Mutual funds in buying mode

Mutual funds (MFs) bought shares worth a net Rs 114.50 crore on Wednesday, 11 August 2010, as against an outflow of Rs 387.30 crore on Tuesday, 10 August 2010.

The net inflow of Rs 114.50 crore on 11 August 2010 was a result of gross purchases Rs 1054.30 crore and gross sales Rs 939.90 crore. The BSE Sensex fell 149.80 points or 0.82% to 18,070.19 on that day.

MFs sold shares worth net Rs 778.90 crore in August 2010 (till 11 August 2010). Mutual funds had sold equities worth a net Rs 4405.30 crore in July 2010.

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

Reliance MF Launches 6 Months FMP

Reliance Mutual Fund has launched a new fund named as Reliance Fixed Horizon Fund – XV – Series 3, a close ended income scheme. The duration of the scheme is 6 months from the date of allotment. The New Fund Offer (NFO) price for the scheme is Rs 10 per unit. The new issue opens and closes subscription on 13 August 2010.

The primary investment objective of the scheme is to generate regular returns and growth of capital by investing in a diversified portfolio of Central, State Government securities and other fixed income/ debt securities normally maturing in line with the time profile of the scheme with the objective of limiting interest rate volatility.

The scheme offers two options viz. growth and dividend payout option.

The scheme will allocate up-to 85% of assets in money market instruments and it would allocate 15% to 100% of assets in Government Securities issued by Central & or State Government & other fixed income/ debt securities including but not limited to Corporate bonds and securitized debt with low to medium risk profile. Debt Securities will also include securitised debt, which may go up to 75% of the portfolio. Average maturity of the securities will be in line with the maturity profile of the scheme.

The minimum application amount is Rs 5000 and in multiples of Re 1 thereafter.

The fund seeks to collect a minimum subscription (minimum target) amount of Rs 20 crore under the scheme during the NFO period.

Entry and exit load charge will be nil for the scheme.

Benchmark Index for the scheme is CRISIL Liquid Fund Index.

The fund manager of the scheme will be Amit Tripathi.

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

Know-Your-Distributor Norms Soon

The Association of Mutual Funds in India (AMFI) is planning know-your-distributor (KYD) norms in line with the existing know-your-customer (KYC) details, a source close to the development told Value Research.

According to the source, who is member of an AMFI committee, the decision on the same would most likely be taken in an AMFI meeting slated later today (August 11). When contacted AMFI Chairman A P Kurian said the draft of the norms would be finalised in another couple of days. He refused to divulge further details.

Under the KYD norms, details such as address, ARN (AMFI registered numbers) etc would be sought from a distributor and a data base of all these details would be maintained by an AMFI body.

As per the KYC norms, an investor has to provide the fund house proof of their identity and address, PAN card and photographs. KYC formalities are required to be completed for all unit holders for any investment (whether new or additional purchase) of Rs 50,000 or more in mutual funds. For the convenience of investors, all mutual funds have made special arrangements with CDSL Ventures Ltd (CVL), a wholly owned subsidiary of Central Depository Services (CDSL).

A mutual fund distributor told Value Research that KYD norms would improve servicing of clients by distributors. "In many cases, independent financial advisors and individual distributors would simply sell the products and never show their face again to the clients. Now, with a comprehensive data base on distributors, once can trace such distributors," he said.

Source:http://new.valueresearchonline.com/story/h2_storyView.asp?str=14959

Seven out of top 10 Asian small-cap funds are Indian

Indian funds have grabbed seven out of the top 10 spots in the league table of leading small-cap funds across Asia, thanks to some canny stock-picking amid growing investor appetite for cheap stocks with potential to deliver multi-bagger returns.

An analysis of nearly 300 Asian small-cap schemes shows DSP BlackRock Micro Cap Fund leading the charge, delivering an 82% return over the past year. Managed by Vinit Sambre, who has been with DSP BlackRock for a little over three years, this fund has also soundly beaten the 58% rise of BSE’s Small-Cap Index since August 2009. The 30-share benchmark Sensex has gained 20% during this period while the wider BSE 500 Index is up 27%.

