Rel MF: turning distributors into financial advisers

To encourage distributors and empower them to offer advisory and be able to charge fee from investors, the country’s largest mutual fund player Reliance Mutual Fund has taken an initiative to help distributors become financial advisers through a certified financial planner (CFP) certification.

Reliance Mutual Fund has negotiated with the Financial Planning Standards Board (FPSB) to charge a significantly lower fee from distributors for the CFP certification programme.

The CFP programme along with its five levels of examination will cost a minimum Rs 23, 000.

The fund house will also refund the fee to distributors who clear the examination.

As of now, most distributors are product providers. “The biggest challenge now is how distributors charge fees and for that we want to turn them into financial advisers,” said said Sundeep Sikka, chief executive officer, Reliance Mutual Fund.

“We have negotiated a discounted fee for distributors, to encourage them to join the CFP programme and start working like advisers,” said Sikka.

“We have offered this to all our 40,000 distributors and 6,000 of them have already shown interest.” The fund house has rolled out this initiative in 20 cities and will take it to over 50 cities in the next year.

Ever since the mutual fund industry entered the regulatory regime of no-entry load, distributors have been crying foul.

While banks offering mutual fund products do charge an advisery fee from investors, distributors find themselves constrained. The industry has also seen distributors move towards selling Unit-Linked Insurance Policy.

“Since investor need will drive mutual funds, its merits like being cheap and tax efficient, will be strong pull factors,” said Sikka.


Source:http://www.hindustantimes.com/business-news/businessbankinginsurance/Rel-MF-turning-distributors-into-financial-advisers/Article1-524373.aspx

UBI, KBC to invest euro 50 m in AMC

Union Bank of India (UBI) and Belgium-based KBC Asset Management will invest euro 50 million (about Rs. 302.42 crore) in their proposed joint venture asset management company, a top official said.

The joint venture, Union KBC Asset Management, has received in-principal approval from market regulator Securities and Exchange Board of India (SEBI).

“The total capital investment in the joint venture will be euro 50 million. It will be the best-capitalised company in India,” KBC Group Chief Operating Officer Danny De Raeymaeker told reporters here on Friday at the formal inauguration of the head office of the newly-formed company. The joint venture would have Union Bank of India as the major stakeholder with 51 per cent while the balance would be with KBC Asset Management.

“We have received an in-principal approval for the proposed mutual fund joint venture and the final approval will be received in the next 4-5 months,” Union Bank CMD M. V. Nair said.

The company would have a dedicated sales force of 500 people who would be placed in an equal number of branches of Union Bank, Mr. Nair said. The company would be leveraging the reach of Union Bank for selling mutual fund products, he said.

“We have our branches but will also tie-up with other banks for distributing our products,” Mr. Nair said.

The newly-formed joint venture would offer capital protected investment funds and open-ended equity funds. “We will be offering innovative and structured products,” Union KBC Asset Management's Chief Executive Officer G. Pradeepkumar said. — PTI



Source:http://www.hindu.com/2010/03/28/stories/2010032861121700.htm

Govt banks make a dash to start mutual fund business

IDBI Bank and Union Bank are the latest entrants.

n less than 24 hours, two public sector players—IDBI Bank and Union Bank of India—announced their foray into over Rs 781,000-crore mutual fund (MF) industry, though both have taken different routes.

While IDBI Bank decided to go solo, Union Bank has partnered Belgian asset manager KBC. By doing so, Union Bank has followed peers such as State Bank of India, Bank of Baroda and Canara Bank that have tied up with foreign partners.

IDBI Bank announced the launch of its asset management business on Thursday, while Union Bank of India announced its entry on Friday.

Other than Union Bank of India, Bank of Baroda has a tie-up with Pioneer Investments, a global asset manager. Canara Bank has a joint venture with Robeco Groep NV of the Netherlands and, in SBI Mutual Fund, the partner is Société Générale Asset Management.

Most of the public sector banks forayed into the MF business in early 1990s, but could not compete with the private sector players once the sector was opened to them around the same time.

“You cannot expect a banker to run an asset management company. Different skill sets are required for it,” said Dhirendra Kumar, chief executive officer of Value Research.

Among the top 10 fund house in terms of asset under management, based on the Association of Mutual Funds in India’s February data, three are in the public sector, and among them, only SBI Mutual Fund is owned by a bank. Experts said initially the banks continued to focus on their lending business, but the rise of equity markets since 2003 led them to re-focus on the MF business.

“The launch of the asset management business is in line with the bank’s long-term vision to emerge as a leading universal bank. IDBI Bank’s established brand name and extensive branch network will enable our asset management company to grow at a fast pace and become a leading player in the business,” said Yogesh Agarwal, chairman and managing director, IDBI Bank, while launching the MF business in Mumbai yesterday.

