MF industry wish list: Abolish STT, continue ELSS tax break

Having seen outflows in almost every month over the past one and a half years, after loads were banned in August 2009, the mutual fund industry now wants sops to lure investors to park their savings with them.

Currently, the AUMs are close to Rs seven lakh lakh crore, of which Rs over Rs 5 lakh crore is invested in debt securities and the smaller amount of just under Rs 2 lakh crore is in equities.

On the industry’s wish list is the abolition of the incidence of STT either on the fund or the investor. Observes Sandesh Kirkire, CEO of Kotak Mahindra MF, “The government should consider abolishing STT at one end. Today, the investors pays the tax while redeeming the units and the fund pays while buying the securities that are invested in the scheme. It doesn't make much sense to charge double STT.” Currently fund houses pay 0.125% as STT while buying equities while investors cough up 0.25% while redeeming their units.

Kirkire also says the government should continue with tax benefits available for ELSS, which are likely to go away once DTC comes into effect.

Also, fund chiefs are hoping that finance minister should charge capital gains tax if investments are held for three year or less. Such a move, they say, will persuade investors to hold on to their units for at least three years leaving fudns with stable money. Currently, long-term capital gains tax is not applicable if investors hold units for more than one year.

T P Raman, MD at Sundaram Mutual Fund says, “We see a lot of people moving away after being invested for a year as there is no long term capital gains tax. So the government should hike this period to three years or even five years so that investors stay invested for longer duration and the churn in the industry is lower.” Currently, short –term capital gains tax is levied at a rate of 15%, along with the surcharge and education cess.

Market participants also say there should be some tax incentive for retail investors coming into debt schemes. A Balasubramanian, CEO of Birla Sun Life MF says, “Given the poor bond market development, MFs could play a big role in the development of the bond market. I think, the government can provide some tax incentive for a higher level of participation of retail investors in fixed income schemes, which are meant for long term investment. They can provide a lock-in period of three year or five years with some tax incentives. That could attract money which would eventually be channeled into infrastructure companies.

Source: http://www.financialexpress.com/news/mf-industry-wish-list-abolish-stt-continue-elss-tax-break/754000/0

Kotak Mutual Fund announces dividend under its Midcap Fund

Kotak Mutual Fund has announced the declaration of dividend on the face value of Rs 10 per unit under dividend option of Kotak Midcap Fund. The record date for dividend has been fixed as 28 February 2011.

The quantum of dividend will be Rs 1.50 per unit as on the record date. The scheme recorded NAV of Rs 16.534 per unit as on 21 February 2011.

Kotak Midcap Fund is an open ended equity growth scheme which has the investment objective to generate capital appreciation from a diversified portfolio of equity and equity related securities

Source: http://www.indiainfoline.com/Markets/News/Kotak-MF-Declares-Dividend-For-Midcap-Fund/3574355862

Sebi plans helpline, media tie-ups to benefit investors

Aiming to resolve investors’ grievances and educate them about markets, the Securities and Exchange Board of India (Sebi) plans to start a nationwide toll-free helpline and launch awareness campaigns through newspapers, radio and TV channels.

Initially, the helpline would assist investors across the country in English and Hindi. The facility would be subsequently expanded to as many as 14 languages, including Assamese, Bengali, Gujarati, Kannada, Kashmiri, Malayalam, Marathi, Oriya, Punjabi, Tamil, Telugu and Urdu.

Besides, the market regulator also plans to revamp its investor website to make it more user-friendly. It plans to provide information in both text and audio-visual forms. Sebi plans to provide information in 14 languages on its website, as against only in English at present.

The proposed moves were part of Sebi’s Strategic Action Plan for Investor Education and Awareness (2011). All these activities would be funded from IPEF (Investor Protection and Education Fund), a senior official said.

As part of the the plan, the Sebi has also proposed to sponsor columns on different aspects of financial education and securities markets in magazines and newspapers. The media partner would need to get the content vetted by the Sebi.

Besides, it has decided to begin campaigns through mass media to provide important messages to investors, in English, Hindi and 12 other languages.

There would be both short and detailed messages for these campaigns and would focus on warning the investors about potential risks in the market and policy actions taken by the Sebi in the interest of investors.

These campaigns would include newspaper advertisements in non-financial dailies, 30-second prime time slots on TV channels and audio slots through radio, including FM channels.

The audio and video messages would be developed through the National Film Development Corporation (NFDC).

In addition, Sebi is planning 30-minute films to educate prospective investors in various languages. These NFDC-produced short-duration films would be hosted on Sebi website and aired on various TV channels

The regulator also plans to issue detailed messages, mostly related to investors’ rights and responsibilities as also do’s and don’ts, through various market entities such as brokers, mutual funds and listed companies.

Sebi also decided to ask stock exchanges, depositories, mutual funds and other entities like AMFI (Association of Mutual Funds in India) and ANMI (Association of National Exchange Members of India) to organise about 5,000 educational and awareness programmes for investors this year.

The regulator also plans to invite student groups from various schools and colleges to its headquarters for imparting an understanding of securities market.

Source: http://www.business-standard.com/india/news/sebi-plans-helpline-media-tie-ups-to-benefit-investors/426024/