BNP Paribas MF expands its equities fund management team

BNP Paribas Mutual Fund continues to expand its equities fund management team with the addition of two senior members to enhance its research capabilities.

Mr. Apurva Shah has joined the team as Head - Investment Research and will head a team of analysts across asset classes. Mr. Shah was the Head of Research - Institutional Equities at Prabhudas Lilladher leading an 18-member research team and has over a decade of experience in the Indian equity markets first as an analyst covering various sectors and then as a strategist covering market overall. Through his career, he has covered sectors as varied as Technology, Media and Financials. Mr. Shah is a CFA charter, a post graduate degree in management from Mumbai University and an engineer from Poona University.

Mr. Abhijeet Dey, with over 10 years of experience, has also joined the team as a Senior Research Analyst. In his previous assignment, Mr. Dey was a Senior Research Analyst at Kotak Mahindra AMC. Mr. Dey has a master’s degree in management and is an Engineer from Mumbai University.

Announcing these appointments, Mr. Nikhil Johri, Managing Director, BNP Paribas Asset Management said, “We are delighted to welcome Apurva and Abhijeet to our team and are sure that their expertise and experience will add a lot of value to the performance track record of our funds.”

“We have been investing in building our team and capabilities in India as part of our endeavour to achieve our long term business ambitions in the country. We continue to strive towards delivering better performance for the benefit of our investors”, he added.

Source: http://www.business-standard.com/india/news/bnp-paribas-mf-expands-its-equities-fund-management-team/450619/

Check out funds that have fared well in different time spans

One of the simplest ways of selecting mutual funds is by looking at their historical performances and picking the top performers. While it is easy to come across fund listings that represent best performers, these are based on a single time scale. So, a listing may show top performing funds on the basis of 3-year or 5-year returns. A fund can be a top performer on one time scale, but may be an underperformer in another.

Take the DSPBR India T.I.G.E.R Fund, which has outperformed its benchmark on a 5-year scale, but has fared worse than its benchmark on the 3-year scale. In three years, the fund returned 6.34% on an average, compared with its benchmark BSE-100, which delivered 7.89%. On the other hand, the fund delivered 8% annualised returns over a 5-year period, in comparison to its benchmark that delivered 7.73% returns. This implies that a person who had invested in 2006 would be better off than a person who had invested in 2008.

Now, consider the Taurus Infrastructure Fund, which has lost 25% in the past year in comparison to its benchmark BSE-200, which lost 15.08%, thereby underperforming its benchmark on the one-year scale significantly. However, the same fund is an outperformer on a 3-year scale, delivering 9.9% annualised return in comparison to its benchmark, which gave 8.32%.

Therefore, the listings for top performing funds that are based on single time scales may not represent true outperformers. Instead, an analysis based on multiple time scales may prove useful for the investors who strongly rely on historical performance. We tried to zero in on funds that have given better results than their benchmarks and category averages consistently across different time scales.

Outperformance would imply either gaining more than the benchmarks and category averages or losing less than the benchmarks and category averages. We have considered six time scales, ranging from three months to five years. The performances of these funds were compared with their benchmarks and category averages across these time scales. Though the time frames of three months and six months are too short for evaluating equity mutual funds, such scales are considered to check the funds' short-term consistency.

We analysed as many as 349 equity mutual funds schemes with growth options. All equity schemes are included in the analysis, and include diversified, tax plans, sector funds, dividend yield funds, contra funds, mid-cap and small-cap funds. We considered only mid- to large-sized funds and ignored the smaller ones. The equity funds whose latest available corpus was more than Rs 100 crore were included. We found 14 funds that were consistent in their performance.

These 14 mid- to large-sized funds have outperformed their benchmarks and category averages in 3 months, 6 months, 1 year, 2 years, 3 years and 5 years. One would have fared well irrespective of the time scale in which the investment was made and, hence, these funds are true outperformers. In this list, UTI AMC tops with its five funds. Franklin AMC shares the second spot with three funds, while BNP Paribas, Canara Robeco, IDFC, SBI, Tata and Sundaram AMCs have one fund each.

Tata Dividend Yield Fund's AUM grew by almost 56% in the past year from Rs 150.74 crore in July 2010 to Rs 235.02 crore in July 2011. On the other hand, IDFC Premier Equity Fund's AUM shot up by almost 44% in the same period from Rs 1,674 crore in July 2010 to Rs 2,411 crore in July 2011.

Most of the shortlisted funds also scored on the portfolio turnover ratio, which reflects how frequently assets within the fund are bought and sold by the fund manager. Generally, the lower the ratio, the better it is because lower ratio signifies lesser transaction costs. A majority of the shortlisted funds have reduced their portfolio turnover ratios in the past year. The UTI Opportunities managed to slash it by more than 51%, followed by UTI Equity and Tata Dividend Yield Fund, which reduced their ratios by 46% and 45%, respectively.

Source: http://articles.economictimes.indiatimes.com/2011-09-26/news/30204446_1_mutual-funds-benchmark-scale/2

Axis Gold Fund floats on

Axis Mutual Fund has launched a new fund named as Axis Gold Fund, an open ended fund of funds scheme. The New Fund Offer price is Rs. 10 per unit. The new issue is open for subscription from 30 September and close subscription on 14 October 2011. 

