Reliance gold fund scheme collects 5 bn rupees

Reliance Mutual Fund on Wednesday said it has so far collected 5 billion rupees ($111 million) from 200,000 investors under its gold fund of funds scheme.

"The large participation in the fund reaffirms our belief that gold will emerge as one of the largest asset classes for the Indian MF industry," said Sundeep Sikka , CEO, Reliance Mutual Fund.

The scheme will be open for trading from March 14, the fund house said in a statement.

India imported a record of over 900 tonnes of gold in 2010 as consumers expected a further rally in near-record prices.

Source: http://economictimes.indiatimes.com/personal-finance/mutual-funds/mf-news/reliance-gold-fund-scheme-collects-5-bn-rupees/articleshow/7662655.cms

SEBI yet to decide on 25 MF licence applications

Mahindra and Mahindra Financial Services, India Infoline and India bulls Financial Services are among the 25 companies waiting for over three years for markets regulator SEBI to clear their applications to start a mutual fund business. There has been no communication to explain the delay, said two people familiar with the impasse.

The business plans of many of these companies are stuck since they can neither scrap the project nor proceed with it since they have invested capital and hired people, the two people said. An internal memo circulating within SEBI talks about the strengths and weaknesses of the various companies that have sought a licence to start an asset management company, but it does not specify if any of the companies should be given a licence, those people said.

An e-mail sent to SEBI executive director KN Vaidyanathan, in charge of mutual funds, seeking reasons for the delay in clearing applications made since 2008 was unanswered. Indiabulls did not respond to an e-mail sent by ET.

Union Bank of India (Feb 2009), Bajaj Finserv (July 09), and Enam Asset Management (Sept 09) are the others waiting for the regulatory nod, according to the SEBI's website. The site says these applications are "under process". Motilal Oswal, Mirae Asset and the state-run IDBI are some of recent entrants in the business.

"We have received SEBI's in-principle approval and are waiting for the final nod. We are very keen on starting our mutual fund business," said Harshad Apte, head of strategy at India Infoline. There is no specific time period for SEBI to grant a mutual fund licence. However, a company has to launch a scheme within six months of SEBI approving its schemes.

Many companies want to enter the mutual funds market to benefit from the rising income of the Indian middle class due to the near 9% economic growth. The mutual funds industry has grown by 9% in the last five years. It now has assets of 6.2 lakh crore under management. The industry has been complaining that fund inflows have dwindled due to the abolition of entry loads, but a Morgan Stanley research found that was not the case. Many funds with small initial capital have been profitable, while the new ones are struggling.

The difficultly in reaching out to investors in the far-flung areas of the vast nation and the downturn in 2008-09 had deterred some applicants from pursuing their plan, the people said. For others, the delay could be because they had faced charges of regulatory violations in the past.

SEBI had fined Indiabulls Securities 15 lakh in 2007 for unfair trade practices in the derivatives segment. Karvy Stock Broking and Indiabulls were accused in the 2006 initial public offering scandals, but Indiabulls was given a clean chit later. Karvy was banned for three months from trading. First Global Financial Services, too, was banned from trading for a year in 2009. India Infoline was penalised 25 lakh.

SEBI is right in restricting "people" it thinks are not eligible, since in mutual funds, people's money is involved, Jagannadham Thunuguntla of SMC Global Securities said. Karvy and First Global could not be reached for comments.

Source: http://economictimes.indiatimes.com/personal-finance/mutual-funds/mf-news/sebi-yet-to-decide-on-25-mf-licence-applications/articleshow/7659546.cms

Mirae launches India-China Consumption Fund

Mirae Asset Global Investments (India) today announced the launch of Mirae Asset India-China Consumption Fund, an open-ended, equity-oriented scheme.

The scheme, the first-of-its-kind in India, will focus on sectors and companies benefiting from the consumption-led demand that is driving the world's fastest-growing economies, India and China, a press release issued here stated.

The new fund will open on March 9 and close on March 23.

It will pursue a flavour of Indian and Chinese consumer stocks, providing Indian investors with the opportunity to benefit from the long-term structural growth trends in consumption and consumption-led sectors, the release said.

Mirae Asset Global Investments (India)'s CEO, Arindam Ghosh, said, "Domestic consumption is the primary driver of the strong growth seen in India and China in recent years. Going forward, the consumption theme will be the engine of sustainable growth made possible by higher per capita income, disposable surplus and growing urbanisation."

