Mutual Funds AUM Report - AUM up by 7.32%

Assets under management (AUM) registered an impressive rise of 7.32% to Rs 5.67 lakh crore in April 2008 compared with Rs 5.28 lakh crore in March 2008. AUM of fund of funds (FoFs) was Rs 3759.02 crore in April 2008. It has been the highest monthly gain in AUM since October 2007.
Of the 33 mutual funds 26 registered a rise in AUM in April 2008 over March 2008 and rest 7 showed a decline in their AUM. There were 17 fund houses with AUM above Rs 10000 crore. Fifteen of them had a net inflow in April 2008 compared with March 2008.
The top three funds witnessing a rise in the AUM included Mirae Mutual Fund (95.18%), Canara Robeco Mutual Fund (30.35%) and AIG Global Investment Group Mutual Fund (21.71%). Reliance Mutual Fund continued its run as the largest fund house with Rs 96386.40 crore of AUM in April 2008 a rise of 5.99% over March 2008. It registered net inflow of Rs 5448.46 crore in April 2008 over March 2008. AUM of ICICI Prudential Mutual Fund was at Rs 55708.52 crore in April 2008 a rise of 2.55% in AUM over March 2008 continued to be at the second position.
AUM of UTI Mutual Fund increased by 7.28% whereas AUM of HDFC Mutual Fund increased by 15.63% in April 2008 over March 2008. Occupying the third and fourth slots, AUM of UTI Mutual Fund and HDFC Mutual Fund were Rs 52549.40 crore and Rs 51770.81 crore, respectively. Both the fund houses were in the third and fourth positions in March 2008.
The other top mutual funds, in terms of AUM, were Birla Sun Life Mutual Fund (Rs 39489.22 crore), SBI Mutual Fund (Rs 30394.73 crore) and Franklin Templeton Mutual Fund (Rs 28631.63 crore) in April 2008. The assets of Birla Sun Life Mutual Fund increased by 9.98% in April 2008 whereas Franklin Templeton Mutual Fund showed an increase of 6.67%.
HDFC Mutual Fund recorded the highest inflow of Rs 6997.65 crore in April 2008 followed by Reliance Mutual Fund with a net inflow of Rs 5448.46 crore. Occupying the third and fourth slots, Birla Sun Life Mutual Fund and UTI Mutual Fund recorded the highest inflow Rs 3583.18 crore and Rs 3566.59 crore, respectively.
Deutsche Mutual Fund recorded the second highest net outflow of Rs 794.77 crore in April 2008, after JM Financial Mutual Fund, which secured its top position with an outflow of Rs 864.86 crore, followed by Benchmark Mutual Fund and ING Vysya Mutual Fund, with a net outflow of Rs 378.42 crore and Rs 138.33 crore, respectively.

New plans of Edelweiss

Edelweiss Capital, a Mumbai based financial services company has received the approval from the market regulator, SEBI, to start its asset management business. As per the press release yesterday, Edelweiss Asset Management Ltd will act as an investment manger for Edelweiss Mutual Fund, whom the registration has been granted. The asset management company plans to launch more than 8-9 products in the mutual fund domain within one year, which will include broad based equity funds, structured funds, arbitrage funds and other innovative fixed income funds and equity funds inline with the requirements of the market. The group company’s businesses include investment banking, insurance brokerage and wealth management.

The Elephant of the Indian mutual fund industry is just away from a marvelous milestone

Reliance Mutual Fund the country’s largest fund house in terms of asset under management is astray by Rs. 4000 crore to strike the miraculous Rupee One Trillion mark. According to the latest figures available on Association of Mutual Funds in India (AMFI), Reliance MF’s average asset under management (AAUM) is Rs. 96,386.40 crores at the end of April, 2008, a 6% growth in AAUM from 90,937.94 crores till March 30. Reliance MF acquires the lion’s share by managing 17% assets of the entire mutual fund industry as per the April month closing data. Reliance MF is continuously stretching the gap with it peers, as since over a year and 3 months the scheme is unbeatably ruling the mutual fund industry. Its closest peer ICICI Prudential MF AAUM stood at Rs 55,708.52 crore. UTI MF stood at the third position with an AAUM of 52,549.40 crores, and HDFC MF which grew 15% ranked fourth in the 34 – member mutual fund industry.

