ICICI Mutual Fund And Others May Face Competition From Aviva India

"As part of our expansion strategy in Asia Pacific and keeping in mind the opportunity India presents, we would like to enter into asset management business as soon as possible," Aviva India Managing Director Bert Paterson said. 

However, the company is yet to decide about the structure, he said, adding the company is looking at a number of ways in which it could be set up. 

"We are considering what the various options might involve, but we have no specific plans to announce at the moment," he said. 

"The company has not yet engaged Securities and Exchange Board of India," he added. 

Of the total 20 life insurance players, about 9 already have their asset management arm. Prominent among them include ICICI Prudential, Reliance Mutual Fund, HDFC Mutual Fund and SBI Mutual Fund.
Source : www.business-standard.com

JM Multi Strategy Fund

JM Multi Strategy NFO ( an Open Ended Equity Fund) today, a brief is mentioned here. 

Launch Date : 31st July’08
Closing Date : 29th August’08

JM Multi Strategy Fund will have an active investment strategy which changes with the changing markets. 

Identifying the future market scenario and identifying stocks that are likely to outperform will be critical in managing the fund. JM Multi Strategy will seek to adopt a portfolio strategy depending on the prevailing market conditions; the scheme will either adopt a growth or a value style of investing.

During bullish market conditions, the scheme will act like an aggressive growth fund with a concentrated portfolio of say 25 to 30 stocks and a targeted portfolio beta of greater than 1.

However,in a bearish market, the scheme will have a low volatility conservative portfolio of a larger number of stocks in the range of 40 to 60 stocks with a targeted portfolio beta of less than 1.

The scheme may have to regularly churn its portfolio at periodic intervals in order to achieve the investment objective and as such the portfolio turnover ratio could be high.

 

The intention is that in these market conditions the fund will switch between aggressive and defensive large caps depending on the market conditions. The fund will have large caps to an extent of 90 to 95%. 

Load Structure: 

Entry Load Exit Load 

In case of investments <>2.25%
In case of investments >= Rs. 2 crores : Nil

In case of investments <>1% if redeemed within 1 year of allotment / transfer of units. 
In case of investments >= Rs. 2 crores: 0.5% if redeemed within 3 months of allotment/transfer of units 
In case of investments made through Systematic Investment Facility : Nil

In case of investments made through Systematic Investment Facility: 2.25% if redeemed within 2 year of allotment / transfer of units of respective installments.

Reliance Cap, HSBC, ICICI join SBI to manage EPFO fund

New Delhi, July 29 In a move that may have far-reaching impact on the future income of the Employees Provident Fund Organisation (EPFO), the largest provident fund in the country on Tuesday decided to induct three private sector fund managers — the Anil Ambani-led Reliance Capital AMC, HSBC AMC and ICICI Prudential AMC — as its new fund managers.
SBI monopoly ends 

This ends the age-old monopoly of State Bank of India, which will, however, continue as the sole public sector fund manager.

The organisation has a corpus of about Rs 1,55,561 crore (at face value) as on March 2007 and around four crore subscribers.

The inclusion of Reliance came as a last minute surprise as the company did not figure in the recommendations placed before the Central Board of Trustees (CBT) by its Finance and Investment Committee (FIC).

The FIC had recommended only two private sector players. The Labour Secretary, Ms Sudha Pillai, told reporters after the meeting that “the CBT has decided to allow Reliance Capital, ICICI Prudential, HSBC and SBI to manage provident fund of employees.”
Same score.

Officials said that SBI and Reliance had the same score in the financial bid, but SBI had a better technical bid evaluation with 81 points out of 100 while Reliance had scored 77 out of 100. The CBT took the decision based on the financial bid, they said.

The CBT Member and Secretary of the Hind Mazdoor Sabha, Mr A.D. Nagpal, who is also a member of the FIC, told Business Line after the meeting that “The FIC had not recommended Reliance. We have put our dissent on record,” he said.
Management fee.

According to the bids approved on Tuesday, Reliance and SBI will get an investment management fee of 10 paisa for every Rs 1,000 managed (0.01 per cent). ICICI Prudential and HSBC AMC will receive 7.5 paisa and 6.3 paisa, respectively, for every Rs 1,000 managed by them.

Source: http://www.thehindubusinessline.com/

HDFC Equity's Stock Selection Strategy

HDFC Equity Fund, one of the top performers in the Indian market has been around for 13 years now. [Originally from ITC Threadneedle then to Zurich and then into HDFC AMC] The silent and soft-spoken Sr. Fund Manager, Prashant Jain who rarely comments in the media has released a note celebrating 13 years of HDFC Equity Fund.

One thing that is worth noticing in the note is the stock selection procedure adopted by the company sticking to its internal process of "Avoiding the Big Mistakes" [ Real Estate, Brokerage Houses etc]. He further said,
Owning strong businesses, that are likely to grow earnings at above market rates. Focusing on long term prospects and valuations and ignoring short to medium term market aberrations i.e ignoring momentum stocks / stocks with excessive valuations if not justified by fundamentals. Remain diversified with exposure to mid-caps varying between a third to fourth of portfolio.

ABN Amro appoints two new key personnel

ABN Amro Mutual Fund has two new key personnel joined AMC, Ms Aparna Karmase and Ms Monaz Elavia with effect from 9th July, 2008. Ms Aparna Karmase is designated as Compliance Officer, Risk Manager and Company Secretary at the age of 30. She is LLB and has done ACS from Institute of Company Secretaries of India. She worked as Company Secretarial & Legal Department - KJMC Global Market (India) Ltd till October 2002; Ms Monaz Elavia is designated as Head of Client Service department at the age of 32 and has done studies in Bachelor of Arts. She worked with Vodafone as Customer Service Executive till Aug 1999.

Benchmark MF Files Offer Document With Sebi

Benchmark Mutual Fund filed offer document with Sebi to launch Shariah BeES. The Benchmark Mutual Fund has filed the offer document with the Securities and Exchange Board of India (Sebi) for launching a dedicated scheme of Shariah Benchmark Exchange Traded Scheme (Shariah BeES). It's an open-ended exchange listed index scheme. The minimum application amount under the scheme is Rs. 10000 and in multiple of Re 1 thereafter. ach unit of the scheme being offered will have a face value of Rs.10 each and will be issued at a premium approximately equal to the difference between face value and 1/10th of the value of the S&P CNX Nifty Shariah Index.

MFs gaining popularity in India, finds Nielsen survey

In 2007, MFs had a 40% share of investment options available to consumers, said the Mutual Fund Brand Health Monitor-4 survey

Mutual funds (MFs) have become the investment tool of choice for Indian investors, who no longer treat them as tax-saving options, but buy them in the hope of earning higher returns, said a survey released by market researcher Nielsen Co.
Popular choice: An ICICI Bank branch in New Delhi. The Nielsen survey found mutual funds offered by ICICI Prudential to be among the most recalled brands among investors. Photograph: Rajeev Dabral / Mint.

In 2007, MFs had a 40% share of investment options available to consumers, said the Mutual Fund Brand Health Monitor-4 survey. Of 1,600 investors polled, 90% said they preferred to invest in MFs over other investment options, it said.

According to the Association of Mutual Funds in India, total assets under management in June were at Rs5.65 trillion, down from Rs6 trillion in May. That drop came as rising food and fuel prices pushed inflation to a 13-year high, credit costs rose and foreign inflows slumped amid global economic uncertainty. The Bombay Stock Exchange’s benchmark Sensex has declined 30% this year, buffeted by global economic headwinds.

Still, MFs have benefited from aggressive marketing, wider media coverage and higher returns they delivered to investors in recent years, Nielsen said in a statement, adding that there had been a mindset change among investors who regarded them once as tax-saving tools. 
They are “...now buying them in the hope of greater financial return”, said Kalyan Karmakar, associate director for customized research at Nielsen. 

The survey found Reliance Mutual Fund to be the most recalled brand among investors, followed by those offered by ICICI Prudential Asset Management Co., State Bank of India and HDFC Asset Management Co. Ltd.

JPMorgan AMC launches JPMorgan India Alpha Fund

JPMorgan Asset Management India Pvt. Ltd. (JPMAMIPL) today announced the launch of JPMorgan India Alpha Fund, an actively managed scheme that aims to produce returns from a portfolio in an all-seasons environment.

The ‘Alpha’ strategy used here involves taking positions with minimal market risk by buying one stock (or its derivative) and selling another (or its derivative). This usually means identifying some trend that is benefiting one company and at the same time is detrimental to another. 

Traditional equity funds tend to invest directly into stocks, which may go either up or down leading to either appreciation or depreciation of one’s investments. In the JPMorgan India Alpha fund, the fund manager would endeavor to construct a portfolio in a manner which will reduce the market risk (beta) significantly by investing in ‘stocks / derivatives with pair trades’. The stock selection would generate the returns (alpha) of the fund. The fund would invest in stocks / derivatives which would illustrate both positive and negative conviction on ideas and seek to benefit from relative outperformance.

The JPMorgan India Alpha Fund will be open for subscription from 31st July to 29th August 2008. 

The JPMorgan India Alpha Fund is an ideal fit for any investor who owns equity mutual funds or direct equity in his portfolio. It is a complement to the existing long-only portfolio as it endeavors to reduce the overall risk (beta) of the portfolio because of the investment strategy. The strategy would be an ideal fit for investors who would like to have an exposure in the equity market but at the same time are not confident from a market outlook standpoint.

