Franklin Build India Fund, NFO closes on 31st July 09

Franklin Templeton Investments has launched its new fund to concentrate more on the critical sectors that drives the economy. The open-ended equity fund called Franklin Build India Fund will be opened for subscription from July 10 to August 8.
"We need to enhance the key building blocks of the economy to sustain and enhance economic growth rates. There is increase in investments in areas such as physical-social infrastructure, resources, financial services and agriculture," said Harshendu Bindal, President, Franklin Templeton Investments. A major part of the equity investments, about 65-100 percent, will be allocated to infrastructure-related companies.
According to Bindal, the fund will allocate 70-100 percent of the assets in equities and equity-linked instruments and up to 30 percent in debt securities and money market instruments. Securities and Exchange Board of India (SEBI) has waived the entry load for investments in mutual fund schemes, effective from August 1. But investors will have to pay an entry load of 2.25 percent for this particular scheme.

Issue Open 10-Jul-2009

Issue Close 31-Jul-2009

Scheme Objective: Franklin Build India Fund is an open-end equity fund. The investment objective of the fund seeks to achieve capital appreciation through investments in companies engaged either directly or indirectly in infrastructure-related activities.

Fund Manager: Mr. Anand Radhakrishnan

Entry Load: Entry Load: 2.25% for investment less than Rs 5 crs.

Exit Load : 1% for investment less than Rs 5 crs, if redeemed within 1 year of allotment and for investment equal to or above Rs 5 crs 1% if redeemed within 6 months pf allotment.

Religare Business Leaders Fund, NFO Closes on 31st July 09

Religare Business Leaders Fund

Issue Open: 10-Jul-2009

Issue Close: 31-Jul-2009

Scheme Objective: Religare Business Leaders Fund, is an open-ended equity scheme. The objective of the scheme is to generate long term capital appreciation by investing in equity and equity related instruments including equity derivatives of companies which in our opinion are leaders in their respective industry or industry segment.

Fund Manager: Vetri Subramaniam

Entry Load: During NFO Period - Entry Load: 2.25% for investment less than Rs 2 crs and 1.25% for invesment grater than or equal to Rs 2 crs.

Exit Load: 1% for investment more than Rs 5 crs, if redeemed on or before 1yr from the date of allotment.

Investment through SIP Entry Load-Nil, Exit Load 1% for each SIP installment less than Rs 5 crs, if redeemed on or before 2 yrs from the date of allotment.

Franklin Templeton Mutual Fund Files An Offer Article With Sebi

Name of Fund: Templeton India Income Opportunities Fund

Scheme: An open ended Income Fund

Investment Objective: To provide regular income and capital appreciation by investing in fixed income securities across the yield curve.

Investment Options: The scheme will offer growth and dividend plan (with reinvestment and payout options).Where the unitholder has opted for dividend payout option and in case the amount of dividend payable to the unitholder is Rs 20 or less, the same will be compulsorily reinvested in the scheme.

Asset Allocation: The scheme will invest upto 100% in government securities and/or securities unconditionally guaranteed by central/state government for repayment of principal and interest.Upto 100% in debt securities issued by public sector undertakings (PSU). Upto 100% in debt securities issued by private sector corporate including banks and financial institutions. Upto 100% in securitized debt and upto 100% in money market instruments.NFO price: Rs 10 per unit.

Load structure: The scheme will not charge any entry load. But will charge an exit load up to 7%.

Minimum Investment Amount: The minimum investment amount is Rs 5000 and additional purchase in multiples of Re 1 thereafter.

Minimum Target amount: The fund seeks to collect a minimum targeted amount of Rs 1 crore during NFO.

Benchmark Index: Crisil Short Term Bond Fund Index.

Fund Managers: Vivek Ahuja ans Sachin Padwal-Desai will manage the fund.

