Axis Bank to open its Asset Management Company

Private lender, Axis Bank is soon going to foray into mutual fund business. The bank plans to commence this new venture in the coming six to eight months period.

The bank has received an approval from the Securities and Exchange Board of India (SEBI) to start its independent asset management firm and now it is waiting for the equity markets to stabilize before rolling out the first fund.
Siddharth Rath, the bank's senior vice-president and head of capital markets said, "We received Sebi's in-principle approval last month. The launch of our first fund will depend on the conditions of the markets, and investor confidence. We will have a balanced mix of equity, liquid and debt funds in our portfolio."
"The new company will be a wholly-owned subsidiary of the bank and will carry out asset management business," added Rath.
The bank received a green signal from the Reserve Bank of India for this new foray in the month of June. Until now the bank has been disturbing mutual funds of other asset management companies (AMCs) to its customers.
From the past one year, the asset management industry in the country is facing erosion in total assets under management (AUM). At the end of October 2008, the industry' AMU showed a fall of about 19% to Rs 432,000 crore against 532,000 crore, for the same period a year ago.
As per the SEBI instructions, a company needs to have a minimum capital base of Rs 10 crore to set up its own AMC. "We will invest as much capital as required to form our own fund house. Our initial investment will be Rs 25-30 crore," said Axis Bank Executive Director M M Agarwal.
In order to manage and distribute new funds across the country, the bank plans to employ up to 500 people. Rath confirmed that the bank has already decided on the important designations like CEO, chief investment officer, head of marketing, and other vertical heads. However he did not disclose the identities of these people stating that the business plans are still on the process.
Rath also told that in the starting, the bank plans to market and distribute these funds from its own branches without joining with any other bank. Axis Bank has about 750 branches across the country. With this entry, Axis Bank will become 36th AMC in the industry.
The bank also plans for a joint venture AMC with Banque Privee Edmond de Rothschild Europe. This European firm is a part of the LCF Rothschild Group and through this tie-up Axis Bank will offer the Indian customers with investment advisory services for private banking and wealth management.

Source:http://www.rupeetimes.com/news/personal_loan/axis_bank_to_open_its_asset_management_company_1879.html

Diversified debt mutual funds better deal

Do you think the concept of a diversified portfolio applies only to equity investors? Well, it is time to think different. According to financial experts, investors would do well if they diversify their debt mutual fund (MF) portfolio into liquid, income and gilt schemes.
‘‘There is clear indication that investors have to look at another class of funds other than liquid scheme,'' says Y Jawahar, V-P & head of distribution, Mata Securities. ‘‘A combination of 30-40% liquid scheme, 30% each in income and gilt schemes would serve them better.'
However, he quickly adds that unlike in a liquid scheme investors can't park money with a short-term investment horizon in an income or gilt scheme. ‘‘One should have a time horizon of one year or more to invest in an income or gilt scheme,'' he says. However, investment tenure is not the only factor that should determine the investment decision in these schemes.

One should always have a clear view on interest rate movement and risks associated with each scheme before parking money. For example, gilt funds, as the name denotes, invest mostly in government securities and carry little credit risk. Income schemes, on the other, are riskier as they invest in corporate bonds, which carry more credit risk.
‘‘Investors, who believe interest rates will go down further and don't want to take any credit risk should go for a gilt scheme,'' says Mukesh Dedhia, director, Ghalla & Bhansali Securities. ‘‘If you have a very competent fund manager who can excel during volatility, you can earn very good returns from gilt schemes.'' If you are ready for the plunge, you can hope to earn around 9-10% from a gilt scheme.

If you have a little more stomach for risk, you can opt for an income scheme.
‘‘The spread (interest rate difference) between corporate and government bonds have widened considerably. There is scope for contraction and that could enhance returns from income schemes,'' says Dedhia.
You can expect to pocket returns around 11-13% from an income scheme. Now, would you still be happy to keep the money in a liquid scheme and earn around 7%? Well, consider the above factors and take a call.

Principal Financial looking to acquire AMC in India

Principal Financial Group, a leading US based financial group is looking to acquire an asset management company (AMC) in India as it wants to scale up its fund unit operations in the high-potential market, reports Business Standard.
Investment bankers have already been told to look out for possible acquisitions especially those with large equity assets. The company feels that current market situation is best time to do an acquisition because of lower valuations commanded by the company.
Principal Financial has three way joint venture with Punjab National Bank and Vijaya Bank, managing about Rs 70 billion.
Since January, when the stock markets started losing steam, the Indian mutual fund industry has found itself losing their average assets under management (AAUM) every month. Due to current financial market turmoil a large number of smaller fund houses valuations have taken a serious hit. Earlier Lotus Mutual Fund was acquired by Reliagre Aegon.

Source:http://www.myiris.com/newsCentre/newsPopup.php?fileR=20081126151404196&dir=2008/11/26&secID=livenews

ABN AMRO MF is now Fortis Mutual Fund

ABN AMRO Mutual Fund today announced having changed its name to Fortis Mutual Fund with immediate effect. The name of the Investment Manager has been changed to Fortis Investment Management (India) Private Limited.

This follows the global integration of ABN AMRO Asset Management with Fortis Investments in the second quarter of 2008 and the completion of all regulatory processes and procuring necessary clearances in India.

As a result of the global merger, Fortis Investments now has expanded both its investment capabilities and its operational platforms. It manages assets of EUR 192.4 billion (as of September 30, 2008) making it one of the world's leading asset managers in terms of both size and investment offering. It has an extensive reach in terms of dominance and scale in Europe, a large presence in the Americas and a substantial position in Asia. Fortis Investments has a global network of 40 dedicated investment centres in over 30 countries.

Source:http://news.moneycontrol.com/india/news/pressmf/abn-amro-mf-is-now-fortis-mutual-fund/22/10/365509

Liquid funds likely to change investment norms from April

implement the proposal not to invest liquid scheme corpus in papers with maturity beyond 91 days from April 2009.
The decision was taken yesterday at a meeting of some of the heavyweights in the Association of Mutual Funds of India (Amfi). Initially, some members were of the view that this should be implemented with immediate effect. However, when a view emerged that implementing the proposal in a hurry may not serve the purpose, the members finally decided to make it effective from April next, said an industry source.
The mutual fund industry is fine-tuning its recommendations before submitting the same to the Securities and Exchange Board of India (Sebi). Amfi had issued the draft proposals in this regard last week.
There were lengthy discussions on the maturity of fixed maturity plans (FMPs). While some players favoured FMPs of three to six months, others advocated a minimum 12-month maturity. Efforts are on to sort out the differences with the help of Amfi. If there is no consensus, the decision may be left to Sebi.
Those favouring a three-month maturity argue that if the period is long, investors would go in for fixed deposits (FD) with banks.
They have also decided that all funds will have to mandatorily disclose their complete portfolio at least on their website. A transparent portfolio will help investors in taking informed decision in tough times when generally rumors rule. Already, some fund houses have been making full disclosure.
In next few days, these proposals would be finalised and submitted to the capital market regulator after which Sebi may come out with revised norms for mutual funds.
The industry is of the view that the proposals that Amfi is going to submit should give confidence to the market regulator that mutual funds are quite disciplined in their approach towards investors.

Source:http://www.business-standard.com/india/news/liquid-funds-likely-to-change-investment-normsapril/00/11/341341/