SBI [Get Quote] Mutual Fund, which launched a systematic investment plan with a minimum monthly contribution of Rs 100 on Thursday, has approached the government seeking a relaxation in the know-your-customer norms.
The fund house has proposed that the government allow those investing up to a specified amount to contribute on a monthly basis without submitting a permanent account number, which is a must for all mutual fund investments.
SBI Chairman O P Bhatt told reporters that the move would help to get more participation in the scheme. While SBI MF is hoping to get around 250,000 investors to invest in 'Chota SIP,' the product aimed at the lower income group, the subscription level could rise to 1 million if the PAN requirement was done away with.
Bhatt said that the government, which had already simplified the rules for no-frills accounts, was examining the proposal and a decision was expected after the general elections were over.
SBI is the latest to join the segment which already has ICICI [Get Quote] Prudential and Reliance [Get Quote] Mutual Fund offering SIPs with a minimum monthly investment of Rs 50 and Rs 100 respectively.
SBI is hoping to leverage its distribution reach of over 11,000 branches to attract more investors. The bank has also decided to set targets for its branches to sell these products from this year.
Bhatt said that, this year, the bank is looking to open 1,000 branches, a bulk of which would be in smaller towns and rural areas.
Additionally, it is planning to hire 100,000 banking correspondents by the end of March 2011 to deal with customers in villages where there are no bank branches.
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Thursday, April 16, 2009
Tuesday, April 14, 2009
Sebi puts 30% cap on MFs' money market exposure
Tuesday April 14, 03:10 AM Source: Indian Express Finance
As a part of a derisking exercise, the market regulator Securities and Exchange Board of India (Sebi) in its board meeting held on Monday has decided not to allow a mutual fund scheme to invest more than 30% of its net assets in money market instruments of an issuer.
For this the Sebi board has decided to amend the Seventh Schedule of Sebi (Mutual Funds) regulations. But the schemes will be allowed to continue to invest up to 15% or 20% of their net assets in other investment grade debt instruments of an issuer as already provided in the regulation.
However, these limits will not cover investments in government securities, T-Bills and Collateralized Borrowing and Lending Obligations (CBLO).
The board also approved the proposals to enable mutual funds and Foreign Institutional Investors (FII)s to invest in Indian Depository Receipts (IDR's) subject to FEMA, demat holdings of IDRs and issue of depository receipts by custodians on behalf of issuers.
On putting restrictions on the mutual funds schemes to invest in money market instruments of an issuer, Jayesh Shroff, fund manager-equity, SBI (SBIN.NS : 1217.9 +77.6) Mutual Fund, said, "This is primarily a de-risking exercise targeted mainly at debt funds. It will not have any major implications on the mutual fund industry as already 99% of the mutual funds schemes are well diversified".
According to sources, Sebi's latest move is following few instances where two to three small fixed maturities plan (FMP) schemes of fund houses had exposed more than 30% of their net assets to the money market instrument of an issuer putting investor's money at risk.
On the proceedings against the NSDL on the IPO demat scam; the Sebi board has decided to seek the opinion of an eminent legal counsel on the issue whether the Sebi board has the legal authority to examine whether the committee appointed by the board to deal with the matter involving a conflict of interest of the current Chairman in relation to NSDL has acted within the framework and terms of reference established by the board resolution. Pending that, with one member dissenting, the board has decided to withhold the orders of the committee.
As a part of a derisking exercise, the market regulator Securities and Exchange Board of India (Sebi) in its board meeting held on Monday has decided not to allow a mutual fund scheme to invest more than 30% of its net assets in money market instruments of an issuer.
For this the Sebi board has decided to amend the Seventh Schedule of Sebi (Mutual Funds) regulations. But the schemes will be allowed to continue to invest up to 15% or 20% of their net assets in other investment grade debt instruments of an issuer as already provided in the regulation.
However, these limits will not cover investments in government securities, T-Bills and Collateralized Borrowing and Lending Obligations (CBLO).
The board also approved the proposals to enable mutual funds and Foreign Institutional Investors (FII)s to invest in Indian Depository Receipts (IDR's) subject to FEMA, demat holdings of IDRs and issue of depository receipts by custodians on behalf of issuers.
