JM Financial Mutual Fund announces merger of JM Nifty Plus Fund and JM Emerging Leaders Fund

JM Financial Mutual Fund has announced the merger of JM Nifty Plus Fund and JM Emerging Leaders Fund. JM Nifty Plus Fund will be merged into JM Equity Fund (surviving scheme) and JM Emerging Leaders Fund will be merged into JM Multi Strategy Fund (surviving scheme). Dividend and growth option in respective merging schemes would be merged with respective surviving schemes. In case the investor is not in agreement with the mentioned revision, investors have the option to exit without payment of any exit load. This option can be exercised from 30 June 2011 to 29 July 2011. For investors who do not redeem/switch out, the current value of their holding in respective merging schemes as on 29 July 2011 will be converted into units of respective surviving scheme, by allotting units at the applicable NAV as on 29 July 2011.

Source: http://www.thefinapolis.com/v2/Mutualfunds/MF_news.asp

BNP Paribas MF Announces Change in Fund Manager

BNP Paribas Mutual Fund has announced that Mr. Deepak Shaw, the key personnel of the AMC has been designated as Fund Manager - Overseas Securities of BNP Paribas China India Fund with effect from 28 June 2011.

Further Mr. Chirag Mehta shall cease to be the Fund Manager - Overseas Securities of BNP Paribas China India Fund and the key personnel of the AMC with effect from close of business hours of 27 June 2011.

Source: http://www.adityabirlamoney.com/news/486996/10/22,24/Mutual-Funds-Reports/BNP-Paribas-MF-Announces-Change-in-Fund-Manager

Birla Sun Life seeks Sebi nod to merge MF schemes

Birla Sun Life Asset Management Company, investment manager of Birla Sun Life Mutual Fund, has sought approval from the Securities and Exchange Board of India (Sebi) to merge some of its MF schemes.

“We have identified some of our existing schemes for consolidation on the basis of their underlying investment philosophy and objective match,” said A Balasubramanian, chief executive of Birla Sun Life AMC, in an emailed response. “Any consolidation has to have the necessary permission from Sebi, for which we have applied.”

He did not offer details of the schemes identified for merger. Currently, the fund house, a joint venture between the Aditya Birla Group and Canada’s Sun Life Financial Services, manages 49 open-ended MF schemes including 26 equity ones 16 debt schemes, six hybrid and one exchange traded fund.

“Some of our schemes belong to the erstwhile Allianz Mutual Fund, which we took over in 2004. Consolidation of schemes not only reduces their number; it also helps the portfolio manager to stay a lot more focused on the scheme portfolio construction strategy and also eases the selection of schemes from the investors’ perspective,” said Balasubramanian.

He added the investors would not be negatively impacted because of the merger. Fund houses have began amalgamating MF schemes after the stock market regulator expressed displeasure over the large number in the market.

According to industry analysts, at least six fund houses have merged their schemes since January 2010. Earlier this year, ICICI Prudential AMC said it would merge ICICI Prudential Fusion-I, ICICI Prudential Equity Opportunities Fund and ICICI Prudential Fusion-III into ICICI Prudential Dynamic Fund.

“Sebi had said too many schemes that appear identical tend to confuse investors. Merger is a welcome move. It benefits investors, as they will have a lesser number to choose from. It also benefits the fund house, because managing a large number of schemes is not always viable,” said Dipali Ranu, mutual fund analyst with Sharekhan.

Source: http://www.business-standard.com/india/news/birla-sun-life-seeks-sebi-nod-to-merge-mf-schemes/440257/

MFs use spare cash to hunt for mid-caps.

Mutual funds are beginning to bargain-hunt, as smaller stocks are tumbling to new lows. A number of mid-cap and small-cap schemes of MFs, which were sitting on huge cash positions in November 2010, when the Sensex touched an all-time high of 21,000, have begun to deploy this cash in the market.

According to Value Research, a Delhi-based MF research agency, 19 of 21 schemes which took the right call at the peak of the market in November 2010, with 10 per cent or more cash in their portfolio, are now buying.

Reliance Small Cap Fund, which has a corpus of Rs 532 crore, had 55 per cent of this in cash at the end of November 2010. Being a new scheme, the fund remained cautious during the first two months this year. It has since reduced its cash position, to 18 per cent of its portfolio by the end of May. Some of its top positions are ABG Shipyard, FAG Bearings and Take Solutions.

