Reliance Mutual Fund Invests In HT Media

Relaince Mutual Fund has invested around r13.05Cr in HT Media. The fund acquired 15,00,000 shares at R87 per share of HT Media through bulk deal on BSE.

 

Reliance Mutual Fund already holds 2.83% stake through Relliance Growth Fund account.

 

HT Media Ltd is an Indian mass media company based in Delhi, India. It publishes Hindustan Times, an English daily, and Mint, a business paper. It operates 19 printing facilities across India with an installed capacity of 1.5 Mn copies per hour.

 

HT Media had bought social networking site DesiMartini through its online subsidiary Firefly eVentures in 2007 and invested in Micro Technologies through 5 lakh CCD's worth R20 Cr.

 

Source: http://www.dealcurry.com/20120824-Reliance-Mutual-Fund-Invests-In-HT-Media.htm

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'I made my money by selling too soon.'

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Benefit for direct investors in small MF schemes

Sebi guidelines will help the financial savvy and the ones still finding their feet in the stock markets.

 

The equity market regulator, the Securities and Exchange Board of India, has made it more profitable for direct mutual fund (MF) investors. In its recent guidelines, it has proposed to keep two net asset values (NAVs) in mutual fund schemes – one for the direct investor and another for the ones who come through distributors.

 

But, before going for the direct route, undertake a cost-benefit analysis. Though, the final difference in costs between a direct investor and one going through a distributor will only emerge when the numbers are actually declared by the fund houses, a little bit of number crunching can give us a ball park figure.

 

Currently, mutual funds charge up to 2.5 per cent as expenses. Add another 20 basis points to that and the investor will be paying around 2.7 per cent – the average expense for a smaller scheme of Rs 500-700 crore will be to the tune of 2.4 per cent.

 

Of this, for equity funds 1-1.25 per cent is charged as investment management fees, registration and transfer charges, custodian charges, investor communication (for printing half-yearly results), trustee fee, etc. All these will come to around 1.75-2 per cent. After all these expenses, the fund house will have 40-65 basis points that could be passed on to the investor.

 

For a larger size fund of Rs 3,000 crore, the numbers would be lower. The expense ratio for such schemes is to the tune of two per cent. So, direct investors will stand to gain very little in schemes that are managing large amounts. The savings will be from trail commissions that are paid to the distributors.

 

For someone who is investing Rs 1 lakh in an equity mutual scheme, the savings would be around Rs 500-700 annually. Direct investors were anyway exempt from paying any entry load (during the entry load regime). However, despite this benefit, still 95 per cent of mutual fund investors buy units through a distributor such as a bank, brokerage, financial planner and so on, say experts.

 

"At present, people don't take the direct route because choosing a suitable mutual fund scheme and doing the necessary paperwork on their own is still quite a cumbersome process," explains Jaideep Bhattacharya, managing director, Baroda Pioneer AMC.

 

From a retail investor's perspective, there will be some savings. But what one needs to consider is – can they take the call on what is the best fund to invest in? The question is important because many put in money because some scheme is performing exceptionally well for a short period. And then get trapped in bad times. If you are unsure about the scheme, it is important that you should take professional help even at a cost.

 

Another move that will expand the investor base, is allowing people without a PAN card or a bank account to invest cash up to Rs 20,000 in MF schemes. At the moment, you need identity proof and bank account for any investment-related transactions. This move, fund experts say, will help people in Tier-IV, V and even VI cities.

Amar Ranu, senior manager (third party products), Motilal Oswal Private Wealth says the ones that are likely to take this route should invest in balanced funds, since they would be first-time investors. Within balanced funds, monthly income plans (MIPs) are a good option.

 

Investors can opt for both combinations – 65 per cent equity or debt – depending on their age and risk profile. In case of 65 per cent equities, the downside is higher in the present market conditions. In good market conditions, they do better than 65 per cent debt products.

 

Source: http://www.business-standard.com/india/news/benefit-for-direct-investors-in-small-mf-schemes/484240/

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'I made my money by selling too soon.'