On putting restrictions on the mutual funds schemes to invest in money market instruments of an issuer, Jayesh Shroff, fund manager-equity, SBI (SBIN.NS : 1217.9 +77.6) Mutual Fund, said, "This is primarily a de-risking exercise targeted mainly at debt funds. It will not have any major implications on the mutual fund industry as already 99% of the mutual funds schemes are well diversified".
According to sources, Sebi's latest move is following few instances where two to three small fixed maturities plan (FMP) schemes of fund houses had exposed more than 30% of their net assets to the money market instrument of an issuer putting investor's money at risk.
On the proceedings against the NSDL on the IPO demat scam; the Sebi board has decided to seek the opinion of an eminent legal counsel on the issue whether the Sebi board has the legal authority to examine whether the committee appointed by the board to deal with the matter involving a conflict of interest of the current Chairman in relation to NSDL has acted within the framework and terms of reference established by the board resolution. Pending that, with one member dissenting, the board has decided to withhold the orders of the committee.
Thursday, April 9, 2009
Cash rich Indian funds risk missing stocks surge
MUMBAI, April 8 (Reuters) - Indian fund investors have missed large part of the surge in domestic shares in the last one month and may be in for more disappointments as their fund managers sit tight on a multi-year high cash levels.
India's benchmark index .BSESN fell to its lowest level in 2009 on March 9, but has surged almost 30 percent since then, helped by a revival in global risk appetite and some flow of funds into emerging markets, including India.
However, nearly 300 diversified funds have seen their net values rise by an average 20.2 percent, held back by unusually high cash levels, with only nine of them rising more than the main stock index, data from global fund tracker Lipper showed.
"These cash calls would certainly impact fund returns once the market bounces back, which we saw in March," Chintamani Dagade, a senior research analyst with Morningstar India, said.
He said most of the large-cap diversified stock funds held double digit cash levels throughout 2008 in a bid to soften blow from falling shares, which went on to end the year down more than 50 percent, their sharpest fall on record in any year.
However, the strategy did not work for most funds.
Net asset values of stock funds recorded their worst annual fall of 54.7 percent during the year, giving up the entire gain made in the previous two calendar years, with nearly half of the actively managed funds also underperforming the benchmark index.
Most funds continue with the strategy and some have raised the cash levels further ahead of general elections in April-May, anticipating a volatile share market, resulting in a major underperformance in the last one month.
India's benchmark index .BSESN fell to its lowest level in 2009 on March 9, but has surged almost 30 percent since then, helped by a revival in global risk appetite and some flow of funds into emerging markets, including India.
However, nearly 300 diversified funds have seen their net values rise by an average 20.2 percent, held back by unusually high cash levels, with only nine of them rising more than the main stock index, data from global fund tracker Lipper showed.
"These cash calls would certainly impact fund returns once the market bounces back, which we saw in March," Chintamani Dagade, a senior research analyst with Morningstar India, said.
He said most of the large-cap diversified stock funds held double digit cash levels throughout 2008 in a bid to soften blow from falling shares, which went on to end the year down more than 50 percent, their sharpest fall on record in any year.
However, the strategy did not work for most funds.
Net asset values of stock funds recorded their worst annual fall of 54.7 percent during the year, giving up the entire gain made in the previous two calendar years, with nearly half of the actively managed funds also underperforming the benchmark index.
Most funds continue with the strategy and some have raised the cash levels further ahead of general elections in April-May, anticipating a volatile share market, resulting in a major underperformance in the last one month.
Tuesday, April 7, 2009
Index funds versus individual stock picking
“Where should I invest my hard-earned money?” – This question invariably puts investors into a serious dilemma as to which investment option should they consider. They get deeply consumed in the process of assessing, determining and considering options which would render optimal returns to them, involving minimal risk and offering safety to their capital.
Investment in equities (individual stock picking) and various types of mutual funds are two very obvious investment vehicles that would come to investors` mind. Equity funds, debt funds, balanced funds, index funds and so on are the several types of mutual funds, which can be considered. Which type of fund is better amongst them? The answer to this question would depend upon the investment goal, risk appetite and time horizon of the investor.
Let us compare individual stock picking and index funds in detail:
Individual stock picking is nothing but merely equity investing. It is the most popular investment vehicle amongst investors. It is considered a high risk- high returns investment vehicle.
But the Bear Market Run carrying on since last year has been responsible for the erosion of capital of several investors. On a broader side, the returns depend on the financial health of the company (of which you have purchased the shares), the performance of that particular sector and the overall market performance in general.
