Goldman Sachs AMC to buy Benchmark MF for Rs 130.5 crore

Goldman Sachs Asset Management Company said on Wednesday that it would acquire Benchmark Mutual Fund, an ETF-focussed Indian fund house. Benchmark mutual fund manages assets worth around Rs 3000 crore.

The deal would be finalised by the end of the year, subject to regulatory approvals, said a statement from Goldman Sachs.

An official associated with the deal said Goldman would pay Rs 130.5 crore or approximately 4.3 per cent of Benchmark's average assets under management (AUM). All Benchmark employees would be retained by the new management, he added. Regulatory approval is expected in the next 3-4 months.

Through the deal, Goldman Sachs aims to bring actively managed on-shore funds into India, added the statement. The financial services major has an office in Mumbai with eight employees, providing research on Indian and BRIC equities for offshore funds.

Goldman Sachs officials could not be contacted for further details.

Benchmark is the country's only fund house with a sole focus on exchange-traded funds (ETFs). The fund house manages eight ETF products and is credited with launching India's first ETF – Nifty BeES. The average AUM for ETFs in India is Rs 5,979 crore, according to the Association of Mutual Funds in India. The gold ETF segment has an AUM of about Rs 3,744 crore with 10 products. India's first Gold ETF – Gold BeES – was conceptualised by Benchmark back in 2007.

MAPE Advisory advised Benchmark in the deal. The Indian MF industry will see further consolidation as the markets become volatile and tough, and big mutual fund players find valuations attractive,” said an industry analyst.

Though Goldman Sachs had received SEBI nod to enter India in September 2008, it kept plans on hold following the economic downturn of 2009.

Source: http://www.thehindubusinessline.com/markets/article1544277.ece?homepage=true

Soumendra Nath Lahiri joins Canara Robeco

Canara Robeco Asset Management Company has appointed Mr Soumendra Nath Lahiri as its Head of Equities effective from April 1.

In his new role, Mr Lahiri will be responsible for managing the equity funds that form a major part of Canara Robeco’s portfolio including Canara Robeco Equity Diversified Fund and Canara Robeco Equity Tax Saver Fund.

Prior to joining Canara Robeco, Mr Lahiri was Senior Vice President and Co-Head, Equities with DSP Black Rock Asset Management Company. He was also recently appointed as Chief Investment Officer at Emkay Global Services.

“We are extremely happy about Mr Soumendra Lahiri joining the team. We look forward to utilising his experience in taking the company forward. His understanding of the markets will add a lot of value to our clients and the entire team will benefit from his knowledge and guidance,” Canara Robeco Asset Management Company’s Chief Executive Officer, Mr Rajnish Narula, said in a statement.

Canara Robeco is a JV between Canara Bank, a 100-year old premier bank in India and Robeco, an 80-year old Rabobank entity and an asset management specialist.

Source: http://www.thehindubusinessline.com/industry-and-economy/banking/article1540431.ece

SBI Mutual Fund announces dividend under SBI Magnum Taxgain Scheme 1993

SBI Mutual Fund has declared a dividend of 40% ((Rs. 4.00 per unit on Face Value of Rs.10) under dividend option of SBI Magnum Taxgain Scheme 1993. The record date for dividend has been fixed as March 18, 2011.

All investors registered in the dividend plan of SBI Magnum Taxgain Scheme 1993 as on March 18, 2011 will receive this dividend. The NAV of the scheme as on March 14, 2011 under the dividend option was Rs. 39.13.

SBI Magnum Taxgain Scheme 1993, is an open ended ELSS Scheme. The objective of the scheme is to deliver the benefit of investment in a portfolio of equity shares, while offering deduction on such investments made in the scheme under section 80C of the Income Tax Act, 1961 and (b) Distribute income periodically depending on distributable surplus.

Source: http://www.moneycontrol.com/news/mf-news/sbi-magnum-taxgain-scheme-1993-declares-dividend-_529645.html

Is Sebi getting ready to reload?

For an industry waiting with bated breath for the new regulator to indicate which way the wind will blow, the two-page circular uploaded on the Securities and Exchange Board of India (Sebi) website on 9 March 2011 quickly became the most emailed and forwarded document. Through the circular, Sebi has allowed mutual fund houses to use two sources of money to pay distributor commissions. One, they can use the accumulated load balances they are holding. Before August 2009, the loads (the distributor commission embedded in the price of the mutual fund scheme) were collected by the fund house and paid to the distributor. Not all such loads were paid out and the money undistributed was kept in a separate account. The older and bigger the fund house, the larger was this amount of accumulated loads. The circular is being seen in the market as of great benefit to the older, larger fund houses that are sitting on Rs250-400 crore each in these accounts. This is a reversal of the earlier argument within Sebi that was in favour of writing back this money to the scheme (that is to the investors). Two, fund houses can use the money collected as exit loads to pay distributors. Both the steps are being seen as a significant indication of what will happen next. The market now expects the two-cheque system to collapse into one and a gentler easing into the pre-August 2009 world when fund houses looked at the distributors as their primary customers and the real retail customer was not really on the radar. When you can buy the business, why spend energy in developing it?