Krishnamurthy Vijayan, Wholetime Director & CEO, JPMAMIPL said, "At the launch of JPMorgan's mutual fund business in India, we had promised to bring in a diverse suite of our global fund products. The launch of JPMorgan India Alpha Fund is just one of the global investment solutions that we bring to you from the JPMorgan suite; and we will continue to launch more of them over the next few years. We are strong believers in long term investment and this fund reinstates our philosophy. We at JPMAMIPL are very excited and feel this fund will become an important part of investors’ portfolios."

Harshad Patwardhan, Investment Manager – Equity, JPMAMIPL said, “The JPMorgan India Alpha Fund will be a great addition to the existing long-only portfolio of investors as it endeavors to reduce the overall risk of the portfolio. The strategy is meant to act as an alternate equity investment targeted at the investor who does not want to take a directional call on the market.”

RBI policy tone remains hawkish: Principal MF

The Reserve Bank of India (RBI) has increased the CRR (Cash Reserve Ratio) by 25 bps and Repo rate (the rate at which the central bank lends money to other banks), by 50 bps.

Ritesh Jain, Head – Fixed Income, Principal Mutual Funds commenting on the rate hike in an exclusive conversation. `The tone of policy remains quite hawkish, indicating the RBI`s clear preference towards inflation containment albeit the move may impact domestic growth somewhat. 

The policy categorically looks to be concerned about the underlying momentum & aggregate demand, and it is likely that the monetary steps will continue to remain the first line of defense in anchoring inflation and inflationary expectation. 

The RBI has indicated its awareness of risks in the global economy and the willingness to act if need be. In terms of direction, the overall interest rates in the economy will align higher. The deposit rates and the lending rates are also likely to head higher over the next couple of months.`

Most ULIPs under-perform Nifty

Equity mutual funds have not managed to contain the declines in their NAV well during the recent market fall, with majority of them trailing the broad market. But did equity-oriented unit-linked insurance plans (ULIPs) from insurance companies manage to do better? 

We took a few schemes which have a track record of at least two-three years. Equity-oriented ULIPs from insurance companies posted a decline of 6.2 per cent in their NAV over the past one year. This compares with the six per cent decline for the Nifty and 11.9 per cent for diversified equity funds as a category. 

Most of the ULIPs trailed the Nifty, with the fund with the maximum decline being Bajaj Allianz Unit Gain Plus Growth (down 11 per cent) and the best – ING Vysya Unit Link Growth. It has lost just one per cent.

ULIPs, however, may not be strictly comparable to equity mutual funds as many of them have lower equity allocations as compared to the former. ULIPs also usually have a focus on large-cap stocks, when compared to equity mutual funds which actively invest in the mid-cap space. In some cases, ULIPs have an inbuilt option that allows the fund manager to move a certain portion of assets to debt or cash, based on the market conditions. However, effective return for investors in ULIPs will not be determined by NAV returns alone; expenses which can account for a significant proportion of initial premia may also have a bearing on returns

“Growth” plans of ULIPs usually invest anywhere between 80-100 per cent in equity and rest in debt. Going by its latest portfolio, ICICI Prudential Life Time Pension Maximer (return negative 7.6 per cent) has invested 95 per cent of the assets in equity and the rest in debt. 

Bajaj Allianz Unit Gain Plus Equity Growth Fund (return negative 11 per cent) has invested 89 per cent of the assets in equity, with its top ten stocks mainly from the large-cap space.

Trail fees by any other name pinches as much

By approaching the mutual fund house directly, investors in mutual funds may have managed to save on money that otherwise would have to be handed over to the distributor. But that still has not given them any immunity from the games played by fund houses. 

These investors who should have been spared the burden of paying any trail fees — a part of the annual recurring charges that is paid to the distributor — are still paying these charges from their investments. So, while they are not paying the initial entry fees for getting into a fund, they are still losing around half a per cent of their investment value every year due to this creative accounting. 

Trail fees are that part of the annual recurring fees that are paid to the distributor (from the investor’s NAV) for retaining the customer. Naturally, any investor who comes without the intermediation of a distributor is justified in claiming relief from this charge. 

Earlier this year, Sebi had a passed a rule that allowed investors, who approached the fund houses directly, to save the fee that is otherwise charged for entering a fund, usually around 2-2.5% of the investment.

Besides these charges, Indian mutual fund laws also allow MF houses to charge a maximum of 1% as investment advisory fees per year and a maximum of 1.5% as other expenses like administrative, registrar and custodian fees and so on. Both these fees are deducted from the investor’s money, bringing down the returns in the process. 

“In a bid to boost their profitability, several MF houses are now charging trail fees (even for direct investors) under the other expenses head, disguising it with names like miscellaneous marketing expenses or other operating charges,” says a financial planner, who is empanelled with several fund houses. 

ET sent emails to Reliance, ICICI Prudential and Fidelity AMCs on the matter, but failed to receive any responses. When contacted, Kotak Mutual CEO Sandesh Kirkire said fund houses were not charging more than the prescribed Sebi limits. “When fund houses charge investment advisory fees and other annual recurring expenses to a fund, they do it at the scheme level, not at the investor level. So, there is no difference made between an investor who comes directly and via a distributor.” 

Distributors have not taken the direct application facility lying down either. They have been telling direct investors that they can arrange for direct applications, but insist on their name to be mentioned in the form for the service provided. So although these investors do not pay any entry fees, they have to cough up trail fees to the distributor every year. End result is the same — lesser returns. 

When Sebi permitted direct applications, leading fund houses opposed the move saying distributors are vital in increasing the penetration of MFs in the country. Since then, direct applications have grown, albeit modestly to around 8-9% of the total investments.

Source : http://economictimes.indiatimes.com/Personal_Finance/Mutual_Funds/Analysis/Trail_fees_by_any_other_name_pinches_as_much/articleshow/3299673.cms

Bottom fishing in India: In the footsteps of George Soros

"While most funds have been dumping stocks in India's sliding market, billionaire global investor George Soros has turned contrarian on India," says international expert Nick Vardy who now suggests "bottom fishing" in India.

In his Global Bull Market Alert, he explains, "One of the best ways to follow in his footsteps are by purchasing the WisdomTree India Earnings ETF (NYSE: EPI)."

"According to the Times of India, the Hungarian born Soros -- who since last August is again actively managing his famed Quantum fund -- recently went on a buying spree in India making investments valued at $140 million in a wide range of Indian companies.

"In many ways, Soros' call is a vintage contrarian bet. India has been one of the worst performers in the global markets this year. 

"Institutional investors have pulled out more than $7 billion from Indian equities as the BSE Sensex crashed 7,400 points, or 35%, from its peak of 20,873 back on Jan. 8 amid concerns over a weak global markets, soaring global oil prices and spiraling inflation in India. 

"Brokerages and investment banks are uniformly gloomy about India. Inflation has accelerated to just under 12%, a 13-year high. Industrial output in May 2008 rose 3.8%, the slowest in six years. Manufacturing growth slowed to 3.9% in May, while capital goods output growth slowed to 2.5% vs. a robust 22.4% last year. 

"According to Lipper Analytics, three India-focused funds rank among the 10 worst-performing funds globally in May. Stories about India's much vaunted middle class and the country's outsourcing prowess have evaporated from the global financial press virtually overnight.

"Yet, Soros realizes that the fundamentals of India have not deteriorated to the extent the drop in its stock market suggests. Indian banks, for example, have had almost no exposure to the U.S. sub-prime markets and continue to grow their earnings at 30%+ year.

"All top traders know that the best time to buy is when there is blood in the streets. And apparently, George Soros -- who called the current crisis the worst the world has seen since the Great Depression -- has seen enough blood in India to get back into the market. 

"The best way to join George Soros is by buying the WisdomTree India Earnings ETF (EPI), which provides a broad exposure to the Indian stock market. Its top holdings in India include the country's biggest companies such as Reliance Industries, Oil and Natural Gas Corporation, Infuses, Bharti Airtel, and ICICI Bank. 

"More than ever, you need to protect your downside, so make sure you place your stop at $16.30. And if you are feeling particularly queasy, you may want to consider taking half of your position size, and adding to your position as it moves in your favor."

ING launches first multi-manager Global Commodity Equity Fund

Laying its faith on commodity companies worldwide, ING Investment Management India on Monday launched ING Optimix Global Commodities Fund, India’s first multi-manager global commodity equity fund. 

The primary objective of the scheme is to achieve long-term capital growth by investing primarily in units of global commodity oriented mutual funds. The scheme opens on July 29 and closes on August 25. 

The scheme carries an entry load of 2.50 per cent for applications below Rs 5 crore and nil for applications of Rs 5 crore and above. There is no exit load either. 

Explaining the rationale behind the new launch, Vineet Vohra, MD and CEO, ING Investment Management India, said, “In the context of high inflation and falling equities in the stock market, commodities do well in helping one to diversify his portfolio. Even institutional investors are allocating funds more and more into commodities.” 

Vohra is eager in taking a cue from the institutional investors and wants retail investors to invest in commodity related equities especially in fall equity markets and high inflation. 

“Commodities do well during high inflation,” added Vohra. 

According to him, “Optimix is not a commodity fund. We are going to invest in commodity equities globally.” 

Under the multi-manager concept, the fund will invest in the global commodity funds managed by some world renowned global asset management houses like Credit Suisse, First State Investment, JP Morgan, Martin Currie, Societe Generale and Investec. 

The fund house is targeting a corpus of Rs 20,000 crore in the new fund offer. Out of the total corpus 65-100 per cent will be invested in global mutual funds which invest in commodity related securies, 0-25 per cent in debt funds, liquid funds, money market funds and 0-10 jper cent in money market securities. 