On a narrower side (investors' side), the returns depend on investors' investment objectives, risk taking capacity and tenure of the investment. If the particular sector or company's shares are not performing well, the investors incur losses. Risk of losing money is high in case of equities due to volatile nature of markets.
Index Funds are a category of mutual funds which invest into a whole index [Sensex (30), Nifty (50)] rather than a specific stock. This strategy is also called ‘indexing’. The goal of most index funds is to follow the index performance. Index funds buy all the stocks of a particular index. This is a passively managed scheme.
The fund managers of these schemes do not get involved actively in shares selection and the process of investing. However, the volatility of markets (indices) is uncertain. The performance of the indices cannot be foreseen by any one. In India, the indices (Sensex, Nifty) are small as compared to US index of S&P 500.
Benefits of index funds
Economical: Indexing is a passive investing strategy; it does not involve any active management by the fund managers as in the case of the actively traded funds. The main objective of index funds is to reflect the performance of indices. The cost of analysts` salaries, research cost, and brokerage is saved in case of the index funds.
Better Performance: The performance of passive funds is likely to be better than actively or professionally managed funds. In the long run, any particular stock cannot beat the whole index performance.
For the week ended Mar. 20, 2009, Index funds were the biggest gainers among all classes of mutual funds with 3.16% gain as the 30 share index, Sensex rose 210.07 points, or 2.40%, to 8,966.68 in the week ended Mar. 20, 2009. On the other hand, the broad based NSE Nifty rose 87.8 points, or 3.23%, to 2,807.05 in the same period.
NAVs of the index funds category gained 3.16% in the week Mar. 20, 2009.
Among the index funds, Nifty Junior BeES gained 4.33%, Benchmark S&P CNX 500 Fund added 3.49%, J M Nifty Plus Fund rose 3.33%, LICMF Index Fund - Nifty Plan climbed 3.27%, Birla Sun Life Index Fund gained 3.24%. (Myiris).
Diversified Portfolio: Index funds invest in all stocks from different companies and different sectors of a particular index, leading to a wide range of stocks, which helps in the diffusion of risk.
Returns: Returns in index funds are largely dependent on the performance of whole indices; the Sensex and Nifty being benchmarks of the index funds` performance in India.
Saves time and money: The hard core research of specific stock or sector is not required in case of index funds as these funds track the performance of whole indices and not a stock and sector in particular. This saves time and money also as nothing comes free and research is not an exception.
Disadvantages of index funds
Market risk: When the market undergoes a fall, you also lose in case of index funds as these funds are entirely based upon the ups and downs of the market
Less Flexibility: Index funds lack in flexibility, as investors don’t get the opportunity to invest into stocks in that particular index. This is so because there is no scope of selecting stocks of personal choice, based on quality and research.
Conclusion:
To conclude, index funds can possibly offer higher returns in the longer period of time, subject to performance of indices or markets. Index funds thus seem to be a better option between the two, as their advantages considerably outweigh the disadvantages. Diversification, lower cost and maintenance give them an edge over individual stock picking.
Investment in equities (individual stock picking) and various types of mutual funds are two very obvious investment vehicles that would come to investors` mind. Equity funds, debt funds, balanced funds, index funds and so on are the several types of mutual funds, which can be considered. Which type of fund is better amongst them? The answer to this question would depend upon the investment goal, risk appetite and time horizon of the investor.
Let us compare individual stock picking and index funds in detail:
Individual stock picking is nothing but merely equity investing. It is the most popular investment vehicle amongst investors. It is considered a high risk- high returns investment vehicle.
But the Bear Market Run carrying on since last year has been responsible for the erosion of capital of several investors. On a broader side, the returns depend on the financial health of the company (of which you have purchased the shares), the performance of that particular sector and the overall market performance in general.
On a narrower side (investors' side), the returns depend on investors' investment objectives, risk taking capacity and tenure of the investment. If the particular sector or company's shares are not performing well, the investors incur losses. Risk of losing money is high in case of equities due to volatile nature of markets.
Index Funds are a category of mutual funds which invest into a whole index [Sensex (30), Nifty (50)] rather than a specific stock. This strategy is also called ‘indexing’. The goal of most index funds is to follow the index performance. Index funds buy all the stocks of a particular index. This is a passively managed scheme.