The other six schemes — Sundaram BNP Paribas Select Small Cap, HSBC Small Cap, JPMorgan Smaller Companies, Franklin India Prima, Franklin India Smaller Companies and ING Vysya CUB — have given investors returns between 44% and 57% on a trailing 12-month basis. These schemes manage anywhere between `46 crore and `954 crore.

Four of these funds were launched during the peak of the previous bull run between January 2007 and March 2008, and investors in them have also had to endure a massive erosion in their initial investment in the downturn that followed.

Mutual fund tracking firm Value Research called the DSP fund as an impressive product in the entire “small-cap universe”, noting that the stocks held by it were “credible, known names and there is a marked absence of momentum in the portfolio”. The fund’s holding includes companies with a high return on equity and strong leadership niches in their industries.

Value Research CEO Dhirendra Kumar said the closed-ended nature of some of these funds helped them weather the market turbulence. “These funds did not face redemption pressures through the declining phase. This, in turn helped them invest for the longer term,” he said.

The DSP fund became open-ended in June this year and fund manager Mr Sambre has kept nearly 10% of his `311-crore corpus in cash to meet potential redemptions and to latch onto any opportunity in the market.

There are 10 small-cap funds in India, which manage roughly `3,450 crore in stocks. These account for just 2% of the total AUM under equity schemes.

Market experts say that as many large-cap stocks became fully priced and relatively unattractive over the past year, the rally shifted to small caps. Stocks such as cooler maker Symphony and luggage maker VIP Industries have led the small-cap charge in the market. Ahmedabad-based Symphony has surged 830% while VIP has risen 548% in the past 12 months. In comparison, top two gainers on the Sensex — Tata Motors and Tata Consultancy Services — are up 135% and 61%, respectively.

“Many small caps with excellent businesses were trading at a pathetically low valuations — many were trading below book value and at dividend yields of 5-7%,” says Deven Choksey, chief executive officer at KR Choksey Shares & Securities. “They just got purchased heavily.”

Even though small-cap funds have delivered solid returns in the past one year, experts say that investors must be cautious and have just 10-15% of their equity exposure in such funds or companies. This is largely because of the volatile nature of their stock performance.

“Investors should have a strong stomach and the ability to

withstand substantial declines in such funds,” says Mr Kumar at Value Research.

Source: http://economictimes.indiatimes.com/Seven-out-of-top-10-Asian-small-cap-funds-are-Indian/articleshow/6295976.cms

SBI Magnum Sector Funds Umbrella - Contra Fund declares 40% dividend

SBI Mutual Fund Trustee Company Private Limited, the Trustee to SBI Mutual Fund have approved 40% dividend in the Dividend option of Magnum Sector Funds Umbrella - Contra Fund, an open-ended equity scheme.

The record date for the dividend is May 11, 2007 and any purchases on or before this date will be eligible for the dividend. Pursuant to the payment of dividend, the NAV of the scheme / option would fall to the extent of payout and statutory levy, if applicable. Dividend distribution is subject to the availability of distributable surplus and statutory levy (if any). All Magnum / Unit Holders of the scheme, whose names appear in the records of the Registrar of SBI Mutual Fund on the aforesaid record date, will be entitled to receive the dividend.

Disclaimer: All investments in Mutual Funds and securities are subject to market risks and the NAV of funds may go up or down depending on the factors and forces affecting the securities markets. Please read the Offer Document carefully before investing.

Source: http://www.equitybulls.com/admin/news2006/news_det.asp?id=12431

Retail investors enter SIPs at high levels, stop at lows

Retail investors in mutual funds are known to chase returns, making large investments at market highs and staying away during its lows.

Systematic Investment Plans or SIPs were devised mainly to prevent this. However, data on SIP investments for 17 leading fund houses now show that investors follow the same practice for their SIP investments as well. They decide to start paying the monthly instalments on SIPs only after markets have rallied and stop them if the stock market is falling.

SIPs jump as Sensex rises

The number of new SIP accounts these funds added in the April-June 2010 quarter was over 50 per cent higher than the number added in the same quarter of 2009.

The number of SIPs added every month averaged 1.79 lakh accounts in the latest quarter, against 1.2 lakh accounts in the same period of 2009.

