Tuesday, February 23, 2010
Thursday, February 11, 2010
Equity MFs see first revival since entry load ban
The mutual fund (MF) industry saw net inflows in equity schemes in January, the first time since the Securities Exchange Board of India banned entry load on equity schemes in August last year. During the month, sales of equity MFs almost doubled on a month-on-month basis.
According to data released by the Association of Mutual Funds in India (AMFI), the equity segment registered net inflows of Rs 980 crore as against net outflows of Rs 2,185 crore in December. Equity sales during the month stood at Rs 7,837 crore as against Rs 4,047 crore in December as the three new fund offers in the equity segment during the period mopped up Rs 1,590 crore.
Equity heads and chief investment officers of various fund houses said a relatively stable market in January attracted investors.
"Retail as well as HNI (high net worth individual) money poured into equity schemes in January," said an equity head of a mid-sized fund house.
Distributors said investors who booked profit when the market rallied sharply last year were coming back.
POSITIVE NOTE
Net inflow/(outflow) in equity schemes
Month Inflow/ (Outflow)
August ‘09 (142)
September ‘09 (1,756)
October ‘09 (2,123)
November ‘09 (1,109)
December ‘09 (2,185)
January ‘10 (980)
All figures in Rs crore.
Figures in bracket shows outflow
Source : Association of Mutual Funds in India (AMFI)
On the debt side, the industry saw net inflows of Rs 1,06,092 crore. The entire flow remained in the positive territory for all the schemes combined (at Rs 97,242 crore)
Liquid and money market schemes continued to see net outflows (Rs 10,218 crore). This figure was Rs 14,267 crore in December.
Gilt funds and fund of funds were the other two categories that saw net outflows, of Rs 257 crore and Rs 58 crore, respectively.
In January, total sales of MF products stood at Rs 8,84,738 crore as against Rs 7,76,811 crore in December
According to data released by the Association of Mutual Funds in India (AMFI), the equity segment registered net inflows of Rs 980 crore as against net outflows of Rs 2,185 crore in December. Equity sales during the month stood at Rs 7,837 crore as against Rs 4,047 crore in December as the three new fund offers in the equity segment during the period mopped up Rs 1,590 crore.
Equity heads and chief investment officers of various fund houses said a relatively stable market in January attracted investors.
"Retail as well as HNI (high net worth individual) money poured into equity schemes in January," said an equity head of a mid-sized fund house.
Distributors said investors who booked profit when the market rallied sharply last year were coming back.
POSITIVE NOTE
Net inflow/(outflow) in equity schemes
Month Inflow/ (Outflow)
August ‘09 (142)
September ‘09 (1,756)
October ‘09 (2,123)
November ‘09 (1,109)
December ‘09 (2,185)
January ‘10 (980)
All figures in Rs crore.
Figures in bracket shows outflow
Source : Association of Mutual Funds in India (AMFI)
On the debt side, the industry saw net inflows of Rs 1,06,092 crore. The entire flow remained in the positive territory for all the schemes combined (at Rs 97,242 crore)
Liquid and money market schemes continued to see net outflows (Rs 10,218 crore). This figure was Rs 14,267 crore in December.
Gilt funds and fund of funds were the other two categories that saw net outflows, of Rs 257 crore and Rs 58 crore, respectively.
In January, total sales of MF products stood at Rs 8,84,738 crore as against Rs 7,76,811 crore in December
Wednesday, February 10, 2010
SIPs losing sheen, net addition declines to 50,000 a month
Inflows into systematic investment plans (SIPs), where investors put money in mutual funds periodically, are on a decline because of poor returns and distributors' lack of interest in serving small investors.
According to executives at various distribution houses, net SIP additions have come down to 50,000 accounts per month from a high of 250,000 in 2007 and 2008. Also, lapsed SIPs are not being renewed. There is no official data on SIP account details.
"SIPs had slowed down, but we have seen the momentum come back in the last two months," said Sundeep Sikka, chief executive, Reliance Mutual Fund.
Bajaj Capital Chief Executive Anil Chopra said the main reason for SIPs not finding favour with distributors was that they were not finding it profitable to serve smaller customers. "The economics does not seem to be working out. If you look at the numbers, SIPs have actually died down. For most advisors on the offline platform, serving a small ticket size like Rs 2,000 or 3,000 per month does not cover even petrol expenses. So, it becomes unviable."