The fund managers of these schemes do not get involved actively in shares selection and the process of investing. However, the volatility of markets (indices) is uncertain. The performance of the indices cannot be foreseen by any one. In India, the indices (Sensex, Nifty) are small as compared to US index of S&P 500.
Benefits of index funds
Economical: Indexing is a passive investing strategy; it does not involve any active management by the fund managers as in the case of the actively traded funds. The main objective of index funds is to reflect the performance of indices. The cost of analysts` salaries, research cost, and brokerage is saved in case of the index funds.
Better Performance: The performance of passive funds is likely to be better than actively or professionally managed funds. In the long run, any particular stock cannot beat the whole index performance.
For the week ended Mar. 20, 2009, Index funds were the biggest gainers among all classes of mutual funds with 3.16% gain as the 30 share index, Sensex rose 210.07 points, or 2.40%, to 8,966.68 in the week ended Mar. 20, 2009. On the other hand, the broad based NSE Nifty rose 87.8 points, or 3.23%, to 2,807.05 in the same period.
NAVs of the index funds category gained 3.16% in the week Mar. 20, 2009.
Among the index funds, Nifty Junior BeES gained 4.33%, Benchmark S&P CNX 500 Fund added 3.49%, J M Nifty Plus Fund rose 3.33%, LICMF Index Fund - Nifty Plan climbed 3.27%, Birla Sun Life Index Fund gained 3.24%. (Myiris).
Diversified Portfolio: Index funds invest in all stocks from different companies and different sectors of a particular index, leading to a wide range of stocks, which helps in the diffusion of risk.
Returns: Returns in index funds are largely dependent on the performance of whole indices; the Sensex and Nifty being benchmarks of the index funds` performance in India.
Saves time and money: The hard core research of specific stock or sector is not required in case of index funds as these funds track the performance of whole indices and not a stock and sector in particular. This saves time and money also as nothing comes free and research is not an exception.
Disadvantages of index funds
Market risk: When the market undergoes a fall, you also lose in case of index funds as these funds are entirely based upon the ups and downs of the market
Less Flexibility: Index funds lack in flexibility, as investors don’t get the opportunity to invest into stocks in that particular index. This is so because there is no scope of selecting stocks of personal choice, based on quality and research.
Conclusion:
To conclude, index funds can possibly offer higher returns in the longer period of time, subject to performance of indices or markets. Index funds thus seem to be a better option between the two, as their advantages considerably outweigh the disadvantages. Diversification, lower cost and maintenance give them an edge over individual stock picking.
SIP renewal rates dip 30%
Investors are not only shying away from equity-based mutual funds, they are also scaling down systematic investment plans (SIPs), say market players. There has been a significant drop in the renewal of existing SIPs.
“SIP volume is down between 20 and 30 per cent of the outstanding systematic investment plans,” said Rajiv Deep Bajaj, managing director, Bajaj Capital. “Investors are breaking their SIPs in between.”
While bad market condition is one reason, experts say investors are moving out because the new investors getting into equity are not used to see deterioration of their wealth. The mutual fund houses say that breaking the SIP in between is not the right way of investing. “Investors should stick to equity investments for at least three years,” said Jaideep Bhattacharya, chief marketing officer, UTI AMC.
The average return in a diversified equity scheme over the past three years runs into a negative of 7 per cent while the Sensex return for the same period stands at negative of 2.8 per cent.
“While most of the SIP investments are three to four years old, the investors are largely first timers and are not used to downward cycle in the market. Hence even after enough convincing they are reluctant to continue,” said a financial planer, who did not wish to be named. “We are not facing any such move from the mutual fund investors who are around five years old.”
But the Unit-linked Insurance Plans (Ulips), which got the insurance shield, are in a better position to convince investors to continue with their investments. However, the new investments into Ulips are also getting impacted.
“While the investors are continuing with their existing investments because of the insurance cover, new investments into Ulips are down,” said the planner.
Source:- Hindustan Times
“SIP volume is down between 20 and 30 per cent of the outstanding systematic investment plans,” said Rajiv Deep Bajaj, managing director, Bajaj Capital. “Investors are breaking their SIPs in between.”
