Axis Asset Targets Top 10 Slot Among Indian Money Managers

Axis Asset Management Co., backed by India’s fourth-largest bank, aims to be one of the nation’s top 10 money managers in the next five years, said Chief Executive Officer Rajiv Anand.
Anand said he expects to receive approval from the stocks regulator to start operating the mutual fund business, set up in January, soon. He plans to offer funds from October and more than double the team to 100 people from 40 by March next year.
India’s funds industry has quadrupled in size over the past five years. Assets under management at mutual funds swelled more than four times to 6.9 trillion rupees ($142 billion) in the five years to July, according to data compiled by Bloomberg. Almost half of India’s 1.1 billion people are under 25 years old. They’re spending more on electronics, clothes and cars as incomes grow along with the economy and credit becomes more accessible.
“It’s a great time to be entering the business,” Anand said in an interview in Mumbai today. “Indian mutual funds that are backed by strong sponsors are witnessing faster growth in their assets under management than peers.”
Lower costs including for real estate and hiring are conducive for setting up a new business, he added.
Anand will seek to tap the client base at more than 550 cities across India where Axis Bank Ltd. has its branches.
“We want to become a significant player in the mutual fund business in the country,” said Anand. “The Axis brand name is very well known and that is a huge advantage for us to leverage the asset management business on.”
Anand said he plans to set up 12 branches across the country. He said he expects to offer money market funds in October subject to receiving regulatory approval and plans to start equity plans after Oct. 26.
He has hired Chandresh Nigam to head the equity business, while Ninad Deshpande will manage fixed-income products.
Anand said he would look at acquiring money managers to grow the business if he finds suitable opportunities.

Source: http://www.bloomberg.com/apps/news?pid=20601091&sid=a_sONe6kwDLQ

AMFI has finalized design on separate MF platform: Sebi

Market regulator Securities and Exchange Board of India (Sebi) today said the Association of Mutual Funds in India (AMFI) has finalised a design on a separate common platform for mutual funds.

"We recently had a meeting with the mutual funds and what the Association of Mutual Funds of India told us is that they have more or less frozen the kind of design that they want," Sebi Chairman C B Bhave today told reporters on the sidelines of the convocation of the Institute of Insurance and Risk Management (IIRM) of IRDA here.
"They will now look to competitive vendors for deciding on what kind of platform needs to be set up," Bhave added.
AMFI is planning to set up a common platform for the MFs which would allow retail investors to trade, switch over and compare the schemes online through a single window.
A common trading platform will not only enable investors to compare the performance of funds, but reduce the costs associated with investments in mutual funds, he added.
The idea is to provide all fund houses and distributors a single platform where investors can have the true sense of choice and an MF investor can access this common platform and choose the scheme that he wants to invest in.
At present, there are 38 mutual fund companies in the country.

Source: http://www.business-standard.com/india/news/amfi-has-finalized-designseparate-mf-platform-sebi/71436/on

Sebi clamps down on MF exit loads

The woes of the mutual fund industry just don't seem to get over. First came the entry load ban with effect from August 1.
Even before the issue of entry load settles down, market regulator Securities and Exchange Board of India (Sebi) has now clamped down on exit loads, forcing AMFI to issue a circular to fund houses on Thursday.
Well, the cat and mouse game between the mutual funds and Sebi continues.
After a ban on entry loads, mutual funds managed to circumvent it by increasing the exit loads. Sebi then banned differential exit loads for HNIs and retail investors and it has now issued a new diktat.
The regulator’s latest diktat on restricting the maximum period for exit loads has caught MFs off guard once again.
Following a closed door meeting with Sebi on Tuesday, AMFI is issuing a new circular to mutual funds, asking them to charge investors' exit loads only in the first year and not three years.
AP Kurian, chairman of AMFI, said, "It will take a couple of months for the industry to settle down. The impact will be clear by October end or November. Both AMCs and distributors will need to rework the way of doing business."
As the MFs are trying to grapple with the change in norms, sales have already dropped 60-70 per cent so far in August.
Experts believe that a fall in AUM will bring down the profitability of several fund houses as well..
Krishnan Sitaraman, head of fund services at CRISIL, said, "There would be an impact on projected cash flow and income flows, which fund houses have projected. The stronger utilities will survive."
The mutual fund industry complains that the regulator is doing too much too soon, but Sebi seems determined to clear the mess.
So, it will be important for the industry to come together and rework their business model.

