ING appoints head of Indian mutual fund unit

ING Groep's Asia-Pacific fund arm has named Navin Suri as chief executive of its Indian mutual fund unit, filling a position lying vacant since January.
Suri, a former Citibank executive in Singapore, joined ING Investment Management, India in August 2008 as vice president and director for sales and distribution and has spent more than 17 years in financial sector in the Asia-Pacific region.
ING had on Dec 18 said it was shifting its chief executive Vineet Vohra to Singapore, a week after its Indian unit's director for research and investment Paras Adenwala left.
The firm, which manages about 23 billion rupees in India, is yet to replace Adenwala.

Source: http://in.reuters.com/article/domesticNews/idINBOM48196820090504

Playing safe, new pension plan halves equity cap to 50%

Contrary to its earlier draft, the New Pension Scheme (NPS) for all citizens to be launched on May 1 has capped the equity exposure fund managers can take on investments made by subscribers at 50 per cent. The draft investment guidelines issued by the Pension Fund Regulatory and Development Authority (PFRDA) earlier had recommended that equity exposure can go up to 100 per cent.
“The idea is to distinguish between mutual funds and pension funds, the latter being a long-term investment plan with an objective to provide individuals a safety net. Given the current market conditions, we were advised accordingly,” PFRDA chairman D Swarup told The Indian Express. However, he said that “we can review this cap after one year.”
After launching the NPS last year for those government employees who joined on or after January 1, 2004, the PFRDA has now opened the doors for the unorganised and private sector citizens.

Swarup said that the NPS “combines flexibility of choice of portfolio, fund managers and the quantum, frequency of investment.” A subscriber can decide the mix of his portfolio between three asset classes: G — Central and state government bonds, C — liquid schemes of mutual funds, fixed deposits of banks and corporate bonds and E — equities. The permissible equity exposure of 50 per cent will, however, be only through index funds, tracking either the 30-scrip BSE Sensex or the NSE’s Nifty 50.
The regulator has also put in place a default option that will work like a life-cycle fund. Up to 35 years of age of a subscriber, the fund will invest 50 per cent in equities, 20 per cent in Central and state government bonds and 30 per cent in the C category. Over the next 20 years, investment in equity will gradually be pared to 10 per cent. The fund will automatically redirect the money invested in equities to government bonds, the safest of all asset classes.
The NPS allows a minimum annual investment of Rs 6,000 and a minimum single deposit of Rs 500. The scheme will be distributed through 23 points of presence that include select banks, life insurers and asset management companies.
Pension fund managers will charge 0.009 basis points as fund management fee (Rs 900 for every Rs 1 lakh of assets managed). Life insurance and mutual fund companies charge between 1 per cent and 2.5 per cent of the fund value.
However, with other charges like a one-time registration fee of Rs 40, transaction fee of Rs 20 and Rs 350 as an annual CRA (central record keeping), the New Pension Scheme becomes a tad expensive for small-ticket investments. An investment of Rs 1,000 a month in a balanced mutual fund, for example, will entail total charges (entry loads and management fee) of about Rs 510 a year. The same investment in the NPS will attract Rs 640 as charges.
Investments made in Public Provident Fund (PPF), Employee Provident Fund (EPF) and Group Provident Fund (GPF) are tax exempt in all three stages of investment, accumulation and withdrawal. In the NPS, funds are taxed at the withdrawal stage. The regulator has been pushing for a level-playing field, but the government has not yet responded.
The pension money of the private and unorganised sector will be managed by six fund managers: ICICI Prudential Life Insurance, IDFC Asset Management Company, Kotak Mahindra AMC, Reliance Capital, SBI Pension Funds and UTI Retirement Solutions.