The Sensex ranged between 17,000 and 18,000 in April-June 2010, compared with 11,000-15,500 levels in April-June 2009.

Failed SIPs

The other disturbing trend is that of a good number of investors are discontinuing their SIPs mid-way. Even as funds added between one lakh and 1.9 lakh accounts each month over the last one year, the number of ‘failed' SIPs was quite large at 1.2-1.7 lakh accounts a month.

The instances of SIPs ‘failing' peaked during March, April and May 2009. In hindsight, that was the best time to invest in equity funds.

Stopping SIPs when market is down would defeat the purpose of cost averaging (buying more shares when prices are low and fewer shares when prices are high) that monthly investing is supposed to serve.

SIP collections rising

Overall, however, fund houses have seen a steady improvement in the new SIP accounts as the markets have climbed over the past year. Between 1.7 and 1.9 lakh SIPs have been added in recent months.

In all, the 17 mutual funds had about 25.6 lakh SIP accounts by end of June 2010.

Together, they managed SIP assets of Rs 20,600 crore.

In spite of improved market conditions compared to 2008-09, the average ticket size of new SIP accounts has not increased substantially. The national average has moved to Rs 2,190 from Rs 2,100 reported in 2008-09.

Source: http://www.thehindubusinessline.com/2010/08/09/stories/2010080952250100.htm

Sundaram BNP Paribas MF Appoints New Fund Manager

Sundaram BNP Paribas Mutual Fund has appointed Mr. Dwijendra Srivastava as Head-Fixed Income in the position of Senior Vice President. He is a Chartered Financial Analyst from CFA Institute, USA. He is also a Textile Engineer with Post Graduate Diploma in Finance.

He was associated with Deutsche Asset Management (India) Ltd. as Vice President and Fund Manager since 2007, spearheading debt schemes. He was also involved in new product development.

He will manage schemes such as Sundaram BNP Paribas Money Fund, Sundaram BNP Paribas Ultra Short-Term Fund, Sundaram BNP Paribas Flexible Fund Short-Term Plan, Sundaram BNP Paribas Flexible Fund Flexible Income Plan, Sundaram BNP Paribas Gilt Fund, Sundaram BNP Paribas Select Debt Short-Term Asset Plan, Sundaram BNP Paribas Income Plus, Sundaram BNP Paribas Capital Protection Series 1-3 Years, Sundaram BNP Paribas Capital Protection Series 1-5 Years, Sundaram BNP Paribas Fixed Term Plan P - 367 days, Sundaram BNP Paribas Fixed Term Plan R - 367 days, Sundaram BNP Paribas Fixed Term Plan S - 367 days, Sundaram BNP Paribas Fixed Term Plan U - 367 days, Sundaram BNP Paribas Fixed Term Plan AA - 14 Months, Sundaram BNP Paribas Fixed Term Plan Z - 15 Months, Sundaram BNP Paribas Fixed Term Plan Y - 18 months, Sundaram BNP Paribas Fixed Income Interval Fund - Quarterly Series - Plan A, Sundaram BNP Paribas Fixed Income Interval Fund - Quarterly Series - Plan B, Sundaram BNP Paribas Fixed Income Interval Fund - Quarterly Series - Plan C, Sundaram BNP Paribas Fixed Income Interval Fund - Quarterly Series - Plan D and Sundaram BNP Paribas Fixed Income Interval Fund - Quarterly Series - Plan E.

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

Birla Sun Life MF makes addendum to Long term Advantage Fund – Series I

Birla Sun Life Mutual Fund has announced change in the name of the scheme “Birla Sun Life Long Term Advantage Fund – Series I to Birla Sun Life Small and Midcap Fund. Accordingly, the benchmark index for evaluating the performance of the scheme has been changed from BSE 500 to S&P CNX Midcap Index. The changes will be effective from 12 August 2010.

Birla Sun Life Long Term Advantage Fund is an open ended small and midcap equity scheme that seeks to generate consistent long term capital appreciation by investing predominantly in equity and equity related securities of companies considering to be small and midcap. The scheme may also invest a certain portion of its corpus in fixed income securities including money market instruments, in order to meet liquidity requirements from time to time.

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