Investment objective: To generate returns that closely corresponds to returns generated by Axis Gold ETF.

Plans/Options offered: Growth and Dividend option. Dividend option further offers Payout Facility and Reinvestment Facility. Benchmark: Domestic price of gold.

Loads: Entry load is not applicable and the scheme charge an exit load of 1% if units are redeemed /switched out within 1 year from the date of allotment.

Minimum Application Amount: Rs. 5,000 and in multiples of Re. 1/- thereafter

Minimum Target Amount: Rs. 20 lakh

Asset Allocation: The scheme shall invest 95-100% in the units of gold ETFs (primary axis gold ETF) with medium risk profile and invest upto 5% in the money market instruments with low to medium risk profile.

Fund Managers: Mr. Anurag Mittal.

Source: http://www.indiainfoline.com/Markets/News/Axis-Gold-Fund-floats-on/3948507332

Motilal Oswal to sell stake in AMC, I-banking arms.

Motilal Oswal Financial Services was looking to sell a little less than 26 per cent stake in its asset management and investment banking businesses, said Chairman and Managing Director Motilal Oswal.

“We are in talks with global players to offload a minority stake in these two businesses. Nothing has been finalised,” he said, declining to give any names.

Motilal Oswal Asset Management Company (AMC) launched its first fund in June 2010. It had average assets under management (AUM) worth Rs 345 crore for the quarter ended June 30 this year, shows data from the Association of Mutual Funds in India. It runs three exchange-traded funds (ETFs) – MOSt Shares M100, MOSt Shares M50 and MOSt Shares Nasdaq 100.

The fund house has applied to launch an ETF based on gold and plans to launch another based on government bonds. “We will remain an ETF specialist,” said Oswal. TFs are one of the fastest growing categories. As of March 31, the AUM of ETFs rose from Rs 6,916 crore from Rs 1,403 crore as of March 31, 2009.

Like most brokerage stocks, those of Motilal Oswal have declined 52 per cent in this year till now, as a fall in the cash market volume due to subdued retail participation and a rise in the low-yielding options segment has dented profitability. In comparison, the Bombay Stock Exchange benchmark, the Sensex, lost 21.7 per cent during the same period.

Oswal said his firm was planning to add people in the wealth management, asset management and investment banking businesses.

PE BUSINESS 

Motilal Oswal Private Equity Advisors has launched its second PE fund, to raise $200 million (Rs 980 crore), Oswal said. “Road shows are on at present. We expect the first closure to happen by next month and hope to raise $100 million by then.”

The fund aims to raise about 30-40 per cent of the targeted amount from domestic investors and the rest from abroad, mostly from Gulf countries, Oswal said. “This fund will invest in companies across sectors with a proven profitability record. The average ticket size for the investment would be $15-25 million.”

Motilal Oswal PE has already invested about $130 mn from its first fund, Oswal said.

Source: http://www.business-standard.com/india/news/motilal-oswal-to-sell-stake-in-amc-i-banking-arms/450537/

All about a Registrar & transfer agent( R&T agents)of mutual fund

Mutual fund investors do a number of transactions, like buying, selling or switching units. They could request for a change in bank details or address. Each such request is a transaction by itself. Mutual fund houses have to maintain records of each such transaction.

Mutual fund houses may not want to invest in these processes nor would they have the skilled expertise to handle these huge transactions on a professional basis. Hence, they would want to outsource this work to an agency, which can handle these requests from investors. The registrar and transfer agents (R&T agents) help them perform this job.

An R&T agent maintains these records on behalf of the fund house, through offices across the country. Computer Age Management Services (Cams), Karvy and Deutsche Investor Services are such agents. An R&T agent has a wide network of branches across the country, helping investors get forms of fund houses, complete their transactions and even obtain their account statements. It acts as single-window system for investors.

An R&T agent also helps investors with information and details on new fund offers, dividend distributions or even maturity dates in case of FMPs (fixed maturity plans). While such details is also available from fund houses, an R&T agent is a one-stop shop for all the information. Investors can get information about various investments in different schemes of different fund houses at a single place.

From a mutual fund's perspective , R&T agents provider greater reach and help save costs. Since R&T agents have offices across the country, they also double up as branches for the mutual funds they serve and help them in their sales process. Typically, investors look to invest in different schemes of different fund houses. As per the rules of Securities and Exchange Board of India, there is a cut-off time by when the investment has to be made to be eligible for that day's NAV.

So, if an investor has to make multiple investments, he will have to approach multiple fund houses. Instead, he can use an R&T agent's services to conduct all his transactions and make the investments. The mutual fund house pays money for the services offered by the R&T agent. The charges would depend on the volume of transactions done for the mutual fund. The mutual fund, in turn, charges such expenses to the expense ratio of the fund. As an investor, while doing transactions at the R&T agents office, you do not have to pay any charges.

