to Rs. 8.08 lakh crore in Sept quarter
Indian mutual funds' average assets under management (AUM) fell by 4.5% or Rs 38,355 cr to Rs 8.08 lakh cr during the quarter ended September 2013 compared to Rs 8.47 lakh cr in the previous quarter (excluding fund of funds), according to CRISIL.

The quarter marked the sharpest fall in mutual fund assets since December 2010 as investor sentiments were hurt due to volatility in equity and debt markets following the weak Indian currency, CRISIL said... Read more

Around 10mn equity MF schemes closed in last 30 months
Around 10 million folios of equity mutual fund schemes have closed in the last four-and-a-half years, according to the SEBI (Securities and Exchange Board of India) data.

Over 9.96 million equity folios have been closed so far since March 2009, the SEBI data added.

However, the actual number of mutual fund holders closing the schemes would be much lower than the number of folios due to duplication of around 25% of folios.

Equity folios, as a percentage of the total number of folios, have declined to 75.4% at the end of September 2013 from 86.2% at the end of March 2008... Read more

MFs investment in bank stocks account for 15.75% of total AUM
The mutual fund industry’s investment in bank stocks stood at Rs. 268.38 billion as on September 30, 2013, which is 15.75% of their total equity assets under management (AUM) of Rs 1.7 trillion, according to SEBI data.

After declining for four consecutive months, bank stocks rose in September on value buying and a number of measures announced by RBI (Reserve Bank of India).

In August, mutual funds’ investment in bank stocks was Rs. 227.44 billion — the lowest level in four years. However, the investment had increased to Rs. 436.59 billion in December 2012.

In September, the BSE banking index called Bankex gained 6.4%, while the BSE benchmark Sensex comprised of 30 stocks rose 4%.

Special Stories

Aadhaar Card to be accepted as KYC proof: PFRDA
The PFRDA (Pension Fund Regulatory and Development Authority) has notified that the letter issued by Unique Identification Authority of India (UIDAI) will be accepted as a valid proof for Identity and address.

It has now been decided to accept e-KYC service launched by UIDAI as a valid process for KYC verification in consultation with UIDAI. The information authenticated and transferred by UIDAI containing demographic details and photograph as a result of e-KYC process shall be treated as sufficient proof of Identity and Address of the client, PFRDA said in a circular on 24th October... Read more

SEBI revises system audit guidelines for stock exchanges
Market regulator SEBI (Securities and Exchange Board of India) has asked stock exchanges to report all major non-compliances and observations by system auditors of stock brokers on a quarterly basis.

The exchanges are also required to ensure that all major audit findings specifically in critical areas, are rectified or complied in a time-bound manner.

The system audit guidelines include System Audit Process, Auditor Selection Norms and Terms of Reference (TOR)... Read more

Domestic News

General insurers can double their investment in liquid MFs: IRDA
After repeated request from the mutual fund association, the Insurance Regulatory and Development Authority (IRDA) has decided to double the investment limit in liquid mutual funds for general insurance companies, according to a media report.

At present, general insurers are permitted to invest 1.5% of assets into liquid mutual funds under the approved investment category where the size of the fund is above Rs. 20 billion, the report added.

Now, general insurers will be allowed to invest an additional 1.5% i.e. Rs. 35 billion. However, the relaxation is temporary, the report further said.

General insurance industry manages assets worth around Rs. 2.5 trillion.

Equity MFs' avg AUM declines 6% to Rs. 1.86 lakh cr in Sept quarter
Equity mutual funds' average assets under management (AUM) fell by 6% or Rs 12,737 cr highest fall in the last seven quarters to Rs 1.86 lakh cr in the September quarter led by outflows and mark to market (MTM) fall, according to CRISIL.

The underlying market, represented by the CNX Nifty, fell by 2% during the quarter on adverse global and domestic economic cues (except for September).

Among categories that gained AUM, fixed maturity plans (FMPs) rose by Rs 14,167 cr in the latest quarter, the highest gain recorded by the category since January-March 2011, CRISIL said in its monthly funds newsletter called CRISIL Fund Insights... Read more

Gold ETFs report 1% rise in assets in Sept quarter
Gold ETFs (exchange traded funds) saw a 1% rise in assets in the September 2013 on account of mark to market (MTM) gains as local gold prices, represented by the CRISIL Gold Index, rose over 18% during the quarter.

The category, however, saw redemptions worth Rs 989 cr in the quarter, CRISIL said in its monthly funds newsletter called CRISIL Fund Insights.

HDFC Mutual Fund retained its top position by total assets managed across fund houses in the September quarter. However, the fund's average assets under management (AUM) was down by Rs 1,930 cr or 1.8% to Rs 1.03 lakh cr over the quarter... Read more

Reliance Life Insurance launches initiative to revive lapsed policies
Reliance Life Insurance Company (RLIC), part of Reliance Capital Ltd, announced its new initiative to revive lapsed policies for its policyholders.

The revival initiative allows RLIC policyholders to renew their lapsed policies by simply paying their due premium – without any penalty or medical tests. Generally, a lapsed policy can only be revived by payment of due premiums along with applicable interest and Declaration of Good Health by the policyholder... Read more

LIC Nomura MF to launch capital protection fund soon
LIC Nomura Mutual Fund plans to launch a capital protection fund shortly, according to a media report.

From the new fund offer, LIC Nomura MF aims to raise around Rs. 2 billion from investors, the report added. LIC Nomura Mutual Fund is a tie-up between insurance major LIC and Japan-based Nomura, with LIC holding 65 percent stake in the joint venture.


A Simple Technique for “Spending less and Saving More”

"Do not save what is left after spending, but spend what is left after saving"

This is how the great investment guru Warren Buffett, explains the importance of Spending less and Saving more. Our own mind also explains the importance of spending less and saving more by telling us, “You need not worry if your income is less provided you know how to spend within your income”... Read more

International News

Nearly 50% of asset managers to hire personnel for alternative investments
New research from Cerulli Associates, a Boston-based global analytics firm finds that 47% of asset managers expect to hire dedicated marketing personnel and 41% expect to hire dedicated sales personnel in the next 12 months to support alternative investments.

"We've seen an increase in asset managers capitalizing on investor interest in alternatives by broadening their product lines," explains Pamela DeBolt, senior analyst at Cerulli. "To be successful, managers must deepen their staff of dedicated professionals to support these efforts."... Read more

Pension plan risks deterring savers and is unsustainable, managers agree
Asset managers active in Europe's defined contribution (DC) pensions industry have criticized a shared-risk pension model-also known as collective DC (CDC)-that the British pensions minister has drawn on to inform his plans for defined ambition pensions in the United Kingdom

Cerulli's European Defined Contribution Markets 2013 report finds that managers who participated in a Cerulli proprietary survey-who run combined European pension assets of more than €1 trillion (US$1.3 trillion)-agreed with statements such as "CDC pension systems are unsustainable in the long run" and "countries moving from a defined benefits-dominated pension system should go straight to individual DC, bypassing CDC altogether."... Read more

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