Interestingly, ING OptiMix fund shall not invest in the single schemes of ING Mutual Fund. Further, it shall not invest in those in overseas mutual fund which have an exposure to Indian securities market through participatory notes. The scheme is large cap biased with 63 per cent of the portfolio. 

“Global commodities offer diversification as they have a low correlation with other asset classes in addition to a wide geographical asset ownership. Commodity exposure offers a strong hedge against inflation making it a relevant asset class especially in the current scenario,” said Arvind Bansal, chief investment officer – Manager Investments, ING Investment Management India. He feels exposure to an alternative asset class like commodities would provide better risk adjusted returns to an investors’ overall portfolio. 

Vohara, who feels commodity equities can deliver better returns than commodities, said, “for investors, a multi-manager solution offers simplicity, efficient diversification of risk and the potential for superior, consistent performance.” 

The fund scheme is benchmarked to Dow Jones World Basic Materials Index (40 per cent), Dow Jones World Oil and Gas Index (40 per cent) and MSCI AC World in INR terms (20 per cent).

Principal Global Opportunities Fund/ Infrastructure and services Industries Fund

Principal PNB Asset Management Company has proposed amendments in the offer documents of Principal Global Opportunities Fund. The fund will be allocating at least 85 per cent of its assets into overseas mutual fund and the rest in money market securities. It also proposes to charge annual recurring expenses up to 0.75 per cent.

Principal PNB Asset Management Company has decided to restructure and re-strategise Principal Infrastructure and Services Industries Fund by changing its investment objective; asset allocation and name of the fund to Principal Services Industries Fund. These proposed changes will be in effect from August 26.

Sahara MF launches Banking & Financial Services Fund

Sahara Mutual Fund today announced the launch of its new scheme �Sahara Banking & Financial Services Fund.

The new fund offer (NFO) opens on July 28, 2008 and would close for initial subscription on August 26, 2008. 

During the NFO period, there is no exit load. Under the scheme one can opt for Dividend Option, (including dividend re-investment option) or Growth Option. Minimum application amount is Rs 5,000.

Announcing the launch, Naresh Kumar Garg, Chief Executive Officer, Sahara Mutual Fund mentioned, The Indian economy is well on its path to become one of the largest economies in the world. The investments in the real economy have been growing at fast pace and the sound Banking and Financial system of the country is proving to be the catalyst in forging the high GDP growth rates for India.

Sahara Banking & Financial Services Fund is an open - ended sectoral growth fund with the objective to generate long-term capital appreciation through investment in equity and equity related securities of companies that are in Banking and Financial Services segments. At least 75% of the total assets will be invested in equity and equity related securities and upto a maximum 25% of the total assets might be invested in debt and money market instruments.

MF NAVs decline sharply as mkts plunge

Equity diversified NAVs ended lower with negative advance:decline ratio of 8:204 as markets sink deep in red on the back of continued profit booking and weak global cues. Markets ignored stability in crude price and steady inflation numbers. The Sensex was down 502.07 points or 3.40% at 14274.94. Nifty was down 121.70 points or 2.74% at 4311.85. 

On the sectoral front, auto and banking funds declined. FMCG funds ended mixed. Pharma funds closed mixed with negative bias while technology funds mixed with positive bias.

However, long term debt funds advanced; advance:decline ratio stood at 47:32.
Equity diversified NAVs end lower 
Auto and banking funds decline 
FMCG funds end mixed 
Pharma funds close mixed with negative bias 
Technology funds end mixed with positive bias 
Long term debt funds advance
Among the equity diversified funds, the top gainers were UTI Mid Cap Fund (G) up 0.44%, Sundaram BNP Paribas Select Small Cap Fund (G) up 0.34% and Birla Sun Life Dividend Yield Plus (G) up 0.21%. The top losers were UTI Index Select Equity Fund (G) down 2.86%, Franklin India Opportunities Fund (G) down 3.00% and ICICI Pru Growth Plan (G) down 2.86%.  

Among the tax saving funds, the only gainer was Taurus Libra Tax Shield (G) up 0.25%. The top losers were LIC MF Tax Plan (G) down 2.78%, Franklin India Tax Shield (G) down 2.53% and Birla Sun Life Tax Relief 96 (G) down 2.78%. 

Among the sector funds, the top gainers were JM Healthcare Sector Fund (G) up 0.42%, Franklin FMCG Fund (G) up 0.42% and SBI Magnum Pharma Fund (G) up 0.17%. The top losers were Lotus India Banking Fund - Retail Plan (G) down 4.80%, UTI Banking Sector Fund (G) down 3.32% and UTI Energy Fund (G) down 3.03%.

Among the balanced funds, the only gainer was BOB Children Fund - Gift Plan up 0.01%. The top losers were Kotak Dynamic Asset Allocation (G) down 3.10%, FT India Balanced Fund (G) down 2.28% and Sundaram BNP Paribas Balanced Fund (G) 2.18%.

MF good for long term

Always have realistic expectations about investment performance. Information available/quoted in various reviews is past performance. Remember that the past performances of the instruments may not be repeatable. 

Investors should look for medium to long-term time horizon for investments in mutual funds (especially equity mutual funds). Investors should keep in mind that short-term gains from mutual funds attract short-term capital gains tax while the long-term gains are tax-free. Also, if you are switching from one fund to another, it involves transaction costs in terms of entry / exit loads. Investors should not look at mutual fund investments for the short term. Consider the fees/loads and taxes applicable on the investment. 

Equity mutual funds invest in the stock markets, and statistically, it is proven that equities provide better results than any other investment instrument over the long term. But stock markets are volatile by nature and are influenced by many events and news inflows (domestic as well international). Therefore, it is advisable for investors to look at medium to long term (more than one year) timeframes while investing in mutual funds. This is because time provides a cushion to absorb all the short-term volatility and helps your investments grow due to market fundamentals. 

Investing in systematic investment plans (SIP) of mutual funds is a good way to begin as it helps in planning your cash outflow well, averaging the entry price in the market, and you get the benefit of timing the market to a certain extent.

Making mutual funds to fund your investment

Mutual funds have put up a strong show in the backdrop of the bull run witnessed in the equity markets in the last five years. 

Funds such as Reliance MF, UTI, HDFC, ICICI Prudential, Birla Sun Life and SBI MF are now boasting of a corpus that easily exceeds the size of the whole industry till a few years ago.

With more transparency in their functioning and stricter regulatory control and the tax concessions that have been extended by the Government to investments in/dividend from mutual fund schemes, the total assets under management of the mutual funds as on June 30, 2008, had grown to Rs 5.64-lakh crore (Source: AMFI). 

Investment in mutual funds has become a viable option for those who are willing to bear a little risk to make a far higher inflation/tax-adjusted return compared to fixed deposits.

Long-term appreciation 

While the growth option of mutual funds would suit those who want long-term appreciation of investment, the dividend option is a boon to those who look for periodic payments.

The diversified equity schemes of the established mutual funds have become a dependable source of income. 

With some of the funds splitting the dividend payments to twice in a year — to the second or third quarter and again to the last quarter of the fiscal — the investors were able to anticipate the cash flow and plan accordingly.

Dividend payout 

An analysis of the fact sheets of prominent mutual funds shows that the NAVs of many of the funds had recovered the fall in value, to the extent of dividend payment made, before the next dividend date or had remained high enough for the funds to make a decent dividend payout again. True, this was possible because of the sustained bull-run the stock markets were witnessing till early 2008. 

But what was significant to note was that for the investors who had taken the SIP route for investment, the dividend earnings would have been consistently on the rise because regular investment would have brought in more units, helped also by the fall in NAV. This benefit of course would not have been achieved if they had redeemed their units.

Take the case of Reliance Growth Fund, which has a mid-cap bias. If one had made an one-time investment of Rs 28,000 ( excluding any load) on July 18, 2003, (cum div NAV Rs 27.96) to be allotted 1,000 units, by end-March 2008, the investor would have earned a cumulative dividend payout of Rs 60,500 on the investment as the fund had made a total dividend payout of Rs 60.50. Even after such a huge payout, value of the original investment itself had nearly doubled as the NAV of the dividend option zoomed to Rs 54.53 as on March 19, 2008, the record date for the last dividend payout.

Reliance Vision Fund, which is a diversified large cap fund, paid a dividend of Rs 19.50/unit in 2003-04 and in the four subsequent financial years, the fund paid each year a dividend of Rs 10.50, Rs 10.50, Rs 10 and Rs 10 per unit, taking the total dividend payout to Rs 60.50/unit in five years, same as its famed sibling.

Franklin Templeton also has upped the dividend payout in the past two years, responding probably to the investor aspirations. 

The fund’s flagship scheme, Franklin India Bluechip Fund had made a total dividend payout of Rs 22.50 during 2003-04 to 2007-08. Franklin India Prima Plus is another fund that has paid a good cumulative dividend of Rs 29 in the past five years. 

Franklin India Taxshield also has been a good dividend payer in the last two years with dividend payout of Rs 8 per unit each year. 

HDFC Mutual Fund’s Equity Fund had paid a total dividend of Rs 24.50 in the past five years. HDFC Prudence Fund, a balanced fund, has been a star performer and the total dividend payout in five years has been Rs 26.50 per unit. Its TaxSaver scheme has paid a cumulative dividend of Rs 28 per unit in the past four years, helped by a higher NAV.

Sundaram BNP Paribas’ Select Focus, which is a ‘pure large cap’ fund, has made a total dividend payment of Rs 27.50 in the past five years. 