While bad market condition is one reason, experts say investors are moving out because the new investors getting into equity are not used to see deterioration of their wealth. The mutual fund houses say that breaking the SIP in between is not the right way of investing. “Investors should stick to equity investments for at least three years,” said Jaideep Bhattacharya, chief marketing officer, UTI AMC.
The average return in a diversified equity scheme over the past three years runs into a negative of 7 per cent while the Sensex return for the same period stands at negative of 2.8 per cent.
“While most of the SIP investments are three to four years old, the investors are largely first timers and are not used to downward cycle in the market. Hence even after enough convincing they are reluctant to continue,” said a financial planer, who did not wish to be named. “We are not facing any such move from the mutual fund investors who are around five years old.”
But the Unit-linked Insurance Plans (Ulips), which got the insurance shield, are in a better position to convince investors to continue with their investments. However, the new investments into Ulips are also getting impacted.
“While the investors are continuing with their existing investments because of the insurance cover, new investments into Ulips are down,” said the planner.
Source:- Hindustan Times
Unitech may have to roll over dues to MFs again
New Delhi: Cash-strapped property developer Unitech Ltd may have to roll over debt owed to mutual funds for a second time. Unitech has to repay Rs500 crore to mutual funds by 19 April, and if it’s unable to tie up the money by then, the firm may have to seek a rollover of the debt, said people familiar with the situation who didn’t want to be named.
The realty firm had to repay Rs900 crore to mutual funds on 19 January. It repaid part of this and managed to roll over the balance by three months.
The company declined to comment on the possibility of it seeking a second rollover.
Unitech is working on several options for raising money. It recently received around Rs380 crore from Unitech Wireless after the latter closed a $1.2 billion (Rs6,036 crore) deal with Norwegian telecom company Telenor SA. Unitech also sold its 200-room Marriott Courtyard hotel in Gurgaon for about Rs230 crore. It is trying to fast track the sale of its 200,000 sq. ft corporate office in Saket, in south Delhi, to raise around Rs500 crore. Proceeds from the launch of its recent mid-income housing project in Gurgaon may also be considered.
Still, a person in Unitech who didn’t want to be named said the exercise may not be easy. “There are a lot of repayment commitments that Unitech has to adhere to, so we may just try and rollover the repayments owed to mutual funds,” said the person.
Unitech has debt of at least Rs8,000 crore on its books. Real estate firms are struggling with a property market downturn and declining valuations as economic growth slows and consumers avoid property purchases in the expectation that prices would slump further.
In January, Unitech filed an application with the Foreign Investment Promotion Board to raise Rs5,000 crore by diluting promoters’ equity. According to the application, the promoters were willing to dilute their equity from their then shareholding of 67.45% to 36.71%. Unitech, however, pulled back the application. As per the company’s last public filing, Unitech promoters have pledged 49.48% of their shares.
cnbctv18@livemint.com
The realty firm had to repay Rs900 crore to mutual funds on 19 January. It repaid part of this and managed to roll over the balance by three months.
The company declined to comment on the possibility of it seeking a second rollover.
Unitech is working on several options for raising money. It recently received around Rs380 crore from Unitech Wireless after the latter closed a $1.2 billion (Rs6,036 crore) deal with Norwegian telecom company Telenor SA. Unitech also sold its 200-room Marriott Courtyard hotel in Gurgaon for about Rs230 crore. It is trying to fast track the sale of its 200,000 sq. ft corporate office in Saket, in south Delhi, to raise around Rs500 crore. Proceeds from the launch of its recent mid-income housing project in Gurgaon may also be considered.
Still, a person in Unitech who didn’t want to be named said the exercise may not be easy. “There are a lot of repayment commitments that Unitech has to adhere to, so we may just try and rollover the repayments owed to mutual funds,” said the person.
Unitech has debt of at least Rs8,000 crore on its books. Real estate firms are struggling with a property market downturn and declining valuations as economic growth slows and consumers avoid property purchases in the expectation that prices would slump further.
In January, Unitech filed an application with the Foreign Investment Promotion Board to raise Rs5,000 crore by diluting promoters’ equity. According to the application, the promoters were willing to dilute their equity from their then shareholding of 67.45% to 36.71%. Unitech, however, pulled back the application. As per the company’s last public filing, Unitech promoters have pledged 49.48% of their shares.
cnbctv18@livemint.com
Sebi no to delaying different load structures for MFs
Mumbai: India’s stock market regulator, the Securities and Exchange Board of India (Sebi), has rejected a plea by the asset management industry to delay the introduction of variable load structures on mutual funds that will enable investors to negotiate the commissions they pay distributors.