But how badly has the industry been affected by the banning of loads? How much was the bleed? I did a small dipstick and found that even informed people thought that the equity funds bled heavily and lost about half their money due to distributors refusing to sell funds and investors getting out in the 18 months since the no-load rule. The truth is a little different. I found (looking at Association of Mutual Funds of India data) that the worst month since August 2009, in terms of outflows, was September 2010 when a net of almost Rs8,000 crore bled out of equity funds, with a gross bleed of just over Rs13,000 crore and an inflow of almost Rs7,00 crore. But this Rs8,000 crore of net redemption was a mere 3.66% of the total equity assets under management (AUM) of Indian investors who hold over Rs2 trillion in equity funds. Right. At the worst point, less than 2% of the money bled out.

In fact, the September numbers prompted an insurance chief, who met me at an airport in mid-October, to confidently predict the demise of the fund industry by December 2010. “They’re dead!” he crowed, “and the business is all coming to us.” The good thing with predictions about the near future is that they can be remembered and validated. February 2011 became the fourth month with positive inflows into equity funds. With more than Rs7,000 crore coming in and almost Rs4,000 crore going out, the net inflows of Rs3,500 crore are 1.93% of the total AUM of equity funds in India. In fact, November to February has seen a spurt in inflows and a decline in redemptions. The reasons for this could be two. One, market volatility is making investors wary of exiting and hence the reduction of redemptions by half in February over the previous month. Or that fund houses are stabilizing into the new no-load world and investors are coming in using the systematic investment plan road. The gross inflows have picked up steam, with an average Rs7,000 crore coming in the last four months, against an average Rs6,000 crore in the 15 months before November 2010.

Could it be that the inflows are coming back in due to fund houses finally getting out of their Nariman Point and Bandra-Kurla offices and getting to the investors through direct sales pitches, through customized products, through investor awareness drives? Could it be that the AUM-focused fund houses in search for valuation are now trying to grow the retail business now that the corporate loopholes are mostly plugged? While it is too soon to say that the industry is settling down, there is clearly a new focus at least within some of the fund houses. From throwing money at the distributors, fund houses are actually thinking about how to get the retail investor. Maybe the new Sebi chief should allow fund houses some more gym time for workouts. They may realize that the crutches of loads are actually not needed.

Source: http://www.livemint.com/2011/03/15212715/Is-Sebi-getting-ready-to-reloa.html?h=B

Canara Robeco MF Declares Dividend

Canara Robeco Mutual Fund has announced the declaration of dividend on the face value of Rs. 10 per unit under dividend option of Canara Robeco Equity Tax Saver. The record date for dividend has been fixed as 18 March 2011.

The quantum of dividend will be Rs. 1 per unit. The scheme recorded NAV of Rs. 18.32 per unit as on 11 March 2011.

Canara Robeco Equity Tax Saver is an open ended equity linked tax savings scheme with lock in period of 3 years. The investment objective of the scheme is to achieve long term capital appreciation by predominantly investing in equities to facilitate the subscribers to seek tax benefits as provided under Section 80 C of the Income Tax Act, 1961.

Source: http://www.indiainfoline.com/Markets/News/Canara-Robeco-MF-Declares-Dividend/3604110664

Infrastructure stocks look attractive: Kenneth Andrade, Chief Investment Officer, IDFC Mutual Fund

In an interview with ET Now, Kenneth Andrade , Chief Investment Officer, IDFC Mutual Fund , talks about the Indian market and his favourite sectors. Excerpts:

Characterise the current market environment for us. Are you cautious, are you fully invested, are you sitting on cash?

From a perspective of what we have been doing as basically looking at the environment currently and with realigning our portfolio into based on the results that just went by and the expectations into March, we have got significant amount of events that have been happening across the entire globe. So we are looking at spaces where we could actually trim our positions which are vulnerable to these moving parts. So that is what we have been doing. We have in the process created some kind of cash in the entire process where we have been looking to redeploy that in the next month or two. So in context where the markets are currently held on moving parts, it is very difficult to take a call on the market and build portfolios, but sticking with where the convictions are the highest and realigning our portfolios accordingly.

What is your view on infrastructure that is one space which has really been beaten down? Do you think a bottom is in place for most of these stocks and would you now be a buyer into it?

We have just closed our product in the infrastructure space. This is in line what we think is probably a nice time to take an allocation into that entire sector. What we would see coming with the March-end results and also balance sheets coming out you probably heading into the worse quality of balance sheet that you have seen over the last decade in these companies. Now that creates a significant opportunity. One, most of the companies will have to reassess the environment around them and rebuild their strategies to improving financial health of the business. Two, the space itself as we see it will be more consolidatory space rather than an expansionary environment. Now this is exactly the opportunity that we are playing for. In a consolidatory phase company has become a significantly more responsive to creating cash on their balance sheets through operations rather than looking at the external environment to raise cash now. This is good for an equity holder. On the other hand you will not see dramatic improvement or increase in balance sheet sizes and you would see balance sheets actually consolidate. So our view is somewhere in 2012 and 2013, you would see this entire balance sheets effectively consolidate themselves and that exactly the opportunity that is there. So we are going into the entire premise and this is a consolidation period for the entire industry and that is where the equity investor would make significant amount of return compared to an expansion phase which you had in the last 3 or 4 years wherein the equity investor were more at the receiving end in the space. So yes, in a way we do believe infrastructure valuations and business opportunity is there. These are appropriate time to start investing into the business.