LOST BATTLE
For the period between Feb 1, 2009 to Feb 1, 2010
Fund Annualised
SIP return Annualised
non-SIP return
DSP Balckrock Opportunities 53.89 79.33
HDFC Top 200 80.55 97.95
Birla Sunlife Top 100 50.86 82.01
IDFC Premier equity 85.65 108.08
Principal Large Cap 59.03 75.62
UTI Opportunities 50.04 79.92
All the figures in % Source: Valueresearch Online
According to rough estimates, there were close to 4.2 million SIPs running at the peak of the bull run, which has come down to 2.5-3 million. SIPs took a big hit in 2009 when adverse market conditions played havoc with retail investors' portfolios. A lot of investors cancelled their SIPs after failing to meet their commitments. Several distributors also blame the new commission regime for the fall.
According to Maju Nair, head of distribution at Sharekhan, banks and independent financial advisers (IFAs), which were major contributors to SIPs, had been badly hit by the new commission regime. "IFAs have gone out of business and are looking at other revenue streams by selling insurance products. Bank are also not pushing for SIPs in a major way as they are getting only 50-80 basis points."
"The cost of providing the service has become more than the money they will make. So, everybody across the distribution spectrum is looking for a substantial size," said Nair.
The worst affected, according to experts, is the micro SIP segment, with distributors finding it difficult to serve investors with ticket sizes as low as Rs 50 and Rs 100. Distributors said this had turned out be a loss-making proposition for most fund houses.
However, Sikka of Reliance Mutual Fund said, "Investor confidence seems to be returning and we are getting fresh inflows. Advisors will have to look at the life-time value of a customer and not just short-term interests. The micro SIP is more of an entry-level strategy where we are trying to bring retail investors at the smallest level into the fold."
Reliance mutual fund has a micro SIP, Reliance Common Man SIP, in which one can invest a minimum of Rs 100 per month. Similarly, SBI has Chhota SIP and UTI has IIMPS (Invest India Micro Pension Services).
According to executives at various distribution houses, net SIP additions have come down to 50,000 accounts per month from a high of 250,000 in 2007 and 2008. Also, lapsed SIPs are not being renewed. There is no official data on SIP account details.
"SIPs had slowed down, but we have seen the momentum come back in the last two months," said Sundeep Sikka, chief executive, Reliance Mutual Fund.
Bajaj Capital Chief Executive Anil Chopra said the main reason for SIPs not finding favour with distributors was that they were not finding it profitable to serve smaller customers. "The economics does not seem to be working out. If you look at the numbers, SIPs have actually died down. For most advisors on the offline platform, serving a small ticket size like Rs 2,000 or 3,000 per month does not cover even petrol expenses. So, it becomes unviable."
LOST BATTLE
For the period between Feb 1, 2009 to Feb 1, 2010
Fund Annualised
SIP return Annualised
non-SIP return
DSP Balckrock Opportunities 53.89 79.33
HDFC Top 200 80.55 97.95
Birla Sunlife Top 100 50.86 82.01
IDFC Premier equity 85.65 108.08
Principal Large Cap 59.03 75.62
UTI Opportunities 50.04 79.92
All the figures in % Source: Valueresearch Online
According to rough estimates, there were close to 4.2 million SIPs running at the peak of the bull run, which has come down to 2.5-3 million. SIPs took a big hit in 2009 when adverse market conditions played havoc with retail investors' portfolios. A lot of investors cancelled their SIPs after failing to meet their commitments. Several distributors also blame the new commission regime for the fall.
According to Maju Nair, head of distribution at Sharekhan, banks and independent financial advisers (IFAs), which were major contributors to SIPs, had been badly hit by the new commission regime. "IFAs have gone out of business and are looking at other revenue streams by selling insurance products. Bank are also not pushing for SIPs in a major way as they are getting only 50-80 basis points."
"The cost of providing the service has become more than the money they will make. So, everybody across the distribution spectrum is looking for a substantial size," said Nair.
The worst affected, according to experts, is the micro SIP segment, with distributors finding it difficult to serve investors with ticket sizes as low as Rs 50 and Rs 100. Distributors said this had turned out be a loss-making proposition for most fund houses.
However, Sikka of Reliance Mutual Fund said, "Investor confidence seems to be returning and we are getting fresh inflows. Advisors will have to look at the life-time value of a customer and not just short-term interests. The micro SIP is more of an entry-level strategy where we are trying to bring retail investors at the smallest level into the fold."
Reliance mutual fund has a micro SIP, Reliance Common Man SIP, in which one can invest a minimum of Rs 100 per month. Similarly, SBI has Chhota SIP and UTI has IIMPS (Invest India Micro Pension Services).
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