Similarly, ICICI Prudential Dynamic Fund, which had cash of nearly 30 per cent in November, is down to 16 per cent. AIG Infrastructure saw its cash level drop from 25 to 15 per cent.

Other schemes which have seen a drop in cash positions in the past six months include Franklin India, DSP Blackrock Small and Midcap, Quantum Long Term Equity, Reliance Equity and JM Midcap. Axis Midcap Fund, which raised money in February, has also rapidly deployed funds, bringing down cash levels to 32 per cent at the end of May.

In the past six months, while the Sensex lost 15 per cent, the BSE Midcap and BSE Small Cap fell 24.5 per cent and 29.5 per cent, respectively. Some stocks have lost 50 per cent or more. This is creating a number of bargains for fund managers.

“It is very evident. Fund houses have increased exposure in quality mid-cap stocks which were beaten down, irrespective of their fundamentals,” said Gopal Agarwal, head of equities at Mirae Asset Global. “The valuations are good in the mid-cap space and during such a volatile market scenario, people will use the cash available with them to buy more.”

In June, the MF houses were net buyers for Rs 748 crore, adding to the Rs 434 crore they bought in May. This is in sharp contrast to foreign institutional investors, which have been big sellers in the market through the year. “This way, I believe the cash level will deplete completely in these (mid-cap) funds,” Agarwal said.

Source: http://www.business-standard.com/india/news/mfs-use-spare-cash-to-hunt-for-mid-caps/440255/

AMFI wants direct line with independent financial advisors

The Association of Mutual Funds in India (AMFI) has expressed its desire to open a proper communication channel with independent financial advisors.

The AMFI has asked independent financial advisors (IFA) to form a body of their own that can regularly interact with AMFI to air their grievances to address distribution-related concerns of fund houses.

“Distribution is a grey area for us,” said Mr H.N. Sinor, Chief Executive, AMFI, at CII's annual mutual fund summit on Wednesday. “We do not have any kind of structured interaction with banks or the IFA community.”

“Persistency is another challenge that the industry faces today,” said Mr Milind Barve, Chairman, AMFI, at the summit.

On the issues plaguing the mutual fund industry, Mr Barve said that what the industry needed foremost was an image change.

“A lot of things are being said about the industry today, but hardly any good word. There is hardly any notice of the positive contribution done by the fund houses,” said Mr Barve.

He clarified that fund houses had not built their institutional business at the cost of their retail business and hence the grouse was not valid.

The AMFI had decided that each fund house will conduct five investor awareness programmes every month, and 2,000 such events will be held in a year.

In 2010-11, 26 AMCs conducted 5,817 investor awareness programmes covering 280 cities and 3,40,383 participants. This fiscal, 19 AMCs have covered 115 cities, conducted 1,123 investor awareness programmes reaching 30,589 participants.

The AMFI is planning to launch a media campaign as a means of reaching the investor. “A film on investor awareness made on a budget of Rs 8 crore will start airing on television screens by mid-July,” said Mr Sinor.

Based on the response to the campaign, another educational series for investors will be launched.

The AMFI also plans to come out with voluntary guidelines for investor protection though it was too early to talk about it, said Mr Sinor.

Mr Barve said that too much dependence on regulation and ‘obsession' with SEBI was a concern.

“There are many things that we need to do ourselves. We need to see what we can do without regulatory intervention.”

Source: http://www.thehindubusinessline.com/markets/stock-markets/article2126413.ece

Top 5 fund houses increase their share in folio accounts

The top five mutual fund houses in the country saw their folio share increase by 6 per cent from 52 to 58 per cent in FY '11 despite the industry witnessing a decline in the number of folio accounts.

Only HDFC and ICICI Prudential saw an increase in folios.

However, despite a drop in folio accounts, fund houses such as UTI, Reliance MF and Birla Sunlife saw their share increase in the MF industry. UTI, with its strong retail presence, saw its folio share increase from 19.7 to 21 per cent. Reliance holds the second largest share at 15.8 per cent. It was 14.7 per cent at the end of FY '10. HDFC saw its share go from 7.7 to 9.9 per cent, ICICI Prudential from 5.4 to 5.9 per cent and Birla Sun Life from 4.8 to 5.1 per cent.

