HDFC MF replaces ICICI Pru to be the second-largest in assets

LIC Mutual Fund breaks into the top-10 club, claims ninth slot.

The stock market crash of 2008 has changed the pecking order of the top 10 mutual funds in terms of their average assets under management (AAUM).
Among the top five, there has been a shuffle in positions. While Reliance Mutual Fund has been able to maintain the number one position at Rs 70,000 crore, ICICI Prudential has been pushed to number four from second spot by HDFC Mutual Fund. ICICI Prudential was above HDFC by Rs 7,300 crore in January-end 2008. But at the end of December, HDFC’s assets were up by Rs 4,879 crore over that of ICICI Prudential.
However, HDFC’s rise in the pecking order is more due to a significant fall in the assets of ICICI Prudential rather than an increase in its own AAUM. ICICI’s AAUM has fallen by 15,230 crore between January and December-end, while HDFC’s assets fell by only Rs 2,780 crore during the same period.
According to HDFC Mutual Fund Managing Director Milind Barve, while their equity schemes have shown resilience during the market crash, it was mainly the debt funds that saw some inflows in the year. “In 2009 too, we expect debt and liquid schemes would do better and collect more money,” he said.
Both UTI Mutual Fund and Birla Sun Life Mutual Fund have maintained their positions at third and fifth respectively. Interestingly, only Birla Sun Life has managed to increase its assets in this period by Rs 4,488 crore. Reliance Mutual Fund has been able to maintain the top slot even after its AAUM dropped during the said period by over Rs 13,690 crore.
According to mutual fund experts, assets were largely affected as nearly half of the actively-managed, diversified stock funds underperformed the benchmark index. These funds put up this poor show despite maintaining a double-digit cash level almost throughout the year.
While ICICI has greater dependence on equity schemes, its fixed maturity plans (FMPs) too were battered due to huge redemption pressure.
The AAUM of UTI Mutual Fund, which has maintained its third position, fell quite sharply by Rs 14,320 crore.
Assets of equity funds were halved in 2008, giving up the entire gains made in the previous two calendar years, as indices slumped by over 50 per cent during the period. This is the worst annual performance recorded by equity funds ever.
These funds’ monthly allocation to mid- and small-cap shares ranged between 33.6 per cent and 43.8 per cent in the year. This exposure delivered a blow to their portfolios as the mid- and small cap indices of the Bombay Stock Exchange slumped by over 70 per cent.
Hemant Rustagi, Director, Wise Invest — a mutual fund distributor — said for a major part of 2009, debt schemes would do well, while inflows into equity schemes may steadily rise during the later part of the year.
While Kotak Mutual Fund’s eighth position has been taken over by Tata, a surprise entrant in the top-10 club is LIC, which is at the 9th position. DSP BlackRock (the erstwhile DSP Merrill Lynch) has been weeded out of the top 10 list after its assets declined by Rs 8,600 crore.

Source: http://www.business-standard.com/india/news/hdfc-mf-replaces-icici-pru-to-besecond-largest-in-assets/18/01/345342/

CDs issuance falls; MFs prefer to hold cash

Issuances of certificates of deposit (CDs) fell today as mutual fund houses — the major investors in such papers — avoided fresh buying and preferred to hold cash, dealers said.

Today, Punjab National Bank placed Rs 1,000 crore of one-year CDs at 7.60 per cent. According to dealers, some mutual funds were holding cash since a long time and were eager to invest the excess funds in CDs due to the recent rise in rates.
Hindustan Construction Co placed Rs 10 crore of three-month commercial papers at 10.35 per cent. Usha Martin issued Rs 25 crore of 89-day non-convertible debentures having a daily put/call option at 250 basis points above Mumbai Interbank Offered Rate. A private mutual fund invested in this paper.
Today, the overnight Mibor was at 4.26 per cent compared with 4.29 per cent on Saturday.
On Friday, L&T Infrastructure placed Rs 50 crore of three-month commercial papers at 9.50 per cent. State Bank of Mysore placed Rs 200 crore of June maturity CDs at 6.95 per cent.
Oriental Bank of Commerce’s December maturity CDs were dealt at 7.55 per cent today. Today, December maturity papers were dealt at 7.55-7.75 per cent unchanged from Friday.

