Mutual Funds News 21st Feb 2008
IRDA asks insurers to follow proposal norms
Hyderabad: The Insurance Regulatory and Development Authority (IRDA) has asked the insurers to strictly follow norms with regard to proposal for insurance. The authority has advised all insurers to strictly follow the provisions relating to 'Proposal for insurance' (Section 4) under the IRDA (Protection of Policyholders' Interests), 2002. IRDA was in receipt of several complaints, citing instances of policies being issued without collecting a proposal form from customers as specified in Section 4.
StanChart's AMC sale talks at final stage
Standard Chartered's plans to sell its asset management company (AMC) has now entered its final stage and Swiss Bank UBS is expected to make another attempt to buy the AMC. But this time whoever gets it might have to pay much more because the valuations have shot up. After the first sale agreement with UBS was scrapped due to regulatory concerns the possible re-entry of UBS into the bidding process has once again raised questions about the future of the sale process.
Standard Chartered is currently in the final stages of the new bidding process. Sources say seven bidders have been shortlisted from a list of 40 and invited to submit financial bids.The bidders include prominent global names like Goldman Sachs, Lehman Brothers & Emirates Bank. UBS is also likely to re-enter the race, now that the RBI has cleared a full banking licence for the Swiss bank.With UBS making a surprise comeback into the race to bag Standard Chartered's lucrative asset management business, many question whether the new bidding process could also now be in jeopardy.
ICICI Prudential AMC bags Lipper awards
ICICI Prudential Asset Management has received the prestigious Lipper Fund Awards for 'Best Overall Fund Group over three years'. The fund house has also won awards for `Best Bond Fund Group' and `Best Mixed Assets Group'. These apart, the company has won awards for its three plans, --ICICI Prudential Gilt Fund Investment Plan-PF Opt Growth, ICICI Prudential Dynamic Plan-Growth and ICICI Prudential Long Term Plan.
ICICI Prudential Asset Management is a joint venture between ICICI Bank and UK-based Prudential Plc. The company has operations in 135 cities in the country and has assets under management of around Rs 64,04,507.55 crore as on January 31, 2008. The Lipper Fund Awards highlight funds that have excelled in delivering consistent strong risk-adjusted performance. Lipper awards are given to funds in 21 countries across Asia, Europe and America.
DSP Merrill Lynch MF launches new FMP Series
DSP Merrill Lynch MF has unveiled DSP Merrill Lynch Fixed Maturity Plan 3 Months Series 3. It is a close-ended income scheme. The scheme has tenure of 3 months. Objective: The primary investment objective of the schemes is to seek capital appreciation by investing in a portfolio of debt and money market securities. It is envisaged that the portfolio of each scheme will display a maturity profile that is generally in line with the term of the scheme. The schemes may also use fixed income derivatives for hedging and portfolio balancing. The fund will invest can invest up to 100% in debt instruments and up to 100% in money market. The scheme may invest up to a maximum of 100% of the scheme's net assets in domestic securitised debt.
DSP ML MF declares dividend
The DSP ML Financial mutual fund has announced the declaration of dividend under dividend option of DSP ML India T.I.G.E.R. Fund (The Infrastructure Growth and Economic Reforms Fund). The record date for dividend will be 22 February 2008.
The quantum of dividend is 50% i.e. Rs. 5.00 per unit on the face value of Rs. 10. The NAV of the scheme was recorded at Rs 27.945 as on 15 February 2008. DSP ML India T.I.G.E.R. Fund is open ended growth scheme, whose primary investment objective is to seek to generate capital appreciation, from a portfolio that is substantially constituted of equity securities of corporates, which could benefit from structural changes brought about by continuing liberalization in economic policies by the Government and/or from continuing investment in infrastructure, both by the public and private sector.
Reliance MF unleashes new Fixed Horizon Fund
Reliance MF launches Reliance Fixed Horizon Fund -VI-Series 2 and it is a close-ended income scheme with maturity period of 91 days from the date of allotment. The primary investment objective of the scheme is to seek to generate regular returns and growth of capital by investing in a diversified portfolio of central and state government securities and other fixed income/ debt securities normally maturing in line with the time profile of the series with the objective of limiting interest rate volatility. The scheme will invest 30%-100% in money market instruments. The scheme will invest 0%-70% in government securities issued by central and/or state government & other fixed income/ debt securities including but not limited to corporate bonds and securitised debt. Debt securities will also include securitised debt, which may go up to 70% of the portfolio. The total debt derivative exposure would be restricted to 50% of the net assets of the scheme. The fund shall not invest in equity derivatives.