Select Midcap is another good dividend payer with a payout of Rs 27 per unit during 2003-04 to 2006-07. Tax Saver Fund which is a five star rated fund by Value Research has made a dividend payout of Rs 26.50 in five years.

Birla Sun Life Equity Fund has given a dividend of Rs 30/unit in five years. But it was its Tax Relief ‘96 scheme that has been a star dividend payer. From its inception in 1996 till March this year, the fund had made a total dividend payout of Rs 211/unit. Of this, Rs 171/unit was paid during 2006-07 and 2007-08. Probably the fund resorted to such high payouts to bring down the NAV so as to attract fresh subscription. This scheme had assets worth Rs 677.72 crore as at the end of May 2008.

Other funds such as ICICI Prudential MF and DSP Merrill Lynch also have funds that have given good dividends in the past few years. DSPML Equity Fund, Top 100 Equity Fund and T.I.G.E.R Fund have provided good dividend payouts. ICICI Prudential’s Infrastructure Fund has been upping the dividend payment and its Tax Plan also has been a good dividend bet.

If one is able to build a corpus of 3,000-5,000 units each, over a period of time, by diligent investing in two or three funds, even a small dividend payout by each of them could turn out to be cumulatively a substantial income. That they are tax free is an added bonus. Part of this income could be used to make fresh investment through the SIP route in the same funds. One could also use the taxable income for investing in tax saving instruments like ELSS or PPF even while using the dividend payment for meeting living expenses.

However, in the near term, it remains to be seen whether the funds would be generous in their dividend payout because of the sustained fall in the value of equities. With the NAV of individual schemes down substantially and the future market trend looking uncertain, the funds may be cautious in their dividend payouts. But, even if the percentage of dividend is pruned, investors, who continue to invest in well-run mutual funds, would still be able to make a decent earning because of the cumulative increase in the number of units held by them. What better time could there be for increasing one’s unit corpus than when the markets are down? With tax concessions thrown in, can the investors ask for more?

JM Financial MF Files An Offer Document

JM Financial Mutual Fund filed an offer document to launch JM Moving Sectors Fund. It is an open-ended equity oriented scheme. The investment objective of the scheme is to provide capital appreciation by taking focused exposure to selective sectors and investing in a reasonable diversified portfolio within those sectors. The scheme offers growth and dividend option.

The scheme will invest 65-100% of its portfolio in equity and equity related instruments including equity derivatives. It may invest up to 35% in money market instruments / debt securities including securitised debt. The Scheme intends to invest in securitized debt up to a maximum limit of 25%.

UTI-MNC Fund declares tax free dividend of 25%

UTI-MNC Fund, an open-ended equity scheme, has declared tax-free dividend of 25% (Rs 2.50 per unit on face value of Rs10/-).

Pursuant to the payment of dividend, the NAV of the dividend option of the scheme would fall to the extent of payout and statutory levy if any. The record date for the dividend is July 28, 2008.

UTI-MNC Fund was launched in April 1998. The objective of the scheme is to predominantly invest in equities and equity related instruments of Multinational Corporations and other liquid stocks.

SBI Mutual Fund declares dividend of 20% on ‘Magnum Comma Fund’

State Bank of India Mutual Fund has declared a dividend of 20 per cent under the dividend option of Magnum COMMA Fund, an open-ended equity scheme.  

The company said in a release that all investor registered under the dividend option of the scheme as on July 25, 2008 will receive this dividend.

The NAV under the dividend plan of the scheme as on July 21, 2008 was Rs 16.39. The record date has been fixed at July 25, 2008.  

However after the payment of dividend, the net asset value (NAV) of the scheme/option would fall to the extent of payout and statutory levy, if applicable.  

Magnum COMMA Fund was launched in June 2005. The last dividend announced by the scheme was of 15% in November 2006.

Gains from MF switch under tax scanner

Indian tax authorities are putting to good use their information network to spot evasion and bolster collection. 

Taxmen have now trained their sights on several investors who had invested a few lakhs in mutual fund schemes and then switched between schemes. The income-tax department is scrutinising the tax returns of several individuals, who have switched their investments during the course of a year. 

The exercise is primarily aimed at preventing tax evasion and ensuring greater compliance. In several cases, the income-tax department has started examining tax returns to ascertain whether investors have short changed it by not paying short-term capital gains tax while exiting a scheme before the completion of one year. Switching schemes does not violate any norms, but investors have to pay a short-term capital gains tax of 15% if they sell the units of a mutual fund or stocks before one year.

Benchmark MF Plans To Launch Oil Bees

The Benchmark Mutual Fund has filed the offer document with the Securities and Exchange Board of India (Sebi) for launching a dedicated scheme of Oil Benchmark Exchange Traded Scheme (Oil BeES). It's an open-ended exchange traded scheme.

The minimum application amount under the scheme is Rs. 10000 and in multiple of Re 1 thereafter. Each unit of Oil BeES issued under the scheme will be approximately equal to one tenth of the price of crude oil. The investment objective of the scheme is to provide returns that, before expenses, closely correspond to the returns provided by crude oil by investing in units of overseas mutual fund schemes including exchange traded funds investing in securities/instruments linked to crude oil and exchange traded notes and other securities/instruments whose returns are linked to crude oil. The scheme will charge 2.25%, as an entry load during NFO period and for continuous offer there is no entry load.

JM Financial Mutual Fund Sells 12% To Hedge Funds For $26M

JM Financial Mutual Fund, the asset management arm of Nimesh Kampani-promoted JM Financial,
has sold 12 per cent stake to three hedge fund investors for Rs 111.7 crore or $26.5 million. The three investors — Valiant Capital Partners, Blue Ridge Capital and Eton Park — have picked up 4 per cent each for about Rs 151 per share in the mutual fund. The total deal size is Rs 111.7 crore, valuing the company at Rs 931 crore, reports Reuters, quoting JM Financial Group Director Vishal Kampani.
The company plans to use the capital to expand and increase its distribution muscle across India, the report added. A non-binding term sheet agreement has been signed between the AMC and the investors subject to signing of definitive agreements and regulatory approvals.
This divestment from JM Financial is a forerunner to JM’s plans for international funds. It plans to launch a Singapore or Mauritius headquartered offshore fund by next year and would be working in close connection with these investors to launch the fund.

Past Mutual Fund Deals
In March, Standard Chartered sold its Indian asset management business to Infrastructure Development Finance Co for $205 million, valuing the firm at about 6 percent of its assets under management. In December, Reliance Capital sold about 5 percent of its fund unit for Rs 500 crore, valuing India’s largest fund firm at 13 percent of total assets.
In October 2007, Pioneer Investments picked up a 51 per cent stake in Bank of Baroda’s Asset Mangement company. In 2006, Canara Bank sold 49 per cent stake in its asset management subsidiary Canbank Investment Management Services to the Netherlands-based Robeco Group NV. Robeco is part of Rabobank. In 2004, SBI divested 37 per cent its mutual fund arm to Societe Generale.
UTI Asset Management, India’s second largest mutual fund group, has also been looking to bring in an international investor in the firm in a pe-IPO deal. The usual suspects Goldman Sachs, Lehman Brothers, Warburg Pincus, Singapore’s sovereign wealth fund GIC and a new investor like Japan’s Shinsei Bank were believed to be in the race for picking up 10-12 per cent stake in the company for about $200 million.
Japanese fund manager Nomura Asset Management evinced sufficient interest to pick up a stake in LIC MF Asset Management Company which manages LIC Mutual Fund.

IDBI to enter mutual funds business

The IDBI Bank Ltd is planning to enter the mutual fund business, a top bank official said here Friday. Talking on the sidelines of a Banking Conclave here, Yogesh Agarwal, the bank’s chairman and managing director, said: “We are talking to a few foreign companies for setting up an asset management company, where we would have the majority holding.”

It is expected that the bank would post a 25 percent credit growth in the current fiscal.

The bank is planning to open five branches abroad, for which it is yet to get necessary approvals. It has applied for full-scale branches in Singapore, Dubai, Bahrain and London and is looking forward to opening a representative office in Shanghai.

IDBI also plans to open 200 new branches in the country.

The bank is also planning to venture into private equity business, either alone or through a joint venture.

IDBI arm IDBI Capital Market Services Ltd is planning to set up a credit information bureau through a joint venture with credit rating agency CARE. The new entity will have a capital base of Rs.200 million.

“We are waiting for the final approval from the Reserve Bank of India to begin operations,” Agarwal said.

It would be a separate company, with both the entities having equal stakes. The credit information bureau would provide information regarding credit worthiness of borrowers.

ICICI Prudential AMC Completes Successful Ten Year

India's leading fund house, ICICI Prudential AMC celebrated the completion of ten years in the Indian Mutual Fund industry. The company which began in the year 1998, with an AUM of Rs 160 Crore, managing only two funds at its inception has since expanded its AUM to Rs 59,505.14 Crore as on 30 June 2008 spread over 40 funds. ICICI Prudential Asset Management Company Ltd. is the joint venture between ICICI Bank, a well-known and trusted name in financial services in India and Prudential Plc, one of UK's largest players in the financial services sectors. Gracing the occasion were stalwarts like Mr. Mark Tucker, Group Chief Executive, Prudential Plc, Ms. Kalpana Morparia, Vice Chairman - Insurance, Securities & Asset Management, ICICI Group and Mr. Nimesh Shah Managing Director, ICICI Prudential AMC spoke on the company's glorious run over the last decade.