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Blog:http://indianmutualfund.wordpress.com/
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Contrarian view: Domestic institutional investors see opportunity in Bharti Airtel, Maruti Suzuki stocks

India's institutional investors have been buying significantly into Bharti Airtel and carmaker Maruti Suzuki over the past six months, although the stocks were heavily beaten down. They, apparently, prefer to take a contrarian bet on these companies at a time when their valuations are at historic lows.

Shareholding of domestic institutional investors such as mutual funds and insurance firms in Bharti rose to 8.4% from 8.2% in the first six months of 2012, with mutual funds being the main acquirer. This was despite India's largest telecom company battling a slide in margins, slowing revenue growth in its African unit and a spate of downgrades by brokerages.

Fund managers who spoke on condition of anonymity, because they are barred from discussing specific stocks, said they are looking at a contrarian investment opportunity in Bharti stock, which sank to a near six-year low on Wednesday.

Saurabh Mukherjea, head of equities at Ambit Capital, believes Bharti's stock price will firm up in the coming quarters. Sankaren Naren, CIO, ICICI Prudential Asset Management, reckons that the entire telecom industry is an attractive investment bet considering that there is still latent demand for telecom services in the country.

In the first six months of the year, institutional investors moved out of quite a few heavyweight stocks as many companies, especially capital goods firms, have faltered in the face of policy paralysis and lack of approvals stalling infrastructure projects.

State-run Bhel, a favourite with mutual fund managers earlier, is now shunned. The company's June 2012 quarter results showed that at Rs 1.33 lakh crore, its order backlog was at its lowest since September 2009.

After selling Bhel, many institutional investors have bought into L&T. However, Bhel's dirt-cheap valuations appear to have attracted some foreign institutional investors and local banks, which have raised their holding in the company.

While FII holding in Bhel rose from 12.2% to 12.9% during the first half of 2012, local banks have increased their stake from 1% to 4.6%. This comes as a bit of a surprise considering that earnings visibility for Bhel is quite weak, with the current order backlog providing it comfort for just a couple of years. What has prompted local fund managers to raise their exposure to L&T is its well diversified business model, growing global presence and surprisingly good set of financial numbers over the past two quarters.

The combined shareholding of local institutional investors and foreign portfolio investors in Bhel rose to 52.5% from 51.6% during the first half of the year. L&T has an order backlog of over Rs 1.53 lakh crore, its highest till date.

With the consumption story still strong, fund managers are fairly bullish on the automobile sector. What has changed in the past few months is their choice of companies. While local fund managers are more optimistic when it comes to two wheeler companies such as Hero and Bajaj Auto, despite their muted sales volumes, foreign portfolio investors have reduced their exposure to both these companies because of slowing rural consumption, a weak monsoon and tax related issues in some export markets such as Sri Lanka.

FII shareholding in Hero and Bajaj has dropped by about 0.56 and 1.25 basis points, respectively, while the holding of local institutions rose by similar margins.

In the passenger car segment, while mutual funds raised their stake in Maruti Suzuki from 3% to 3.8% given its strong product portfolio, Tata Motors' global presence has made it an attractive investment for FIIs who have increased their stake from 24% to 27.7% in the January-June 2012 period.

In stark contrast to the belief that Maruti may have seen a flight of investors after the labour strife at Manesar, many local institutional investors have perceived it as a contrarian investment opportunity, and are gradually increasing their stake. "Many large investors believe that the Manesar issue was overplayed and see the panic-selling as a great buying opportunity," says Saurabh Mukherjea of Ambit Capital.

Source: http://economictimes.indiatimes.com/markets/stocks/stocks-in-news/contrarian-view-domestic-institutional-investors-see-opportunity-in-bharti-airtel-maruti-suzuki-stocks/articleshow/15626175.cms?

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'I made my money by selling too soon.'