UTI MF launches new FTI Series
UTI Mutual Fund has unveiled a fund called UTI Fixed Term Income Fund- Series IV Plan III -February 14 Months and it is a close-ended income scheme with plan tenure between 12 to 24 months. The objective of the scheme is to generate regular returns by investing in a portfolio of fixed income securities. The fund will invest 30%-100% in debt including securitised debt. It will have an investment of 0-70% in money market instruments. The plan invests up to 100% of its debt portfolio in securitised debt. The scheme charges an exit load of 3.00%, if the investment is redeemed before the maturity period. Whereas there will be no exit load charged on the redemption made on or after the maturity period.
ICICI MF declares dividend
ICICI Mutual Fund has announced 25 February 2008 as the record date for declaration of dividend under dividend option of ICICI Prudential Interval Fund II - Quarterly Interval Plan C. The fund house has decided to distribute 100% of surplus available as on record date. The NAV for the scheme was Rs. 10.1192 as on 18 February 2008. ICICI Prudential Interval Fund II - Quarterly Interval Plan C is a debt oriented interval scheme. The investment objective of the scheme is to seek to generate optimal returns consistent with moderate levels of risk and liquidity by investing in debt securities and money market securities.
Tata MF files an offer document
Tata Mutual Fund has rolled out a fund called Tata Small and Mid Cap Infrastructure Fund and it is an open-ended equity scheme. The investment objective of the scheme is to seek long-term capital appreciation by investing predominantly in small and mid cap stocks of companies engaged in or expected to benefit from the growth and development of infrastructure.
Tata Small and Mid Cap Infrastructure fund offers two options i.e. growth and dividend. Dividend option will have facility of dividend payout and dividend reinvestment. The scheme may invest 65-100% in small and mid cap stocks of companies engaged/ associated with infrastructure sector. It will have investment of 0-35% in other equity and equity related instruments. The scheme may prefer to invest 0-35% in debt, money market and securitized debt medium instruments. Investment by the scheme in securitized debt will not normally exceed 30% of net asset of the scheme. The scheme may levy 2.25% an entry load for each investment amount less than Rs. 2 crore. No entry load will be charged for the investment amount equal to or more than Rs 2 crore. The scheme carries an exit load for each investment amount less than Rs. 2 crore; it may charge 1% an exit load if redemption is done on or before expiry of 12 months from the date of allotment. For investment amount greater than or equal to Rs. 2 crore, the scheme may not charge any exit load.
HDFC MF declares dividend
HDFC Mutual Fund has announced 25 February 2008 as the record date for declaration of dividend under dividend option of HDFC Fixed Maturity Plan 90 Days November 2007 (2) under HDFC Fixed Maturity Plan -Series VI. The fund house has decided to distribute 100% of surplus available under its both retail and wholesale plans as on record date. The NAV for the scheme was Rs. 10.2081 as on 18 February 2008. HDFC Fixed Maturity Plan 90 Days November 2007 is a close-ended income scheme. The investment objective of the scheme is to seek to generate income by investments in debt, money market instruments, and government securities.
SBI MF launches new debt fund series
SBI Mutual Fund has launched a fund called SBI Debt Fund Series - 90 Days Fund and it is a close ended debt scheme. The objective of the scheme is to provide regular income, liquidity, and returns to the investors through investment in a portfolio comprising of debt instruments.
The fund will invest 0%-80% in Government of India dated securities and treasury bills and money market instruments. It will have an investment of 20-100% in AAA/AA+ bonds and debt instruments. The investment in securitised debt will be up to 20% of the exposure to AAA/AA+ bonds. SBI Debt Fund Series - 90 days offers two options i.e. growth and dividend. The dividend option further offers dividend payout facility. The scheme charges an exit load of 1.00%, if the investment is redeemed before the maturity period. Whereas there will be no exit load charged on the redemption made on or after the maturity period. The minimum investment amount under the scheme would be Rs 50,000 and in multiples of Rs 1000 per application.
Mutual funds continue selling
Mutual funds (MFs) sold shares worth a net Rs 326.80 crore on 19 February 2008, compared to their selling of Rs 45.10 crore on Monday, 18 February 2008. MFs' net outflow of Rs 326.80 crore on 19 February 2008 was a result of gross purchases Rs 618.70 crore and gross sales Rs 945.50 crore. The 30-share BSE Sensex rose 27.61 points or 0.15% at 18,075.66 on that day. MFs were net sellers of shares worth Rs 539.40 crore in this month, till 19 February 2008.
Seven suitors line up for StanCharts MF business
The race for Standard Chartered Mutual Fund is in the last lap, with around seven suitors in the fray, including Credit Agricole, Shinsei and IDFC. The price tag is $200 million, up from $120 million that UBS was willing to pay last year.
Initially there were 20 fund houses in the race including three from India. The base price for the deal was $137.5 million. In the final round, the lowest bid has been for $175 million while some were above $200 million.
