MFs offer top-ups to bring back investors

With markets remaining volatile, fund houses are offering products having new features, aimed at tackling the downturn and eliminate the uncertainty element as much as possible.
One fund house has even lowered the ticket size to a portfolio management services (PMS) product, willing to bring into the PMS fold even those who are just on the borderline of qualifying as a highnetworth individual (HNI). Fund managers believe that this would help them in bringing retail investors back into the industry.
Over the last one year, first a bad equity market hurt fund investors hard. Then as the gilts were rallying, they shifted to gilt funds but soon burnt their hands there too. Thereafter as they shifted to FMPs and liquid funds, there also, between October and December, the liquidity crunch hit them hard. Looking at this chain of events the fund industry had to work overtime to launch schemes which could minimise investment risks as much as possible.
Recently HDFC Mutual Fund (MF) has introduced ‘Flexindex’ plan that allows investors to put money in equity funds at their preferred Sensex levels. ICICI Prudential MF has come out with a ‘Target Return’ fund, which gives the investors to lock in their gains at pre-set trigger points.
On its part, IDFC MF has launched its Hybrid Infrastructure scheme, a portfolio management services (PMS) product with entry load as low as Rs 10 lakh. And UTI MF is offering its second scheme under the “Wealth Builder” umbrella, whose portfolio is spread across equity, debt and gold in good measure to shield investors from the market volatility.
In all of I-Pru MF’s equity schemes, there is a trigger return but almost no investor opts for this, top fund house officials said. Under the ‘Target Return’ fund this trigger is compulsory. For example, after an investor’s investment gains 20%, either his full investment along with the gains, or only the profit part will be transferred to a debt fund where the risk of losing money in case of a market downturn is much lower.
I-Pru MF recently also brought in a systematic transfer plan in its ‘Income Opportunities’ fund, which allows investors to enjoy gains in the debt category while allowing them a gradual entry into the equity market.
“These products would gain momentum in the short run. We have to give a lot of solutions to investors now,” said Vikram Kaushal, head, retail sales & distribution, I-Pru MF.
“Investors are looking for relatively safe and less volatile products. Since returns are quite low in these market conditions we have to offer products that provide stability ,” said Harsha Upadhyaya, fund manager, UTI MF. “In a market like this investors are more receptive to such ideas,” feels Dhirendra Kumar, CEO, Value Research, a firm that tracks MFs.
::RICH PICKINGS::
ICICI Target Return
The investor would have a range of triggers to choose from 12% to 100%. The fund, which would invest primarily in largecap stocks, offers the option to either switch the entire investment along with appreciation or just the appreciation to any of the four debt funds man-aged by ICICI
HDFC Flexindex
The investor can put money into select HDFC debt/liquid schemes and choose four Sensex levels or ‘trigger events’ of choice to get into equity. They can then automatically transfer investments from these debt/liquid schemes to select equity schemes of HDFC MF at closing Sensex levels of choice
UTI Wealth Builder
The fund invests in equity, debt and gold. Investments are scaled up or brought down in each of these asset categories depending on market conditions. The fund can invest a maximum of 35% in gold/debt

Source: http://economictimes.indiatimes.com/Personal-Finance/Mutual-Funds/MF-News/MFs-offer-top-ups-to-bring-back-investors/articleshow/4461825.cms

BNP Paribas, Sundaram to launch India-dedicated offshore fund

To take advantage of the highly under-owned pattern of the Indian equity market, French financial major BNP Paribas will set up an offshore fund jointly with the Sundaram group. The two companies are already running a mutual fund in India called Sundaram BNP Paribas Mutual Fund with assets of over Rs 10,000 crore.

According to top Sundaram BNP Paribas officials in India, the offshore fund will be domiciled in Singapore and legal formalities for this are under process.
“Initially, it would be a $100-million plus India-dedicated fund and it is likely to be launched before the end of 2009,” said sources close to the development, adding that Sundaram BNP Paribas would be marketing the fund aggressively in middle-eastern countries.

FUND FUNDAMENTALS

* Initially, it would be a $100-million plus India-dedicated fund

*It is likely to be launched before the end of 2009

*Credit Suisse too is looking to set up an India-dedicated offshore fund

TAX SOPS

* Of late, Singapore has become the most-favoured destination for fund managers

* Singapore grants tax exemption to a qualifying fund, provided it is not 100 per cent owned by domestic investors

* Collects tax, if any, from the investor*Fund managers are taxed only 10 per cent on their fee-income

BNP Paribas is one of the six strongest banks in the world, according to Standard & Poor’s. The group is present in 85 countries. The group is very strong in three major segments: corporate and investment banking, investment solutions and retail banking.
Apart from Sundaram BNP Paribas, Switzerland-based global financial major Credit Suisse too is looking to set up an India-dedicated offshore fund.
While most of the offshore funds are domiciled in Luxembourg or launched from tax havens like Mauritius or Cayman Islands, of late Singapore has become the most-favoured destination due to its tax exemption policies.
To encourage fund managers to set up shop, Singapore has in place a tax incentive scheme to benefit offshore funds. A qualifying fund will be granted tax exemption, provided it is not 100 per cent owned by Singapore investors. Tax, if any, will be collected from the investor, depending on his specific profile. Apart from this, fund managers are taxed only 10 per cent on their income from fees.
According to some of the top traders in Indian markets, Singapore has become more of a single-point investment destination for major Asian markets. All major benchmark indices, including India’s Nifty, are listed on the Singapore Stock Exchange (SGX). In fact, Singapore has become so important that global financial majors can decide the mood of Asian markets from that country alone.
“If fund managers want to take a call on Indian markets, they do not have to bring their money to India. Instead, they can simply trade Nifty futures on SGX and this saves them legal hassles involved in getting money into India,” said a Singapore-based fund manager.

Source: http://www.business-standard.com/india/news/bnp-paribas-sundaram-to-launch-india-dedicated-offshore-fund/356540/