Franklin Templeton MF Announces Change in Fundamental Attributes of Templeton Monthly Income Plan

Franklin Templeton Mutual Fund has announced change in Fundamental Attributes of Templeton Monthly Income Plan with effect from 26 July 2010. The following are the proposed changes.

Revised Name of the Scheme: Templeton India Low Duration Fund

Type of Plan Introduced: Growth Plan.

Asset Allocation Pattern: The scheme would allocate upto 100% of assets in debt including corporate debt, PSU, Gilts and Securitized debt with low to medium risk, upto 20% in Money Market instruments with low risk profile and up to 15% in Equity and Equity linked schemes with medium to high risk profile.

Load Structure: Entry load charge will be nil for the scheme. Exit load charge will be 0.50% of the NAV if investors who redeem/switch out such investments within 3 months from the date of allotment.

Minimum Application/Redemption Amount: Minimum investment Rs 10000 additional/redemption amount of Rs 1000.

This addendum forms an integral part of the Scheme Information Document. All the other terms and conditions will remain unchanged.

Source: http://www.apollosindhoori.cmlinks.com/MutualFund/MFSnapShot.aspx?opt=9&SecId=10&SubSecId=22,24

UTI Dividend Yeild Fund declares 5% dividend

The record date for the dividend is July 27, 2010.

UTI Dividend Yield Fund declares tax-free dividend of 5% (Re.0.50 per unit on face value of Rs.10). Pursuant to the payment of dividend, the NAV of the dividend option of the scheme would fall to the extent of payout and statutory levy if any.

The record date for the dividend is July 27, 2010.

All unitholders registered under the dividend option of UTI Dividend Yield Fund as on July 27, 2010 will be eligible for this dividend. Also investors who join the dividend option of the scheme on or before the record date will be eligible for the dividend.

The NAV per unit as on July 21, 2010 was Rs. 14.91 under the dividend option.

Source: http://www.indiainfoline.com/Markets/News/UTI-Dividend-Yeild-Fund-declares-5-percent-dividend/4888707747

MFs: Where are the investors?

There are just 10 mn MF investors compared to 60 mn homes with life insurance.

For an industry boasting 38 active players spread across 150 cities, with over Rs 6.7 lakh crore of average assets under management (AAUM) in June, mutual funds in this country have barely 10 million investors. Perhaps, even less.

The data till June-end available on the website of the Association for Mutual Funds in India (Amfi) showed the MF industry had almost 48 million folios. Amfi started publishing data of the number of folios with fund houses in November last year.

One folio is equivalent to investing in a single scheme. Industry experts admit most MF investors have at least four-five schemes, which translates into four-five folios per person. In many cases, this number is much more. In fact, there are customers with 100-150 schemes.

“The MF industry, as a whole, has been unable to convey the message to investors about its attractiveness,” said Rajeev Deep Bajaj, vice-chairman and managing director, Bajaj Capital, adding that the number of investors has stayed static for almost six months. Between November 2009 and June-end, the industry added only 70,503 folios.

If one looks at numbers from the Centre for Monitoring Indian Economy (CMIE), the number of MF investors is even lower. As on December 2009, CMIE’s Consumer Pyramids estimated that out of 235 million households, only two million invested in MFs. CMIE assumes one household has five members, but it’s unrealistic to assume all five would have invested in MFs.

In comparison, 87.66 million households invest in gold. The life insurance industry has 59.7 million households covered by insurance policies. Close to 46.06 million households have fixed deposits. Only 0.39 per cent, or 920,000, households directly invest in equities, according to CMIE.

Though there are 17 million demat accounts with NSDL and CDSL, only a handful seem active. Among the top five fund houses, UTI Mutual Fund, which has been there for over four decades, had slightly over 10 million folios, the highest. The other four are Reliance MF with 7.40 million; HDFC MF with 4.04 million; ICICI Prudential MF with 2.94 million; and Birla SunLife MF with 2.47 million folios.

Both distributors and fund houses are fighting to attract the same customer.

The good part is that though a large part of the money – almost 75 per cent – is in the debt segment, a bulk of retail folios are for equities and balanced funds – 43.56 million. This implies that investors are willing to put money in equities.

Hemant Rustagi, CEO, Wiseinvest Advisors, said, “There have been limitations, in terms of operations, lack of advisors in numbers and quality and phases of extreme volatility in stock markets. Still, the highest growth has been there in equities.” The lack of penetration is mainly due to the fact that MFs need to be pushed, aggressively sometimes. “Many investors still find MFs complex. There should be an industry association platform to promote them,” added Bajaj.