ICICI Prudential AMC has maintained a lead over the competition with its consistent long-term performance, innovative products, superior technology and a powerhouse of the best talent in the industry during both good and bad in the market over the past decade.

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Ten Books Every Investor Should Read

When it comes to learning about investment, the internet is one of the fastest, most up-to-date ways to make your way through the jungle of information out there. But if you're looking for a historical perspective on investing or a more detailed analysis of a certain topic, there are several classic books on investing that make for great reading. Here we give you a brief overview of our favorite investing books of all time and set you on the path to investing enlightenment.

"The Intelligent Investor" (1949) by Benjamin Graham 

Benjamin Graham is undisputedly the father of value investing. His ideas about security analysis laid the foundation for a generation of investors, including his most famous student, Warren Buffett. Published in 1949, "The Intelligent Investor" is much more readable than Graham's 1934 work entitled "Security Analysis", which is probably the most quoted, but least read, investing book. "The Intelligent Investor" won't tell you how to pick stocks, but it does teach sound, time-tested principles that every investor can use. Plus, it's worth a read based solely on Warren Buffett's testimonial: "By far the best book on investing ever written."

"Common Stocks And Uncommon Profits" (1958) by Philip Fisher
Another pioneer in the world of financial analysis, Philip Fisher has had a major influence on modern investment theory. The basic idea of analyzing a stock based on growth potential is largely attributed to Fisher. "Common Stocks And Uncommon Profits" teaches investors to analyze the quality of a business and its ability to produce profits. First published in the 1950s, Fisher's lessons are just as applicable half a century later.

"Stocks For The Long Run" (1994) by Jeremy Siegel
A professor at the Wharton School of Business, Jeremy Siegel makes the case for - you guessed it - investing in stocks over the long run. He draws on extensive research over the past two centuries to argue not only that equities surpass all other financial assets when it comes to returns, but also that stock returns are safer and more predictable in the face of the effects of inflation.

"Learn To Earn" (1995), "One Up On Wall Street" (1989) or "Beating The Street" (1994) by Peter Lynch
Peter Lynch came into prominence in the 1980s as the manager of the spectacularly performing Fidelity Magellan Fund. "Learn To Earn" is aimed at a younger audience and explains many business basics, "One Up On Wall Street" makes the case for the benefits of self-directed investing, and "Beating The Street" focuses on how Peter Lynch went about choosing winning stocks (or how he missed them) while running the famed Magellan Fund. All three of Lynch's books follow his common sense approach, which insists that individual investors, if they take the time to do their homework, can perform just as well or even better than the experts.

"A Random Walk Down Wall Street" (1973) by Burton G. Malkiel
This book popularized the ideas that the stock market is efficient and that its prices follow a random walk. Essentially, this means that you can't beat the market. That's right - according to Malkiel, no amount of research, whether fundamental or technical, will help you in the least. Like any good academic, Malkiel backs up his argument with piles of research and statistics. It would be an understatement to say that these ideas are controversial, and many consider them just short of blasphemy. But whether you agree with Malkiel's ideas or not, it is not a bad idea to take a look at how he arrives at his theories.

"The Essays Of Warren Buffett: Lessons For Corporate America" (2001) by Warren Buffett and Lawrence Cunningham
Although Buffett seldom comments on his current holdings, he loves to discuss the principles behind his investments. This book is actually a collection of letters that Buffett wrote to shareholders over the past few decades. It's the definitive work summarizing the techniques of the world's greatest investor. Another great Buffett book is "The Warren Buffett Way" by Robert Hagstrom.


"How To Make Money In Stocks" (2003, 3rd ed.) by William J. O'Neil
Bill O'Neil is the founder of Investor's Business Daily, a national business of financial daily newspapers, and the creator of the CANSLIM system. If you are interested in stock picking, this is a great place to start. Many other books are big on generalities with little substance, but "How To Make Money In Stocks" doesn't make the same mistake. Reading this book will provide you with a tangible system that you can implement right away in your research.

"Rich Dad Poor Dad" (1997) by Robert T. Kiyosaki
This book is all about the lessons the rich teach their kids about money, which, according to the author, poor and middle-class parents neglect. Robert Kiyosaki's message is simple, but it holds an important financial lesson that may motivate you to start investing: the poor make money by working for it, while the rich make money by having their assets work for them. We can't think of a better financial book to buy for your kids.

"Common Sense On Mutual Funds" (1999) by John Bogle
John Bogle, founder of the Vanguard Group, is a driving force behind the case for index funds and against actively-managed mutual funds. In this book, he begins with a primer on investment strategy before blasting the mutual fund industry for the exorbitant fees it charges investors. If you own mutual funds, you should read this book.

"Irrational Exuberance" (2000) by Robert J. Shiller
Named after Alan Greenspan's infamous 1996 comment on the absurdity of stock market valuations, Shiller's book, released in Mar 2000, gives a chilling warning of the dotcom bubble's impending burst. The Yale economist dispels the myth that the market is rational and instead explains it in terms of emotion, herd behavior and speculation. In an ironic twist, "Irrational Exuberance" was released almost exactly at the peak of the market.

The more you know, the more you'll be able to incorporate the advice of some of these experts into your own investment strategy. This reading list will get you started, but it is only a fraction of all the great resources available.

Good time to invest' SMART TALK/ Nilesh Shah

ICICI Prudential Asset Management Company is India's second largest mutual fund with assets under management of about Rs 60,000 crore. The man responsible for investments across its 40 schemes and personal management services is its deputy managing director, Nilesh Shah. 

In this interview to Jitendra Kumar Gupta, he talks about the current situation of the market, the fallout due to high oil prices, interest rates, inflation and steps investors should take to maximise their returns.

Is the slowing down of India's growth rate responsible for the market's performance? 
India continues to be on its growth path and nothing has changed fundamentally with the Indian economy. 
However, certain events like increasing oil prices and rising inflation have slowed down the pace of growth but have not derailed the economy's growth process. However, the Indian economy and equity markets are two different things. 
Indian equity markets have crashed from January 2008 as the FIIs have pulled out more than $6bn on account of perceived deterioration in macroeconomic fundamentals viz. higher oil prices leading to higher trade deficit which has resulted in a weaker rupee pushing inflation higher and increasing subsidy burden resulting in higher fiscal deficit. 

What's your call in the short term and what should investors do in these volatile times? 
Current market situation is more sentiment driven with high emphasis on global oil prices. Hence, in the near term a lot will depend on direction in which oil prices will move. 
However, in the long term we continue to remain positive on Indian markets provided there is adequate policy response. An investor should never try to time the market. We recommend to investors who have already invested to bear the pain and stay invested. For new investors, we recommend the simple rule of systematic investments with a long-term investment horizon. Additionally buying on each dip could add to their overall return.

Do you like any particular sector or theme, where one can invest for the long term especially when the markets are down? 
Looking at the ownership of Indian equity by retail investors, I can only say that first invest in broad markets itself and then look for specialisation. 
With India growth story being at the helm of all policy decisions, a theme like infrastructure is interesting. Mutual Funds dedicated to this theme could serve as an option. Another interesting sector is the banking and financial services sector which has seen substantial correction in the recent past and are available at attractive valuations. 

Which risks have the markets not factored in as yet? 
Most of the event risk in terms of high inflation and oil prices are being factored in, however sentiments are still weighing higher than fundamentals resulting in downward move of the Sensex. The markets will always find a villain. Currently oil price is the fear factor, tomorrow politics could be the one. The point is to look at valuations and invest. 

Given the current situation, do you expect a downgrade in earnings (for FY09) for India Inc.? If so, by how much? 
Sure there will be a earnings downgrade in the corporate sector. Higher oil prices and higher interest rates will erode earnings. Most analysts wake up to this post facto. When horses have bolted they will close the gates. The good thing is that markets are much smarter than analysts like us and moves ahead of events. 

What are your expectations for Q1 results? Which sectors where you expect companies to surprise positively and negatively? 
We think Q1 results will surprise the market positively, if the advance tax collection in Q1 09 is any indication. We think banking and real estate will shock the market, auto, FMCG and pharma will be in line with market expectations. Tech, metals and infrastructure space can surprise positively. 

In the current environment isn't investing in debt instruments more attractive? 
Investors with the help of a financial advisor should get their financial health checkup done and then arrive at an asset allocation strategy. Under this asset allocation, debt should certainly be a part of the portfolio as it offers stability to returns. However, we do not recommend income and gilt funds at this stage as we expect 10 year yield to go further up. We recommend investors to look at FMP in the current rising rate environment. 

What is course interest rates and the inflation will take going forward? 
The inflation cycle is likely to soften towards the Q4 of FY09. This will be more due to good monsoon, base effect and hopefully lower oil prices. The interest rate cycle will be primarily driven by inflation and then by government's fiscal deficit. We expect yields to remain high on government securities till inflation persists and government has to run higher deficits. Let's hope that the 10 year G-Sec yield starts stabilising at 9.5 per cent yield. 

What happens to interest rate sensitive sectors? 
Interest rate sensitive sectors have corrected sharply. We believe that currently banking and financial services sector has corrected substantially and is available at attractive valuations. 
This sector being the lifeline of any growing economy, has high potential on the upside. The real estate sector has corrected significantly and on a selective basis provides some opportunity. 
Automobile sector has moved from value to deep value or cheap to cheaper segment. It should do well unless oil prices go up substantially. 

