UTI Mutual Fund declares dividend in 2 schemes

UTI Mutual Fund has declared a dividend of 15% (Rs 1.5 per unit on a face value of Rs 10), in UTI Equity Tax Savings Plan and UTI Transportation & Logistics Fund. The record date for dividend is December 29, 2009.

All unit holders registered under the dividend option of the schemes as on December 29, 2009 will be eligible for this dividend. The NAV of the schemes under dividend option as on December 24, 2009 was Rs 17.06 and Rs 15.28 respectively. (Check out - Recent MF Dividends)

UTI Equity Tax Savings Plan is an open ended ELSS scheme. The investment objective of the scheme is to invest the funds collected into equities, fully convertible debentures / bonds and warrants of companies, investment may also be made in issues of partly convertible debentures / bonds including those issued on rights basis subject to the condition that as far as possible the non-convertible portion of the debentures / bonds so acquired or subscribed shall be disinvested within a period of twelve months from their acquisition.


UTI Transportation & Logistics Fund is an open ended equity scheme. The objective of the scheme is to seek capital appreciation through investments in stocks of those companies engaged in transportation & logistics sector.

Source: http://www.moneycontrol.com/news/mf-news/uti-mutual-fund-declares-dividend2-schemes_432942.html

Realty mutual funds, investment trusts to open up new channels of funding

Initial public offerings (IPOs) in the near-term, real estate mutual funds (REMFs) and real estate investment trusts (REITs) in the medium-term are likely to emerge as new channels of real estate financing in the country. Property funds are also expected to enhance their activities in coming quarters.

The market capitalisation of country’s real estate firms, which equals to just 2.2% of the aggregate equity market capitalisation, far below than the 10-15% level found in advanced economies, is an indicator of the future potential, said Ramesh Nair, managing director (Chennai & Hyderabad), Jones Lang LaSalle Meghraj, a global realty consultancy firm.

According to estimates, the real estate sector will require an additional $3.66 billion to construct undertaken commercial projects and fulfil the unmet housing demand. While sources of funding have become scarce in the aftermath of the 2008 global financial crisis, there are some emerging channels, which are likely to help the sector continue its high-growth story.

With several real estate players having submitted red herring prospectus to the Sebi, a total of $3.31 billion is expected to be raised in coming months. Given that the Sebi has recently allowed anchor investors to participate in this fund-raising channel, IPOs can be an attractive vehicle to tap domestic as well as foreign institutional investment. Additionally, they provide a good exit option for most PE investors that have a short-term to medium-term investment horizon, Nair told FE.

According to a study on emerging trends in real estate finance carried out by Jones Lang LaSalle Meghraj, REMFs and REITs have played an important role in institutionalising real estate investment in many countries. The essential difference between them is that while investment made by REITs are only permitted in income-generating physical real estate assets, REMFs can take exposure in securities of real estate companies as well. Currently, both of these vehicles remain a future prospect in India.

As per Sebi regulations, REMFs in India have to invest in direct ownership of real estate (that accrues rentals and capital appreciation), mortgage-backed securities and securities of companies dealing in the development of real estate. However, a minimum of 35% of net assets have to be invested in direct ownership, leaving an upper limit of 65% on security exposure by REMFs, says the study.

According to the study, real estate developers HDIL, HDFC, ICICI, L&T and Unitech are some of the players that have expressed interest in launching REMFs. While issues related to valuation and taxation are currently holding back this emerging vehicle, the government is expected to clear these uncertainties soon. Similarly, regarding REITs, many policy issues are yet to be resolved, and authorities concerned have yet to come up with clear regulations.

The study says there are challenges that must be addressed in order to bring about a smooth improvement in the sources of funding. Establishing a nodal real estate regulator will be a welcome step in enhancing transparency and making the sector more organised. Clarifications pertaining to taxation and valuation issues for existing REMF and REIT guidelines will also be expected in the coming quarters.

Source: http://www.financialexpress.com/news/realty-mutual-funds-investment-trusts-to-open-up-new-channels-of-funding/561653/0

RBI puts banks on notice again over MF exposure

The Reserve Bank of India (RBI) has, for the second time in a fortnight, sought details from banks about their investments in mutual funds treasury officials at several banks said. The banking regulator has yet again made it clear in its communication that it is against banks handing over their surplus money to fund houses, officials told ET.

RBI’s concern stems from the fact that banks’ investments in mutual funds have risen even after it first made its displeasure known about these in the October mid-term policy review. This number rose by Rs 8,753 crore to Rs 1,69,236 crore in the month that ended on December 4, data from RBI show.

In the latest letter, the RBI has asked banks to give data on the average, lowest and the peak level exposure to mutual funds at various points of time. The regulator specifically sought data about their quarterly exposure since March 2009 and the third quarter (September to December) exposure to mutual funds, said treasury officials who requested they not be quoted.

The RBI also wants data on certificate of deposits (CD) issued by banks which are directly subscribed by mutual funds. CDs are money market instruments sold by banks to raise short-term funds. This money, too, is often routed back to mutual funds through investments in their liquid funds.

The regulator has also sought specific details about the money lent by mutual funds to banks through market repo or Collateralised Borrowing & Lending Obligations (CBLO) route. Both are markets where money is lent and borrowed on an overnight basis.

In mid-December, the RBI had officially asked banks about their aggregate exposure in mutual funds schemes and the steps that they have taken to curtail this figure although it was in the mid-term policy review in October 2009 that RBI governor D Subbarao had first expressed concern about banks parking surplus money in mutual funds.


In an interview to this newspaper, the governor had termed it as “circular trading”, saying the money was finding its way back to banks through route.

In a meeting with the RBI, bank CEOs had assured the regulator that they will set an internal limit, approved by the board, on such investments. It is estimated that banks account for one-third investments made in the liquid mutual fund scheme.

Meanwhile, select public sector banks have begun putting internal caps on such investments. Canara Bank has fixed a limit of Rs 6,000 crore or 10% of total investments while Oriental Bank of Commerce has fixed it at 10% of investments, top officials in the two banks said.

For Dena Bank and Indian Bank, the number stands at 5% of total investments. Officials with Bank of Baroda said they are considering linking the quantum of cap to total assets.

The RBI has often maintained that it is not comfortable with banks extending funds to corporates through intermediation of mutual funds. Banks charge anywhere between 7% to 10% to most highly-rated corporates on short-term loans while mutual funds subscribe to the short-term bonds at rates ranging from 5% to 7%.

As a result, corporates who are perceived as more creditworthy have begun raising money from mutual funds by selling debentures with a daily put and call option shunning banks in the process.

Source: http://economictimes.indiatimes.com/News/Economy/Finance/RBI-puts-banks-on-notice-again-over-MF-exposure/articleshow/5397769.cms?curpg=2