Though new players have entered the market, they have been not been able to add many new investors. Look at one new player, Axis Mutual Fund. In November, it had 491 folios in income/debt schemes. At present, the number of folios is 158,694. At the same time, the total number of folios between November and May rose by only 70,000 (from 47.87 million to 47.94 million). And, many other players gained folios as well. For example, HDFC Mutual Fund’s folios rose by almost 400,000 in the same period. Clearly, the same investor has multiple folios.

Source: http://www.business-standard.com/india/news/mfsareinvestors/402204/

Sebi wants mutual fund trustees to be more accountable

The Securities and Exchange Board of India (Sebi) wants trustees and independent directors to become more proactive in the functioning of fund houses and enhance their roles to ensure investor protection.

The market regulator aims to make trustees and independent directors of asset management companies (AMCs) familiar with the best practices and keep them updated with the technical know-how of the mutual fund (MF) business.

To achieve this, Sebi plans to conduct workshops for trustees and independent directors of AMCs, through National Institute of Securities Markets (NISM).

The first workshop, here on September 15, is to cover topics such as discharging fiduciary duties, insight into debt and money markets and reviewing fund performance beyond returns.

“This is a step towards making trustees more accountable in the functioning of AMCs,” said Aditya Agarwal, country head of Morningstar India, an MF tracking firm.

Sebi also wants trustees to have more involvement in reviewing the performance of MF schemes. In a recent event organised by Tamil Nadu Investors’ Association, K N Vaidyanathan, executive director of Sebi, who is in charge of MFs, had said trustees should question the variations in performance of similar types of MF schemes offered by a fund house.

“A lot of regulatory changes have come in the MF industry in the recent past. Sebi’s objective is to make trustees and independent directors more knowledgeable about the business,” said the managing director of an MF house. NISM will run at least three workshops every year, which will focus on technical subjects and the regulatory perspective.

Sebi norms require at least four trustees to supervise the functioning of an MF house and at least two-thirds of them need to be independent persons, not associated with the sponsors or the AMC. The general power of monitoring and directing an AMC is vested with the trustees, who have a fiduciary responsibility to investors.

Source: http://www.business-standard.com/india/news/sebi-wants-mutual-fund-trustees-to-be-more-accountable/402205/

Diversified MFs outperform mkts

Though the equity markets have remained flat in the first six months of 2010, more than 90% of equity-diversified funds have outperformed the benchmark index. This is in keeping with a trend seen over the past 10 years, which suggests that, typically, fund managers have managed to score over the index whenever the market has been either flat or in the midst of a bull-run. In 2009, for instance, when Sensex gained 81%, more than 97% of equity-diversified schemes outperformed the benchmark.

However during bear phase, fund managers tend to lag behind. For instance, whether it was during 2000, 2001 or 2008, equity-diversified funds lagged behind the benchmark indices . In 2008, when Sensex reported a negative return of 52%, only 3.5% of equity-diversified schemes were outperformers.

From January 2010 till date, Sensex has given a return of only 2.1%. However, Birla Sun Life MNC Fund has given its investors a return of 22.5%, which is the highest in the equity-diversified category. The HDFC Mid Cap Opportunities Fund has delivered 18.4% while Canara Robeco's FORCE fund has given 19% returns. However, given that over 250 schemes qualify for the category, the average return has been just over 5%, with six schemes showing a negative return. These include JM Basic which gave a negative return of over 6% while Bharti AXA Equity fund also giving negative return of approximately 3%. Tata AMC MD Ved Prakash Chaturvedi, whose Tata Dividend Yield Fund has given 17% returns, said, “We invested in companies that were likely to announce big dividends and that has paid off. We were looking at stocks where we could unlock value.”

Canara Robeco Mutual Fund head-equities Anand Shah said, “Two things matters the most if any fund wants to beat the benchmark, one is stock picking and other is the selection of a sector. In our case, in the first six months this year we had a good exposure to the banking sector which has helped us.” Fortis Mutual Fund senior portfolio manager Amit Nigam said, “During the bullrun and when markets are flat, mid-caps usually outperform large-caps and fund managers have some exposure to the mid-caps which helps them beat the index.”

Source: http://www.financialexpress.com/news/diversified-mfs-outperform-mkts/649950/

Sebi for recorders to check front running in MFs

In a move to enforce discipline and check front running in mutual funds, Sebi has asked mutual fund houses to install recording facilities in dealing rooms and disallow traders from using their personal mobile phones. Sebi, in a letter to mutual fund players, has directed that all dealing records be preserved for eight years. Further, Sebi has asked asset management companies to ensure that the terms of reference of the review of internal auditors are submitted to the board of trustees. Moreover, Sebi wants that AMCs ensure that the recordings are checked periodically by designated executives.