Source: http://www.business-standard.com/india/news/cds-issuance-falls-mfs-prefer-to-hold-cash/18/01/345988/

Investors wary of equity, MF tax saving schemes

Many people start thinking about tax planning only after the New Year. With barely three months to go for the last date of completing the process, they would weigh their options and their tax implications . However, according to financial advisors, some people seem to be wary of equity linked tax saving scheme (ELSS) or tax saving schemes from the mutual fund houses.
The reasons are many. One, the latest Satyam fiasco has shaken their confidence in the stock market. Two, the ensuing financial turmoil in the global arena and also in India is also making them nervous. Lastly, the performance of these schemes is also nothing to write about. (See table: to 5 tax planning schemes). You can't blame poor investors if they want to let go off tax saving schemes this year. "I have been investing in tax saving mutual fund schemes for the last three years. All these schemes have given me negative returns. Considering the current status of the market, I don't want to invest in them this year," says an employee in a courier company.
But is it a wise move? "It is a natural psychological reaction . People wanted to get into the market when it was at 18,000 or 20,000, but when it is actually hovering around 9,000 to 10,000 they don't want to invest ," says Sajag Sanghvi, a certified financial planner. "But avoiding ELSS because of the bad performance of a year or two could be a huge mistake. If you have invested in ELSS as part of your asset allocation plan to take exposure to equity, you should continue with it," he adds.
"Investors shouldn't let short-term trends cloud their judgement. They should understand that among investment options under section 80 C, apart from ELSS all other instruments offer only fixed rate of returns," says a tax consultant. "They can get only 8-9 % from schemes like national savings certificate, public provident fund, 5-year fixed deposits. But they stand a chance to earn better returns of, say, 12-15 % from tax saving schemes. This is provided they have the stomach for risk and are prepared to wait for three to five years," he adds.
True, you should invest in stocks only because you are ready to take the risk and wait for at least three years.

Source: http://economictimes.indiatimes.com/Personal_Finance/Mutual_Funds/Investors_wary_of_equity_MF_tax_saving_schemes/articleshow/3971093.cms

MFs shy away from equity-linked offers

The unexpected Satyam scam has further dampened the market sentiments. It has led to a dip in both the leading bourses. The bearish sentiment likely to deter the Mutual Fund (MF) houses from filing applications with the Sebi for offering equity-linked new fund offerings (NFOs) for the retail investors.
According to Sebi, out of 35 fund houses, only two have filed applications for offering equity-linked NFOs in the last one month.
The ICICI Prudential Mutual Fund has filed two applications with the regulator to offer ICICI Prudential Recovery Fund, an open ended equity fund, and ICICI Prudential Target Return Fund, an open ended diversified fund. Similarly, Tata Mutual Fund has filed an application for Tata Value Opportunities Fund, an open ended equity scheme.

A senior analyst from a broking firm said that the domestic market was effected due to the US financial tsunami leading to the global market meltdown. The BSE Sensex dipped by 52% or 10,639 points and NSE Nifty slide by 52% or 3,179 points in the calendar year 2008. The market has shown some recovery in the month of December, 2008 as Sensex gained 9% or 809 points and Nifty jumped by 10% or 276 points. However, Satyam scam was responsible for the nervousness in January as both the leading bourses are currently having south-bound journey.
In line with the equity market players, the MF industry is uncertain about the market movement. Commenting on the few applications for introducing equity-linked NFOs, a fund manager from a domestic fund house said that the overall bearish market due to the global meltdown and now the scam will influence the retail investors not to invest in the equity-linked NFOs. They will prefer to hold all their investment decisions for a while, the fund manager said.
It may be mentioned here that the meltdown in the equity market has majorly resulted in the reduction of Asset Under Management (AUM) of the MF industry. According to Amfi, the AUM has dipped by Rs 1.27 lakh crore to Rs 4.21 lakh crore as on December 31, 2008 in the calendar year 2008.

Source: http://in.biz.yahoo.com/090112/203/6zas1.html