Buffett Says Credit Crisis Ebbs for Wall Street Firms (Update4)

May 3 (Bloomberg) -- Warren Buffett, chief executive officer of Berkshire Hathaway Inc., said the global credit crunch has eased for bankers, and the Federal Reserve probably averted more failures by helping to rescue Bear Stearns Cos.
``The worst of the crisis in Wall Street is over,'' Buffett said today on Bloomberg Television. ``In terms of people with individual mortgages, there's a lot of pain left to come.'' Buffett was interviewed before the Omaha, Nebraska-based company's annual meeting, attended by about 31,000 people.
Buffett, the world's richest man according to Forbes magazine, said the Fed acted properly when it arranged a $2.4 billion buyout in March of New York-based Bear Stearns by JPMorgan Chase & Co. The billionaire said he turned down the opportunity because he lacked enough capital and time to craft a solution. More failures and wider panic may have resulted if the regulators didn't halt the run on Bear Stearns, he said.
``The worry was that there would be contagion; it was a very real worry,'' Buffett said. ``If Bear Stearns had gone, the next day, somebody else would have gone. It could've been a very, very, very chaotic situation.''
Buffett, 77, said he was contacted in March before JPMorgan, the third-biggest U.S. bank by assets, agreed to buy Bear Stearns. The person calling him, whom he wouldn't identify, was ``someone responsible'' and wasn't from the Federal Reserve or the Treasury. The call lasted about half an hour, Buffett said.
Too Big for Buffett
``As I understand it, Bear Stearns had $65 billion due on Monday and I didn't have $65 billion,'' Buffett said. ``I couldn't get my mind around that situation in the required time.'' New York-based JPMorgan was the right buyer for Bear Stearns, he added.
Berkshire had about $35 billion in cash as of March 31, according to a regulatory filing yesterday.
JPMorgan agreed in mid-March to acquire Bear Stearns, once the fifth-biggest U.S. securities firm, after customers grew concerned about the company's health and pulled out their money, leaving Bear Stearns short on cash. JPMorgan, which got financial support from the Federal Reserve, raised the purchase price a week later to $10 a share from $2 to mollify Bear Stearns shareholders who said they weren't getting enough.
The 24-company KBW Bank Index has advanced 14 percent since the Bear Stearns bailout was announced in March, and the 11- company Amex Securities Broker/Dealer Index has climbed 30 percent.
Credit Losses
In a question-and-answer session at the shareholder meeting, Buffett said that from a risk perspective, some banks got ``too big to manage.''
The world's largest banks and investment firms have recorded more than $300 billion of losses and writedowns tied to mortgages, bonds and loans.
Berkshire's own investment in derivative contracts recovered $500 million to $600 million of lost value since the end of March, Buffett said. The company will make ``significant money'' on the derivatives over the long term, he said at the meeting. Berkshire said yesterday the value of the investments had declined by $1.7 billion in the first quarter. The entire company's quarterly profit plunged 64 percent to $940 million.
Buffett is scheduled to embark on a four-city European trip this month to scout potential acquisitions, including family- owned companies. He has been investing in China, Israel and the U.K. to spur profit growth after saying that U.S. investments meeting his criteria have become scarce.
International Earnings
``Over time we'd like to develop more international earnings,'' Buffett said. ``If it's a $2 billion deal, fine; if it's a $20 billion dollar deal, fine.''
Buffett, who made his first non-U.S. acquisition in 2006, paying $4 billion for 80 percent of Israel-based Iscar Metalworking Cos., said he can't predict the location of the next company Berkshire will acquire.
``They can come from Europe, they can come from the United States, you just never know,'' he said. ``Somebody, someplace is going to have a situation where we fit. They're going to call me; I want to make sure I'm on their radar screen.''
Buffett said during the meeting he'd like to buy businesses in India and China, and that he wanted to acquire one or two non- U.S. companies in the next three years. He is looking as competition forces down insurance rates in the U.S. for Berkshire, which typically gets about half its profit from insurance units including National Indemnity, General Re Corp. and Geico Corp.
The U.S. dollar will keep weakening and Buffett feels ``no need to hedge'' against currency risk when buying large companies outside the U.S., he said.
Landing From Mars
``If I landed from Mars today with a billion of Mars dollars, or whatever they call them on Mars, and I was thinking about where to put my money,'' he said. ``I don't think I'd put the entire billion in U.S. dollars.''
Berkshire Hathaway has spent $4 billion investing in the municipal auction-rate bond market, taking advantage of payouts that topped 10 percent after regular bidders fled the market. Markets were so disrupted, Buffett said, that bonds from the same issue were selling simultaneously from the same broker with yields of 6 percent and 11 percent.
Berkshire has risen about 22 percent in New York Stock Exchange composite trading during the past 12 months and gained about 4,700 percent in 20 years through Dec. 31, about six times more than the Standard & Poor's 500 Index including dividends.
Buffett took shareholder questions for more than five hours on dozens of issues.
Other topics Buffett addressed include:
-- There's ``no guarantee'' Berkshire Hathaway won't be a buyout target after his death, though such a takeover is unlikely.
-- He said he's in good health because of his diet, ``some Wrigley, some Mars, some See's, some Coke.'' Berkshire this week committed $6.5 billion to help finance candy company Mars Inc.'s takeover of Wm. Wrigley Jr., the world's biggest maker of chewing gum. Berkshire owns See's Candies and is the top shareholder of Coca-Cola Co.
-- He doesn't support a push for companies or countries to boycott the Olympics in China based on that country's human rights record.
-- He would buy shares of PetroChina Co. again if they are at a level he considers cheap, Buffett said. Berkshire sold a stake in the company last year.
-- Factories in China have different norms for working conditions than those in the U.S., and he won't ``tell the world how to run'' their businesses.