Fundmen say market still above fair value, but begin to nibble

Domestic fund managers who have shunned the markets for the best part of the past six months are slowly beginning to find the market attractive. With the quarterly earnings season promising to be better than the past two, though a majority still find the market trading above fair valuation, most of them are using the correction to shop for their favourite stocks, many of which look less expensive.
A DNA poll found that 70% of the top fund managers feel the market is trading above its fair valuation; 10% feel it is trading below fair valuation; and 20% see opportunities to invest even at present levels.
Around 70% of the managers are either fully invested or have begun deploying cash, while the rest say they would start deploying cash if the market corrects a bit more.
"There was a lot of hype over the budget expectations, which has now cooled off. The valuations are attractive although the levels are still above the fair value range," said the equity head of a large fund house, which came with an NFO recently.
He said the fund house is continuously deploying cash (buying stocks) at these levels.
The survey polled managers from top fund houses, including Reliance MF, DSP Blackrock, SBI MF and Birla Sun Life MF, who between them control over 40% of the equity assets managed by MFs in the country.
It marks a significant change in the mood of the fund managers. The change is banking on the increasing optimism that the corporates are heading back to positive growth after two bad quarters."The earnings will be better than last two quarters, though year on year it would be flattish-to-marginally negative. Metals and real estate will create delta on the negative side, while banking will give a positive swing," Anup Maheshwari, head of equity and corporate strategy, DSP Blackrock MF said.
Also, from a valuation perspective, things have begun to look attractive for the funds, after the post-Budget correction in the market. Yet another aam admi-friendly Budget has dampened sentiments of short-term foreign investors, who are looking to book profits.
On Wednesday, foreign funds sold equities worth Rs 828 crore. Gopal Agarwal, head equity, Mirae Asset, said, "FII interest has come down to some extent post Budget." He was quick to add that the days of risk aversion are largely over.
Agarwal feels global cues will continue to dictate market direction going forward.
The president of a large foreign mutual fund, who did not want to be quoted, agrees that global market movements will be important. "Markets will be influenced by what is happening in global markets. The Budget was good. There is no reason to be disappointed with it. Today's market reaction is largely influenced by the global cues. We are reasonably deployed in the market. We are buying on dips," he said.
On Wednesday alone, the local funds net-bought shares worth Rs 594 crore. This was on top of Rs 196 crore they bought on Tuesday.
Domestic institutions have been sitting on huge cash positions and have bought a meagre Rs 1,825 crore between January 1 and July 7 this year. This is less than even the amount garnered by a single NFO recently.
On the contrary, the foreign institutional investors have been shopping non-stop over the past four months. Since March, they have picked up Indian shares worth over Rs 34,000 crore. May alone saw foreign money in excess of Rs 20,000 crore come in after expectations soared with the election results.
Maheshwari of Blackrock said, "At this point, market seems to be fairly priced at around 15 times. It is close to the long-term average PE. Earnings scene at this stage is a bit of tail wagging the dog. If the market remains stable, there will be opportunity for companies to raise capital. This will in turn help improve their earnings over the subsequent quarters, which could further improve valuation."On the other hand, earnings could get affected if the market remains weak, he added.
In such a scenario, most managers are not seeing a major upside before the end of this fiscal. The most optimistic yearend target in the poll was 17000 on the Sensex, which means a 25% upside; the worst was 12000, a downside of 11%.
Most managers see markets ending higher if the global cues are favourable.
Agarwal of Mirae said, "If US is good, we might see Sensex going to 17000; if US is bad, we might trade in the 13000-14000 band."

