UTI MF Declares Dividend for Opportunities Fund

UTI Mutual Fund has announced the declaration of dividend on the face value of Rs. 10 per unit under dividend option of UTI Opportunities Fund. The record date for dividend has been fixed as 2 May 2011.

The quantum of dividend will be Rs. 0.80 per unit. The scheme recorded NAV of Rs. 14.97 per unit as on 25 April 2011.

UTI Opportunities Fund is an open ended equity oriented scheme which has the investment objective to generate capital appreciation and/or income distribution by investing the funds of the scheme in equity shares and equity related instruments. The main focus of this scheme is to capitalize on opportunities arising in the market by responding to the dynamically changing Indian economy by moving its investments amongst different sectors as prevailing trends change.

Source: http://www.indiainfoline.com/Markets/News/UTI-MF-Declares-Dividend-for-Opportunities-Fund/3664942358

Low-income investors shirk micro SIPs for high costs & complexity.

The initial enthusiasm of mutual fund houses to promote micro-systematic investment plan, or SIP, an investment route to attract low-income individuals to invest regularly in equities, is waning due to high costs and regulatory hiccups.

Higher costs to service such accounts without adequate growth in investor base had been deterring mutual funds from promoting this channel. Now, the Securities and Exchange Board of India's decision to make know-your-client, or KYC, norms mandatory for even investments of less than Rs 50,000 in mutual funds has hit the final nail in the coffin of micro SIPs.

SEBI had made it mandatory for every mutual fund investor to be KYC-compliant from January 1, in a move intended to check fraudulent practices and money laundering activities. To be KYC-compliant, an investor is required to submit valid identification documents. Earlier, only those individuals investing Rs 50,000 or more needed to quote their permanent account number, or PAN.

Now, the revised norms mean even low-income investors, investing smaller amounts in mutual funds through micro SIPs, also need to provide the required documents. Mutual fund officials and distributors said a majority of the investors opting for micro SIPs, mostly workers in the unorganised sector in the two and three-tier cities, do not have documents to complete the KYC procedure.

"Many low-income individuals look for convenience while investing, as they get intimidated by procedural challenges," said Surajit Mishra, national headmutual funds of Bajaj Capital . "Greater legal requirements have discouraged them from investing in mutual funds through micro SIPs," he said.

Many top asset management companies jumped the bandwagon to offer micro SIP services to grow their business in the largely untapped rural India, but soon found that the costs incurred in selling and servicing these accounts were prohibitively high, since the investor base was not registering substantial growth. The key to profitability in micro SIP accounts is volumes.

Currently, UTI Mutual Fund , Reliance Mutual Fund , SBI Mutual Fund , ICICI Prudential Mutual Fund , Sahara Mutual Fund and Birla Sun Life Mutual Fund offer the micro SIP facility. Schemes of some of these mutual funds accept as low as Rs 50 per month through micro SIPs. The minimum accepted amount under normal SIPs is usually Rs 500 per month. A majority of the fund houses lack distribution strength to cater to small towns across the country and are finding it difficult to garner more accounts.

The problem is compounded by distributors' refusal to push mutual fund products following the ban on entry loads, the fee that mutual funds charged investors to pay distributors, since August 2009. A top official with a large mutual fund house, which offers micro SIPs, said the breakeven period for a mutual fund selling micro SIPs could be at least five to seven years.

"Micro SIPs do not make sense at all for most mutual funds as profitability is a key issue here. The costs involved in selling them were a hindrance; now KYC rules have made buying mutual funds through this route more complex," said Dhirendra Kumar, chief executive of Value Research , a New Delhi-based mutual fund tracker.

Source: http://economictimes.indiatimes.com/personal-finance/mutual-funds/mf-news/low-income-investors-shirk-micro-sips-for-high-costs-complexity/articleshow/8096214.cms

Smaller fund houses deliver higher returns

While size is much sought after in the mutual fund industry, it is the smaller fund houses which have actually delivered the best returns to investors in the past year.

Consider this. If one averages the returns across their equity schemes, Quantum Mutual Fund, Benchmark Mutual Fund and Daiwa Mutual emerge as the top performers over the past one year, managing returns of 13.4 per cent to 15.8 per cent. These funds are midgets, having under their fold only between Rs 125 crore and Rs 1,500 crore of assets. Their equity assets are lower.

Four other small houses including Mirae and Canara Robeco figure among the top 10 on returns, delivering returns in the range of 10-15 per cent. Top equity managers such as Reliance Mutual, Sundaram Mutual and SBI Mutual have in contrast delivered average one-year returns of 4-7 per cent on their schemes.

Consistency factor

Ranking all the fund houses by their one-year returns, only HDFC, Fidelity and UTI from the larger fund houses make it to the top 10 list. Even over a slightly longer timeframe of three years, smaller managers have fared well.

In fact, five out of the top 10 are small houses. Here again, HDFC and Fidelity among the larger houses delivered consistent returns.

Is it then correct to come to the conclusion that investors should bet only on schemes from smaller fund houses? Not necessarily.

Lacking variety

For one, many smaller fund houses have only a few equity schemes under operation, aiding their ‘averages'. Quantum and Mirae have two and three equity schemes under management respectively.

Two, not too many of these schemes may have a long enough record to judge performance. Most of flagship funds for these funds invest in large-cap stocks, which outperformed the broader markets over the last few years.

Correct size

Here JP Morgan's AMC too needs a mention as all three of its schemes have outperformed indices over the last one-year, but has lagged behind over longer timeframes.

But is managing a smaller number of funds the only way to better returns? It seems so.

Fidelity with just six funds and DSP Blackrock with 10 schemes under management have seen consistent performance from most of them. Of course HDFC with 14 schemes has seen 11 of those perform consistently over one- and three-year periods.

But with 17-21 schemes under operation, fund houses such as Sundaram, Tata, SBI, Birla Sun Life and Reliance have found it more challenging to deliver a consistent show across schemes. Only half of their funds have outperformed indices such as the Sensex, Nifty or BSE 100.

Source: http://www.thehindubusinessline.com/markets/stock-markets/article1763923.ece?css=print