Want to earn like Warren Buffett? ...24 tips

"An investor needs to do very few things right as long as he or she avoids big mistakes. " Warren Buffett

One of the world's most successful investors, Warren Buffett is the richest man on earth. Chairman of the Berkshire Hathaway, Buffett's wealth jumped by $10 billion to hit $62 billion during 2007. Buffett's life is an inspiration for investors across the globe.

So what makes the world's wealthiest man so rich? Buffett believes that successful investing is about having common sense, patience and independent research.

'How Buffett Does It', by James Pardoe is a great guide for investing in any market. A look into Buffett's simple, yet intelligent mantras for investing and minting millions.

1. A frugal billionaire Buffett believes in simplicity. He advises investors to take easy decisions. Never buy when you are doubtful. Invest only if you understand the businesses well.

2. Focus on not losing money rather than making it. Don't own any stock for 10 minutes that you wouldn't own for 10 years.


3. A proponent of value investing, he believes that one must take decisions on his own. He doesn't believe in listening to analysts or brokers. The best investing decisions come from oneself.

"It is not necessary to do extraordinary things to get extraordinary results."

4. Buffett advises to invest in 'old economy' businesses, companies, which have been around for fifty years and will continue to have a long innings.

5. We have often heard of people suffering heart attacks when markets crash. Well, Buffett advocates a sound temperament for stock market success.

6. You don't need to be a genius to succeed in the stock markets. People who can stay cool will succeed in the long run. Always keep in mind the hidden costs, from commissions on active stock trading to high mutual fund fees.

7. Buffett always looks at businesses he can understand, look at the profits in the past, long-term potential of the company, good top level management of the company and companies that have a good value proposition. The strategy is to think about the business in the long term.

"You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right."

8. Invest in businesses with great management. Always keep a track of the management of the company. The top decision makers have a lot to do with the company's performance.

9. One of Buffet's biggest strengths is independent thinking. Many people go by what the experts says or what others do but belief in one's own judgement is the key to stock market success.

10. Patience pays, says Buffet. He says one must not worry too much about the price of the stocks. What's more important is the nature of business of the company, earnings capability and its future potential.

11. Don't target just stocks, look at businesses. How a company performs is key to its stock market performance. You must know the track record of a company before you invest in it.

"Price is what you pay. Value is what you get."

12. Prices keep changing. Don't get worried by the ups and downs. Investing is all about creating wealth. It's important to understand the value of a stock than its price.

13. He believes that franchisee businesses are good opportunities to invest in. Avoid hi-tech, complex businesses. Look for businesses that are set to diversify and grow.

14. Never be disappointed when markets fall. Take it as a buying opportunity. Buffet says one must have lesser number of investments with more money in each lot.

15. He advises to avoid diversification. Invest in companies with sound business models. Choose a few good ones and stay invested, it will give you the benefits.

"I don't look to jump over 7-foot bars; I look around for 1-foot bars that I can step over."

16. Doing nothing pays at times! One must not jump at price fluctuations and take impulsive decisions.

17. Don't get carried away by market forecasts. Ignore market swings and remain an investor with a good business sense.

18. Buffett advises to be fearful when others are greedy and greedy when others are fearful. Buy when people are selling and sell when people are buying.