Consolidation is the way forward for the mutual fund industry as is obvious from the fact that the top five fund houses now account for a larger share of the folio numbers, say fund experts.

“Products are today sold on the basis of merit. For an investor the brand name and trust are more important than earlier. However, having said that, some smaller fund houses despite good performance lose out on investors because of lack of adequate advertising,” said Mr Rakesh Goyal, Senior Vice-President, Bonanza Portfolio.

Of the top five, only two fund houses saw an increase in their folio numbers. HDFC saw a 20 per cent increase, while ICICI Prudential saw an increase of 2.5 per cent. Fund analysts attribute this to the robust in-house distribution system of these fund houses, which is in the form of their own banks.

“Several individual distributors and other multi-national banks that were into mutual fund distribution have closed shops due to lowered investor response. This has impacted the sales of the smaller fund houses which do not have a strong distribution network,” said the head of a distribution firm.

The mutual fund industry lost close to 36 lakh folios in FY ‘11. The number of folios in the industry stood at 4.69 crore at the end of FY '11 as against 5.05 crore in FY10.

Folio numbers were not expected to rise anytime soon, say fund analysts, unless distributors are compensated well. “Margins are low and salary costs of distributors are high and continue to increase every year due to inflation. Most distributors are, therefore, shifting to other products,” said a mutual fund official.

Source: http://www.thehindubusinessline.com/markets/stock-markets/article2123954.ece

Fixed income ETFs may soon be available in India

Exchange-traded funds (ETFs) on fixed income, which manage $200 billion globally, may soon be available here, if the market regulator has its way. The Securities and Exchange Board of India (Sebi) wants fund houses to attract the untapped mass of risk-averse small investors through these low-risk and low-cost products.

At a conference on ETFs last week, K N Vaidyanathan, executive director, Sebi, said, “We need to think about how to bring this vast majority of savers to get a little more productive in their investments. Initially, may be through the debt route or the liquid investment route. Why does the realm of ETFs stick to equities or gold? Why haven’t we thought of ETFs, say, around a liquid fund, which will make the concept very easy for anybody to relate to as a sweet product?”

Indians are among the most avid savers in the world, saving nearly one-third of their income every year. However, most of this saving is held in bank fixed deposits and other fixed income products. Even after 15 years of existence, mutual funds have not been able to increase their penetration beyond the big cities. Less than two per cent of the population invest in mutual funds, which have been focusing largely on selling high-risk equity products to small investors.

According to Vaidyanathan, the adage that ‘equities are for retail, debt is for institutions’ does not make sense.

“The highest risk product is for retail. The lowest risk product is for institutional investors. Somewhere, we got that mix wrong,” he said. “Do you want to make 50 basis points on a Rs 10,000-crore corpus or two per cent on a Rs 100-crore corpus?” he asked.

Fixed income ETFs have become a rage in West, especially after the collapse of Lehman Brothers in 2008, as investors put safety of capital before returns. However, in India, the concept is in its infancy. Fundhouses like Benchmark and Motilal Oswal AMC are looking at ways to break ground in this untapped segment in India.

“We are evaluating it,” said Nitin Rakesh, CEO, Motilal Oswal Asset Management, which is positioning itself as a ETF fund house. “Globally, fixed income ETFs are the fastest growing after the 2008 crisis. There are ETFs on money market, corporate bonds, etc. It’s a $200-billion market now,” he added.

According to him, several simple issues need to be figured out. Fund houses are looking for regulatory guidance on how ETFs would function, as there are no tradeable fixed income indices in India. If the fund is going to actively manage underlying securities in the absence of an index, then it may lose out on the transparency which is an USP of ETFs. Most Indian ETFs have a fixed basket of securities which they trade on, like the equity indices or gold.

Benchmark AMC, India’s largest AMC focusing on ETFs, has already filed offer documents for a Gilt ETF that will have 10-year government securities as underlying. It is waiting for clearances from Sebi. When asked if the public statement means the product will be cleared soon, Sanjiv Shah of Benchmark said, “I hope so.” But he was not very sure if ETFs can bring in huge number of retail investors. “Retail participation has traditionally been through bank deposits,” Shah said.

Source: http://www.business-standard.com/india/news/fixed-income-etfs-may-soon-be-available-in-india/439982/