Mutual Fund NEWS Group: 2013

Wednesday, June 26, 2013

Single SRO for MF distributors

Single SRO for MF distributors

In its Board meeting yesterday, SEBI decided to approve a single SRO for MF distributors. Here is the extract from SEBI's press release : "The Board approved the proposal to have single SRO for Distributors of Mutual Fund Products after following a fair and transparent procedure. Further, in order to facilitate the recognition of single SRO for Distributors of Mutual Fund Products and to avoid delay, it has been decided to have a cut off time for accepting applications for being recognized as SRO." AMFI has already applied and has been advised by SEBI to constitute the Sec 25 company which AMFI proposes as the SRO and then submit the application from that entity. AMFI is in the process of doing this and is expected to file the revised application shortly. Meanwhile, FPSB - Financial Planning Standards Board is also engaged in discussions with SEBI on promoting the SRO. It however appears that FPSB is more keen on promoting an "umbrella" SRO which would encompass self regulation of intermediaries across all financial products rather than confine it to a single product of mutual funds. Given that SEBI has currently asked for the SRO to be set up only for MF distributors, it remains to be seen how keen FPSB may be in promoting a single product oriented SRO. Meanwhile, the idea of having multiple SROs for different distribution segments within MF distributors is now clearly buried, after this decision from SEBI. As it stands now, it appears that the entity that will be promoted by AMFI may be the front-runner in the race to set up this SRO. In any event, regardless of who the promoting entity may be, SEBI will have 5 of its nominees on the 9 member Board and 4 directors will be from the industry. SEBI will therefore be able to exercise its due influence in critical aspects of the SRO, through its Board majority. - Wealth Forum News

http://www.wealthforumezine.net/InnerDailyUpdates.aspx?sec=Industry

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'I made my money by selling too soon.'

Website: http://indianmutualfund.co.cc/

Blog:http://indianmutualfund.wordpress.com/
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Thursday, April 11, 2013

SEBI prevents attempt to mis-sell an investment product

SEBI prevents attempt to mis-sell an investment product SEBI today prevented an attempt to mis-sell an investment product to an investor in Delhi by a person claiming as

agent of mutual funds. SEBI had received a complaint from an investor (hereinafter referred to as ' complainant') that some unknown persons claiming to be 'agents' and

'brokers' of Mutual Funds and insurance companies have been contacting the complainant saying that the deceased son of the complainant had invested in Mutual Funds and

they are maturing in a short while. In order to get the full amount, the complainant must issue a cheque in advance for a new mutual fund scheme or insurance policy failing

which the complainant will lose a substantial portion of the maturity amountas broker commission. The 'agent' informed the complainant that the son had made investments in

Mutual funds which are about to mature and on maturity the complainant will get only Rs. 5 lacs. However, the 'agent' further stated that if the complainant makes a further

investment of Rs.2.5 lacs, the complainant will get maturity proceeds to the tune of Rs.12.5 lacs.

Thereafter, the Investigations Department of SEBI conducted preliminary investigations where it was found that the phone numbers from which the 'agent' had called were in

some others' name and the Company was also in a different name. Sensing a clear attempt to defraud, cheat and misappropriate as well as missell financial products, SEBI

deputed an official to visit the 'complainant' at the time of the visit of the 'agent'.

The assistance of the Economic Offences Wing of the Delhi Police was also taken. On perusal of the forms and after preliminary enquiries, the suspicions were confirmed

that indeed there was an organised attempt by several people to defraud and missell and accordingly an FIR to that effect is being lodged with Delhi Police. It is suspected

that the number of victims of such fraudulent attempts could be much higher, which would be revealed in due course after further investigations by Delhi Police and SEBI.

SEBI cautions investors that investors should verify the credentials of people approaching them as agents / employees before making any investment through such agents /

employees.

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___________________________________________________________________________________
'I made my money by selling too soon.'

Website: http://indianmutualfund.co.cc/

Blog:http://indianmutualfund.wordpress.com/
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Direct, Indirect or Nothing?

Investing through direct plans of funds makes sense when investors are certain that going through an intermediary offers no value...

Since the beginning of this year, mutual fund investors have had the option of investing in funds directly with the fund companies in special 'direct' plans of all funds. While investors could have invested directly earlier too, there was no advantage in doing so. However, since January 1, SEBI has asked fund companies to create special direct plans in which the commission that would otherwise have been paid to intermediaries goes to the fund's NAV, and thus to investors.

