KPMG sees India fund assets tripling by 2015

Assets of Indian mutual fund industry could triple to nearly 18 trillion rupees by 2015 if Indian economy revived quickly, consultant KPMG said in a report on Wednesday.
However, profitability may come down as revenues shrink and operating costs mount, it said.
Indian fund industry profitability as a percentage of assets stood at 14 basis points in FY08, down from 25 basis points two years earlier, as the industry gathered more assets in low margin products targeted at institutional segment, KPMG estimates.
Corporates, banks and foreign institutional investors collectively control more than half of the 6.6 trillion rupees Indian funds managed at the end of May, data compiled by the Association of Mutual Funds in India (AMFI) show.

Source: http://in.reuters.com/article/domesticNews/idINBOM20948620090617

Birla Sun Life Mutual Fund Launches Internet Based SIP

Birla Sun Life mutual fund has launched internet based SIP (systematic investment plan) or iSIP, a unique and convenient mode of transaction facility that will enable investors to start their SIP investments online. iSIP will provide multitude of benefits to investors-being faster, more convenient and providing paper less management of SIPs.
Investors investing through financial planners can quickly and conveniently act upon the advice of their advisors.
Investors can make purchases, renew their SIP and also have the option to cancel it online. The service is currently available through Citi, ING and Axis banks. Going forward more banks would be added by the fund house.
Birla Sun Life MF has effectively leveraged technology platforms through its "Anytime Anywhere" initiative to provide its customers enhanced service experience.
“There has been increased interest among investors to invest through the Systematic Investment route.
We have witnessed a 250% jump in the total number of SIPs registered with Birla Sun Life MF in the previous financial year.
This year, we want to reach out to even more SIP investors”, Anil Kumar, CEO, Birla Sun Life MF said.
“We now offer our investors the facility to track their investments through internet based Online Portfolio Management services, through Interactive Voice Response system on toll free number and through Mobile Investment Manager.
All these services are secure, user friendly and more importantly available 24X 7. The endeavor is to provide full range of convenient service solutions to our investors.”

Fund houses lap up infra, realty stocks

Infrastructure and realty sectors are back on the radar of mutual fund houses. In the first five months of the current calendar, they have significantly increased their exposure to stocks in these sectors.

Some fund houses are launching new schemes as well. Reliance Capital Asset Management has recently launched an open-ended infrastructure fund. Even Tata Mutual Fund has applied to the Securities and Exchange Board of India (Sebi) to launch a small-and mid-cap infrastructure fund.

In terms of number of shares, the total exposure of mutual funds to Indiabulls Real Estate has increased from 32,000 to 1.7 crore during the period under review. Similarly, their holdings in DLF and Unitech have increased from 7.7 lakh to 61 lakh and 13 lakh to 3.3 crore shares, respectively. These fund houses’ holdings in GMR Infrastructure have also increased from 65 lakh to 1.1 crore shares.
Mahesh Patil, co-head, equity, Birla SunLife Mutual Fund, said: “At present, the infrastructure sector accounts for only 4 per cent of our gross domestic product (GDP), while it accounts for 10 per cent of China’s GDP. There is a wide gap that needs to be bridged in the next five-ten years.”
Market players are also enthused by the fact that a stable government at the Centre is likely to focus aggressively on infrastructure development. Along with increased spending by the government, there are expectations of high foreign inflows as well.
There could be more projects through public-private partnerships, which would help these companies’ balance sheets. Also, the worse for these sectors could be over due to easing of liquidity conditions.
Power stocks have also seen some keen interest from fund managers. GVK Power & Infrastructure, Suzlon and NTPC are some of the stocks where aggressive buying was witnessed. Market experts said that this sector was going to get a big boost because of the high demand in semi-rural and rural areas.

Source: http://www.business-standard.com/india/news/fund-houses-lapinfra-realty-stocks/361145/

Sebi wants to make P-Notes route less attractive

Sebi may take a decision this week.

To discourage foreign investors from the participatory notes (PN) route, the Securities and Exchange Board of India (Sebi) will on Thursday decide on a proposal to lower the registration fees for foreign institutional investors (FIIs).
The regulator is expected to recommend amendments to the Sebi Act and the Securities and Contract Regulation Act to arm itself with more powers to deal with fraudsters. The amendments under discussion include powers to attach the assets of those found guilty of market manipulation, sources said. The move comes soon after the Satyam scam, when Sebi had to play second fiddle to local police and investigators.

