MF NAVs make new highs, but selloff continues

More than a third of all equity schemes that are over five years old have already surpassed their previous net asset value (NAV) highs, reached in 2008. Despite this, mutual fund schemes continue to see redemptions.

Data from fund house tracker Value Research show out of 177 such equity schemes, 60 hit lifetime highs at the beginning of this week.

Anand Shah, equity head at Canara Robeco Mutual Fund, said, “Our schemes have already surpassed the previous peak of 2008. I see no reason why they will not be at lifetime highs. The same will be true for the industry.”

HDFC MF’s nine equity schemes have hit all-time highs. Seven schemes of Birla Sun Life MF and six each of Franklin Templeton, ICICI Prudential MF, Reliance MF and UTI MF have hit all-time highs.

There are 404 equity schemes. Of these, 227 are less than five years old. If one takes the entire lot, 173 schemes touched all-time high at the start of this week.

Navneet Munot, chief investment officer, SBI Mutual Fund, said, “I believe that in a high market situation, the money entring into mutual funds through systematic investment plans (SIPs) will not be impacted. The industry gets the major portion of inflows through the SIP route and not lump-sum amounts.’

Shah, in agreement with Munot, said investments through SIPs were quite robust and would continue despite the high NAVs.

As on August 31, the industry's total average assets under management rose 3.3 per cent to Rs 6.87 lakh crore from Rs 6.65 lakh crore last month.

However, equity schemes continued to see high redemptions in August. Overall net outflow from these during the current financial year is Rs 7,613 crore.

Source: http://www.business-standard.com/india/news/mf-navs-make-new-highsselloff-continues/408757/

IDFC MF to Revise Exit Load Structure for its Monthly Income Plan

IDFC Mutual Fund has decided to revise the exit load structure for its IDFC Monthly Income Plan. The changes will be effective from 01 October 2010.

Accordingly, the exit load would be 1.50% of the NAV for redemptions/switch outs anytime within 18 months from the date of subscription applying First In First Out Basis. No load shall be applicable for switches between options of the schemes.

Moreover, the exit load /CDSC of up to 1% of the redemption value charged to the unit holders by the fund on redemption of units shall be retained by each of the schemes in a separate account and will be utilized for payment of commissions to the ARN holder and to meet other marketing and selling expenses. Any amount in excess of 1% of the redemption value charged to the unit holder as exit load/ CDSC shall be credited to the respective scheme immediately.

IDFC Monthly Income Plan aims at generating regular returns primarily through investment in debt oriented mutual fund schemes and to generate long term capital appreciation by investing a portion of the schemes assts in equity oriented MF schemes.

Source: http://www.indiainfoline.com/Markets/News/IDFC-MF-to-Revise-Exit-Load-Structure-for-its-Monthly-Income-Plan/3302907454

Ahead of the fundamentals?

Not only is it riding an unprecedented inflow from foreign institutional investors (FIIs), the market cap has actually grown more than the size of the economy --- the only economy among leading nations where this is the case. The stronger GDP growth rate for India (IMF projects India’s growth at 9.4 per cent for 2010-2011, next only to China) may justify this kind of movement to an extent, but experts say the Indian markets have moved ahead of fundamentals.

“The companies are becoming expensive and the fundamentals are not justifying the current optimism,” said the head of a mutual fund who did not wish to be named.

The German economy is more than two-and-a-half times the size of India, but India’s market capitalisation is now ahead of the European giant.

Over the past one month, the Sensex has outperformed markets across all major developed and emerging economies, and has grown by 8.7 per cent on the back of the strong FII inflows. Germany’s DAX followed closely with a gain of 8.4 per cent in the period, while all other major economies grew 3-5 per cent.

This FII enthusiasm on the India growth story has now brought it into a territory that is even concerning the best of the fund managers to take fresh positions, and both broker and MF community is advising the retail investor to practice caution and not get carried away by the momentum.

http://www.hindustantimes.com/Ahead-of-the-fundamentals/Article1-603082.aspx

For mutual fund investing, online is the way to go

Good and bad times are going hand in hand for retail investors in mutual funds. While Sebi has stepped in with a slew of regulatory changes, bringing down the cost of investing significantly, incentives for the mutual fund distributor community has come down drastically as a consequence of these changes. This has left investors without the services of mutual fund agents. What will investors do? Help of financial advisors may be sought by high net-worth individuals. For others, other channels have to be explored.

There are two modes for retail investors to choose from – offline and online. The comparison between the two modes is easy. With the offline mode, the investor will be required to fill up forms and write cheques for every investment. Also, one will not get a consolidated view of investments. In the online mode, one can either go via demat/exchange route or via mutual fund websites that deal directly with mutual fund companies. Paperwork is one-time after which subsequent transactions can be made with a few mouse clicks.

Between the two online modes of investments, the comparison gets a little tricky. If an investor chooses to go via the exchange, he/she should have a demat account which comes with an account maintenance cost. The non-demat route, provided by some online service providers does not require an investor to have a demat account. However, it should be noted that mutual fund units are held in a digital (dematerialised) form regardless of the route chosen by an investor.

Consolidation services are available in both modes. However, in the demat mode, all the holdings of the investor (including stocks) are consolidated into one statement. This is beneficial, especially if an investor is an active stock trader too. Some non-demat service providers allow investors to maintain their separate demat account along with their mutual fund account, allowing a virtual consolidation. However, the two instruments (mutual fund units and shares) are maintained separately.

Many brokerages offer zero-cost trading for mutual fund units. Some non-demat service providers also provide zero-cost mutual fund transactions. However, brokerages are bound to charge for mutual fund transactions in the long run, just the way delivery-based share trading is charged.

The cost comparison can be better understood from a business perspective also. In the demat mode, there are five entities involved — broker, exchange, clearing agent, depository and registrar of mutual fund — apart from the investor and the mutual fund. In the non-demat mode, there are only two entities involved – the service provider and the registrar of mutual fund. The former will prove more expensive for an investor in the long run.

Hence, going online would be the best way. Between the two online modes, choose the demat mode if you are an active stock trader and would not mind the costs incurred in the long run.

Source: http://www.financialexpress.com/news/for-mutual-fund-investing-online-is-the-way-to-go/683163/0