IDBI Mutual Fund MD&CEO Krishnamurthy Vijayan said, “Most of the funds have already been following these practices. Perhaps the regular may have found a couple of instances where this was not happening which is probably why the directive has been issued. “ These directives from Sebi come in the wake of the regulator unearthing a massive front running trade involving an employee of HDFC AMC and three other clients during April to July 2007.

Source: http://www.financialexpress.com/news/sebi-for-recorders-to-check-front-running-in-mfs/649951/

MFs check investor exodus, add over 21,000 accounts in June

After losing investors for three consecutive months in a large-scale exodus, mutual funds seem to be gaining investors' confidence again, as they managed to get over 21,000 new accounts last month.

However, new investors seem to be coming in for debt schemes only and fund houses continued to lose investors in equity schemes for the fourth consecutive month in June, 2010.

According to data available with industry body AMFI, the total number of investor folios with a total 38 fund houses in the country increased to 4,79,41,251 at the end of June, 2010, against 4,79,19,901 a month ago.

However, the cumulative increase of 21,350 folios, or investor accounts, seems to be entirely on account of new investors in debt schemes, with 1.90 lakh new folios added.

At the same time, the folios for equity-focused mutual fund schemes dipped by more than 1.37 lakh during the month.

This takes the total investor exodus from equity schemes to close to 7.5 lakh in the past four months -- that is, from March till June, 2010.

The fund houses have been working hard to regain investors and have been asking market regulator SEBI for remedial action, including an expanded distribution model for these investment products.

Debt schemes had seen an increase in the number of investor accounts last month also, but such schemes account for under 10 per cent of the total number of MF accounts.

As per the Association of Mutual Funds in India (AMFI), the total number of equity-focused scheme folios stood at over 4.05 crore at the end of June, 2010, while the figure for debt schemes was little over four lakh.

The total number of folios had reached as high as 4.83 crore, including 4.13 crore accounts in equity-focused schemes, at the end of February, 2010.

Since then, the number of accounts in equity schemes have declined by about 7.5 lakh, although non-equity schemes have registered an increase of close to four lakh folios.

The fund houses are getting increasingly concerned about investor exits, particularly in the backdrop of market regulator SEBI scrapping the entry-load for MF schemes.

While this step was taken late last year in the investors' interest, the distributors have become less interested in selling equity MF schemes since then, while products like ULIPs, which are life insurance products but invest heavily in stock and bond markets just like MFs, are being sold aggressively because of high commission payouts.

Concerns over investors' flight away from MFs have been compounded by the fact that the stock market has been gaining in the past four months and the number of demat accounts, which are needed for investing in the stock market, has also grown during this period.

Source: http://economictimes.indiatimes.com/personal-finance/mutual-funds/mf-news/MFs-check-investor-exodus-add-over-21000-accounts-in-June/articleshow/6183612.cms

MFs Look For Life Beyond Entry Load Ban

Hey, if you happen to meet the Sebi chief, please ask him what is the expiry date of the mutual fund industry.’’ This SMS has been doing the rounds among mutual fund players for sometime. The message is revealing on two counts: one, it tells you how bitter the industry is about the regulator and the changes it has introduced in the recent past. Two, it also smacks of a sense of resignation on the part of the MF industry, which manages over Rs 6.75 lakh crore on behalf of both institutional and individual investors. Incredible it may sound, but sadly the brightest investment minds that can weather the ups and downs of the stock market don’t seem to find answers to the troubles faced by the industry.

“Nobody is questioning the intentions of Sebi. Indeed, we have to keep the interests of investors in mind if we have to attract them. But the entry load ban was something the industry was not prepared for. It came [too] soon and the industry or the distribution force didn’t have time to adapt,’’ says a senior mutual fund manager, who prefers not to be named. “Ever since C B Bhave has taken over as the chairman of Sebi, he has initiated a lot of changes in regulations, be it documentation, expense, benchmarking, disclosure... The industry didn’t object to any of them, but the entry load ban was something it just couldn’t cope with.’’

Sebi banned entry load (upfront commission paid to mutual fund distributors) on mutual fund investments in August last year. This has hit the industry hard, as many independent financial advisors (IFAs) abandoned MF schemes overnight and switched to selling unit-linked insurance plans (Ulips) from insurance companies because of the attractive commissions on them. Ulips used to offer very high commissions (up to 40-50%) on the first year premium at that time.