Even though it's early days yet, a handful of investors have started coming in through direct plans. This number could only grow in the future. It appears that compared to corresponding indirect plans, direct ones will have higher returns of the order of 0.4 per cent to 0.7 per cent per year. Over a long period, that does accumulate. During the last decade, the median large cap equity fund had returns of 18.81 per cent a year. That means an investment of Rs 1 lakh would have grown to Rs 5.37 lakh. A direct plan with returns of half a per cent more would have delivered Rs 5.60 lakh.

Investors should maximise value but you have to decide whether over ten years this differential is large enough to forego the services of an intermediary. The answer depends entirely on what services your fund advisor offers you and whether you can substitute them yourself. Ideally, an advisor would be helping you with investment advise as well procedural help. If you don't think these are worth the extra money and you are confident of your do-it-yourself abilities, then you should go direct.

However, I find that the most important service that intermediaries provide is often not given enough importance--many a time, their sales pitch goads you into investing when you may not have done so. The worst investment is often when you don't invest at all and making you invest could be the most valuable service of all.

Source: http://www.valueresearchonline.com/story/h2_storyview.asp?str=22627

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___________________________________________________________________________________
'I made my money by selling too soon.'

Website: http://indianmutualfund.co.cc/

Blog:http://indianmutualfund.wordpress.com/
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Wednesday, March 20, 2013

Mutual fund products: Sebi issues colour codes, labelling

Market regulator Sebi has issued a guidelines on 'product labelling' with colour coding for mutual funds (MFs), a move that would help investors assess the risk associated with the schemes.

The guidelines would be effective from July 1, 2013, for all existing and forthcoming schemes, Securities and Exchange Board of India (Sebi) said in a circular yesterday.

As per the norms, product labels carrying details about the schemes would be disclosed on the front page of initial offering application forms.

Besides, the labels would have to be placed in common applications forms and advertisements.

The regulator has also decided up on colour codes to indicate the level of risk associated with the product.

A blue colour coded box would indicate low risk, yellow would signify a medium risk, while brown would be represent schemes with high risk, Sebi said.

"In order to address the issue of mis-selling, a committee was set up to examine the system of product labelling that would provide investors an easy understanding of the kind of product/scheme they are investing in and its suitability to them," Sebi said.

Based on the recommendations by the committee, it has been decided that all the mutual funds would 'label' their schemes on certain parameters, it added.

The labels would include details about the nature of schemes "such as to create wealth or provide regular income in an indicative time horizon (short/ medium/ long term)".

Moreover, mutual funds would have to state a brief about the investment objective in a single sentence followed by kind of product in which investor is investing (equity or debt).

As per the guidelines, mutual funds would also have to include a disclaimer that "investors should consult their financial advisers if they are not clear about the suitability of the product".

Sebi said that the product label has to be placed in proximity to the caption of the scheme in the initial offering -- Key Information Memorandum (KIM) and Scheme Information Documents (SIDs) -- and common applications so that they are prominently visible to investors.

Source: http://www.indianexpress.com/news/mutual-fund-products-sebi-issues-colour-codes-labelling/1090399/0

Thursday, January 17, 2013

AMFI to waive registration fees from first time mutual fund distributors

Industry body Association of Mutual Funds in India (AMFI) today decided to waive registration fees, estimated at Rs 3,000, for first time distributors for a period of five months beginning February 1.

The initiative is aimed at enlarging distribution network and attracting new cadre of distributors or Independent Financial Advisors (IFAs) for selling mutual fund products, AMFI said in a release here.

AMFI has "decided to waive registration fees for all registrations of first time distributors for a period of five months from February 1, 2013 to June 30, 2013."

The objective is to create larger number of 'feet-on-street' to distribute mutual fund products, AMFI Chief Executive H N Sinor said.

In November last year, AMFI had slashed registration fees to Rs 3,000 for three years per distributor from Rs 5,000.

The distributors registering under the category of individuals, including senior citizens and new cadre of distributors, need not pay the registration fees during the five-month period, the release said today.

After two years of successive decline, the mutual fund industry managed to register rise in assets base nearing Rs 8 lakh crore with an increase of about Rs 2 lakh crore in 2012.

As per industry data, the total assets under management (AUM) of all the fund houses put together rose by 30 per cent on strong inflows in fixed income, gold schemes and liquid funds.

Market regulator SEBI last year introduced a new cadre of distributors, who have been allowed to sell units of simple and performing schemes to increase the strength of mutual fund distribution network.

Source: http://www.indianexpress.com/news/amfi-to-waive-registration-fees-from-first-time-mutual-fund-distributors/1060214/0

LIC Nomura Mutual Fund re-launches ULIS with more features

LIC Nomura Mutual Fund has re-launched its open ended Unit-Linked Insurance Scheme (ULIS) today with additional features aiming at Rs 500 crore assets under management (AUM) by the end of FY13, with one lakh new investors.

