Bank of India in talks with Bharti Axa, 2 others for MF entry

Public sector lender Bank of India today said it is in talks with Bharti Axa and two asset management companies for an entry into the mutual funds business and hopes to seal the deal before end September.

“We are in talks with Bharti AXA and two other companies ...we will announce it before end of the next quarter,” Chairman and Managing Director, Mr Alok Misra, told reporters.

Bharti, which exited life insurance business earlier this month by selling its stake in Bharti Axa Life Insurance to Reliance Industries, is also tipped to be looking at options of exiting other non-core businesses, to concentrate on telecom and retail.

A senior Bank of India official said it makes sense to acquire an operational business than start something which will take two years to build up.

The Mumbai-headquartered Bank of India has appointed consultancy firm Ernst and Young for advising it on the takeover, the official added.

Source: http://www.thehindubusinessline.com/markets/article2118285.ece

Govt may allow foreign individuals to invest $10 bn in MFs

India is likely to allow foreign individuals to invest in mutual funds in the next two weeks but with a cumulative cap of USD 10 billion, an official said today.

The detailed guidelines are being worked out jointly by the finance ministry, RBI and Sebi.

These will be notified by the capital market regulator, the Finance Ministry official said.

The move follows announcement in the last Budget by Finance Minister Pranab Mukherjee.

It was aimed at broad-basing the flow of foreign investment in the Indian stock market, so that dependence on FIIs' funds, considered as hot money, is reduced.

"This will increase corpus in MF holdings, which means MFs will purchase more equity and other schemes as a result of which it will help in fighting volatility, which takes place due to FII outflows," a Finance Ministry official told PTI.

At present, only FIIs and sub-accounts registered with the market regulator Sebi and NRIs are allowed to invest in mutual fund schemes in the country.

"Discussions between government, RBI and Sebi are in final stages and market regulator's guidelines in this regard are expected in two-three weeks," the official said.

The proposed move would not only help in attracting more foreign funds but is also expected to bring in 'more depth' in the fast-growing domestic mutual funds industry.

Earlier Mukherjee in his Budget speech had said: "To liberalise the portfolio investment route, it has been decided to permit Sebi-registered mutual funds to accept subscriptions from foreign investors who meet KYC requirements for equity schemes".

The official said there is a "broad consensus" that investments by foreign individuals should be limited up to USD 10 billion.

For allowing foreigners in the segments, the government is looking to introduce a completely new class of investors, called Qualified Foreign Investors (QFIs).

QFIs registered with depository participants can invest in the mutual funds directly and also through a mechanism -- Unit Confirmation Receipt (UCR) system -- sources said.

Under the proposed UCR approach, a foreign investor can go to depositories in his home country and place orders on custodian banks in India. The custodian banks will look into the MFs and issue UCRs against the underlying MFs.

The fund houses, however, will have to comply with know-your-customer (KYC) norms before seeking investment from overseas investors.

The average assets managed by the MF industry, consisting of 40 players, stood at Rs 7,00,538 crore as of March 31, 2011.

Source: http://articles.economictimes.indiatimes.com/2011-06-19/news/29676960_1_investment-from-overseas-investors-mutual-funds-mfs

Mutual funds continue buying

Mutual funds (MFs) bought shares worth a net Rs 44.60 crore on Thursday, 16 June 2011, compared with an inflow 2.10 crore on Wednesday, 15 June 2011.

The net inflow of Rs 44.60 crore on 16 June 2011 was a result of gross purchases Rs 596 crore and gross sales Rs 551.40 crore. The BSE Sensex had fallen 146.36 points or 0.81% to 17,985.88 on that day.

Mutual funds have sold shares worth a net Rs 14.60 crore this month so far (till 16 June 2011). They had bought stocks worth a net Rs 434.70 crore last month.

Source: http://www.adityabirlamoney.com/news/485760/10/22,24/Mutual-Funds-Reports/Mutual-funds-continue-buying

Canara Robeco MF announces change in the constitution of the board of trustees

Canara Robeco Mutual Fund has announced the change in the constitution of the board of trustees of Canara Robeco Mutual Fund. With effect from 15 June 2011, Mr G. Anantharaman has been appointed as an independent trustee on the board of trustees of Canara Robeco Mutual Fund.

Mr. Anantharaman, I.R.S. (Retd.) has worked in various senior capacities in the revenue service (income tax) of the government of India since 1968 before retiring as chief commissioner of income-tax-Mumbai in June 2004. Mr. Anantharaman has handled several tax fraud cases and, matters relating to tax administration. He was also one of those who were instrumental in developing the anti-money laundering draft provisions in the Indian context from 1995 to 1996. Post retirement, he acted as a whole time member of capital market regulator, SEBI, as in-charge of surveillance, investigations and market regulations till 2008. He has also acted as director (vigilance) for HPCL.

Source: http://www.adityabirlamoney.com/news/485700/10/22,24/Mutual-Funds-Reports/Canara-Robeco-MF-announces-change-in-the-constitution-of-the-board-of-trustees

Retail investors keep the faith

Despite weakness in equity markets, MFs see net inflows of Rs 5,000 cr till May this yr.

Even as foreign institutional investors are underweight on Indian equities, retail investors are looking at entering the market at attractive valuations. According to Amfi data, equity mutual fund schemes witnessed net inflows of Rs 1,546 crore in May, after net outflows of Rs 1,076 crore in April. Rather than staying on the sidelines, retail investors are looking at the negative performance of the broader equity market as an opportunity. In the first five months of the calendar year, funds have seen net inflows of almost Rs 5,000 crore, which accounts for the sum total of inflows into ELSS, balanced, equity and ETFs (excluding gold).

Fund managers believe this reflects the maturity of the retail segment, which is looking at timing its entry into the market. In 2010, when market performance was relatively better, inflows into equity funds stood at Rs 1,860 crore for the first five months of the year, compared to net inflows of nearly Rs 5,000 crore this year. Gopal Agrawal, chief investment officer at Mirae Asset Mutual Fund, says this year a lot more investors have opted for systematic investment plans, which is driving inflows. The domestic MFs have been playing it safe all through May, as discouraging news flow, both domestic and global, continued to affect sentiment. But strong inflows have helped MFs make investments in May. Investment by MFs in equity market stood at Rs 434.9 crore at the end of last month, even as FIIs sold Rs 5,158 crore in the same period.

Fund houses are coming up with different offerings as well to keep the investors interested. Given that Indian equities have underperformed other emerging markets, HSBC launched its Brazil fund for investors wanting to participate in the growth story of alternative emerging markets. This scheme has seen inflows of Rs 313 crore. While this money is not earmarked for the Indian equity markets, it speaks volumes about the investor sentiment.

So, what’s yielding returns for investors? FMCG and pharmaceuticals sectors have proved to be good defensive plays. During the month, pharma funds topped the scoreboard with 1.8 per cent growth, followed by FMCG funds that grew 0.5 per cent on an average. Franklin FMCG Fund remained the top performer among all the other funds.

Source: http://www.business-standard.com/india/news/retail-investors-keepfaith/439260/