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

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Canara Robeco Mutual Fund to hire 2 managers for equity assets

Canara Robeco Mutual Fund is said to be roping in two fund managers to manage its equity assets. The mutual fund industry is abuzz with talk that the fund is hiring Ravi Gopalakrishnan, former chief investment officer of Pramerica Asset Management and Krishna Sanghavi, former fund manager with Kotak Mutual Fund.

Such talk comes in the wake of Soumendra Nath Lahiri quitting Canara Robeco to join L&T Mutual Fund. The buzz in the industry is that Canara Robeco is hiring two fund managers to ensure it is not stranded if one of them quits.

In the past couple of years, two fund managers have moved out of Canara Robeco. Replacing Gopalakrishnan at Pramerica Mutual Fund is BP Singh, who was chief investment advisor at Baer Capital-promoted Beacon India Alpha Equity Fund — an India-focused hedge fund.

Prior to his stint at Beacon, BP Singh was heading equity investments at Deutsche Asset Management. Senior officials at both Canara Robeco and Pramerica Asset Management declined to comment.

 

Source: http://economictimes.indiatimes.com/news/news-by-company/corporate-announcement/canara-robeco-mutual-fund-to-hire-2-managers-for-equity-assets/articleshow/15610661.cms

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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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Indian funds are the cheapest and cleanest in the world

A fund will have three kinds of costs—entry, ongoing and exit. By banning entry loads, India has collapsed all costs into the annual cost and the exit load

 

Now that the dust has settled over last week's announcements by the Securities and Exchange Board of India (Sebi) and the merits or otherwise of the hike in mutual fund costs have been chewed over, two issues have emerged that still need a comment. One, that Indian funds are the most expensive in the world. Two, that the changes are pro-big fund houses.

 

The 50 basis point (bps) hike (30 bps for non-metro penetration and 20 bps to take care of the exit load clawback getting ploughed back into the scheme) in expense ratios will bring the entry level cost of an equity fund to 3% a year. Funds are allowed to charge expense ratios on a sliding scale. The first Rs.100 crore of assets under management will now be charged 3% (2.5% earlier), the next Rs.300 crore 2.75%, the next Rs.300 crore 2.5% and all assets after Rs.700 crore will be charged 2.25%. If the average cost was 2% earlier, it will now be 2.5%. Let's look at what the rest of the world charges: the median annual recurring cost in the US is 0.94%, in UK 1.67%, China 1.3% and South Africa 1.47%. Remember, we're talking about managed funds and not passive index huggers. At 2.5% annual cost, India is indeed the most expensive. But that is only half the truth; to see the total impact of cost, we need to build in all other costs as well. A fund will have three kinds of costs—entry, ongoing and exit. By banning entry loads, India has collapsed all costs into the annual cost and the exit load. If we build in the 1% exit load on money that leaves an equity fund before 365 days, we get a total cost of 3.5%. Now look at what the US and UK charge. The US, with its three share classes, has costs that range from 1.18% to 7.1%. The UK funds cost an average of 6.67% a year.

 

Not only are Indian funds the cheapest, they are also the most transparent. Costs in other markets such as the UK and US are not so easy to define. The US, with its various share classes and cost sub-categories, is almost impossible to navigate for an average investor. The UK too seems not to define costs as well. Says financial planner Nick Cann, chief executive of the UK-based Institute of Financial Planning: "The annual management charge on mutual funds in UK varies quite a lot. There's no set minimum and maximum, 1.5% per annum is pretty typical although 0.5% of that is usually paid away to the adviser (if there is one). Some charge more (specialist funds usually go upto about 2%), others charge less although few go below 1% per annum." Maybe it's time we stop beating ourselves up and look at mutual funds as the lowest cost, transparent vehicle for a variety of retail investment needs.

 

The second crib is around the smaller asset management companies (AMCs) getting short-changed by linking the hike in expense ratios to gathering non-metro business and for the exit load clawback rise in expense ratios. The argument is that this will benefit the larger fund houses. Two points here. One, smaller AMCs are represented on the mutual fund committee and need to use that forum to put their voices across. Two, when a business is started there are no guarantees getting handed out. What prevents a new AMC from coming in with a business plan that looks at focusing on a non-metro region rather than trying to replicate the high-cost 15-metro-heavy existing business model of the large AMCs? The mutual fund industry is more than 20 years old and those that have been there for those many years will have an advantage over the newcomers. I don't understand why the regulator should give sops to the newbies to make their business profitable.