"ULIS has a good track record since 23 years. With additional features, we expect the fund to have Rs 500 crore AUM, with one lakh new investors," LIC Nomura Mutual Fund CEO Nilesh Sathe told reporters today.

The asset management company has tied up with 14 banks to sell this scheme, he said.

At present, ULIS has Rs 140 crore AUM, he said, adding that in three years, it plans to have Rs 1,000 crore AUM for the scheme.

The scheme's additional features include free accident cover up to Rs 1 lakh, guaranteed maturity bonus of 2.5 per cent to 10 per cent of target amount; no exit load as well as auto cover option, besides low-cost life insurance.

Fund allocation is balanced with 65 to 80 per cent invested in equity and 20 to 35 per cent in debt, he said.

The fund, which has three-year lock-in period, allows partial withdrawal subject to minimum balance requirement and top-up facility.

Investment in ULIS as well as its dividend is tax free.

Source: http://www.indianexpress.com/news/lic-nomura-mutual-fund-relaunches-ulis-with-more-features/1059685

Sebi cancels registration of Fidelity Mutual Fund

Capital market regulator Sebi has cancelled the registration of Fidelity Mutual Fund following its buyout by L&T Finance.

The decision was taken following the acquisition of Fidelity Mutual Fund by L&T Finance and at the request of FIL Fund Management, the Asset Management Company (AMC) of Fidelity Mutual Fund.

Securities and Exchange Board of India (Sebi), through its letter dated January 14, has "cancelled the certificate of registration of Fidelity Mutual Fund and has withdrawn the approval granted to FIL Fund Management to act as the Asset Management Company."

Consequently, Fidelity Mutual Fund, FIL Trustee Company and FIL Fund Management cannot carry out any activity as a Mutual Fund, Trustee Company and asset management company, respectively, with immediate effect.

In November, L&T Finance, a part of diversified group Larsen & Toubro, had completed the acquisition of Fidelity's mutual fund business in India for an undisclosed amount.

L&T Finance is a part of engineering conglomerate L&T Group and Fidelity Mutual Fund is part of the US-based

Fidelity Worldwide Investment.

Source: http://www.indianexpress.com/news/sebi-cancels-registration-of-fidelity-mutual-fund/1060190/

Wednesday, January 9, 2013

Mutual funds start lining up RGESS offerings

Fund houses have begun lining up mutual fund schemes focused on the government's newly proposed Rajiv Gandhi Equity Savings scheme (RGESS), which aims to attract first-time small investors into the capital market by offering them tax benefits.

Two state-owned fund houses --SBI and IDBI, as also one private fund house DSP Blackrock have filed draft offer documents for such schemes with the market regulator Sebi, while others may soon follow the suit.

Filing draft papers is mandatory before launching new schemes and the regulator usually takes about three-four weeks to clear these schemes.

"RGESS is likely to help improve penetration of mutual funds among the retail investors in the country. This scheme will not only create awareness, but it also has the potential to channelise retail money to capital markets in an informed manner," ICICI Prudential AMC MD and CEO Nimesh Shah said.

"The scheme is only for the first time investors in the capital market and there is a huge potential in the country. But only three fund houses have filed draft papers as without knowing the target audience they cannot go for the scheme and investors are required to have demat accounts, "Quantum Asset Management Company CEO Jimmy Patel said.

DSP BlackRock had filed the draft papers with Sebi within days of issuing guidelines by the regulator, while IDBI and SBI had submitted the draft details last week.

In order to encourage flow of savings in the financial instruments and improve the depth of the domestic capital market, Sebi last month announced the framework for Rajiv Gandhi Equity Savings Scheme.

Under the scheme, new investors can avail tax benefits who invest up to Rs 50,000 in the stock market and whose gross total annual income is less than or equal to Rs 10 lakh.

Source: http://www.indianexpress.com/news/mutual-funds-start-lining-up-rgess-offerings/1056841/0

Mutual Fund average AUM rose to its highest level in more than 2 years

Indian mutual funds' average assets under management (AUM) rose by 5.3% or Rs 392 bn to Rs 7.87 trillion in the October-December 2012 quarter from Rs 7.47 trillion in the previous quarter (excluding fund of funds) as per the latest numbers released by the Association of Mutual Funds in India (AMFI). This is the highest level since September 2010 (when AMFI started declaring quarterly average numbers) and the third consecutive quarterly gain in mutual fund assets.

The growth in assets in the latest quarter was primarily driven by inflows into income and gilt funds. Further, assets grew by 15% or Rs 1.05 trillion in the calendar year 2012 vis-a-vis 1% growth in 2011.

