Immediate measures to be taken by the ministry for boosting the MF industry

Boosting financial advisors and providing greater flexibility to manage the total expense ratio (TER) for AMCs are on priority list of the ministry.

The Secretary, Department of Economic Affairs met mutual fund industry officials and financial advisors association along with senior officials of finance ministry and SEBI to discuss the strategies to re-boost the mutual fund industry.

The ministry is concerned with the decline in gross asset mobilisation in the mutual fund industry in 2009-2010 and steps needed to boost the advisory fraternity. “The objective of the Government and SEBI is to align the interest of all the share holders and streamline the operational procedures to achieve the highest growth in mutual fund industry,” said a press release issued by the ministry.

The ministry has classified the agenda discussed in the meeting into two categories – immediate and medium term plan. The immediate plan of the body is as follows:

Attend to issue relating to compensation payable to distributors

To provide greater flexibility to asset management companies to manage the total expense ratio (TER)

Medium term plan includes looking at greater role of pension and insurance sector. Tax related issues were also discussed in the meeting and the mutual fund industry has been asked to do an in-depth study of tax issues and submit a proposal to the Government.

Source: http://www.cafemutual.com/News/InnerNews.aspx?srno=1753&MainType=New&NewsType=Industry&id=21

Reliance Retirement Fund files offer document with Seb

An open ended notified tax savings cum pension scheme

Reliance Mutual Fund has filed offer document with Sebi to launch Reliance Retirement Fund, an open end notified tax savings cum pension scheme. The scheme will get tax benefit (upto Rs. 1 Lakh) as a Notified Pension Fund U/S 80C of Income Tax Act 1961. The New Fund Offer price is Rs. 10 per unit.

Investment objective: The investment objective of the scheme is to provide capital appreciation and consistent income to the investors which will be in line with their retirement goals by investing in a mix of securities comprising of equity, equity related instruments and fixed income securities.

Options: The scheme will have 2 plans: (Both the plans will have separate portfolio)

1. Wealth Creation Plan

2. Income Generation Plan

The above plans will have Growth Plan & Dividend Plans respectively as specified below:

• Growth Plan: Growth Option & Bonus Option

• Dividend Plan: Dividend Payout Option & Dividend Reinvestment Option

Lock - in Period: 5 years in the scheme from the date of allotment of units. (Note: 5 years lock in period is in respect to the scheme and not in respect to Wealth Creation Plan or Income Generation Plan. Auto transfer from Wealth Creation Plan to Income Generation Plan is applicable during 5 year lock - in period).

Asset Allocation: Wealth Creation Plan shall invest 65% to 100% of assets in equities and equity related securities with medium to high risk profile. On the other side it would allocate upto 35% of assets in debt and money market securities with low to medium risk profile.

Income Generation Plan shall invest 5% to 30% of assets in equities and equity related securities with medium to high risk profile. On the other side it would allocate upto 70% to 95% of assets in debt and money market securities with low to medium risk profile.

Benchmark: Wealth Creation Plan : BSE 100

Income Generation Plan : Crisil MIP Blended Index

Loads:

Entry load: Not applicable

Exit load:

1% if redeemed/switched out (other than Auto Transfer) before attainment of 60 years of age.

Nil in case of Auto Transfer from Wealth Creation Plan to Income Generation Plan.

Nil in case of Auto SWP/Redemption/Switch out (other than Auto Transfer) on or after attainment of 60 years of age or after completion of 5 year lock in period, whichever is later.

Minimum Application Amount:

For Lumpsum: Rs.5, 000 & in multiples of Re.500 thereafter

For SIP:i. Monthly Frequency: Rs. 500 & in multiples of Re. 500 thereafter

ii. Quarterly Frequency: Rs. 1,500 & in multiples of Re. 500 thereafter

iii. Annual Frequency: Rs. 5,000 & in multiples of Re. 500 thereafter

Minimum Target Amount: Rs. Twenty crore

Fund Manager: The scheme will be managed by Sanjay Parekh, Anju Chajjer and Jahnvee Shah (fund Manager - Overseas Investments).

Source: http://www.indiainfoline.com/Markets/News/Reliance-Retirement-Fund-files-offer-document-with-Sebi/4389968737

Mutual funds’ asset base grows modest 4%

The mutual fund industry’s average assets under management of fund houses for the June quarter grew four per cent. According to data from the Association of Mutual Funds in India (AMFI), average AUM for the June quarter was Rs 6.92 lakh crore versus Rs 6.64 lakh crore in March.

Assets under management represent the total value of funds handled by fund houses at the end of any time period. It is the total value of their investment portfolio and the cash balances.

Debt, major contributor

Debt funds continue to be the major contributor to the growth of the mutual fund industry. “This is entirely on account of growing assets in the fixed income products. Equity funds have not been able to mobilise any meaningful assets,” said Mr Dhirendra Kumar, CEO, Value Research, a Delhi-based mutual fund research firm.

In the months of April and May, a total of 80 new schemes were launched, of which 79 were in the debt fund category and one in the open-ended equity category. The new debt schemes accumulated Rs 8,863 crore, while the equity fund only garnered Rs 18 crore on completion of allotment. Data for new schemes launched for the month of June was not available on the AMFI Web site.

Investors stay away

Experts said investors preferred to stay away from equities. “Equity funds have given returns in the range of 0.5 -1 per cent over the last three months. Even on a month-on-month basis, the AUM has not gone up significantly,” said Mr. Kumar.

HDFC Mutual Fund continues to be the top fund house in the country with assets worth Rs 92,624 crore. The next four include Reliance, ICICI Prudential, UTI and Birla Sun Life.

Compared to the March quarter, the top five fund houses have seen an average growth of 5.2 per cent in their AUM. Birla Sun Life recorded the highest AUM growth at 10 per cent.

ICICI Prudential’s AUM rose by 6.3 per cent, HDFC grew by 3.05, Reliance by 3.3 and UTI grew 3.4 per cent.

However, compared to the corresponding quarter of last year (April-June 2011) all these fund houses, except HDFC and Birla, have seen a sharp decline in AUM.

While HDFC rise was marginal at 0.6 per cent, Birla Sun Life saw a decline of 0.4 per cent. Reliance has seen the highest decline at 20 per cent, followed by UTI at 12 per cent and ICICI at 8.4 per cent.

About ten fund houses saw their AUMs decline. At 47 per cent, Escorts Mutual Fund’s AUM declined the most to end at Rs 112 crore at the end of the June quarter.

Source: http://www.thehindubusinessline.com/markets/stock-markets/article3598919.ece?homepage=true&ref=wl_home