Source: http://www.indianexpress.com/news/playing-safe-new-pension-plan-halves-equity-cap-to-50/452904/0

Manage your own pension

Anybody can invest in a pension fund with the Pension Fund Regulatory and Development Authority (PFRDA) launching the facility for the general public. The scheme is similar to the one currently in operation for central government employees, which yielded an average return of 14.5% in 2008-09.
Under this National Pension Scheme (NPS), money invested in the pension fund during the working life of the investor will come back partly as a lumpsum and partly as an annual payment or pension.
The fund gives investors the option of deciding what level of risk they want to take, given the fact that higher returns are typically associated with higher risk investments. The fund will be invested in three kinds of assets — equity, government bonds and corporate bonds — and it is for the investor to decide how much should be invested in each of these.
Investment in equity is, however, subject to two significant caveats. First, it cannot be more than 50% of the amount in the investor's account. Secondly, fund managers cannot invest in shares of individual companies, but only in index funds linked to the BSE's sensex or the NSE's Nifty.
For those who would rather leave it to experts to decide what the balance should be, there is `auto choice' option. Under this option, for those aged 18-36, 50% of the amount in their pension account will be invested in equity, 30% in corporate bonds and the remaining 20% in government securities. From age 36 onwards, the proportion of investments in equity and corporate bonds will decrease annually while that in government securities will increase till the mix reaches 10% in equity, 10% in corporate bonds and 80% in government securities at age 55.
Under the scheme, you can invest any amount, though tax benefits will be available only up to Rs 1 lakh under Sec 80C. The minimum annual contribution, however, has been mandated at Rs 6,000.
The fund will be managed by six fund managers, appointed by the government at annual fees of 0.0009% of the invested amount, which is less than one paise per Rs 100. The fund managers appointed by the PFRDA are SBI, UTI Asset Management, ICICI Prudential Life Insurance, Reliance MF, IDFC Mutual Fund and Kotak Mahindra.
To open a pension account, you will have to approach the branches of any of the 22 `point of presence' (POP) service providers selected by the authority. These include State Bank of India and all its seven subsidiaries as well as ICICI Bank and Punjab National Bank. PFRDA Chairman D Swarup said that to start with there would be around 300 POPs in the country, which will soon be ramped up to more than 10,000.
The investor's account will be kept by a record keeping agency appointed by the PFRDA. However, the investor will need to interact only with the POP, where he can deposit his annual/monthly contribution.
The scheme gives the investor the option of shifting from one fund manager to another, merely by instructing his POP to do so. The POP will inform the same to the record keeping agency, which will shift the fund to the new fund manager, selected by the investor.

Source: http://timesofindia.indiatimes.com/India/From-today-manage-your-own-pension/articleshow/4469763.cms

MFs offer top-ups to bring back investors

With markets remaining volatile, fund houses are offering products having new features, aimed at tackling the downturn and eliminate the uncertainty element as much as possible.
One fund house has even lowered the ticket size to a portfolio management services (PMS) product, willing to bring into the PMS fold even those who are just on the borderline of qualifying as a highnetworth individual (HNI). Fund managers believe that this would help them in bringing retail investors back into the industry.
Over the last one year, first a bad equity market hurt fund investors hard. Then as the gilts were rallying, they shifted to gilt funds but soon burnt their hands there too. Thereafter as they shifted to FMPs and liquid funds, there also, between October and December, the liquidity crunch hit them hard. Looking at this chain of events the fund industry had to work overtime to launch schemes which could minimise investment risks as much as possible.
Recently HDFC Mutual Fund (MF) has introduced ‘Flexindex’ plan that allows investors to put money in equity funds at their preferred Sensex levels. ICICI Prudential MF has come out with a ‘Target Return’ fund, which gives the investors to lock in their gains at pre-set trigger points.
On its part, IDFC MF has launched its Hybrid Infrastructure scheme, a portfolio management services (PMS) product with entry load as low as Rs 10 lakh. And UTI MF is offering its second scheme under the “Wealth Builder” umbrella, whose portfolio is spread across equity, debt and gold in good measure to shield investors from the market volatility.
In all of I-Pru MF’s equity schemes, there is a trigger return but almost no investor opts for this, top fund house officials said. Under the ‘Target Return’ fund this trigger is compulsory. For example, after an investor’s investment gains 20%, either his full investment along with the gains, or only the profit part will be transferred to a debt fund where the risk of losing money in case of a market downturn is much lower.
I-Pru MF recently also brought in a systematic transfer plan in its ‘Income Opportunities’ fund, which allows investors to enjoy gains in the debt category while allowing them a gradual entry into the equity market.
“These products would gain momentum in the short run. We have to give a lot of solutions to investors now,” said Vikram Kaushal, head, retail sales & distribution, I-Pru MF.
“Investors are looking for relatively safe and less volatile products. Since returns are quite low in these market conditions we have to offer products that provide stability ,” said Harsha Upadhyaya, fund manager, UTI MF. “In a market like this investors are more receptive to such ideas,” feels Dhirendra Kumar, CEO, Value Research, a firm that tracks MFs.
::RICH PICKINGS::
ICICI Target Return
The investor would have a range of triggers to choose from 12% to 100%. The fund, which would invest primarily in largecap stocks, offers the option to either switch the entire investment along with appreciation or just the appreciation to any of the four debt funds man-aged by ICICI
HDFC Flexindex
The investor can put money into select HDFC debt/liquid schemes and choose four Sensex levels or ‘trigger events’ of choice to get into equity. They can then automatically transfer investments from these debt/liquid schemes to select equity schemes of HDFC MF at closing Sensex levels of choice
UTI Wealth Builder
The fund invests in equity, debt and gold. Investments are scaled up or brought down in each of these asset categories depending on market conditions. The fund can invest a maximum of 35% in gold/debt

