PAN relief for SIP up to Rs 50,000

Mutual fund investors would now be exempt from furnishing their Permanent Account Number for investments in systematic investment plans of mutual funds up to Rs 50,000, the Association of Mutual Funds in India (AMFI) Chairman, Mr A.P. Kurian, said.
“We are waiting for the official notification from the Government but the proposal has been approved,” said Mr Kurian, speaking on the sidelines of the Mutual Fund Summit 2009 organised by CII.
It is high time for harmonisation of the statutory and regulatory provisions with respect to the mutual fund industry, Mr Kurian said.
The industry is expected to record 150 million folios by 2015 from 48 million, Mr Kurian said. The industry added 10 million folios a year between 2005 and 2008 but the number declined to a mere 3 million in 2008-09, he added.

Significant growth

The CII-KPMG Report on the Indian mutual fund industry, which was released at the summit, states that investment in mutual funds comprised 7.7 per cent of the gross household financial savings in FY 2008, a significant increase from 1.2 per cent in FY 2004. The report mentions that the households continue to hold 55 per cent of their savings in bank fixed deposits, 18 per cent in insurance and 10 per cent in currency as of FY 2008.
The industry is likely to continue to grow 15-25 per cent over the next five years based on the pace of economic growth, the KPMG report stated. In the event of a relatively slower economic revival, the industry may grow 15-18 per cent over the next five years, the report said.
“Industry profitability may reduce further as revenues of asset management companies shrink due to focus on low-margin products to attract risk-averse investors, and also as operating costs escalate due to the focus on penetrating retail population beyond tier-2 cities and operating costs escalate,” said the report..
Panellists at the summit stressed on the need for creating and selling simple products. “We need to sell products which can be explained to an investor in about five to six lines,” said Mr Milind Barve, Managing Director, HDFC AMC.
“There are more than 900 schemes, so simplification would help,” said Mr Dhirendra Kumar, CEO of Value Research.

Source: http://www.thehindubusinessline.com/2009/06/18/stories/2009061851971000.htm

Focus more on retail investors, MFs told

Asking mutual fund industry to stick-on to know-your-customer (KYC) norms by implementing them in letter and spirit, the Securities Exchange Board of India (SEBI) Chairman, C. B. Bhave, on Wednesday said that increased focus on retail investors was the key to the growth of the mutual fund industry.
“If the mutual fund industry wants diversity, importance of non-corporate investors should be realised. It is in the interest of the industry to have increased investor participation,” said Mr. Bhave. He was speaking at the Fifth CII Mutual Fund Summit-2009 on “Indian mutual fund industry — the future in a dynamic environment” organised by Confederation of Indian Industry (CII) here.
The SEBI chief said though the mutual fund industry had passed unscathed in the recent global crisis, there were certain issues, particularly in the way liquid schemes of mutual funds were structured, which need to be tackled. He said that in the case of fixed maturity plan schemes, mutual fund houses should refrain from offering securities which were fixed but whose underlying assets were beyond the tenure of those securities. While replying to the industry’s concern on the issue of KYC norms, Mr. Bhave said that KYC was not difficult but a requirement in the interest of the investor and the industry as a whole. He said that while distribution commission on insurance products was larger than on mutual fund products, it was for the industry players to educate the investors of the cost implications and returns in both kinds of products and thereby generate greater volumes. Earlier in his welcome remarks Arun Nanda, Deputy Chairman, CII Western Region, said that the mutual fund industry was still at its nascent stage and collaborative efforts for growth were essential. He also highlighted the role of the retail investor by saying that though India had close to 39 per cent savings rate, the retail side was quite untapped by the industry.
The summit also witnessed the release of CII-KPMG report on Indian mutual fund industry — the future in a dynamic environment. While assessing the current state of the mutual fund industry, the report laid down the challenges of low customer awareness, financial literacy and limited retail penetration among others for the growth of the industry.
PTI reports from Delhi:

Anchor investors
With not many initial public offerings (IPOs) hitting the market, SEBI may on Thursday assess whether a new entity, named anchor investors, be allowed to take part in the public offers to boost the sagging primary market.
The SEBI board is likely to discuss the issue of anchor investors threadbare to spur the IPO market, official sources said here.
Anchor investors (AI) are long term investors and if the IPO issuer can find anchor investors, it indicates that the company enjoys good reputation and its public offer could be a success.
An AI would be required to pay a margin of 25 per cent on application with the balance 75 per cent to be paid within two days of the date of closure of the issue. AI would be asked to bring in the additional amount if the price fixed for IPO is higher than that paid by this new form of entity. As per the proposal to be discussed by the SEBI board, 30 per cent of the portion for qualified institutional buyers in an IPO will be reserved for anchor investors. At present, 50 per cent of the IPO size is reserved for qualified institutional buyers.

Source: http://www.hindu.com/2009/06/18/stories/2009061855961600.htm

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