Source: http://profit.ndtv.com/2009/08/21225800/Sebi-clamps-down-on-MF-exit-lo.html

Sebi plans to reduce IPO allotment period to 5 days

The Securities and Exchange Board of India (Sebi) is planning to reduce the IPO allotment period to five working days from the present 15 days and is hopeful of doing that in a year’s time, according to its chairman CB Bhave. “The cut in timeframe for allotment is a systemic change and we need to see how it progresses. Our ultimate aim is to reduce the timeframe to five working days. We would like it to happen as soon as possible. But, we also have to deal with the fact that the whole system has to change, Bhave told reporters during the sidelines of an event hosted by the Institute of Insurance and Risk Management (IIRM).
He added that Sebi is also minimising disclosure norms for fast processing of the rights issue. As per clause 8.19 of the Sebi DIP guidelines, currently, companies should finalise the basis of allotment within 15 days and utilise the rights issue proceeds only after the allotment is finalised.
“The main difficulty in reducing the period between the end of an issue and the day of listing is the fact that we have to handle a lot of physical applications. Along with these, physical cheques have to be cleared in the systems. So, it is our hope that as the ASBA (Application Supported by Blocked Amount) process becomes more popular, this processing will get reduced, and then we will be able to reduce the time line,” he said. As far as the ASBA process was concerned, Sebi has received some encouraging response in the recent NHPC issue where about 1,50,000 applications came through ASBA.
The regulator at present was looking at the proposed interest rates futures market. “An RBI and Sebi committee has worked on it and has called for applications from the stock exchanges which are in a fairly advanced state of preparation. We should see some results in the next couple of months,” he said. A joint technical committee of the Reserve Bank of India and SEBI had, in June, recommended allowing interest rate derivatives based on 10-year government bond yields. National Stock Exchange and MCX-SX are currently working on the modalities of launching rate futures.
On the common online platform for mutual fund transactions, Bhave said: “AMFI has told us they have more or less frozen the design they want. They will now look at competitive vendors to decide on what kind of platform needs to be set up.”

Source: http://www.financialexpress.com/news/sebi-plans-to-reduce-ipo-allotment-period-to-5-days/505324/0

Now, mutual funds switching to sell-mode

With markets remaining patchy due to concerns about poor monsoon and the strength of the global
recovery, mutual funds (MFs) are slowly moving to the sell-mode. MFs have net sold equity worth Rs 756.7 crore in this month (up to August 17), data with Sebi shows.
The volatility in markets has hurt performance with returns from diversified equity funds slipping in August. Only 23 out of the 280-odd equity MFs have managed to post gains in the month (till August 18). The gainers too managed to deliver only single digit returns.
"Valuations are a little stretched. QIPs and new issues (IPOs such as NHPC) have taken out some liquidity," said Sameer Narayan, head, equity, Fortis Investments. "The poor monsoon and the strong rally of the dollar, which made people to move away from risk, have also played a role," he said. "Markets have given strong returns and so some amount of profit booking is happening now."
"Investor confidence in India has softened in recent days," according to Moody's Economy.com economist Sherman Chan. Investors are worried that poor agricultural performance could derail overall recovery, she said in her latest note on India. Though the concern on monsoon remained, the strong industrial production data has evoked a lot of optimism and it would be too early to conclude a downtrend, Fortis' Sameer said. MFs turned net buyers of equity in March. They have continued to invest in stocks after remaining on the sidelines for most of April. While net equity purchases by MFs topped Rs 2291.3 crore in May it came down to Rs 839.3 crore in June but recovered in July when net investments stood at Rs 1825.5 crore.
Fund houses recorded their best performance for the year in May. More than 100 diversified equity schemes registered 30-40% growth for the month in a strong post-election rally. However, they couldn't keep up the pace and came up with a tepid performance in June. Only 50 funds registered gains and out of this just two funds managed a growth of above 5% during the month, Value Research data shows. MFs turned in a better show in July buying equity worth Rs 22,559.5 crore, the highest in a month in 2009, Sebi data shows.

