Sahara Banking & Financial Services Fund declares dividend

Sahara Mutual Fund has declared a dividend of 40% (Rs 4.00 per unit on a face value of Rs 10), under Sahara Banking & Financial Services Fund. The record date for the purpose of dividend payout is January 19, 2010.

All investors registered under the dividend option of Sahara Banking & Financial Services Fund as on record date January 19, 2010 will receive this dividend. The NAV under the dividend plan of the scheme as on January 14, 2009 is Rs 18.9493. (Check out - Recent MF Dividends)

Announcing the dividend Mr. Naresh Kumar Garg, CEO mentioned that Indian economy is on the high growth path and Indian banking & financial system has proven its robustness in the economic crisis faced by economies across the globe over the last two years. The Indian Banking system which is the backbone of our economy is poised for better performance over medium to long term.


He further mentioned that Sahara Banking & Financial Services Fund has shown remarkable performance ever since its launch in September 2008. It regularly feature among the Top performing funds. Based on its excellent performance, the Fund has declared two back to back dividends in the last 6 months.

Sahara Banking & Financial Services Fund is an Open-Ended Sectoral Growth scheme that aims to provide long term capital appreciation through investment in equities and equities related securities of companies engaged in Banking / Financial services, either whole or in part.

Source: http://www.moneycontrol.com/news/mf-news/sahara-bankingfinancial-services-fund-declares-dividend_435942.html

Shinsei, Jhunjhunwala sell MF business to Daiwa

Japan’s troubled Shinsei Bank and billionaire investor Rakesh Jhunjhunwala are said to be selling out their Indian mutual fund joint venture to Daiwa for about $10 million, as industry profitability erodes on rising competition and regulatory restrictions, two senior bankers familiar with the matter told ET.

The two-year old venture could provide Daiwa, a cross-town rival of Shinsei, a platform to expand in the financial services in a nation of fast-growing middle class. For Shinsei, which sold real estate in Japan to shore up its finances after losses, it may free up resources from a tiny venture to focus on merging with Aozora Bank.

Daiwa Capital Markets, which had raised funds for Indian mutual funds from Japanese investors, can now offer asset management services on its own. Recently, it hired bankers from Credit Suisse and YES Bank to raise business in equity capital markets, private equity and M&A. It plans to double the investment banking team to 18.

“The deal is almost done, it has to now receive regulatory approvals,” said a person privy to the development. Indian mutual fund industry has been losing charm in the past few months, as regulators are cracking down on what is considered unfair practices to get funds.

The Securities & Exchange Board of India, or Sebi, abolished entry loads on mutual fund investments, slowing inflows for asset management companies. Banks, a major source of assets for mutual funds, have been asked to withdraw their money by the Reserve Bank of India.

Aditya Rattan, country head of Daiwa Capital Markets India, declined comment. “We have no comment on this matter,” said James Seddon, group IR & corporate communications division, Shinsei Bank, in an email response.

If the deal goes through, Shinsei, which manages Rs 448 crore of assets in debt and equity schemes, will be valued at about 10% of assets, comparable with previous deals. L&T Finance last December paid Rs 45 crore to buy DBS Cholamandalam Asset Management, a joint venture between Singapore’s DBS and the Chennai-based Cholamandalam.

T Rowe Price bought 26% in UTI Asset Management Company for $135 million, 3.6% of assets. These valuations are a far cry from what Eton Park Capital paid for Reliance Mutual Fund in 2007. Eton paid 13% of assets in December 2007 when equity markets were roaring.

Although the benchmark indices have recouped most of their losses in 2009, the retail investor is yet to hang on to the optimism. New regulations provide no incentive for middlemen to sell mutual fund products, either. Hence, mutual funds have been losing assets.

Outflow from equity schemes continued for the fifth consecutive month, totalling Rs 7,300 crore since August after Sebi’s fiat on entry loads. Banks reportedly withdrew more than one-lakh crore from mutual funds recently.