Tough stance: The Securities and Exchange Board of India building. Adeel Halim / Bloomberg The regulator is keen to push a decision soon and may take the matter to its board shortly, a person close to the development told CNBC-TV18.
The mutual fund industry has been trying hard to convince Sebi to push back its proposed decision to introduce variable load structures for mutual funds. Once approved, investors will have the right to negotiate the commission they pay a distributor every time they buy a mutual fund.
Mutual fund houses are concerned that distributors may be reluctant to push their products if the rule comes into force.
”We have suggestions both in favour of this and against it. Some strong views in favour of it and strong views against it,” M.S. Sahoo, a whole-time member of Sebi, told CNBC-TV18. “We have to take a call but there is nothing called the right time...,” Sahoo said. In 1992-93, similar opposition had greeted a decision that required brokers to disclose brokerage fees they charged, Sahoo said.
But the Association of Mutual Funds of India (Amfi) is still trying hard. It has insisted on a so-called multiple class share model if the regulator implements the variable load structure right away.
The multiple-class share model is popular in the US wherein investors have different payment options depending on the amount they are willing to pay upfront. This, Amfi says, will mark a paradigm shift in the pricing of services offered.
“Variable load structure could be implemented right away provided it is a part of the shift,” Amfi chairman A.P. Kurian said. “We just want that it should not be implemented in an ad hoc manner.”
cnbctv18@livemint.com
Tough stance: The Securities and Exchange Board of India building. Adeel Halim / Bloomberg The regulator is keen to push a decision soon and may take the matter to its board shortly, a person close to the development told CNBC-TV18.
The mutual fund industry has been trying hard to convince Sebi to push back its proposed decision to introduce variable load structures for mutual funds. Once approved, investors will have the right to negotiate the commission they pay a distributor every time they buy a mutual fund.
Mutual fund houses are concerned that distributors may be reluctant to push their products if the rule comes into force.
”We have suggestions both in favour of this and against it. Some strong views in favour of it and strong views against it,” M.S. Sahoo, a whole-time member of Sebi, told CNBC-TV18. “We have to take a call but there is nothing called the right time...,” Sahoo said. In 1992-93, similar opposition had greeted a decision that required brokers to disclose brokerage fees they charged, Sahoo said.
But the Association of Mutual Funds of India (Amfi) is still trying hard. It has insisted on a so-called multiple class share model if the regulator implements the variable load structure right away.
The multiple-class share model is popular in the US wherein investors have different payment options depending on the amount they are willing to pay upfront. This, Amfi says, will mark a paradigm shift in the pricing of services offered.
“Variable load structure could be implemented right away provided it is a part of the shift,” Amfi chairman A.P. Kurian said. “We just want that it should not be implemented in an ad hoc manner.”
cnbctv18@livemint.com
Friday, April 3, 2009
SBI MF launches gold ETS
SBI (SBIN.NS : 1147.05 +69.6) Mutual Fund, a joint venture between the State Bank of India and Societe General AMC, on Monday launched an open-ended Gold Exchange Trading Scheme (SBI GETS). The minimum investment in SBI GETS is Rs 5,000 and in multiples of Re 1 thereafter.
"Once the new fund offer (NFO) closes on April 28, 2009 the units would be listed on the National Stock exchange (^NSEI : 3211.05 +150.7). Investors can then trade in it like any other stock in the secondary market," said Navneet Munot, chief investment officer of SBI Funds Management Private Ltd.
Each unit of SBI GETS will be approximately equal to the closing price of 1 gram of gold on the date of allotment. The units will have face value of Rs 100, and will be issued at a premium equalling the difference between allotment price and face value during the NFO.
Achal Kumar Gupta, managing director and CEO of SBI Funds Management Private Ltd said, "Gold is the safest bet during troubled times. Indians consume around 800 tonnes of gold annually, but 95 per cent of it is in physical form."
Advocating benefits of gold in demat form, Munot said, "In exchange traded scheme, the holding will be in demat form and investor does not have to worry about its safekeeping and purity. The unit can be sold at prevailing market price at any given day."
The fund is looking at raising around Rs 150-200 crore. "At compound annual growth rate of 20 per cent, gold is a must in every portfolio," said Munot.
