UTI MF announces change in benchmark index of Banking Sector Fund

UTI Mutual Fund has announced change in benchmark index of UTI Banking Sector Fund with effect from May.13, 2010. Accordingly, the benchmark index has been changed from S&P CNX Banks Index to CNX BANK Index. UTI-Banking Sector Fund is an open-ended equity oriented scheme. The scheme has an investment objective to generate capital appreciation through investments in the stocks of the companies/institutions engaged in the banking and financial services activities.

Source: Karvymfs.com

FT India Balanced Fund declares tax-free dividend

Franklin Templeton Mutual Fund has declared dividend under its scheme, namely FT India Balanced Fund. The quantum of dividend decided for distribution under the scheme is Rs.3 per unit where face value of the scheme is Rs.10 per unit. The record date decided for distribution of dividend is 21st May.

Source: Karvymfs.com

Sebi panel to discuss select MF products on 31 May

Sebi had sought proposals from AMCs regarding selling of equity options

A committee of market regulator Sebi will consider the issue of restricting mutual funds (MFs) from selling an equity product that involves betting on future prices.

The Sebi Mutual Fund Advisory Committee is concerned that this is not mutual funds’ core activity and may take a decision on 31 May.

Equity options is a derivative product where investors bet on future value of stocks or their indices and Sebi is against mutual funds getting into the hedging business, as it could suffer losses.

In a letter sent to all fund houses recently, Sebi had sought proposals from asset management companies (AMCs), regarding selling of equity options and an increased disclosure of their investment in this segment, sources in fund houses said.

Mutual funds have already submitted their view to Sebi and they may be reviewed at the Sebi’s Mutual Fund Advisory Committee meeting scheduled on 31 May.

“MF industry body Association of Mutual Funds of India (AMFI) has already submitted its views in consultation with industry players. The proposal would be discussed on 31 May,” a Sebi source said on condition of anonymity.

The market regulator on its part wants the fund houses to control the risk exposure and clearly demarcate their risky exposure, he added.

Industry players said, “Sebi has been looking at ways and means of regulating distribution of MF products and also MFs investment in derivatives.”

The steps are part of Sebi’s move to control the risk taken by MFs, analysts said.

Selling an option usually involve huge losses as the underwriter gets exposed to unlimited risks when market becomes volatile or collapses or hits the upper circuit.

“The objective of Sebi could be to ensure that MFs can hedge by buying options, but they should not underwrite the option as it is not the core business of MFs to take risk this way,” an analyst at a brokerage house said.

In order to increase accountability on the part of fund houses, the market regulator had last week asked AMCs to disclose the details of investor complaints on websites, as well as in annual reports.

Now all AMCs will have to put up the data for the bygone fiscal by 30 June 2010, and for each new fiscal within two month of the close of the fiscal year.

In order to increase investor interest in MFs, the market regulator had last year abolished entry load and asked fund houses not to deduct marketing and distribution charges from the investment made by customers.

Source: http://www.livemint.com/2010/05/17142235/Sebi-panel-to-discuss-select-M.html

SBI Mutual launches PSU Fund

SBI Mutual Fund plans to rake in more than Rs 1,000 crore through its new open ended equity fund, SBI PSU Fund. The New Fund Offer opened today and will close on June 14.

The scheme will invest in stocks of domestic public sector undertakings. The investment objective of the fund is to provide long term growth in capital. The scheme will invest a maximum of 35 per cent of its corpus in debt and money market securities. And a minimum of 65 per cent in equity and equity-related instruments covered under the universe of listed PSU companies.

The fund will be benchmarked against the BSE PSU index. The NFO price for the scheme is Rs 10 a unit. "PSUs have strong fundamentals and are available at attractive valuations compared to broader markets.

There may arise several divestment opportunities, which will lead to unlocking of value in these companies", said Mr. Navneet Munot, Chief Investment Officer, at SBI Funds Management.

The investment will be through primary as well as secondary market, private placements, QIP, preferential and firm allotments from time to time.

The minimum investment in the fund if Rs 5,000 and in multiples of Re 1 thereafter. An exit load of one per cent will be applicable if an investor exits the scheme within three years.

Source: http://www.thehindubusinessline.com/2010/05/18/stories/2010051852741301.htm