19. Make a list of companies, sectors that you find safe to invest in and try to stick to the list.

20. A sound business, strong management, good fundamental and low stock price should be a must-buy.

"Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well."

21. Try to ignore stock charts, says Buffett. They may not give the right indicators. A stock which may have done well earlier may not do so in future.

22. Buffet spends a lot of time on reading and more importantly thinking. Reading helps investors, so spend a lot of time reading about the stocks, companies and markets. A good investor must have a good knowledge base.

23. A good investor also needs to be efficient. Investors may have great capabilities but many do not make use of it. One needs to hone skills to meet the targets.

24. Good investors never rush to make money. They give time, thought and work on investment decisions. The mistakes that others make should be a lesson for you.

Investors may sweat in May

While you may escape the sweltering May heat by flying to cooler climes, there may not be any escape for investors in the month of May since, after October, this is the worst month for stocks.

A study of the last 18 years demonstrates that March (-0.39 per cent), May (-0.74 per cent) and October (-1.63 per cent) are the months in which stocks have given negative returns.

But if you were to consider the last five years only, then October slips out of the list and you are left with March and May which have seen average declines of 1.17 per cent and 1.61 per cent respectively.

Let's concentrate on May alone. The month has turned negative returns in eight out of the last 18 years under study. And how can investors forget the sell-offs seen in May 2004 and May 2006?

There is another peculiarity to May. Since 1998, it has given negative returns in alternate years. We saw declines in 1998, 2000, 2002, 2004 and 2006. This is 2008, which makes it a contender for yet another fall.

Besides the dubious track record of the month, let's see whether we have other triggers that could lead to potential losses in the month.

May is the month in which the atomic energy treaty is likely to be taken out of the cupboard, dusted and given another look. The International Atomic Energy Agency meets on May 5 and 6, and the Left and the UPA will meet to take stock of where they stand on the issue.

The parliamentary session should also end by then. If the UPA wants the Left to pull the rug and force an election, then this is their chance now.

By going ahead with the nuclear deal, the UPA can force the Left to finally bite after years of barking. But with the inflation inferno still on and no fire tenders in sight, the UPA may not want to take the gamble. So a rally in capital goods will also be ruled out.

Fundamentally speaking, it will be difficult to justify any further rise in the markets. As the April derivatives have expired comfortably at the 5,000 level in the Nifty, punters have been expecting a rise to the level of 5,350 and then 5,550.

My sense is that companies reporting quarterly numbers in the month of May may not bring good tidings for the markets. Margin pressures will continue. Secondly, companies that are late to report are usually the ones that spring a nasty surprise.

More importantly, stocks have seen a substantial bounce from their March lows. While the Sensex has seen a rise of 13.9 per cent, 89 per cent of the regularly traded stocks on the BSE have given returns in excess of that. I do not remember any period in which stocks have out-performed the Sensex by such a wide margin.

Look at the returns - 73 per cent of stocks have returned more than 25 per cent from their March lows and one out of every four stocks on the BSE has returned more than 50 per cent. With so much of a rise, it may be a good idea to book profits in May. One of the methodologies to adopt is trailing to stop loss. The Nifty has serious resistance at 5,550 and 5,368.

The Fed could cut rates further by 0.25 per cent at its next meeting. Any signal emanating from the Fed that it has got into the pause mode should strengthen the dollar. A strong dollar could dampen the sentiment for commodities.

Whether it will buoy our tech stocks will be a function of what affect the fire-fighting by Dr Reddy has on the rupee.

Keep your fingers crossed for the month of May.

http://www.rediff.com/money/2008/apr/30guest1.htm

Mutual fund ‘schemes’ of a different kind

For some time now, it is a common sight to find AMCs use miscellaneous means to increase their investor/asset base. By miscellaneous, we mean all methods and ‘schemes’ unrelated to performance/track record. Ideally, an AMC should not have to talk beyond its track record over various market cycles to make investors aware of what they can gain by investing in the AMC’s funds. Unfortunately, either because their track records weren’t impressive enough or because they weren’t able to communicate their performance effectively, AMCs have had to resort to other means to draw investors.

Of course, not all AMCs use such marketing schemes; certain AMCs have told us that they would have preferred to keep an arm’s length from these tactics, but their hand was forced by other AMCs. The bottom line is that investors/agents are regularly bombarded with rewards/incentives by AMCs and core factors like the fund’s investment proposition and track record are conveniently pushed to the background.