Source: http://economictimes.indiatimes.com/personal-finance/mutual-funds/analysis/rtf1ansiansicpg1252deff0deflang1033fonttblf0fnilfcharset0-arial-unicode-mscolortbl-red0green0blue0viewkind4uc1pardcf1f0fs20-all-about-a-registrar-transfer-agent-rt-agentsof-mutual-fundpar/articleshow/10134846.cms

Energy sector may take few more years to deliver

Equity markets go through extremely good and weak periods. It's based on what point in time you set the valuation. We are in an extremely challenging local environment and that has impacted the performance of key companies. SATISH RAMANATHAN, HEAD, EQUITIES, SUNDARAM MUTUAL FUND

Managing equity in uncertain times is a challenge for any fund manager. In an interview with Business Line Mr Satish Ramanathan, Head of Equities, Sundaram Mutual Fund, spoke about the underperforming sectors and about the performance of Sundaram funds that have exposure to these sectors.

Excerpts from the interview:

Infrastructure based funds have given very poor returns. Is it advisable for investors to move out of such funds? Or should AMCs dilute the theme and make it more broad-based?

The performance of infrastructure funds has been disappointing over the past one year. The key learning is that infrastructure is not just about constructing projects. It is also not about taking up several projects and over-stretching yourself. It's about viable business with some cash-flow and investments.

The key takeaway for us is to invest in more mature companies like NTPC or GAIL or ONGC. It may be better to invest in slightly mature companies which have gone through the initial learning cycle. Going ahead, many of the funds and fund houses will not replicate the strategy they did in their previous tenure. They may back the large and stable companies than investing in smaller companies for growth purpose. So all this means that the rate of appreciation will come down and equally the volatility of the portfolio.

If you ask me whether infrastructure as theme is viable or not, the answer is it is very viable, provided you are selective. The second phase we are talking about is selectivity.

You should hold the right companies rather than looking at the sector. So, the first leg was about sectors but the second phase is about companies.

Investors buy theme funds for high growth. If you start buying only large-cap stocks, then the purpose may be defeated?

I did not imply that we will be looking only at large-cap companies. It's about selecting the right companies for the portfolio.

So if you have a company that is conservative and have profitable projects, we would prefer those instead of companies that take on number of unviable projects. It is about selecting the right companies and the right set of business models rather than having high-growth companies only for growth prospects.

So, from an investor's perspective since they have taken the conscious risk of investing in a theme fund or sector fund, unless their risk perception has changed, they should continue in the fund.

Schemes that invest in large cap stocks are now struggling to reward investors. Is it due to high valuations?

Equity markets go through extremely good and weak periods. It's based on what point in time you set the valuation.

Needless to say, we are in extremely challenging local environment and that had impacted the performance of key companies. Second point is that our political stability is also questioned and investor's sentiment is also low.

Retail participation has been very low for several years now and domestic inflows into equity are also low. The inflows are coming only through FIIs and they can be volatile. You also have a situation where the interest rate offered is at 10-10.5 per cent and it will dissuade any risk-taking.

Why should any investor walk in and invest in equity with all these risks when you can get assured return for 3-4 years. That is the key deterrent as we stand today. When the interest rate eases and comes down I am sure the risk appetite will come back into the market albeit slowly and money would move into equity market.

For how many quarters do you anticipate the Indian markets will be under pressure due to macro-economic concerns, domestic and global?

I expect weakness in the Indian markets to continue for next 6-12 months. But most of the weakness is internally created. On reversing some of the issues we can move forward quicker than anticipated.

The key thing we need to bear in the mind is that reduction in subsidies of petrol, fuel and fertilisers will help release of lot money for government's core development activities.

We can be cynical about this, but nevertheless what we need to bear in the mind is that government borrowing for petrol subsidy is going to come down when the fuel prices are passed on to public.

If we are little lucky and the crude oil price falls below $90, losses of oil marketing companies and State Electricity Boards are likely to come down significantly.

With concerns in the banking space which segment — public or private banks — do you expect will perform better?

For the PSU banks incentive to maintain asset quality and growth is not so high given that these banks' Chairmen keep changing often, and their commitment is only for 3-5 years. So the bank's growth and profitability can swing extremely. It is one of the key concerns I have in the PSU space. So it's more individual-centric than system driven.

The same holds good for private banks also, but there exists continuity of the same management and the targets are fairly aligned with the shareholders' expectations. For the long term I would bet on private banks.

Sundaram Energy Fund was launched almost four years ago, but is still below its face value. What should investors do with the fund? Are you planning any mandate change?

We are not planning to change the mandate of the fund. What has happened is very unfortunate. One, many of the projects are getting delayed due to environmental issues. Reliance Industries, which is a major holding in the portfolio, is getting impacted due to its KG D6 issue.

So, what has really happened in the energy space is that the stock prices have fallen 40-50 per cent. Considering that, our performance is satisfactory. It could have been far worse.

We have taken course correction along the way. But are we happy about our performance? Clearly not. I think some of these will reverse over time. Clearly it will take a minimum of one and a half years in terms of projects and delivery, given the significant project delays. Everything has slipped in the past two years. That was one reason why promoters, companies and fund under-delivered.

Source: http://www.thehindubusinessline.com/features/investment-world/mutual-funds/article2482455.ece