In terms of asset allocation, the fund will seek to invest 65-90 per cent of its assets in Indian equities and equity-related securities of companies that are likely to benefit either directly or indirectly from consumption-led demand.

The fund will also invest 10-35% of its portfolio in Chinese equities and equity-related securities of companies that are likely to benefit either directly or indirectly from consumption-led demand, the release said.

The fund may take up to 25 per cent exposure in money market instruments (including CBLO)/debt securities instruments in India and/or units of debt/liquid schemes of domestic mutual funds.

The scheme will use a customised benchmark index that constitutes MSCI India Consumption Index (65%) and MSCI China Consumption Index (35%). The scheme does not guarantee or secure any returns, the release said.

Mirae Asset Global Investments (India) is a wholly-owned subsidiary of Mirae Asset Global Investments Group.

In less than a decade, Mirae Asset Global Investments has become one of the world's largest investors in emerging market equities, managing total assets of over $54 billion as of February.

Source: http://www.business-standard.com/india/news/mirae-launches-india-china-consumption-fund/128224/on

Bank of India set to buy 51% in Bharti AXA MF

Public sector Bank of India (BoI) is set to re-enter the mutual fund business. It is close to buying a 51 per cent stake in Bharti AXA Investment Managers.

Senior bank officials confirmed this. “We are in an advanced stage of negotiations with Bharti Axa for picking up a majority stake in their asset management company (AMC),” said an official.

Sandeep Dasgupta, chief executive, Bharti Axa Investment Managers, refused comment. The company has been looking for a partner for some time.

BoI sources said talks were continuing on the terms and conditions, especially pricing. “Things have more or less fallen in place. We are just awaiting the final contours of the deal. The deal is likely to be closed by the end of this month,” said the official.

Sources said the talks were prolonged because besides the valuation, the bank was also working on the fresh capital infusion that the company might need after the acquisition.

BoI says it works on a universal banking model and so wants to provide as many financial products under one roof as possible. “The AMC business stands to gain from our branch network,” said the official.

Bharti Axa has been looking to rope in an Indian bank as a partner for some time. In its annual report for 2009-10, the company said it was scouting for a joint venture partner, preferably a bank, to increase its distribution reach.

“In a large country like India, it is not feasible or desirable to rely solely on proprietary distribution infrastructure,” the report said. The company posted a loss of Rs 42.14 crore in 2009-10, down from Rs 45.6 crore in 2008-09.

BoI had started a mutual fund business in 1990. However, it exited in 2004. Of the six schemes launched by the fund, four were redeemed. The other two were sold to Taurus Mutual Fund in 2004 after giving an exit option to investors.

While the valuation is not known, mutual fund industry sources say that given the 60 per cent debt component in Bharti Axa’s portfolio, the value of the deal is likely to be two-three per cent of the assets under management. In December-end, Bharti Axa was managing Rs 412 crore.

In 2009, L&T Finance bought DBS Chola AMC for Rs 45 crore, valuing the company at 1.56 per cent of the assets under management.

Last year, the Daiwa Group bought Shinsei’s mutual fund arm for Rs 48.6 crore, or 11 per cent of the assets under management. However, industry sources said the high valuation was because Daiwa acquired the licence to immediately do business in India.

Explaining the rationale for the deal, the BoI official said, “While the Indian mutual fund industry is facing challenges in terms of inflows and financial health, we look at this as a temporary phase.”

Recently, a number of top executives quit Bharti Axa. They included equity head Prateek Agrawal. Human resources head Debraj Sinha, fixed-income head Sujoy Kumar Das and country head, business development, Vikaas M Sachdeva, have also left the company in recent months.

There are many mutual funds either fully or partly owned by banks, along with foreign partners. These are Baroda Pioneer Mutual Fund, Canara Robeco Mutual Fund, ICICI Prudential Mutual Fund, Principal Mutual Fund and SBI Mutual Fund, Axis Mutual Fund and IDBI Mutual Fund.

Another public sector lender, Union Bank of India. has floated an asset management company in partnership with the KBC Group of Belgium.

Source: http://www.business-standard.com/india/news/bankindia-set-to-buy-51-in-bharti-axa-mf/427389/