Other players in the final leg are Fortis, Aviva, Mirae, a US fund major and a Middle East player. Incidentally Fortis is in the final stages of taking over ABN Amros AMC business in the country as part of its global deal past year. ABN Amro has assets under management of Rs 8529 crore as on the end of January. StanChart has AUMs of Rs 13,118 crore. The AMC which focused on debt schemes forayed into equity two years ago; today it has around 30% of its AUMs in stocks something that has pushed up the valuation.
As a part of the erstwhile deal with UBS, employees were to be given a retention bonus. This time depending on the final deal, either StanChart or the new buyer will give the bonus to the employees. The core team is expected to remain in place. Sources maintain that any new buyer would not only takeover the AMCs assets but its team.
The deal between StanChart and UBS was canceled as the latter failed to secure the Reserve Bank of India approval for the deal. When contacted, StanChart officials refused to comment on the process. Though StanChart would be more amenable to an overseas player taking over the fund, as it would mean a possible tie-up to distribute funds internationally, it is not against a domestic entity like IDFC.
Its perceived that a local buyer may be quicker in getting regulatory approvals.
Last year when the British bank tied up with UBS to sell the AMC business, it had also said that Standard Chartered Wealth Management will form a strategic alliance with UBS Global Asset Management to distribute mutual funds in Asia, Africa and the Middle East. It would look at a similar model this time too.
Crisil 'AAAf' rating to DSPML MF
Crisil has assigned AAAf rating to DSP Merrill Lynch Mutual Fund's DSP Merrill Lynch Cash Plus Fund, which indicates that the funds portfolio will provide very strong protection against losses due to credit defaults.
Crisil's assessment of a bond fund's credit quality is based on the creditworthiness of the fund's portfolio, for which it has developed a credit quality matrix to assess the aggregate credit quality of a fund's underlying portfolio.
The fund is managed by DSP Merrill Lynch Fund Managers.
JM Financial ML MF declares dividend
The JM Financial ML Financial mutual fund has announced the declaration of dividend under dividend option of the regular and institutional plan of JM ML Fixed Maturity Fund Series VI- Quarterly Plan 5. The record date for dividend will be 25 February 2008.
The AMC plans to distribute realized appreciation in the NAV of the plan / option from 27 December 2007 till the record date as dividend. The NAV of the scheme was recorded at Rs 10.1238 under regular plan and Rs 10.1314 under institutional plan as on 19 February 2008.
JM ML Fixed Maturity Plan Series VI- Quarterly Plan 5 is a close-ended income scheme, whose primary investment objective is to seek to generate regular returns through investment in fixed income securities normally maturing in line with the time profile of the respective plan.
Rolta India stocks likely to benefit MF scheme
Share prices of Rolta India went up by 3.26% to Rs. 313.55 reported at BSE at 10.43 a.m. on 21 February 2008 against previous day close of Rs 303.65.
The rising share prices may have positive impact on NAV of mutual fund schemes, which holds their stake in the company. Tata Capital Builder Fund (G) is likely to gain most as it has the highest percentage holding of the stocks of the company compared to its peer groups who have invested in the stocks of the company in January 2008. Tata Capital Builder Fund (G) was holding 2.60% of its total portfolio size invested in the stocks of the company as on 31 January 2008. The scheme holds 27200 units of the company in January 2008.
Other schemes, which likely to gain includes DSP ML Technology.com (G) with holding of 1.04 lakh units (1.72% of its portfolio), and LICMF Growth Fund (G) with 40000 units holding (1.20%) as on 31 January 2008.
Canara Bank loses by 3.41%
Share prices of Canara Bank went down by 3.41% to Rs. 278.00 reported at BSE at 10.52 a.m. on 21 February 2008 against previous day close of Rs 287.80.
Declining share prices may have negative impact on NAV of mutual fund schemes, which holds their stake in the bank. Reliance Banking Fund - (Bonus) is likely to lose as it has the highest percentage hold of the stocks of the bank compared to its peer groups who have invested in the stocks of the bank. Reliance Banking Fund - (Bonus) has 6.27% of its total portfolio size invested in the stocks of the bank as on 31 January 2008. The scheme holds 17.90 lakh units of the bank in January 2008 compared to its peer groups who have invested in the stocks of the bank.
Other schemes, which may affect includes ING Dividend Yield Fund (G) with 60155 units (6.03% of its portfolio), JM HI FI Fund (G) with holding of 75194 units (4.54%) as on 31 January 2008.
Mutual fund firms seek nod to offer more tax plans
Indian mutual fund firms have asked the government to allow them to offer investors multiple tax planning equity funds, seeking relaxation of a rule that limits the options they can offer to customers.
A regulation framed in 2005 restricts them to just one such fund or equity linked savings scheme (ELSS), limiting options for investors who have been increasingly using them to save tax.