 

End note: Out of all the debate, there may emerge some things that may need a tweak. One example is the exit load calculation. The way the numbers are done right now, it seems that the fund houses' benefit will be a multiplier to that of the investors. Exit load calculations need to be seen on incremental assets gathered by the fund and not on to the total corpus. An update a year later will also help in mapping out how this change has impacted the industry and the investor. Since we know what we are trying to map, possibly the data collection could happen on an ongoing basis rather than defining the data metrics a year later.

 

Source: http://www.livemint.com/2012/08/21213341/Indian-funds-are-the-cheapest.html

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'I made my money by selling too soon.'

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Small town financial advisors not enthused by Sebi's moves

Independent Financial Advisors seek higher trail commissions, mutual fund executives agree.

Independent Financial Advisors (IFAs), a strong link between asset management companies (AMCs) and potential investors, especially in the smaller cities of the country, are not excited with the tweaks made by the capital markets regulator, Securities and Exchange Board of India (Sebi) last week to increase penetration of mutual fund products. Rather, they termed the steps as a "drop in the ocean".

 

In its quick check with small IFAs spread across the country, Business Standard, found out that majority of financial advisors have lost a significant chunk of their revenues from selling mutual funds. Though frustrated, they said they wanted a clear and concrete road-map for the industry.

Sanjeev Sharma, an Indore-based IFA, says, "Amfi aur Sebi ko cheezein clear rakhni chaahiye. Jab aap kuchh change karo to hamein samay lagta hai adjust karne mein. Ek saal beeta nahi ki fir se parivartan ho jata hai, jo sahi nahi hai (Amfi and Sebi should keep things clear. It takes time to adjust in a new business model, but rules get tweaked in a year which is not good)."

 

The sentiment is reflected by a Patna-based advisor Manu Mehrotra, who says, "I have upgraded my office and invested in technology to service my clients but people are used to free financial advice which is not helping us. By increasing 30 bps (basis points) in expense ratio, it's not going to increase penetration of mutual fund products." He adds that investors must pay as advisors need to be remunerated for their services.

 

Last week, Sebi allowed AMCs to charge an extra 30 bps as expense ratio provided the new fund flows from beyond the top 15 cities make up 30 per cent of the overall assets.

 

Though none of the AMCs have yet called upon IFAs about how they plan to take things further, the latter said they would prefer increment in their trail-commissions rather than a rise in upfront commissions.

 

Bikaner-based Suresh Modi, who lost more than 80 per cent of his mutual fund business over the last few years, says, "I get 5-10 basis points (bps) as upfront commission. But my trail commission is around 50 basis points. It would be better if AMCs increase the trail to 80 bps." Other advisors echo Modi's opinion. Moreover, they say that if trail goes up they would like to retain clients for a longer period of time, which will be good for all stakeholders.

 

Currently, on an average, upfront commissions to IFAs range between 10 bps to 50 bps (though in some cases it is as high as 1.5 per cent) while the trail stands in the range of 30 bps to 80 bps.

 

The demand by IFAs for higher trail has also found takers in the industry. Chief executives say they will be in a better position to take a call on the same once Sebi brings out the fineprint of the measures announced last week.

Sanjay Sachdev, chief executive officer (CEO) of Tata Mutual Fund, says, "I am in favour of higher trail-commission. Though, as of now, I cannot make any commitment till things get clear." Agrees Akshay Gupta, CEO of Peerless MF.

 

According to Dhirendra Kumar, chief executive of Delhi-based mutual fund tracking firm Value Research, "Higher trail-commission is quite a legitimate demand from IFAs. It will help retain funds for longer period. I believe, distributors should not only get higher trailing commissions on the new flows but also on the existing fund mobilisation."