Source: http://www.dnaindia.com/money/report_fundmen-say-market-still-above-fair-value-but-begin-to-nibble_1272407

Irda plans to cap overall charges on Ulips

Fund management, mortality charges to be out of the ceiling; guidelines expected in 15 days

After the Securities Exchange Board of India (Sebi) scrapped the entry load for mutual funds, the Insurance Regulatory and Development Authority (Irda) is considering putting a cap on the overall charges levied on the unit-linked products of life insurance companies.
Irda officials said the overall charges could be capped at 25 per cent on Ulips with a life of 20 years. The current charges vary from 27 to 29 per cent.
This, it is felt, will make the product even more attractive to the policyholders. Insurers now levy a host of charges — policy administration, fund management, premium allocation, mortality and rider - on Ulips.
However, some insurance companies said if charges were capped, they would have to increase the premium to manage distribution expenses.
Ulips account for 90 per cent of the total premium collected by private insurance companies. The state-owned Life Insurance Corporation of India has collected 65-70 per cent of its total premium income from such products in 2008-09.
“We are working on capping the overall charges, which will increase transparency. At the same time, it will help customers take an informed decision about his investments,” R Kannan, member (actuary), Irda, said, adding the regulator would issue guidelines on this in 15 days.
The regulator may keep fund management and mortality charges outside the cap on overall charges. This is because of the industry’s feedback that fund management charges are not based on premium, but on the performance of the fund and assets under management.
Life Insurance Council, the representative body of the life insurance companies, is working on the standardisation of the nomenclature of charges and has presented the draft document to the regulator.
“Charges in the first year are very high. There is a lack of disclosures on the charges by the insurance companies to the policyholders. Irda should look at capping the premium in the first three years of the policies,” said Kamesh Goyal, country manager, Allianz.
The regulator, sources said, is not looking at micro-management - like whether the charges should be front-loaded or back-ended.
“The charges levied on Ulips have come down compared to five years ago. The cap should be reasonable and should cover the distribution expense of any insurer. Competition anyway brings down the charges,” Aegon Religare Life Insurance CEO Rajiv Jamkhedkar said.
The regulator is also looking into the guarantees offered by insurers. Sources familiar with the developments said since only five per cent of the policies were guaranteed, the entire industry should not be penalised.

Source: http://www.business-standard.com/india/storypage.php?autono=363325

MF vendors may levy financial planning fee

Several AMCs have set up advisory arms.

The scrapping of entry load might prompt traditional distributors of mutual funds to consider offering fee-based financial planning – a service that was available nearly free till recently.
Entry load is an amount deducted by mutual funds from the investor’s subscription for making payment to distributors and for other marketing expenses. It usually ranges between 2 and 2.25 per cent.

Research base
Fee-based financial planning services are still at a nascent stage in the country.
According to industry experts, the removal of entry load by the Securities and Exchange Board of India may bring about a shift in distribution from plain-vanilla products to a holistic financial planning model.
“Investors might prefer seeking advice and portfolio services if backed by strong independent research, as that would enable the selection of the right scheme from the 300-400 equity schemes available in the market,” an industry expert who did not wish to be identified said.

Customised service
Most asset management companies have already set up financial advisors’ wings to tap the potential.
ING Mutual Fund, for instance, has set up ING Financial Advisors Network for offering such services.
“Distributors will now look at customised financial planning based on the client’s profile – factoring in age, income, number of dependents and risk profile,” said Mr Malhar Majumder, Partner, Black & White Financial Managers.
“Working out a client’s risk profile is a serious business and can take up a lot of time.”
Explaining the spirit of the regulator’s circular on scrapping of entry load, an industry expert said, “The essence of the circular indicates the need for differential pricing/commission to distributors based on the quality of advice offered to the client.”
The business model of financial advisory was radically different from the current business model of fund houses and might call for readjustment in the way business has been conducted, senior officials observed. However, it might soon become the order of the day, they added.
“If it (concept of financial planning) is logical then people will come to adjust in due course of time,” said a senior official who did not wish to be identified.

Lowering costs
The scrapping of entry load would ensure responsibility and accountability and would act as a key differentiator between a good and a bad financial planner.
“There will be a tough competition among advisors which will help bring down costs for the investors – the primary goal of SEBI,” the official added.

Source: http://www.thehindubusinessline.com/2009/07/09/stories/2009070951161000.htm