Tata Mutual Fund launches Tata Gilt Mid Term Fund

Tata Mutual Fund has launched, a new open ended debt scheme, Tata Gilt Mid Term Fund. The new fund offer would remain open from 20th May, 2010 to 17th June, 2010. The scheme will seek to provide reasonable returns and high liquidity to the unit holders by investing predominantly in Government Securities having residual maturity up to 15 years. The scheme will offer growth and dividend option to its investors.

Source: www.karvymfs.com

M R Mayya joins L&T MF as independent director

M R Mayya, a well-known finance professional and former executive director of Bombay Stock Exchange (BSE), has been appointed as an independent director on the board of L&T Mutual Fund Trustee Limited with effect from May 17, 2010.

Mayya, an MA in Economics from Madras University was also founder chairman of BOB Capital Markets. After completing his MA, Mayya entered into the Indian Economic Service in July 1958, and served about 18 years in the Forward Markets Commission regulating commodity markets.

He joined the stock exchange division of the Ministry of Finance regulating stock markets in February 1973. He became the head of stock exchange division in August 1978. He joined Bombay Stock Exchange as an executive director in August 1983 and after working for about 10 years, he retired in August 1993.

With his vast knowledge and experience, Mayya was appointed as the Member of the Rating Committee of CARE for over 14 years till January 2008. He has also been Director of various Companies.

Commenting on Mayya joining the trustee company, N Sivaraman Sr VP L&T Finance, the sponsor of L&T Mutual Fund Trustee Limited said, “We are proud to have Mr. Mayya, a legend in the financial Services in India on the Board of L&T Mutual Fund Trustee Limited. His guidance will be valuable to us in building a robust mutual fund business”.

L&T Mutual Fund manages 11 equity schemes and 11 debt schemes.

Source: http://www.business-standard.com/india/news/m-r-mayya-joins-lt-mf-as-independent-director/95172/on

IDFC mutual fund seeking foreign ally

At present, seven of the top 10 fund managers in the country are in the form of joint ventures

The asset management arm of Infrastructure Development Finance Co. Ltd(IDFC) is looking for a strategic foreign partner that will give it access to an overseas distribution network, enable it to build an international presence and tap investors abroad.

Discussions are under way with several potential overseas partners for IDFC Asset Management Co. Pvt. Ltd, IDFC executive director Vikram Limaye said in a phone interview.

“I don’t know in what shape and form the partnership will evolve, and there could be an arrangement of the partner taking a minority stake in the company,” he said.

IDFC Asset Management wants a foreign partner that will help it tap a share of the capital that flows into the Indian market, boosting its fee income and improving its margins.

“Domestic mutual funds do not have the international distribution, brand or relationships to intermediate international capital flows into the Indian markets from an investment management perspective,” Limaye said.

In January, Baltimore, US-based asset management firm T. Rowe Price Global Investment Services Ltd agreed to buy a 26% stake in UTI Asset Management Co. Pvt. Ltd for $140 million (around Rs655 crore today). At the price, UTI Asset Management was valued at around Rs2,500 crore.

At present, seven of the top 10 fund managers in India are joint ventures (JVs), with the local partners holding a controlling stake in each of them. Franklin Templeton Asset Management (India) Pvt. Ltd is the only 100% foreign-owned asset manager among the top 10.

Kotak Mahindra Asset Management Co. Ltd is the only one among the larger asset managers without a foreign partner.

Foreign joint venture partners help get significant overseas funds to manage for local ventures, said N. Prasad, an independent consultant and a former chief investment officer at Sundaram BNP Paribas Asset Management Pvt. Ltd.

“Though the fee is lower, it goes direct to the bottom line as there are no marketing costs for the JV. In contrast, though you get a higher fee on the local money, you end up spending a bulk of it in brand building and marketing activities,” he said.

IDFC Asset Management started operations by acquiring Standard Chartered Plc’s asset management business for Rs830 crore in March 2008. Standard Chartered had assets of Rs14,141 crore under management.

Joint ventures are mutually beneficial for foreign and local asset managers, said Sudeep K. Moitra, chief distribution officer of Anagram Stockbroking Ltd.

“While foreign players get a share of the growing Indian market, the local players get access to international management practices, fund management processes and control mechanisms,” Moitra added.

In the past two years, IDFC Asset Management has almost doubled its asset base. At the end of April, it managed in excess of Rs26,000 crore, making it the 10th largest asset manager in the country.

India has 38 asset management companies that handle a total Rs7.7trillion.

On Thursday, Pramerica Asset Managers Pvt. Ltd, a unit of US-based Prudential, said it received regulatory approval to start operations, becoming the 39th.