Source: http://economictimes.indiatimes.com/Personal-Finance/Mutual-Funds/MF-News/MFs-offer-top-ups-to-bring-back-investors/articleshow/4461825.cms

BNP Paribas, Sundaram to launch India-dedicated offshore fund

To take advantage of the highly under-owned pattern of the Indian equity market, French financial major BNP Paribas will set up an offshore fund jointly with the Sundaram group. The two companies are already running a mutual fund in India called Sundaram BNP Paribas Mutual Fund with assets of over Rs 10,000 crore.

According to top Sundaram BNP Paribas officials in India, the offshore fund will be domiciled in Singapore and legal formalities for this are under process.
“Initially, it would be a $100-million plus India-dedicated fund and it is likely to be launched before the end of 2009,” said sources close to the development, adding that Sundaram BNP Paribas would be marketing the fund aggressively in middle-eastern countries.

FUND FUNDAMENTALS

* Initially, it would be a $100-million plus India-dedicated fund

*It is likely to be launched before the end of 2009

*Credit Suisse too is looking to set up an India-dedicated offshore fund

TAX SOPS

* Of late, Singapore has become the most-favoured destination for fund managers

* Singapore grants tax exemption to a qualifying fund, provided it is not 100 per cent owned by domestic investors

* Collects tax, if any, from the investor*Fund managers are taxed only 10 per cent on their fee-income

BNP Paribas is one of the six strongest banks in the world, according to Standard & Poor’s. The group is present in 85 countries. The group is very strong in three major segments: corporate and investment banking, investment solutions and retail banking.
Apart from Sundaram BNP Paribas, Switzerland-based global financial major Credit Suisse too is looking to set up an India-dedicated offshore fund.
While most of the offshore funds are domiciled in Luxembourg or launched from tax havens like Mauritius or Cayman Islands, of late Singapore has become the most-favoured destination due to its tax exemption policies.
To encourage fund managers to set up shop, Singapore has in place a tax incentive scheme to benefit offshore funds. A qualifying fund will be granted tax exemption, provided it is not 100 per cent owned by Singapore investors. Tax, if any, will be collected from the investor, depending on his specific profile. Apart from this, fund managers are taxed only 10 per cent on their income from fees.
According to some of the top traders in Indian markets, Singapore has become more of a single-point investment destination for major Asian markets. All major benchmark indices, including India’s Nifty, are listed on the Singapore Stock Exchange (SGX). In fact, Singapore has become so important that global financial majors can decide the mood of Asian markets from that country alone.
“If fund managers want to take a call on Indian markets, they do not have to bring their money to India. Instead, they can simply trade Nifty futures on SGX and this saves them legal hassles involved in getting money into India,” said a Singapore-based fund manager.

Source: http://www.business-standard.com/india/news/bnp-paribas-sundaram-to-launch-india-dedicated-offshore-fund/356540/

Peerless may launch mutual fund next year

The Kolkata-based residuary non-banking finance firm Peerless General Finance and Investment Co is likely to launch its own mutual fund next year, a
senior company official said here Tuesday.
'We have got in-principle approval from SEBI (Securities and Exchange Board of India) and within the next six months we hope to get the final approval. We are going to launch the fund next year,' Peerless director of financial products distribution Jayanta Roy told reporters.
The company has been planning to launch a mutual fund for quite some time.
Meanwhile, Peerless signed a pact with private sector insurer Max New York Life Monday for distribution of Max Vijay insurance cum savings policies.
Max New York has targeted sales of over 500,000 such policies in one year through the Peerless network.
'We have so far sold 20,000 policies,' said Max New York chief executive officer and managing director Rajesh Sud.