“The regulator wanted these distributors who were acting like a medical shop to become doctors overnight. The idea was that you offer investors good advice and earn a fee, but the idea just didn’t take off,’’ says another mutual fund head on condition of anonymity. “Probably, it is the Indian mindset. Most people want everything free or at a steep discount. Probably, distributors aren’t good enough to demand a fee. In short, most MF advisors figured out that getting their clients to cut another cheque for the advice is not going to happen anytime soon and they just fled from the scene,’’ he adds.

According to industry players, there were around 40,000 IFAs active in the country before the upfront commissions were banned by Sebi. The number of active IFAs has reduced to 3,000 since then, they claim. “If the trend continues, it would be terrible for the industry,’’ says Surajit Misra, EVP & national head-mutual hunds, Bajaj Capital. “Unlike banking or insurance, the mutual fund industry is yet to become a brand people are comfortable with. So, you need someone to convince the investor to put money in a mutual fund scheme.’’

Sure, the MF industry has a point there. However, critics point out that the industry is hiding behind the entry load ban and not willing to take the blame for creating a sales force, predominantly concentrated on tier I and II cities, which was happy churning the portfolios of their existing clients without bothering to bring new investors into the system. “I agree the industry is literally at a crossroad. But we should also share some blame for the situation,’’ says the marketing head of a leading mutual fund house. “We were pampering our distributors and forgot to remind them that the industry would survive only with long-term money from investors. We were happy if we got some inflows every month. It just didn’t matter if the distributor was taking the money out from one fund and putting it in another.’’

He has point. The argument against the entry load ban is this: insurance companies can still pamper their agents, but the MF industry can’t do the same. And gone are the days when MFs would fly their prized distributors to exotic foreign locales for a holiday for bringing in more money.

Nobody could blunt the criticism from fund houses better than the Sebi chief himself. In a gathering of fund house honchos last month, the market regulator clarified that he didn’t have any false notion that anybody would serve investors free. “All we were saying is that let the investor decide what he wants to pay for the service. You don’t decide how much he should pay,’’ he told the audience. As if sensing the skepticism of the industry, he also said that the fund houses should try to communicate better with investors if they want to justify the rationale behind the industry’s existence. Bhave also ridiculed the industry’s obsession with the asset under management (AUM) figure, which funds try to boost by chasing institutional money. Perhaps, he was hinting that the salvation for the industry lay in going back to its original mandate of collecting money from lay investors and managing it for them.

However, dumbstruck MF officials didn't seem pleased with Bhave's utterances at the meet. Many of them said sarcastically that, perhaps, they better start selling Ulips since the demise of MF industry was only a matter of time. Sadly, they don't have that choice anymore. Ulips are not that lucrative now. Once again, they would blame Bhave. His battle with theIRDA has resulted in some key changes in Ulips — the commissions are lower, and the insurance cover and lock-in period have gone up.

Some feeble optimistic voices can be heard from the industry these days. One set of people is still concentrating on how to get the distribution force back into the game. One of the main suggestions — the AMFI has made a representation to Sebi in this regard — is to include the service fee in the MF application form.

“We all agree in principle with what Sebi is saying about letting the investor decide what he wants to pay for the advice. Since the implementation of it has not been smooth, we have to find a practical way to solve the problem. We have proposed that let there be a column in the application form where the investor can write what he wants to pay for the advice,'' says AP Kurien, chairman, AMFI. “We can have a cap on the fee. Let it be X% and we can put that in bold letters so that it will catch investors' attention.''

Bajaj's Misra also thinks that is the only way out of the tricky situation. “The idea of writing two cheques is just not happening. It will take a lot of time. The one way out is to include the fee in the application form itself,'' he says.

Another set of people has already started speaking about increasing the awareness about MFs among individual investors, especially those in smaller cities as tier I cities — particularly the four metros — account for around 80% of the money managed by MFs. They also propose educating the distribution force so that it offers better advice and is in a position to demand a fee from investors. “We are focusing on advisors. We want them to offer effective personalised advice to investors so that they won't hesitate to pay for the advice. We are also focusing more on the retail investors. We are educating our advisors about bringing in more investors who want to invest for the long term,'' says A Balasubramanian, CEO, Birla Sun Life MF.

Source: http://timesofindia.indiatimes.com/biz/india-business/MFs-Look-For-Life-Beyond-Entry-Load-Ban/articleshow/6184976.cms