What is your view on crude oil prices over the next 3, 6 and 12 months and, the implications for the same on India's GDP and the markets? 
India imports about 70 per cent of its crude requirement. Even though the prices are regulated for end consumers, high oil prices hit most of the industries associated with oil adversely. High oil prices not only impact the input cost but they also influence sentiments, which in turn is adding 
on to market volatility. Oil prices are today a function of demand supply mismatch and speculation. It is extremely difficult to predict how they will behave in the near term but in the long term they will decline reasonably as the law of average catches up with it. High prices will reduce demand and increase supply, and invisible hands of Mr Market will bring oil prices lower. 

Is there value in the market at current levels? 
Currently there is not only value but also deep value in the market. You are unlikely to get such a good environment to invest in the markets. The best way to tap the market is to either do hard work yourself and invest or seek professional help. Markets look attractive at current levels. We continue to believe in the long term story of the Indian economy and also the Indian equity markets. We are certain that markets will strengthen over the long term. 

Are you facing redemptions in some of your schemes? Please elaborate on the recent trend in AUMs? 
Indian investors are maturing when it comes to planning their financials. To some extent, credit goes to the education efforts undertaken by various stakeholders including government, regulator, AMCs and distributors. 
More and more investors are adopting mutual funds as a route for investment and interestingly we have not seen redemption pressure during recent market corrections. Instead more monies were invested at every fall.

UTI MF enhances features of UTI-ULIP

UTI Mutual Fund has enhanced the features of UTI-Unit Linked Insurance Plan (UTI-ULIP) and has introduced monthly systematic investment plan (SIP) under the scheme. 

UTI-ULIP is an open-end tax-saving-cum-insurance scheme and its investment objective is primarily to provide returns through growth in net asset value or through income distribution and reinvestment thereof, a press release issued in Mumbai stated. 

To provide additional benefits to investors, UTI MF has enhanced the features of UTI-ULIP. 

The target amount is increased from Rs five lakh to Rs 15-lakh with the flexibility to invest higher than the maximum target amount, the release said. 

There is also a higher insurance cover up to Rs 15 lakh. A fixed term cover has been introduced under the scheme and choice given to investors for fixed or declining term cover. 

Membership would continue even in the event of non-receipt of instalment and premium would be paid to LIC by redeeming existing units, the release said. 

UTI AMC's Chief Marketing Officer, Jaideep Bhattacharya, said, "UTI ULIP helps investors to create wealth at low-cost while safeguarding their families from any unforeseen event." 

"UTI ULIP is positioned as a balanced fund with not less than 60 per cent of the funds invested in debt instruments with low-to-medium risk profile and not more than 40 per cent of the funds in equities," Bhattacharya said.

Fidelity poaches ING Asia fund exec Venes

Mutual fund giant Fidelity International has poached a senior marketing executive from ING Groep NV's (ING.AS: Quote, Profile, Research)(ING.N: Quote, Profile, Research) Asia Pacific fund arm as part of its expansion in the region, a source told Reuters on Thursday.

The international affiliate of the world's largest mutual fund company has hired Carlo Venes to join the firm on Aug. 4 in a newly created role as head of institutional business for non-Japan Asia, said the source, who had direct knowledge of the situation.

Venes, who joined ING in 1994, was most recently the Hong Kong-based regional chief marketing officer for the fund arm of the Dutch financial services group.

ICICI Prudential MF launches Banking and Financial Services Fund

CICI Prudential Mutual Fund has launched ICICI Prudential Banking and Financial Services Fund, an open-end equity scheme. The scheme opened for subscription on July 9, 2008 and will close on Aug 07, 2008. The units of the scheme will be available at Rs 10 per unit.

Objective

ICICI Prudential Banking and Financial Services Fund seeks to generate long-term capital appreciation by investing in equity and equity related securities of companies engaged in banking and financial services.

The scheme will offer for redemption/switch-out of units at daily intervals at NAV based prices. 

The scheme offers growth option and dividend option. The dividend option shall have payout and reinvestment facility. 

The minimum application amount is Rs 1,000 and Re 1 thereafter. 

During the NFO period fund aims at raising Rs 10 million, however there is no upper limit.

Asset Allocation

The scheme aims at investing 65% to 100% in Equity & Equity related securities of companies engaged in Banking and Financial Services Sector, 0% to 35% in debt instruments.

Investment Strategy

The fund will follow the bottom-up approach to identify bargain stocks. This will involve intensive company visits and research to arrive at an intrinsic value of the company and identifying and investing in stocks with promising potential for long-term growth. The stocks may be at any levels of market capitalization.

Banking and financial services includes and is not restricted to the following types of companies / industries banking companies, broking companies, asset management companies, wealth management companies, insurance companies, non-banking financial companies (nbfc), investment banking companies, leasing and finance companies, term lending institutions and any other company engaged in providing banking and financial services.

Performance and Management

The performance of the scheme will be measured against benchmark, BSE Bankex and the fund manager for the scheme is Prashant Poddar.

MFs lap up Rs 3,000 crore shares amid market meltdown

Funds houses in the country are lapping up the opportunity presented by the slump in the market and have emerged net buyers in equities for the third month in a row in June, a latest report says. 

Mutual Funds continued to be net buyers to the tune of Rs 3,179 crore in the secondary market compared to a net buyer position of Rs 64 crore in May, a study by fund evaluation and risk solutions provider Crisil FundServices stated. 

This is the third month in a row that mutual funds have been net purchasers in secondary equity market signaling that equity fund managers appear to be finding value in stocks that are looking under-priced in the bear phase engulfing the equity markets f rom the beginning of the year, Mr Krishnan Sitaram, Head of Crisil FundServices' said in the study. 

Fund houses have made net equity purchases close to Rs 7,614 crore till June end this year. Meanwhile, the assets under management (AUM) in equity mutual funds dropped 24 per cent while the benchmark index S&P CNX Nifty fell as much as 34 per cent in th e first six months of the year. 

However, the fact that the AUM of the equity funds has been falling lesser than the benchmark indices is a sign of increasing maturity of investors. 

“Investors now seem to be looking to buy at lower levels. Also systematic investment plans have gained popularity which means inflows into funds to some extent are insulated from market movements”, the study said 

“Thus while the declining AUMs is a reflection of the markets declining, retail investors with a reasonably long term investment horizon seem to be continuing to be loyal to equity funds as one of the avenues to get inflation beating returns,” the study further said.

Global investor John Templeton dies at age 95

John Templeton, a pioneering mutual fund manager, global investor and billionaire philanthropist, died of pneumonia in a hospital in the Bahamas on Tuesday, a spokeswoman at his foundation said. He was 95.
Templeton, who started his career on Wall Street in 1937, created several successful international funds before selling the Templeton Funds in 1992 to Franklin Resources for $440 million in what was then the largest acquisition of an independent mutual fund company.
He remained deeply involved in his business until he was nearly 80. "People keep noticing that I'm 79 years old, and ask me what would happen if I would die," he told Reuters in an interview in 1992 while negotiating the sale of his firm.
"I have to take that into account," he said.
He died at 12:20 a.m. after being admitted about a week ago to Doctors Hospital in Nassau, said John Templeton Foundation spokeswoman Pamela Thompson.
In 1954 Templeton set up the Templeton Growth Fund at a time when few Americans considered investing offshore. The fund has returned 13.3 percent on average annually. A $10,000 investment made when the fund began is worth about $8 million today, according to Franklin Resources.
Templeton's knack for investing was evident as early as 1939, when at the start of World War II he borrowed money to buy 100 shares each in 104 companies that sold for $1 per share or less, including 34 companies that were in bankruptcy.
According to the Foundation's website, only four of those 100 turned out to be worthless, and Templeton made large profits on the others after holding each for an average of four years. In 1999, Money magazine called him "arguably the greatest global stock picker of the century."
A devout Presbyterian, Templeton was known for starting his mutual fund's annual meetings with a prayer. Some of those religious beliefs were reflected in the more than dozen books he wrote or edited.
Templeton contributed a sizable portion of his fortune to his foundation, which now has a $1.5 billion endowment. In 1972 he set up the 1 million pounds sterling Templeton Prize, the world's largest annual award given to an individual, for work related to spirituality. Mother Teresa was the first recipient of the award, in 1973.
"Insights can come quickly and easily when we commit ourselves to the action of the spirit, when have committed ourselves to the awakening of our soul faculties," Templeton wrote in his book "Wisdom from World Religions: Pathways Toward Heaven on Earth".
Born in 1912 in Tennessee, he renounced his U.S. citizenship in the 1960s and moved to the Bahamas, becoming a naturalized British citizen and living free of income taxes in the former British colony.
He was knighted by Britain's Queen Elizabeth in 1987 for his philanthropic accomplishments. He is survived by two sons, Christopher and Jack.
"We owe him a deep debt of gratitude," Franklin Resources President and Chief Executive Greg Johnson said in a statement after his passing.

Have you looked at these promising new MFs?

Dhirendra Kumar, CEO, valueresearchindia.com said that Templeton India Equity MF is a kind of fund which an investor should be regularly investing in, without looking at what is the outlook for the next three years, three months, four months, six months and so on. For naïve and recently initiated investor, this is an investment, which one should just stick on without looking at the performance, he added.

On funds that invest abroad, he believes that the difference between a fund through which Indian investors can invest abroad, is little different. He said, "One is that when a new fund is created in India it has no history. It is a story, it is a theme and it is a new offer document, which states that it intends to do this thing and come and invest money." According to him, they are stable investments, diversified adequately and they will do the job. So, don’t chase past performance when choosing these funds as well, he said.  