Source: http://news.smashits.com/377991/Peerless-may-launch-mutual-fund-next-year.htm

Economy may recover by Sept: ICICI Prudential

Offering atleast three pre-requisites, Nilesh Shah, deputy managing director of ICICI Prudential Asset Management Company said the economy may recover by September this year.

According to Shah, if the next few months witness a good monsoon, capital flows from abroad and further rate cuts by RBI, Indian economy may come out of the current slowdown.
Shah, who was in the city to launch 'ICICI Prudential Target Returns Fund', an open ended diversified equity fund, further said that the country may witness negative inflation between May and September.
"What we may see will not deflation but negative inflation for a short time. The economy may witness negative inflation between May and September," he said.
The AMC's Target Return Fund seeks to generate capital appreciation by investing predominantly in equity shares of the large market capitalization companies constituting the BSE 100 index.
The scheme will have pre-determined triggers set for investors based on their risk appetite, which provides investors with an option to automatically switch the appreciation or entire investment with appreciation to pre-selected debt schemes of ICICI Prudential Mutual Fund.
The entry load for the scheme is 2.25 per cent for investments of less than Rs 2 crore under the retail option, while it is nil in the case of institutional investments. The subscription for the scheme will close on May 14, 2009. The assets under management of the ICICI Prudential mutual fund as of March 2009 were Rs 51,432 crore against Rs 54,321 crore in the same month previous year.

Source: http://www.business-standard.com/india/news/economy-may-recover-by-sept-icici-prudential/356294/

India-fund flows turn positive

Global investors are warming up to India, it appears from the fact that money has started flowing into India dedicated funds after the local markets gained close to 40% in a global rally.
These funds saw inflows of around Rs 500 crore in the week ended April 22 and a little over Rs 1,000 crore over the past four weeks, Citigroup analysts Elaine Chu and Markus Rosgen wrote in a report.
Inflows for the year were marginally negative by around Rs 10 crore until the latest inflows. Following the inflows, however, cumulative inflows have turned positive at around Rs 490 crore.
The same week (to April 22) last year had seen outflows of Rs 4,000 crore.
The Sensex has gained 3211 points since the beginning of the rally.
From the beginning of the year till March 9, after which the rally began, FIIs sold Indian equities worth Rs 9,000 crore.
Since March 9, they have invested Rs 8,000 crore in the Indian markets.
Experts, however, aren't celebrating just yet. While it is true that investors have allotted money for India, when and how it comes into India would depend on the new government at the Centre, the banking system in the US and economic numbers, they say.
The fiscal position and the general elections are still a cause for concern.
However, the outlook may be improving.
"While the first worry is justified, we believe the risk of an anti-market government emerging is very low. An attractive prospective PE of 11.4x suggests India could rebound once the election is out of the way," HSBC analysts John Lomax, Wietse Nijenhuis and Anupama Rao said in a report.
The Indian economy was likely to rebound with growth returning in the second quarter of FY10 and real GDP growth for CY09 could come in at 6.2%, the HSBC analysts said. "We expect earnings growth of 5-10% this year too, whereas the consensus has already been cut to 4%."
Jagannadham Thunuguntla, equity head at SMC Global Securities feels India's attractiveness as an investment destination would depend on the outcome of the elections. "There would be a bit of herd mentality as far as foreign money is concerned. Once the initial flow begins, then a lot more can follow. Right now, FIIs would be looking to a stable government for cues. If there is sufficient flexibility for the government to act, then one can expect foreign money to chase India," he said.
Ajay Argal, co-head, equity investments at Birla Sun Life Mutual Fund agrees that most FIIs would be playing a waiting game as far as the elections are concerned. But they would also watch the health of the financial system in the US and data in India. "The first week of May will reveal how well banks are holding up to stress tests and that will have an impact on the financial sector and global sentiment. In India, FIIs would be watching for numbers like industrial production," he said.

Source: http://www.dnaindia.com/report.asp?newsid=1251072