"Once the new fund offer (NFO) closes on April 28, 2009 the units would be listed on the National Stock exchange (^NSEI : 3211.05 +150.7). Investors can then trade in it like any other stock in the secondary market," said Navneet Munot, chief investment officer of SBI Funds Management Private Ltd.
Each unit of SBI GETS will be approximately equal to the closing price of 1 gram of gold on the date of allotment. The units will have face value of Rs 100, and will be issued at a premium equalling the difference between allotment price and face value during the NFO.
Achal Kumar Gupta, managing director and CEO of SBI Funds Management Private Ltd said, "Gold is the safest bet during troubled times. Indians consume around 800 tonnes of gold annually, but 95 per cent of it is in physical form."
Advocating benefits of gold in demat form, Munot said, "In exchange traded scheme, the holding will be in demat form and investor does not have to worry about its safekeeping and purity. The unit can be sold at prevailing market price at any given day."
The fund is looking at raising around Rs 150-200 crore. "At compound annual growth rate of 20 per cent, gold is a must in every portfolio," said Munot.
MF industry lines up investor-friendly plans
The drop in assets under management of the mutual fund industry to sub-Rs 5 lakh crore levels has led to a flurry of activity in the mutual fund industry towards wooing investors.
This time around, there are a lot of investor friendly plans on the anvil. Soon, investors in the country will able to glance at dividends declared by asset management companies (AMC) on the website of the Association of Mutual Funds in India (Amfi).
AP Kurian, chairman of Amfi, said, "In the next 10 days, investors will be able to look at the dividends declared by their funds. We were receiving several queries that; people are sometimes not aware of what dividends they get from different schemes. So, now, with all the other details of the fund, we will be also providing dividends on the Amfi website."
He was speaking on the sidelines of the 6th Annual Conference on Capital Markets in Mumbai.
Amfi is also in process of launching a common platform for mutual funds transactions, which will facilitate transactions like buying and selling schemes.
The mutual fund industry, at the moment, is going through testing times. The withdrawal of funds by the banking sector has seen most of the big asset management companies report depleted AUM numbers. Among the top five houses, only HDFC Mutual Fund has seen an increase in the AUM in March.
Additionally, the MF industry also faces a big asset-liability mismatch. UK Sinha, chairman of UTI Mutual Fund, mentioned that the industry acquired 75-80% of its resources from short-term avenues, and then invested these in long-term loans to corporates.
"This is not a healthy trend," he said, adding that it could lead to an asset-liability or maturity mismatch. That too, when banks can withdraw money parked with mutual funds within 24 hours.
Nimesh Shah, MD of ICICI (ICICIBANK.NS : 360.7 +11.35) Prudential MF, said, "In the current scenario, profits of AMCs have vanished." Shah also pointed out that fund houses are facing problems in selling their equity schemes in "such volatile market conditions".
He also said that distributors have started selling other products along with MF.
Overall, there are approximately 60,000 distributors selling MF schemes, and number is decreasing over time.
Many markets players also sense that given the trying times, it is very difficult to convince investors to enter equity schemes.
Fund houses also expressed concern about the continuous low penetration in the urban areas at the conference.
"Last month, over 60,000 systematic investment plans (SIP) were registered with our AMC. 60% of these were from non-metros."
"We had seen tremendous redemption pressure in the month of October and November last year, as over a lakh crore were redeemed from various schemes. However, now it seems that everything is falling in place and once the markets start their positive rally, we will witness some ease in the MF industry," concluded Kurian.
This time around, there are a lot of investor friendly plans on the anvil. Soon, investors in the country will able to glance at dividends declared by asset management companies (AMC) on the website of the Association of Mutual Funds in India (Amfi).
AP Kurian, chairman of Amfi, said, "In the next 10 days, investors will be able to look at the dividends declared by their funds. We were receiving several queries that; people are sometimes not aware of what dividends they get from different schemes. So, now, with all the other details of the fund, we will be also providing dividends on the Amfi website."
He was speaking on the sidelines of the 6th Annual Conference on Capital Markets in Mumbai.
Amfi is also in process of launching a common platform for mutual funds transactions, which will facilitate transactions like buying and selling schemes.
