Mutual Fund assets may grow 29% annually in next 5 yrs

The country's burgeoning mutual fund industry is expected to see its assets growing by 29 per cent annually in the next five years, with high household savings rate and low retail penetration attracting foreign asset managers, a report has said.

"The total assets under management in the Indian mutual funds industry are estimated to grow at a compounded annual growth rate (CAGR) of 29 per cent in the next five years," the report by global consultancy Celent said.
The pace of the growth in assets is expected to be higher in the years ahead as compared to the CAGR of 25 per cent witnessed in 2004-2009 period.
"A very high household savings rate and low retail penetration make the market a target for foreign asset managers," the report added.
However, the profitability of the industry is expected to remain at its present level mainly due to increasing cost incurred to develop distribution channels and falling margins due to greater competition among fund houses, it said.
Celent estimates the retail segment, which at present contributes just 37 per cent of the assets, to grow at a 35 per cent compounded annual growth rate for the next five years, driven by rise in income and awareness of MF products.
Meanwhile, institutional investors dominate the market with contributions of 56 per cent in assets.

Source: http://www.business-standard.com/india/news/mutual-fund-assets-may-grow-29-annually-in-next-5-yrs/70735/on

IRDA to increase lock-in period for Ulips

To check mis-selling, the Insurance Regulatory and Development Authority (IRDA) is planning to increase the lock-in period for unit-linked insurance plans (Ulips) from three to five years. R Kannan, IRDA member said, "This move may reduce the problem of policyholders letting covers lapse and also benefit companies as it would help them minimize their administrative and marketing costs. We are waiting for a consensus on the issue."
A senior executive at a large private sector insurance company said that the minimum tenure for a Ulip was five years at present, but partial withdrawals were allowed after three years. If the intent is to allow partial withdrawals only after five years, then it is good since insurance is a long-tenure product.
In recent months, IRDA tried to tighten regulations on Ulips. First, it put in place systems to ensure that policies were not front - loaded in terms of premium payment. Last month, it also reduced the charges levied on Ulips, though the circular was expected to be modified to factor in industry concerns.
On the current move, G N Agarwal, Chief Actuary, Future Generali said, "The move would benefit the mutual fund industry as the interest of Ulip buyers might be affected since they have to wait for five years before they could exit."

Source: http://www.siliconindia.com/shownews/IRDA_to_increase_lockin_period_for_Ulips_-nid-60336.html

Reliance MF considering IPO, scouts for global acquisitions

India's largest mutual fund may also be the first to go public. Sundeep Sikka, CEO, Reliance Mutual Fund, says the company is considering an initial public offering. "I think we are well capitalized at this point of time, but we are open for an IPO also. We are open and it is on the white board only."
According to him, Reliance MF is looking to expand through global acquisitions. "As far as global ambitions are concerned, yes we are. We are already present in Singapore, Malaysia, Dubai and we have a subsidiary in UK. As far as acquisitions are concerned, we are open for it as along as anything is coming at the right price."
As per the company's website, Reliance Mutual Fund is a part of the Reliance - Anil Dhirubhai Ambani Group. RMF offers investors a well-rounded portfolio of products to meet varying investor requirements and has presence in 118 cities across the country. "Reliance Mutual Fund schemes are managed by Reliance Capital Asset Management Limited., a subsidiary of Reliance Capital Limited, which holds 93.37% of the paid-up capital of RCAM, the balance paid up capital being held by minority shareholders."
Reliance Mutual Fund (RMF) has Average Assets Under Management (AAUM) of Rs 1,08,334.38 crore and an investor base of over 74.63 lakh. (AAUM and investor count as on July 31, 2009).
Reliance Capital has interests in asset management, life and general insurance, private equity and proprietary investments, stock broking and other financial services.

Source: http://www.moneycontrol.com/india/news/business/reliance-mf-considering-ipo-scouts-for-global-acquisitions/411039