Source: http://timesofindia.indiatimes.com/news/business/india-business/Now-mutual-funds-switching-to-sell-mode/articleshow/4912828.cms

MFs asked to live with new charge structure

Domestic mutual funds returned empty handed from a meeting between them and Sebi on Tuesday. In the meeting called by SEBI chairman CB Bhave to receive feedback from mutual funds on its recent decisions on entry and exit loads, he is believed to have made it very clear that the industry will have to live with new norms.
According to fund officials, who attended the meeting, Mr Bhave patiently heard out the issues related to the new commission structure, but reiterated that the new steps will only be beneficial for the long-term growth of the industry.
He suggested that mutual funds need to be investor-centric and should have a uniform cost structure to avoid conflicts within the industry. Mr Bhave is believed to have told the officials that the period for charging exit loads should be one year for all mutual funds, capped at 1%, irrespective of the amount invested by any client.
While rules say that funds can charge unitholders up to 7% on exit, they were imposing this load on the basis of the quantum of investments. A fund official said: “In short, SEBI has hinted that mutual funds should compete on the basis of performance of its schemes and not on the commission structure.”

Source: http://economictimes.indiatimes.com/Personal-Finance/Mutual-Funds/MFs-asked-to-live-with-new-charge-structure/articleshow/4913156.cms

Sebi wants MF exit load only for 1st year

Within weeks of shaking up the mutual fund industry by abolishing entry load in all schemes and moving
to a uniform exit load regime, Sebi has given another jolt to the fund houses. In a late evening meeting on Tuesday, Sebi suggested fund houses to move to a regime of charging exit loads only for the first year of investments. Tuesday's meeting with Sebi chairman was attended by all the heads of fund houses, the chief of Association of Mutual Funds in India (AMFI), the MF industry trade body and some top Sebi officials from the mutual fund department.
After Sebi mandated that all entry loads should go and exit loads should be uniform across-the-board, fund houses had gone into a rejig mode with their finances so that they could compensate MF distributors. The change in the compensation structure was done with the assumption that exit loads could be there for perpetuity.
But ‘‘the recent Sebi suggestion on exit load has sent all those changes to the compensation structure for a toss,'' said a top official at a fund house. ‘‘Our capacity to pay to the distributors will reduce substantially,'' said the head of a local fund house.
MF industry officials said that limiting exit load to a year could lead to increased inclination among investors to move out of a scheme if the returns over one year are good. ‘‘It has the potential to lead to large-scale churning in the fund industry,'' said the official. Earlier, as part of the rejig exercise to change the compensation structure, a host of fund houses had increased exit load period. Now if Sebi's advice becomes a rule, all those will have to be reversed, industry players said.
However, as the CEO of a fund house pointed out that so far Sebi has not come out with any formal letter. ‘‘It's still evolving. I believe a lot of things can happen before it is formally notified,'' said the fund house CEO.

Source: http://timesofindia.indiatimes.com/news/business/india-business/Sebi-wants-MF-exit-load-only-for-1st-year/articleshow/4912829.cms

Sebi rejects mutual funds' concerns over new norms

The Securities and Exchange Board of India (Sebi) has ruled out rolling back its order banning entry load and parity in exit loads for all classes of investors.

On Tuesday, Sebi Chairman CB Bhave met chief executive officers (CEOs) of all fund houses to take stock of the ground realities after the new guidelines.
Industry sources said while the fund houses explained that the industry was still in a nascent stage and imposition of stringent guidelines would stifle its growth, the market regulator told them to adjust within the new guidelines.
Industry players, while admitting that the step was in the right direction, said such developments were much ahead of their time.
“Sebi’s moves have moderated the distributors’ compensation and they certainly are not happy. There is no overnight solution to this new development,” said the CEO of a large domestic mutual fund house who did not wish to be named.
While fund managers said there would be three-four months before the industry would be able to gauge the impact of the guidelines, they felt their collections could be hurt. “The market regulator may have to come up with corrective measures if things do not improve,” said the CEO.
Sources added that fund houses with high cost structure would become increasingly uncomfortable in case the adjustment takes longer. “The trend will be visible from the industry’s August numbers,” said another leading fund manager.
Sebi had banned the entry load charged by fund houses from August 1. In the new regime, distributors would have to negotiate the commission with customers and be paid through a different cheque.
Also, distributors would have to disclose the commission they were being paid for similar products.
In yet another move, the market regulator had asked fund houses to stop discriminating between high networth and retail investors and charge them the same exit load.

Source: http://www.business-standard.com/india/news/sebi-rejects-mutual-funds%5C-concerns-over-new-norms/367518/