On Templeton India Equity MF:

It is a relatively new fund but this fund has done extremely well. The real benefit of a mutual fund is that with Rs 500 monthly investment you are able to invest and your portfolio is also well spread. It is a fund, which is nearly on an average, it has been about 80%-85% into domestic stock, 10%-15% has been into foreign stocks and this fund has done extremely well in this falling market. It has fallen the least and these are the point of time when the diversification bid actually shows up that how beneficial it is. In the good times, we just tend to forget the rules that it is time to make easy money quickly and you do not need to follow rules but past six months has reminded us of that. 

It is an excellent fund and because it has fallen less and has been able to guard your assets reasonably well. This is a kind of fund which an investor should be regularly investing in without looking at what is the outlook for the next three years, three months, four months, six months and so on. For naïve and recently initiated investor, this is an investment, which one should just stick on without looking at the performance. 

If an investor can invest more, most welcome because if one is looking at three-five year horizon, that will be guided by his own situation. For long-term allocation invest in a fund like this and if one can invest more one should. 

On funds that invest in international assets:

There are quite a number of options today. There are about 13-15 funds, which invest abroad, and many more are in the pipeline. The difference between a fund through which Indian investors can invest abroad, is little different. One is that when a new fund is created in India it has no history. It is a story, it is a theme and it is a new offer document, which states that it intends to do this thing and come and invest money. 

Compared to that the funds, which are investing abroad in an existing vehicle are structured in a manner that they are an existing fund, which have managed abroad, have a history and in which the Indian investors money will be channelized into. So, you are buying into an existing performance. To that extent, many of these funds qualify on the framework that they have some history. The first and foremost objective of an Indian investor when he is evaluating these funds because it is a new avenue, is to achieve diversification globally, internationally. 

So, don’t get into exotic investment ideas, which are very quirky in terms of this theme, that theme, this commodity cycle, this part of the globe, that part of the globe, these kind of businesses. We have seen it in recent past that the funds which are the simplest ones like the Principal Global Opportunity and Birla Sun Life International Fund, which is a newly created fund but it gives you the widest in diversification internationally in terms of foreign markets. They have been able to guard investor’s assets very well and have been able to deliver superior returns. These investments are not to be evaluated just for the sake of return. They are stable investments, diversified adequately and they will do the job. So, don’t chase past performance when choosing these funds as well. 

On Tata Indo Global Fund:

I am quite downbeat on this sector in India. This was the big story and a lot of investors made money in the past two to two and a half years but the coming year could be difficult for this kind of thematic fund. There is a slightly advantageous position that here is a fund, which will be invested abroad in foreign markets in this space itself. But that does not actually reduce the pain and for an investment horizon of one to one and a half years, there could still be downside because markets have this viral attitude. 

When we get optimistic, we take it to a different level and when we are neutral or negative on a sector then they go completely out of favour and that is why we see this wild swings. For the next one to one and a half year, the investor may not be lucky with the wild swings on the positive side. So one will be in a better position of being in a diversified equity fund, one should just check the pain. There will not be any tax incidents; it is a relatively new fund move to a Tata pure equity or something which he can do on an overall basis. 

On Birla Sun Life Tax Relief Fund: 
Birla Sun Life Tax Relief is a good fund but there are other choices too. For tax saving fund, one has to be little more careful because once you choose it you can’t undo it for three-years. Once you invest in such a fund you have to stay put for at least three-years. So, one has to be a little careful that you don’t go and choose a fund, which completely lacks any credentials and a completely new tax fund is avoidable.  

For a Birla Sun Life Tax Relief or Magnum Tax Gain or a Principal Tax Saver, we will be looking at past three-years and the next three-years could be very different. So generally an investor should choose a fund, which stacks up among the top five-seven over three-five years period and Birla Sun Life Tax Relief will qualify them. These tax relief funds are very smart vehicle because all other tax saving avenues available to Indian investor is a fixed income avenue whether you invest in Public Providend Fund (PPF), NSE or even a bank deposit with a five-year lock in of a certain kind gets you the same advantage.  

On one extreme you have this government-bagged sovereign guaranteed fixed income avenues, on the other extreme you have this tax savings funds and in the middle you have the Unit Linked Insurance Plans (ULIPS). For anybody who is looking at five-years and above, this is the smartest tax saving vehicle.

RBI grants permission to Axis Bank mutual fund

Axis Bank formerly known as UTI Bank has obtained the Reserve Banks permission to launch its the mutual fund business. Permission from SEBI the market regulator is still under process. The move is interesting as Axis Bank is one of the descendants of the former bank Unit Trust of India (UTI). Among others, the banks funds will be competing for investors attention with those run by UTI Mutual Fund, which is the inheritor of the Unit Trusts mutual fund business. The new company will be a wholly owned subsidiary of the bank and will carry out asset management, advisory and related services, said Asok Kumar, executive director of the Mumbai-based bank. The fast growth and higher margins in Indias asset management segment are attracting several foreign and domestic players. The segment has grown 47% year-on-year (y-o-y) between 2003 and 2007 in India, according to a study in March by consultancy firm McKinsey and Co.

Birla Sun Life MF to launch equity linked FMP

Birla Sun Life MF to launch equity linked FMP Birla Mutual fund has launched Birla sun life equity linked FMP - Series A & B option. It is Close Ended Debt scheme with only one time investment option available. The Maturity period for Series A is 36 months and for Series B it is 21 months. The Liquidity for both series is Quarterly and NAV declaration for both series will be every Wednesday. The primary investment objective of the scheme is to invest in short and medium term debt instruments with fixed and/or floating payouts linked to equity indices. The Scheme may also undertake to invest in derivative contracts. These instruments will normally mature in line with the time profile of the scheme. The scheme also offers Institutional and Retail - Growth and Dividend options.

The offer opened on 26th June, 2008 and closes on 23rd July, 2008.

The minimum investment amount is Rs 5000 for retail plan and Rs. 5 crore for Institutional Plan in multiple of rupee 1 thereafter.

Entry Load for Series A: Retail Plan is 2.25% and Series B Retail Plan is 1.50%. However there is no entry load for Institutional plan under both A & B plans. 

MFs focusing on global markets fare better in June

Investing in global markets seem to have helped withstand the extremely bearish local market conditions for some funds enabling them to give better returns than other sector funds.

Net asset values of some global funds including DSP Merrill Lynch World Gold Fund, Birla Sun Life International Equity Plan A, Sundaram BNP Paribas Global Advantage, Principal Global Opportunities, DWS Global Thematic Offshore Fund fell the least compared with other funds in June. 

Although the benchmark index Sensex fell by around 18 per cent in June, these funds have fallen by less than 10 per cent.

“The funds which figure on top in both the periods are generally international funds, funds which partially invest in foreign markets or fund of funds”, said an analyst with a mutual fund.

DSP Merrill Lynch World Gold Fund has given positive returns of 1.30 per cent, while Birla Sun Life International Equity Plan A fell 5.33 per cent, Sundaram BNP Paribas Global Advantage declined 7.31 per cent, Principal Global Opportunities by 8.21 per cent, DWS Global Thematic Offshore Fund by 7.96 per cent, according to the data provided by Value Research.

Among the other funds which have invested globally and fallen less than 10 per cent include DSP Merrill Lynch Natural Resources and New Energy fund, whose NAV fell less than eight per cent; it invests a certain portion of its corpus in the equity and equity-related securities of companies domiciled overseas or in units and shares of Merrill Lynch International Investment Funds - New Energy Fund, New Energy Fund and similar other overseas mutual fund schemes.

HSBC Emerging Markets fund witnessed a fall of 8.16 per cent in June, and Tata Growing Economies Infrastructure fund, which invests in infrastructure-related sectors in growing economies overseas and in India, has fallen by 8.94 per cent.

“Though the global markets have been in the negative, Indian markets were amongst the worst performers globally,” said Mr Rajat Jain, Chief Investment Officer, Principal Mutual Fund. In case of the returns over the past six months also most of the above mentioned funds have fallen by less than five per cent outperforming the BSE Sensex, which fell by more than 33 per cent.

Emerging markets have been giving better returns thanks to a mix of factors such as better macro-economy condition, successful outsourcing story and huge commodity business, said a fund manager of a domestic mutual fund.

“Globally we have been amongst the worst performers and since we are comparing these funds with Indian markets, they seem to have performed better,” said Mr N. Prasad, Deputy CEO, Sundaram BNP Paribas Mutual.

Another set of funds which have been amongst the best performers include healthcare and pharma funds, which are considered to be defensive sectors. 

The funds include JM Healthcare Sector fund, UTI Pharma & Healthcare fund, Franklin Pharma, Magnum Pharma fund, according to Value Research, which tracks the performance of mutual funds.

Retail investors shying away from equity markets

The downslide trend of the Indian equity market for the last two months has forced retail investors in equity markets to look for alternative mode of investment. 

The stock market which just a few months ago was considered as a most lucrative investment proposition has suddenly turned a monster for the common investors, many of whom put their hard-earned money and suffered losses.

'I don't see any future for middle class in equity markets. It is better to go for a traditional system of savings like buying gold, bank deposits which can fetch better and assured returns', K. H Bhatt, a diamond dealer form Mumbai, told IANS. Bhatt says he has suffered losses to the tune of Rs.700,000 in the last two months due to the fall in markets.

Echoing the same sentiment, Vasant Kulkarni, a human resource consultant with a leading firm in Mumbai, said: 'Just a few months back equity market seem to be the most viable option for investment, but within the last few weeks it has changed completely. And now it seems traditional system of savings is the best option - at least your returns are assured.'