Freedom Financial, founded by Sanjay Sachdev, the founder CEO of the Principal Group in India, would also sell its stake, but Sachdev would remain with Daiwa. Shinsei, part-owned by investor Christopher Flowers, holds 75% in the asset management company, Mr Jhunjhunwala 15% and Freedom Financial the rest. N Sethuram, former chief investment officer of SBI MF, who had served in Japan for many years as an employee of SBI, is the CIO of the mutual fund.

Source: http://economictimes.indiatimes.com/personal-finance/mutual-funds/mf-news/Shinsei-Jhunjhunwala-may-sell-MF-business-to-Daiwa/articleshow/5451004.cms

Exchange platform unattractive for MFs & investors: UK Sinha

With a majority of people going for traditional instruments that are easily available and simple to understand, the investor population is shrinking, says UK Sinha, chairman and managing director, UTI Asset Management Co, in an exclusive interview with Sucheta Dalal. This is the first part of a two-part series

Sucheta Dalal (ML): You were among the first to join the effort to introduce exchange based trading, after the scrapping of entry loads on mutual fund schemes. In your view, how is it working?
UK Sinha (UKS): There is no alignment of interest. I don't see this move being successful. We were hopeful that it would succeed, but now we are discovering that the interests of the brokers, the stock exchanges, the depositories, the mutual funds and the investors are not aligned.

What is happening is that each broker who is a member of this system is participating in it, not because of the small income he gets from the investor but because he is negotiating a separate rate with the mutual fund. And that rate is the best possible rate that the mutual fund can offer. So to think that trading is happening because of the availability of the platform and is easy to access is not correct. What is also happening is that each large broker has his own mutual fund distribution platform where he has an arrangement with the mutual fund. So if he is charging, for example, 1.25% or even 1.5% in some cases on his distribution platform, why should he charge any less here? After all, it is part of the same family. So there is no compromise on fees or the commission that is paid by the AMC. What they are expecting is that they will also charge something from the investor in the bargain. They hope to charge around 50 basis points (which is the amount paid for delivery-based trades).

The whole culture in the secondary markets is to encourage trading and churning, but to encourage an investor to come to buy and hold is not the culture in a majority of the cases. So unless there is some incentive to the investor through this platform it will not work. There is no advisory service, because the broker has no time to even offer a choice of five or ten schemes which the investor can select.

ML: But many brokers have joined the platform; what persuaded them to do so?
UKS: What happened was that everybody decided to take a chance and join this bandwagon because if it succeeded, they would be left out. There is a gradual realisation that this is not going to work. There is also a worry about future fees. Stock exchanges are not charging any fee right now, but they have said that they will not charge a fee only for the first few months—they will start charging a fee sometime. Depositories too are not charging a fee today; they too will begin to charge some time. Then there is the issue of Securities Transaction Tax (STT). It is not clear if that is applicable or not.

ML: So an investor is not charged STT today, but may have to pay if it is charged later?
UKS: Yes, he could be asked to pay, because there are two different interpretations. The stamp duty implication is yet another issue. One view is that stamp duty could be charged because trading is on the secondary market platform. All this has led to a situation where nobody wants to push for exchange trading because there is no clarity on several issues.

ML: But when the exchange traded platform was created, should at least tax implications like STT and stamp duty have been clarified?
UKS: Yes, they should have been done, but it was not.

ML: We hear that the exit load of 1% that is still permitted may be an incentive to encourage investors to churn, is that a possibility?
UKS: Not really, because brokers are already negotiating 1.5% as an incentive from the AMC includes a trail commission, so that eliminates the incentive to an extent. It is very simple. Mutual funds today earn just 1%; if they pay more than that, they will make a loss. But they are promising 1.5% hoping that the money will stay with them. This means that the 1.5% will be paid, provided the money stays with them for a year or longer. If the money goes away earlier, the broker loses the trail commission and that is a disincentive of sorts.

Source: http://www.moneylife.in/article/8/3225.html