Reliance Capital Asset Management Ltd, HDFC Asset Management Co. Ltd and ICICI Prudential Asset Management Co. Ltd are the top three fund houses in India.

Mutual fund valuations peaked when Eton Park Capital Management paid 12.9% of assets for a 5% stake in Reliance Capital Asset Management in December 2007.

After the market decline of 2008, valuations have plunged.

In July, Nomura Asset Management Co. Ltd picked up a 35% stake in LIC Mutual Fund Asset Management Co. Ltd for 2.4% of total assets.

In September, the financial services unit of engineering firm Larsen and Toubro Ltd announced plans to buy DBS Cholamandalam Asset Management Ltd for Rs45 crore, valuing the firm at about 1.6% of its assets under management.

Profit margins of asset management companies have come under pressure. A ruling by the capital markets regulator, Securities and Exchange Board of India, had restrained fund houses from charging upfront commissions for mutual fund investments starting August.

A study by consultancy firm McKinsey and Co. said that asset management companies would see profit erosion in fiscal 2010 and 2011.

“The industry is likely to witness consolidation as smaller AMCs (asset management company) may not be able to accommodate the acute profit and loss stress,” the study added.

Source: http://www.livemint.com/2010/05/20233817/IDFC-mutual-fund-seeking-forei.html?h=A1

Take a SIP to cut your lump-sum investment risks

All financial advisors worth their salt will recommend that a systematic investment plan (SIP) route is the time-tested, sure-shot way of making returns from investment in equity mutual funds.

This, of course, makes sense when the underlying trend is upward, as no one wishes to put money in a losing cause. The current European crisis will result in your getting jittery and wanting possibly to stop your regular SIP investment. My simple advice to you is: Don’t.

Since the start of this calendar year, the 50 stock Nifty has moved down 500 points in the first five weeks (from 5,200 levels to 4,700 levels in early February), only to rise by 650 points in the next two months, followed by a 350 point fall in the past four weeks.

In fact, at current levels of 5,000 Nifty, we are at the same point that we were in September/October 2009. Hence, an entrant into the stock markets in end September 2009 has made nil returns in the past nearly eight months.

SIP explained

If you think of a SIP as opposed to a gulp, you will realise that a SIP is different from a lump-sum entry into a mutual fund. Since equities are a volatile class of asset, we normally use SIP in equities. However, this option can also be utilised for entry into debt. In fact, SIP is an ideal method to average out the entry levels with the objective of reducing risks of lump-sum investments.

Back testing some recent data

While the intention of investing in equity funds is for the long term, it is always useful to see how the discipline of SIP would have benefited you, the investor, in the recent past.

For this, I have assumed that you could have invested in two equity funds — one, a large-cap fund and the other, a mid-cap scheme, on a weekly basis (Rs 1,000 each week) from July 2009 and the values are as of May 17, 2010.

As you will see from the table (above), the mid-cap scheme has comfortably beaten the large-cap one, but that’s a wrong way to compare schemes. It may be more prudent to see how the scheme has performed versus its self-proclaimed benchmark.

Cutting the emotional aspect from investing

If you can cast your eye back to the period that we are referring to, there would have been times when you would have been jittery to write out your investment cheque. For investing in a SIP, you need to write out your first cheque, and then issue instructions for an auto debit from your bank account.

Operationally, it works just like payment of the EMIs, and ensures that you do not have a bloated bank account. So, while international markets shiver and India will catch some bit of a cold, investing through an SIP in equity mutual funds will ensure that I am not left out of the equity markets.

After all, the long-term for Indian equities does seem rosy and we would want to continue participating in the upsides through the SIP route.

Source: http://economictimes.indiatimes.com/personal-finance/savings-centre/analysis/Take-a-SIP-to-cut-your-lump-sum-investment-risks-/articleshow/5955971.cms

Pramerica to launch India fund business in June

Pramerica Asset Managers, the Indian arm of U.S.-based Prudential Financial said on Thursday it has received regulatory approval to launch mutual funds in the domestic market.

"Pramerica Mutual Fund will soon file products for SEBI approval and hopes to launch its first product by the end of June," it said in a statement.

Pramerica joins the likes of Italian bank UniCredit's arm -- Pioneer Global, South Korea's Mirae Asset, France's Axa and Japan's Shinsei, who have started operations in India's fiercely competitive fund industry over the last three years.

Many more, including German firm Allianz and South African financial services firm Sanlam, are considering an entry into the Indian market, forecast by the Boston Consulting Group to manage $520 billion by 2015.

Indian mutual funds industry managed assets worth 8.1 trillion rupees ($174 billion) at the end of April, data from the Association of Mutual Funds in India showed. ($1=46.5 rupees).

Source: http://in.reuters.com/article/fundsNews_DUP1/idINSGE64J0B120100520