What is your view on commodity prices? One side you have the Fed which is pumping the economy by QE2 and the Japanese bank also is now planning to inject about $85 billion, given the way how both central bankers are now planning to pump in more money will commodity prices go up more?

Most of our portfolio is extremely light in terms of commodities. A very large part of the allocation in our local portfolio or domestic portfolios are more playing the consumer economy in India, latter part of it is started and small part of that is effectively on the infrastructure side of the entire business. Now in line with what we are trying to do with the consumer part of the economy and the infrastructure part of the entire economy and if this plays out over the next 2 or 3 years, it may not make for an interesting view in commodities. One, the consumer part if consumers are going to determine volume growth in the entire business, the consumer economy is not very commodity intensive. Secondly, if we believe that infrastructure is going to be more of a consolidation play and rather than an expansionary play, again this may not be a very good thing from a commodity perspective. Now that is in line with what we are doing in India or most of our portfolio are doing in India. If you step back and look at the 12th five year plan which the Chinese economy has just come through with again the shift and the focus is towards enabling the consumer in that respective economies. If that holds true again, we probably may not have an environment which is very conducive for further commodities business. It is not like commodities are going to fall off the place where going to be a base demand for commodities which will continue to exist and there will be couple of commodities which are consumer intrinsic, which depend upon the consumer and end consumer and these are copper etc. They largely go into the electrical business which is again related to the consumer environment, consumer economy. So I guess we have to pick and choose as to which part of the commodity business you want to be with. So I guess something like crude, the demand will be reasonably tight and this is structural in nature given the fact that 35% of the world?s population which is a Chinese and Indians are earning double digit growth in their per capita incomes. So that is basically you will probably need to pick and choose on commodities rather than owning a basket of commodities in this environment.

You have bought consumption-oriented businesses for the year gone by which is the year 2010 and that worked like a charm for you. What is your big bet for the year 2011?

Well, little bit of infrastructure which seems to be basing out and the business still has reasonably amount of momentum still in the consumer part of the economy. So we would expect going into this year the two themes to effectively play out unlike a single theme that we have bought through 2009 and 2010.

In the near term though what is the call on the rate sensitives, in particular autos, because they seem a little edgy ahead of the policy?

With autos you also need to realise that they come out extremely high base and the environment that you see at this point in time is also a environment where rates are not coming down, which is what you rightly said. So I moderate my expectation from that sector, it probably would not do what it did last year, it could be a pocket of strength but again like you basically cannot say that it is going to be an entire sector that is going to do well you will have to pick and choose and that goes down to what markets might look like for 2011 and may be a very large part of 2012. You would need to pick and choose you may not find one particular segment of the market that gives you all the outperformance that is there.

If I look at your latest declared portfolio holding, you have exposure to Asian Paints , Shriram Transport and Exide. Your top holdings change in coming months?

Cannot see any reason to change that.

Why do you like paint companies? Why do you like auto companies at a time when the country is experiencing inflation? I am sure that will hit consumption patterns.

I guess these are all consumer businesses and in line with just talking about the consumer economy, the underlying part of the portfolio if you go across the top 10 companies or even the top 15 companies in the portfolio that we construct, all of them are industry leaders by themselves, all of their balance sheets which are non-geared and all of them are growing faster than index level itself. So even if you hit an inflation point or even if you hit a point over the next year or 2 years, where you see a slowdown coming in the entire system, our belief is that given the financial strength and the dominance of each of these players in their industry, they will only gain market share. So we effectively come from a position that these companies are already extremely strong and even if we hit a patch which is a slowdown, these guys will only increase market share. If the contrary of that happens and the market effectively expands also, then they will grow, with all the companies in this portfolios. So either which ways the portfolio is that we have constructed so far should withstand itself in an environment which is growing and even if the environment consolidates or slows down, these guys should come out reasonably stronger than what they are.

You also own textile stocks Arvind Mills , Shri Lakshmi . Textile stocks have never created wealth for any investor. Why do you like textiles?

Well, it is likely a contrarian in that space. We like the manufacturing business because they have reasonably run out of capacity at this point in time. Secondly again in line with our putting a portfolio together a very large part of that entire portfolio is oriented towards the largest guys in the entire business. Cash flows are extremely strong. So another year of these kind of cash flows and the financial health of these companies will be significantly better than what they appear to be and what they appear to be is also significantly stronger than what these companies were over the last decade. All of them are available in between 3 to 5 times cash payback and there is not much too debate as far as valuations are concerned except for the fact that there is lot of policy risk in the textile environment. Apart from that, we are in the sweet spot as far as that industry is concerned.

Source: http://economictimes.indiatimes.com/opinion/interviews/infrastructure-stocks-look-attractive-kenneth-andrade-chief-investment-officer-idfc-mutual-fund/articleshow/7699894.cms