The mayhem in equity markets has broken the back of many investors. What started as a mere correction is now being termed as a bear market.

From a record high of 21,206.77 hit on January 10 2008, Sensex has lost 7752.77 points or 36.55 percent. It has shed 6832.99 points or 33.68 percent in calendar year 2008 thus far, from its close of 20286.99 on December 31 2007. 

According to a market analyst, the market has depreciated more than 40 percent in the last eight weeks and the common investors are in a kind of dejection.

Sudip Bandyopadhyay, director & CEO of Reliance Money, said: 'Retail investors are looking for alternative option. In fact, in the first quarter of the current fiscal we have seen a significant growth in Fixed Maturity Plan (FMP) schemes, which indicates that people are now preferring schemes which give them assurance of fixed returns'.

'Common investors are confused. They have been putting a lot of money through Systematic Investment Plan (SIP) in equity markets and suddenly the market has changed its course,' said Asish Poddar, research analyst of Almondz Global Securties Limited.

However, many market analysts feel that inflation and crude oil prices have become informal standards for stock traders instead of the earnings rate, their consistency and sustainability, and the retail investors should not panic.

'New anchors, such as eye-balls in the dot com era and foot-falls in the retail boom are now history; the oil standard too will soon fade as long-term investors will be coming into the market,' Ashok Jainai, head of research of Khandwala Securities, told IANS.

Diversified stock portfolio can deliver 20% over 3-5 years

There is nothing like a ‘right time’ to invest in equities. What matters is the time horizon for which you want to stay invested, according to Sukumar Rajah, CIO - Equity, Franklin Templeton Investments India. In an interview with ET, he said, if one still wants to time the market, it makes sense to invest when there is gloom all around. 

What is the kind of returns that an investor should be expecting, if he is looking to stay invested for more than a year? And what are the kind of schemes he should be looking at? 

Investors with a longer investment horizon can look to invest in diversified equity funds with a track record across market cycles and those with a higher risk profile could consider funds targeting aggressive growth. We expect a diversified portfolio of stocks to deliver around 15-20% over 3-5 years, which is in line with our earnings growth expectations. 

Which are the sectors you are bullish on? 

We believe long-term investors are better off adopting a bottom-up approach and investing in companies with good fundamentals across market-cap ranges and sectors. 

Sectors that can piggyback on the domestic consumption theme such as retail banking, consumer goods and automobiles; trends in domestic infrastructure spending such as construction and capital goods, are good investment opportunities for long-term investors. 

How do you see interest rate sensitive sectors faring, given expectations that rates could harden further because of rising inflation? 

Interest rate sensitive stocks are likely to be under pressure until inflationary pressures ease out. Typically, our investments are with a medium to long-term horizon, but we reshuffle our portfolios on the back of relative valuations and opportunities emerging in various sectors. 

The recent market declines have resulted in attractive opportunities across the market-cap range and the sell-off has been indiscriminate in nature, with quality stocks also moving down sharply. We are using this opportunity to increase exposure to such companies across sectors/market capitalisation range. 

Do you agree with the general perception that the macro-economic situation is deteriorating? 

Domestic macro-economic trends have been largely positive — FY08 GDP numbers revised upwards, strong direct tax inflows in the current fiscal year and IMD indications of normal to excess rainfall trend in June. While rising borrowing costs and inflation are likely to impact GDP growth over the near term, longer-term economic drivers such as demographics, rising disposable incomes and investments in infrastructure remain in place. 

Oil remains a key factor given that imports account for over 75% of India’s crude oil requirements and its implications for domestic inflation/fiscal deficit. This means that continued rise in oil prices will impact India’s Balance of Payments (BoP) and put further pressure on the rupee. However, strong forex reserves and relatively low external debt to GDP ratio should help mitigate deficit impact to a certain extent. 

What do you think of gold as an alternative asset class? 

While it provides for additional portfolio diversification, gold cannot be the mainstay of a portfolio and investors can consider marginal exposure. They need to keep in mind that the performance of such a portfolio is likely to be cyclical and long-term returns have tended to be low. 

What is your investment philosophy strategy and what kind of cash levels are you sitting on? 

Franklin Templeton does not take cash calls on fund portfolios and we try to reduce risks through stock selection based on fundamental research focusing on the long term. 

We offer long-only products and there are different products like hedge funds, dynamic asset allocation funds (our FT Dynamic PE Ratio Fund of Funds) that are specifically designed to make tactical asset allocation changes based on market conditions. Our portfolios are typically fully invested (around 5% cash keeping in mind the liquidity requirements of an open-end fund). 

We will continue to invest in companies that are best positioned to take advantage of the Indian economic growth. As bottom-up investors, we seek to invest in companies whose current market price, in our opinion, does not reflect future growth prospects. 

We choose companies that have identifiable drivers of shareholder value creation and that present, in our opinion, the best trade-off between earnings growth potential, business and financial risk, and valuation.

Govt wants Sebi to examine conflict of interest in MFs

The Ministry of Corporate Affairs has asked market regulator Securities and Exchange Board of India (Sebi) to examine whether there are any issues of conflict of interest occurring between sponsors of mutual funds (MFs), trustee companies and asset management companies (AMCs). 

 

The ministry, taking cognizance of a representation made by mutual fund industry expert Vijay Gokhale, in a letter to Sebi has asked the regulator to examine the matter at the earliest. 

Gokhale, in his representation to Sebi as well as the Ministry, said many AMCs carry out practically all activities pertaining to the fund on behalf of the trustees and the AMC is virtually the face and mouthpiece of the fund. 

He said there should be an ‘arms length' relationship between a trustee company and the AMC. But that is not the case in many mutual funds. 

Gokhale pointed out that many trustee companies do not have an independent place of business or staff of their own. 

"It is impossible to visualise as to how do the trustees discharge various responsibilities without own staff. It is feared that conflicts of interest occur in this informal arrangement, creating great potential for abuse. This has been going on for years," Gokhale's communique to Sebi said. 

Association of Mutual Funds of India (AMFI) Chairman A P Kurian, however, maintained that there is no conflict of interest occurring in mutual funds. When asked why many trustee companies do not have independent staff or office space, he said it is not needed. 

Gokhale said at present many trustee companies carry their supervisory functions based on information provided by the AMC itself and sometimes even the reports submitted by trustees to Sebi are prepared by AMCs. 

Ideally, an AMC should be an independent company and try to compete for business from a mutual fund and trustees should choose an AMC on merit, he said. 

A top official associated with mutual funds also agreed with this viewpoint. However, he said the industry is still not ready for this.

Nomura may invest in LIC Mutual Fund

Nomura Asset Management Co, the fund management unit of Japan’s Nomura Holdings, said it has agreed to invest in an asset management unit of Life Insurance Corp.

Nomura Asset will work with LIC Mutual Fund on the asset management business in India, said Riyo Azechi, a Nomura Asset spokeswoman. 

In Mumbai, Thomas Mathew managing director, LIC, told DNA Money, “We have only signed a memorandum of understanding. We will have to discuss the details after due diligence. Negotiations will start now and the process will start to see how we can co-ordinate.” 

Sushobhan Sarker, CEO, LIC MF, said he could not comment on whether it will lead to a stake sale. “It’s an MoU exploring common areas for both companies. We will take the call only after sometime,” he added.

UTI Asset Management defers IPO plans

UTI Asset Management Co., India's oldest money manager, canceled plans to sell shares after the nation's benchmark index posted its worst first half on record, four people familiar with the matter said. 

UTI, based in Mumbai, had proposed to sell 48.5 million shares, according to an offer document filed with the Securities & Exchange Board of India on Jan. 9. The money manager is required to complete the IPO by July 21 or restart the process, under Indian rules. Khurshid Mistry, a spokeswoman for UTI Asset, declined to comment today. 

The money manager becomes the fifth Indian company to pull a share sale this year, and joins more than 160 companies, including developer Emaar MGF Land Ltd., to have delayed or canceled IPOs globally in 2008 as faltering economic growth led investors to abandon equities. The withdrawal is a blow to UTI's owners, who can't raise funds from selling stakes bought in 2005. 

``It is bad news for State Bank of India and Life Insurance Corp.,'' two of the four shareholders, said Dhirendra Kumar, managing director of Value Research Ltd., a firm that tracks Indian mutual funds. Still, ``I don't think it is a permanent shelving, it may be just a temporary postponement.'' 

State Bank of India, Life Insurance, Punjab National Bank Ltd. and Bank of Baroda, the four government-controlled entities that each hold 25 percent of the UTI Asset, were planning to sell 12.1 million shares, or 38.8 percent of their combined holding, said the offer document. 

Benchmark Index Drops 

The Unit Trust of India was formed in 1963. In 2003, the ailing fund management business was split into two, and stakes in UTI Asset was sold to the four state-run companies in 2005. 

The IPO may be revived later, said the people, who asked not to be named before an official announcement. 

UTI Asset planned the share sale after the Bombay Stock Exchange's Sensitive Index climbed 47 percent last year, making it Asia's best performer after China and Bangladesh. The index is down 32 percent this year as interest rates climbed to a six-and- a-half year high after surging fuel and foods costs drove inflation to a 13-year high. 

JM Financial Consultants Pvt., Citigroup Inc. and Enam Securities Pvt. were hired to arrange the IPO. Goldman Sachs Group Inc., UBS AG, ICICI Securities Ltd., SBI Capital Markets Ltd. and CLSA Ltd. also won mandates to manage the sale. 

UTI Asset Management also canceled plans to sell 16 million shares to select investors before the IPO, the people said.