Indore's Sharma, rightly points out, "We will keep trying to adjust with new norms and service our clients for longer-term if trail goes up."

 

Source: http://www.business-standard.com/india/news/small-town-financial-advisors-not-enthused-by-sebis-moves/483966/

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'I made my money by selling too soon.'

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Sebi’s new steps may ring in a Rs 775 crore windfall for mutual funds

While there has been wide criticism on plans to re-introduce entry load on mutual fund investments, a look at the steps taken by the Securities and Exchange Board of India (Sebi) in its board meeting on Thursday leads to the conclusion that even a "regressive" measure like the introduction of entry load of 1 per cent could have actually been better for investors than the proposal for the additional TER (Total Expense Ratio) of up to 50 basis points (bps) that finally passed muster.

 

Through the twin measures (additional TER of 30 basis points and 20 bps respectively) that is slated to push the expense ratio up by an aggregate of up to 50 bps, Asset Management Companies (AMCs) stand to make additional revenue of around Rs 775 crore per annum on the total outstanding equity assets under management of Rs 1,55,132 crore as on July 31, 2012. However, if Sebi had chosen to introduce an entry load of 1 per cent on the new sales during the year the burden on investors was likely to have been far lower.

According to the data available with AMFI (Association of Mutual Funds of India), total equity sales during the last 12 months stood at Rs 42,570 crore and a 1 per cent charge on that comes to Rs 425 crore, which is significantly lower than the Rs 775 crore that will go in the form of higher expense ratio from the entire equity AUM.

 

A hike in expense ratio is more dangerous also because in the case of entry load, 1 per cent would have gone only on the investment amount during the year but in the case of higher expense ratio, it will go on both new and old investment, which will only compound the cost for investors every year. Since mutual fund is a long-term product for 5, 10 or 20 years, an investor will end up paying a far higher amount over the tenure of investment.

 

Consider this: If you invest Rs 1 lakh every year for 20 years and the investment grows at 10 per cent per annum, at an expense ratio of 2 per cent, your total outgo stands at Rs 8.6 lakh over 20 years but at an expense ratio of 2.5 per cent it will jump to 10.75 lakh. Thus the burden of this additional expense ratio of 50 basis points is not a few thousands but Rs 2.15 lakh over the tenure of investment.

 

A higher expense ratio guarantees an increase in revenue for mutual funds every year whether they take special efforts or not for penetration but an increase in entry load of 1 per cent for sales beyond 15 cities would have ensured that they take special efforts to earn more. Sebi's action is also a blow for existing investors as they will be funding the AMCs for penetrating into smaller cities.

 

While Sebi has asked AMC's to credit the exit load (charged on early withdrawal) back to the scheme, which is widely seen as a positive move, exiting investors of the scheme will have to hope that more than 20 per cent of the assets are redeemed within one year by certain investors in order to be able to benefit from the same.

 

For example: If the size of a scheme is Rs 1,000 crore and only 10 per cent of the assets (Rs 100 crore) are redeemed within one year of investment then Rs 1 crore (1 per cent exit load) is collected as exit load and will be added back to the scheme taking the AUM to Rs 901 crore. However, since AMC's have been allowed to claw back an additional TER of 20 basis points on the entire scheme AUM, Rs 1.8 crore (0.2 per cent of Rs 901 crore) will be charged by AMC's from the scheme which will bring the AUM down to Rs 899.2 crore. This is lower than Rs 900 crore that would have been as per old regulations and thus long- term investors in the scheme are at a loss.

 

However if 25 per cent of the assets are redeemed within one year of investment then with exit load coming back to the scheme, the AUM will stand at Rs 752.5 crore and even if 20 bps are taken out of the scheme by AMCs, the AUM will stand at Rs 751 crore, which is higher than Rs 750 crore as per the old regulations. This will benefit the long term investors.

 

Source: http://www.indianexpress.com/news/sebis-new-steps-may-ring-in-a-rs-775-crore-windfall-for-mutual-funds/990825/0

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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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