In addition, the Sebi board is scheduled to discuss a host of other measures aimed at speeding the rights issue process and lowering the cost of investing in mutual funds.
According to sources privy to the discussions, Sebi has proposed that the registration fee for FIIs be cut to $5,000 (Rs 2.35 lakh) for a five-year licence, as against the present level of $10,000 (Rs 4.70 lakh) for a three years. Similarly, in case of sub-accounts, the registration fee is expected to be lowered to $1,000 (Rs 47,000) for five years from $2,000 (Rs 94,000) for three years, said informed sources.
Market participants said over the past month, when $3.5 billion (around Rs 16,500 crore) of foreign funds flowed into Indian capital markets, a large chunk came through the PN route. Sebi wanted more funds to be invested directly by FIIs and so, has proposed a cut in the registration fees, the sources said.
There is possibility of more such funds waiting to come through the FII route. The Cayman Islands Monitory Authority (CIMA), where over 3,000 hedge funds and FIIs are registered, has now become a member of the International Organization of Securities Commissions (IOSCO). The Cayman Islands have been famous as a tax-avoidance and regulation-avoidance haven.
“This is a good development, as all the hedge funds registered with CIMA can also be registered by Sebi. This move can bring in huge investment through FII route,” said Siddharth Shah, head funds practices, Nishith Desai Associates.
In the case of rights issue, the market regulator will discuss a proposal to further simplify the procedure, to help complete the issues faster. It is expected to lower the disclosure requirements related to promoter holding, capital structure, financial details, and summary of industry and business, sources said.
An interesting proposal is the introduction of variable entry loads for mutual fund investors. Sebi has earlier proposed an option for mutual fund investors to issue separate cheques for payment of commission to distributors and for investment. Alternatively, application forms will have a column where investors will mention commission payable to the distributor, which the fund house will deduct and pay.

Source: http://www.business-standard.com/india/news/sebi-wants-to-make-p-notes-route-less-attractive/361322/

MFs eye budget but shy from investment calls

Despite fears that the budget may not live up to expectations and even act as a dampener for the Indian stock markets, mutual fund managers seem unperturbed and are going about investing in the usual way. Most have already taken a bottom-up approach in view of the government’s reformist approach from a long term perspective.
“Our investment decision will not be guided by any speculation on budget outcome. Rather, we repose faith in UPA-government’s economic policy approach on 5-year term basis. We cannot expect them to execute full reform process in a single budget, whatsoever may be the expectation level,” said N K Garg, CEO, Sahara Mutual Fund.
Fund houses are already overweight in sectors like power and infrastructure post elections, and such sectoral bias is unlikely to change unless the government makes some major policy announcements.
When the world economy is going through tough times, the combination of an economist Prime Minister Dr Manmohan Singh, an astute politician Pranab Mukherjee as finance minister and a technocrat deputy commissioner of Planning Commission Montek Singh make a strong case for sustainable long term growth, fund managers believe.

Instead of changing investment strategy, MFs are keeping an eye on the budget for government’s future policy directions, which will help them take long term investment decisions.
“Budget should enable availability of cheap funds to all types of companies. Borrowing is still a costly affair. It will help companies grow faster. Further, economy needs allotment of funds for infrastructure projects,” pointed out Ved Prakash Chaturvedi, managing director, Tata Asset Management.
Navneet Munot, chief investment officer, SBI Mutual Fund, said: “Striking a balance between stimulus economic package to fuel economy and rising fiscal deficit should be the biggest task of this new government’s first budget that is going to be a signal for government’s reformist intensions in the next 5 years.”

Source: http://economictimes.indiatimes.com/Personal-Finance/Mutual-Funds/MF-News/MFs-eye-budget-but-shy-from-investment-calls/articleshow/4661108.cms