The mutual fund industry, at the moment, is going through testing times. The withdrawal of funds by the banking sector has seen most of the big asset management companies report depleted AUM numbers. Among the top five houses, only HDFC Mutual Fund has seen an increase in the AUM in March.
Additionally, the MF industry also faces a big asset-liability mismatch. UK Sinha, chairman of UTI Mutual Fund, mentioned that the industry acquired 75-80% of its resources from short-term avenues, and then invested these in long-term loans to corporates.
"This is not a healthy trend," he said, adding that it could lead to an asset-liability or maturity mismatch. That too, when banks can withdraw money parked with mutual funds within 24 hours.
Nimesh Shah, MD of ICICI (ICICIBANK.NS : 360.7 +11.35) Prudential MF, said, "In the current scenario, profits of AMCs have vanished." Shah also pointed out that fund houses are facing problems in selling their equity schemes in "such volatile market conditions".
He also said that distributors have started selling other products along with MF.
Overall, there are approximately 60,000 distributors selling MF schemes, and number is decreasing over time.
Many markets players also sense that given the trying times, it is very difficult to convince investors to enter equity schemes.
Fund houses also expressed concern about the continuous low penetration in the urban areas at the conference.
"Last month, over 60,000 systematic investment plans (SIP) were registered with our AMC. 60% of these were from non-metros."
"We had seen tremendous redemption pressure in the month of October and November last year, as over a lakh crore were redeemed from various schemes. However, now it seems that everything is falling in place and once the markets start their positive rally, we will witness some ease in the MF industry," concluded Kurian.
Thursday, April 2, 2009
MF's AUM falls in March 2009
Mutual fund industry has reversed back to record a fall in growth in its Average Asset Under management (AUM) in March 2009 from February 2009. Association of Mutual Fund of India (AMFI) has released AUM data for March 2009. Till now the data is available for 33 fund houses. The AUM has plunged by 1.54% to Rs 4.87 lakh crore in March 2009 compared with Rs 4.94 lakh crore in February 2009 excluding Edelweiss Mutual Fund and Fidelity Mutual Fund.
Baroda Pioneer Mutual Fund has topped among others by recording AUM growth of 30.90% to 1132.01 lakh crore in March 2009. Religare Mutual Fund followed it by posting a rise of 11.05% in its AUM.
As per asset wise, Reliance Mutual fund continued to be in the first position to Rs 80962.94 crore in its AUM in March 2009 compared with the month of February 2009. However, its AUM has dropped by 0.81% in March 2009 over February 2009. HDFC MF retained second position with the average AUM of Rs 57956.45 crore a rise of 1.92% compared with the month of February 2009 and ICICI Mutual Fund with an AUM of Rs 51432.50 crore with a fall of 3.89% in March 2009 over February 2009.
The other top mutual funds, in terms of AUM included UTI MF recording a fall of 0.96% to Rs 48754.17 crore in March 2009. Birla Sun Life MF has recorded a drop of 3.01% in its AUM to Rs 47096.23 crore and SBI MF also plunged 4.50% to Rs 26382.68 crore.
HDFC Mutual Fund recorded the highest inflow in AUM of Rs 1092.06 crore, while Tata MF recorded the highest outflow of Rs 2269.87 crore in March 2009.
Baroda Pioneer Mutual Fund has topped among others by recording AUM growth of 30.90% to 1132.01 lakh crore in March 2009. Religare Mutual Fund followed it by posting a rise of 11.05% in its AUM.
As per asset wise, Reliance Mutual fund continued to be in the first position to Rs 80962.94 crore in its AUM in March 2009 compared with the month of February 2009. However, its AUM has dropped by 0.81% in March 2009 over February 2009. HDFC MF retained second position with the average AUM of Rs 57956.45 crore a rise of 1.92% compared with the month of February 2009 and ICICI Mutual Fund with an AUM of Rs 51432.50 crore with a fall of 3.89% in March 2009 over February 2009.
The other top mutual funds, in terms of AUM included UTI MF recording a fall of 0.96% to Rs 48754.17 crore in March 2009. Birla Sun Life MF has recorded a drop of 3.01% in its AUM to Rs 47096.23 crore and SBI MF also plunged 4.50% to Rs 26382.68 crore.
HDFC Mutual Fund recorded the highest inflow in AUM of Rs 1092.06 crore, while Tata MF recorded the highest outflow of Rs 2269.87 crore in March 2009.
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