Listed below some of the most popular carrots dangled by AMCs to their investors/agents:

1) Waiver of entry load
This is the most common trick in the AMC’s marketing manual. AMCs usually have a marketing plan to mobilise assets in a particular mutual fund scheme. The easiest way to elicit interest in that scheme is to give investors an ‘entry load waiver’. This means that for investments made over a specified time period, investors will not incur an entry load (which is usually used towards the agent’s commission); so his entire money is invested in the scheme.

The entry load is waived off either on SIPs (systematic investment plans) or lumpsum investments. Until some time ago, it was usual for most AMCs to waive entry loads on SIPs. It took a few AMCs to start this trend and sure enough other AMCs followed suit. The principle advanced by AMCs for waiving off entry loads was to encourage mutual fund investing and financial planning. Over time the entry load waiver had garnered considerable assets for AMCs. On the flipside, the waiver was proving to be an expensive proposition (since in such a scenario, AMCs had to pay commissions from their own pockets); so they reversed the trend of waiving off entry loads.

2) Star fund manger
Another marketing ploy that usually does the trick with gullible investors is the ‘Star fund manager’ carrot. Most AMCs when they have a track record are happy to project it to investors. Some times, AMCs take the easy way out; more than their track record they like to talk about their Star fund manager and his past exploits. The message for investors is clear – invest in the AMC’s funds and benefit from the expertise of the Star fund manager.


3) Bundling other services/products
AMCs are quick to identify opportunities that could be potential areas of interest to their investors. And for most investors, getting insurance (health/life/child) is very important. Many AMCs bundle insurance with their offerings and are happy to make that a talking point rather than the scheme itself. While some of these features may be innovative, they nonetheless detract from the scheme and its performance, which should be the talking point, rather than the add-on benefit.


4) Incentives for mutual agents
You would have noticed that the persuasive tactics we have discussed so far are aimed at the investor. AMCs also employ indirect means to woo the investor. These indirect means use the agent as leverage. So the AMC woos the agent, who in turn pitches the AMC’s schemes to the investor. Some of the more common agent incentives include higher commissions on specific schemes or on specific targets or on specific initiatives (like getting US64 bondholders to invest the redemption proceeds of their investments in mutual fund schemes from the parent AMC). Of course, everyone knows about the offsite ‘training’ meets arranged for select agents in the most exotic locations.

In conclusion, there are a lot of distractions for investors looking to make an unbiased and informed investment decision. As always, our advice to investors is to ignore the persuasive tactics and invest in mutual funds based on track records over the long-term and across market cycles.

Make Money in Real Estate

promising, to say the least. Over the past few years, a number of real estate companies were listed and foreign money poured into real estate funds. India's largest IPO - DLF in 2007 - was from this sector. The listing of DLF even benefited existing players like Ansal Properties and Unitech which witnessed a sharp rise in their stock prices. A new index was developed to track the performance of the sector. And as the Sensex soared, the real estate sector too delivered impressively.

BSE Realty, the index for the real estate sector in India, witnessed a sharp rise, gaining nearly 84% in just a span of six months starting from July 2007. The index reached an all time high of 13,647 on January 14, 2008. But when the Sensex crashed and lost nearly 20% (between January 21, 2008 and April 22 2008), BSE Realty lost nearly 41%. Despite this, investors in the ING Global Real Estate Fund were far from sorry. The fund came out with flying colours and stole the show. It outperformed the BSE Realty Index by a significant margin. The fund not only survived the jolt and took the crash in its stride, but delivered a return of 8% over the same time period.

If you had invested Rs 10,000 separately in the Sensex, BSE Realty and the ING Global Real Estate Fund on January 10, 2008, your investment would be worth Rs 7,900, Rs 5,500 and Rs 10,800 respectively (as on April 22, 2008).

The fund offered a return of around 11% for the one-month period ended April 22, 2008.

Simultaneously, ICICI Pru Real Estate Fund delivered a negative return of 1% over the same period. Of course, a blanket comparison is unfair since the latter is a domestically invested fund while ING Global Real Estate, a globally invested fund, is primarily a feeder fund to foreign equity fund ING Real Estate Securities.

Lesson to be learnt: Its not just asset diversification that matters. Geographical diversification too helps in enhancing the overall portfolio returns.