SEBI Chief to address CII's Mutual Fund Summit 2009

Confederation of Indian Industry (CII) is organizing its 5th edition of national Mutual Fund Summit 2009 to be held on Wednesday, June 17th 2009 in Mumbai, under the chairmanship of Mr U K Sinha, Chairman, CII National Committee on Mutual Funds and Chairman & Managing Director of UTI Asset Management Company Limited.
Mr C B Bhave, Chairman, Securities & Exchange Board of India is the Chief Guest, will address the inaugural session and also release the CII-KPMG report.
This summit will also witness the release of the CII-KPMG report on Indian Mutual Fund Industry "The Future in a Dynamic Environment".
The Mutual Fund Summit will attempt to summarize the emerging opportunities in a challenging environment. It will also look at the implementation of new policies and new processes in the face of increased client expectations. The Summit will also aim to bring in global best practices and case studies from international markets.
The Summit would cover a wide range of topics of interest to stakeholders in the industry, including Towards Greater Retail Participation The Customer Centric View, Opportunities for Industry wide Transformation, The Manufacturer's Perspective, Becoming Trusted Advisors, The Distributor's Aspiration and leading industry players will also participate in an exclusive CEOs Interactive Roundtable: Transformation - Catalyst for Industry Growth?".
This Summit is supported by Association of Mutual Funds in India (AMFI), Central Depository Services (India) Limited (CDSL), Bombay Stock Exchange Limited (BSE), National Securities Depository Limited (NSDL), National Institute of Securities Markets (NISM).

Source: http://www.webnewswire.com/node/458167

DSP Black Rock Mutual Fund India Declares Dividend in TIGER Fund

DSP BlackRock Mutual Fund has declared a dividend under the dividend option of the DSP BlackRock India T.I.G.E.R Fund (The Infrastructure Growth and Economic Reforms Fund), an open ended diversified equity scheme. The fund house has fixed 19 June 2009, as the record date for the payment of dividend.
The quantum of the dividend will be Rs 2.00 per unit and it will distribute on the record date on the face value of Rs 10 per unit. The scheme has recorded the NAV of Rs 18.032 per unit as on 12 June 2009.
The primary investment objective of the scheme is to seek to generate capital appreciation from a portfolio that is substantially constituted of equity securities and equity related securities of corporates, which could benefit from structural changes brought about by continuing liberalization in economic policies by the Government and/or from continuing investments in infrastructure, both by the public and private sector.

Nomura to pay $29 mln for 19 pct LIC MF stake

Japan's Nomura will pay about 1.38 billion rupees ($29 million) to buy 19.3 percent stake in LIC Mutual Fund, part of a deal to acquire 35 percent, a top official of a group firm of the Indian money manager said.
The deal values the fund firm at $149.3 million, or about 2.5 percent of its May average assets of nearly 286 billion rupees. "We have got around 39.3 percent stake in LIC Mutual Fund," R.R. Nair, chief executive of LIC Housing Finance told Reuters in a telephone interview on Monday. "Twenty percent we will be holding back. Balance will be offloaded to Nomura."
LIC Housing and LIC Mutual are both units of state-owned Life Insurance Corp of India, the country's largest insurer.
The deal was valued lower than 4-5 percent that many Indian money managers have fetched because more than 90 percent of LIC Mutual's assets were in low margin fixed-income funds, Chintamani Dagade, a senior research analyst at Morningstar India, said.
"Such a valuation would be in line with what the market would be expecting... it looks okay," he said.
Separately, mortgage lender GIC Housing Finance Ltd said on Monday its board had approved sale of its entire holding of 11.2 percent in LIC Mutual and 3 percent in LIC Trustee Company for about 890 million rupees.
GIC officials could not be immediately reached for comment but Nair at LIC Housing said the deal was part of a plan to sell 35 percent of LIC Mutual to Nomura to give the Indian money manager access to global markets and strengthen its operations.
"This is to bring in an international player with expertise and exposure," Nair said. "We thought it will benefit the company."
"After the deal, both LIC and LIC Housing (together) will hold 65 percent in LIC Mutual Fund," he said.
LIC Mutual Chief Executive Sushobhan Sarker confirmed holding talks to sell a stake to Nomura, but declined to give details citing non-disclosure agreement.
Nomura Asset Management spokeswoman in Japan also declined comment.
Assets of Indian funds industry have jumped 60 percent to 6.6 trillion rupees in two years, luring the likes of JPMorgan, South Korea's Mirae Asset, Pioneer Global, the fund arm of Italian bank UniCredit and France's Axa.
More than 20 firms, including Credit Agricole and UBS are considering to enter India's promising but fiercely competitive fund market forecast by Boston Consulting Group to manage $520 billion by 2015.

Source: http://in.reuters.com/article/domesticNews/idINBOM46448820090615?sp=true