Source: http://articles.economictimes.indiatimes.com/2013-01-07/news/36192900_1_mutual-fund-assets-amfi

Monday, January 7, 2013

Mutual funds remained heavy net sellers of equities in December

All's well that ends well, so goes the adage. However, in 2012 that remained a distant dream for India's mutual fund industry's equity segment.

The struggling sector failed to attract retail investors even in the last month of the year when optimism rose significantly higher on equity to be an outperforming asset class in the coming years.

December witnessed the second largest net selling by equity fund managers during the year as they sold shares worth Rs 2,700 crore amid redemption pressure.

Despite being a flat month when indices gained a marginal half percentage point, sector officials say, investors' request for redemptions from equity schemes continued unabated.

According to the chief investment officer (CIO) of a large fund house, no one would want to take a cash call when there are anticipations for a turnaround in the market. "So, when investors want to redeem, as they had been doing for the last two to three years, we have no alternative but to sell our holdings," he admits.

Though industry body Association of Mutual Funds in India ( Amfi) would release the monthly data of fund inflows next week, industry insiders say sales remained poor and December would not be any better than the previous months.

In a year that saw the country's benchmark stock indices give returns of over 25 per cent, the mutual fund industry remained a net seller in a rising market. Rather, in the October-December quarter, the sale of shares only intensified as the fund industry sold equities worth Rs 7,615 crore.

During the full year, equity managers sold shares worth Rs 17,955 crore.

"Unfortunately, in last year's rally domestic investors did not participate," adds the CIO. According to statistics available from the Securities and Exchange Board of India ( Sebi), till November 2012 the industry had lost over three million equity folios.

The national sales head of a private bank-sponsored asset management company ( AMC), says, "The equity segment remained a big problem. Purchases remained poor compared with redemptions. But, I believe as the situation improves, retail will come back."

Net outflows from pure equity schemes stood at Rs 9,370 crore till November, which during the corresponding period in the previous year was in positive territory with net inflows of Rs 3,236 crore.

This is despite the fact that several schemes, including banking equity schemes, FMCG schemes and pharma schemes among others, outperformed the benchmark indices during the year. For instance, schemes which primarily invest in banks and FMCG companies gave returns of over 50 per cent during the year while those of pharma-related schemes rewarded investors with over 30 per cent returns.

Source: http://business-standard.com/india/news/mutual-funds-remained-heavy-net-sellersequities-in-december/497641/

Wednesday, January 2, 2013

Banking, FMCG funds top Mutual Fund return charts in 2012

Mutual funds focused on banking, FMCG and midcap stocks topped the return charts for investors in 2012, while those investing in IT stocks fared the worst, albeit with modest gains.

As per an analysis of net asset values for all mutual fund schemes during 2012, the banking funds have an average 55 per cent return in the year, as against appreciation of 26-28 per cent in the broader benchmark indices.

The FMCG funds came a close second with average return of 48 per cent in 2012, followed by midcap schemes (41 per cent), multicap funds (33 per cent) and pharma funds (32 per cent).

Tax funds, a popular avenue for saving taxes, gained 31 per cent in calendar year 2012.

"Some sectors which gave extraordinary returns in this period include Banking, FMCG and Consumer Durables. Stocks in sectors such as IT, Power and Oil & gas didn't do as well in 2012. Largely, investors currently favour stocks in consumption sector give some of macro winds," said Atul Kumar, Senior Fund Manager, Quantum MF.

Infrastructure equity funds rode on the back of market rebound to give investors 25 per cent average gain in 2012. International equity funds (14 per cent), arbitrage funds (9 per cent) and IT funds (6 per cent) were the poorest performers in the year gone by as their chosen themes did not play out well as the winners.

Gold funds, which saw copious inflows, gave an average 11 per cent gain in 2012 as the precious metal prices inched up. In the fixed income fund space, Gilt medium and long term funds walked away with the honors of best average gains (10.5 per cent), followed by income funds (10.1 per cent), short-term income schemes (9.8 per cent), liquid funds (9.2 per cent) and gilt short-term funds (8.3 per cent).

"Most short-term debt funds and dynamic bond funds have also increased duration and exposure to government securities to take advantage of a fall in yields," said Sachin Jain, analyst at ICICIdirect.com.

Among the hybrid fund categories, equity-oriented funds gave an average 27 per cent gains while the debt oriented ones mirrored the fixed income gains of around 13 per cent.

Source: http://www.indianexpress.com/news/banking-fmcg-funds-top-mutual-fund-return-charts-in-2012/1052881/0