Union Bank of India Chairman and Managing Director MV Nair said the current penetration level of asset management companies indicated the vast untapped potential. The fund house has a vision to be among the top 10 in five years. It is targeting an average asset under management of about Rs 12,000 crore in three years.

Kumar of Value Research said the huge distribution network of public sector banks through their branches was an advantage which would be difficult for a standalone asset management company to match.

Source: http://www.business-standard.com/india/news/govt-banks-makedash-to-start-mutual-fund-business/389919/

Daiwa buys out Shinsei's MF arm

Barely a year after it commenced operations in India, Shinsei Bank Limited has decided to sell off its entire stake in Shinsei Asset Management Company (India), which manages Shinsei Mutual Fund (MF), to Daiwa Securities Group (comprising Daiwa Securities Group Inc and Daiwa AMC).
Shinsei AMC is promoted by Shinsei Bank of Japan. It holds 75 per cent stake in the AMC; 15 per cent is held by well-known investor Rakesh Jhunjhunwala and 1o per cent by Freedom Financial Services.
Under the agreement, the other two domestic share holders too will divest their stakes. Both the par

ties will apply to the Securities and Exchange Board of India (Sebi) for regulatory approval.
Sebi granted approval to Shinsei MF in February 2009. Its first fund was launched in June 2009. Shinsei AMC presently has three active funds – Shinsei Industry Leaders, Shinsei Liquid and Shinsei Treasury Advantage Fund.
The decision is part of Daiwa Securities Group’s plan to expand its business in Asia and to enter the Indian domestic asset management business.
Shinsei Bank is a leading diversified Japanese financial institution with total assets of US$ 124.9 billion on a consolidated basis (December 2009). Daiwa Group is also a leading financial services group from Japan. Daiwa is Japan’s second largest asset management company with over US$ 100 billion of assets under management.
Due to this development, Sanjay Sachdev, General Manager and Country Manager-India at Shinsei Asset Management has decided to quit.

Source: http://new.valueresearchonline.com/story/h2_storyView.asp?str=101333

NISM to conduct Association of Mutual Funds in India certification exam from June

Starting June 2010, the National Institute of Securities Markets (NISM), a division of the Securities & Exchanges Board of India (Sebi), will conduct the certification programme for professionals planning to enter the mutual funds industry.

So far, the Association of Mutual Funds in India (Amfi) has been deciding the syllabus and accepting registration formalities.
But now that the Sebi wants to bring all financial products certification programmes under one umbrella, the Amfi certification too will shift. “From June 1, 2010, the NISM will conduct the Amfi Certification,” A P Kurian, chairman of Amfi, who is retiring in September 2010, told DNA Money.

Amfi has not been able to update the regulatory blitzkrieg that the Sebi has bombarded the mutual fund industry with, since early 2009. The last update on the Amfi syllabus was done in 2006, after which a lot has changed on the Indian mutual fund slate.

Professor G Sethu, Sebi officer on special duty & in-charge of NISM, told DNA Money, “Amfi had last updated its syllabus some years ago and it is now time to include recent changes. In the regular case, Amfi itself would have done it, but we will do it now.”
Asked whether the registration for examination will change, Sethu said, “That procedure may change. We have not decided on it. Maybe the registration can come directly from Amfi.”

“We have to incorporate the changes that have taken place when we start looking at the workbook. They (the syllabus committee) will have to make it up to date,” Sethu added without defining the regulatory changes that would be adopted in the new version.

Until December 31, 2009, the Amfi certified 1.98 lakh individuals, of which 1.014 lakh have been registered as mutual fund agents.
It is learnt that NISM will continue to use the test administrators that the Amfi has been utilizing, which include the National Stock Exchange and Bombay Stock Exchange.

“The Amfi workbook covers what matters. However, we would be reviewing it for clarity, focus and current relevance after changes over a period of time. Objectives will reflect these changes.

Generally reviewing the syllabus of any certification is an annual feature, but in case of significant changes we might decide to review it when required,” said an NISM official not willing to be named.

Presently, the NISM conducts certification programmes for intermediaries in currency derivatives, registrar and transfer agents for stocks and registrar and share transfer agents for mutual funds.

The objective of the NISM is developing certification examinations for professionals employed in various segments of the Indian securities markets.

A newsletter of NISM stated early this year, “Of these NISM will shortly be launching Compliance (stock brokers) Certification Examination. NISM is also currently developing the course material for interest rate derivativesexamination.”

Source: http://www.dnaindia.com/money/report_nism-to-conduct-association-of-mutual-funds-in-india-certification-exam-from-june_1364973