ELSS is same as diversified equity funds except that they come with a three-year lock-in period. To cater to the rising interest in such funds, asset managers should be allowed to float as many ELSS as they wanted, to offer themes such as infrastructure, mid-cap, multi-cap or sectoral funds as available to them in other equity funds.
Two years ago, India allowed savers to claim tax benefit on investment of up to 100,000 rupees in ELSS, making them hugely popular among investors with assets of such funds rising nearly 25 times to 154 billion rupees in past three years.
FoFs and International Funds
The industry also wants fund of funds (FoFs), which invest in equity schemes, and other funds investing in overseas equities to be treated as equity funds to enable them to pay less tax.
Indian regulations classify funds investing more than 35% of assets in foreign equities and FoFs as debt funds and subject to higher taxes, making them unattractive. Investments in them attract long-term capital gains tax of 10% after a year, which domestic equity funds do not pay. Short-term gains tax can go up to 30%, while it is only 10% for equity funds. Investors also pay surcharge and cess.
HSBC MF launches HSBC FT Series 43
Name of Fund: HSBC Fixed Term Series 43
Scheme: It is a close-ended income scheme, which will be for fixed term of 14 months from the date of allotment.
Investment Objective: The investment objective of the scheme is to seek generation of returns by investing in a portfolio of fixed income instruments normally maturing in line with the time profile of the plan.
Asset allocation: The scheme may invest up to 100% in money market instruments (including CBLO and reverse repo) It may invest up to 100% in short term and medium term debt instruments and securitised debt. The investment in securitised debt will not exceed 50% of the net asset of the scheme. The net notional exposure to derivatives shall not be more than 50% of the net assets. Under normal circumstances, the scheme shall not have an exposure of more than 50% of its net assets in foreign securities.
Fund Opens: 19 February 2008
Fund Closes: 21 February 2008
Face Value: Rs 10
Investment Options: The scheme offers two plans i.e. regular and institutional plan. The scheme will have both growth and dividend option. Dividend reinvestment facility is available under dividend option.
Load structure: The scheme may not levy entry load as it is of close-ended nature. The scheme charges an exit load of 2.00% if the investment is redeemed before the maturity date.
Minimum Investment Amount: The minimum investment under regular plan is Rs 10,000 and in multiple of Re 1 thereafter. For institutional plan, the minimum investment amount is Rs 1 crore and in multiple of Re 1 thereafter.
Minimum subscription amount: Rs 5 crore
Benchmark Index: CRISIL Liquid Fund Index
Fund Manager: Mr Alok Sahoo and Mr Suyash Choudhary
Principal PNB MF launches FMP Series
Name of Fund: Principal Pnb Fixed Maturity Plan 460 Days - Series IV
Scheme: It is a close-ended scheme.
Objective: The primary objective of the scheme is to build an income-oriented portfolio and provide returns along with regular liquidity to investors.
Asset Allocation: The fund will invest up to 0%-100% in debt securities (including securitized debt) and money market instruments. It will have investment of 0-100% in government securities. Investment in securitised debt may be up to 100% of the net assets of the scheme.
Fund Opens: 19 February 2008
Fund Closes: 21 February 2008
Face Value: Rs 10
Investment Options: The scheme will have two-investment plans viz. regular plan and institutional plan with growth and dividend options under each plan. The dividend option under both plans will have the facility of payout and sweep.
Entry Load: No entry load will be charged during the new fund offer of the scheme.
Exit Load: The scheme may levy 1% an exit load on redemption of investment from the date allotment to 400 days.
Minimum Investment Amount: The minimum investment amount under regular plan is Rs 1000 and any amount thereafter. Under institutional plan, the minimum investment amount is Rs 50 lakh and any amount thereafter.
Benchmark Index: CRISIL Short Term Bond Fund Index
Fund Manager: Mr. Ritesh Jain
MFs crash but still promise long term gain
The bearish trend in the stock market for the last few weeks has hit the investors hard. Even those who have invested through mutual funds have lost substantial wealth. However, this has created a good opportunity to invest in the market.
It is expected that in the next one to three years, Indian stock market will give a return of more that 25% compounded annually. The investor should postpone the idea of liquidating their investments in the stock markets to invest some other assets class. Returns from the investment in the equity market would be more than other areas.
In the long term, equity is still the best instrument to invest. However, one should not enter the market with the short term view in the current market scenario.
The 30-share sensitive index has fallen by over 25% in the last one month from 20,827 on January 11 to 16,631 on 11 February 2008. This has brought down the share prices of many good performing companies to very attractive level. Prices of medium and small companies have become even more attractive.
The present fall in the market is mainly because of the apprehension of a slowdown in the US economy. The performance of India centric companies is likely to improve as economy continues to grow at around 8.5%. Investment in equity of these companies will remain robust.
There is no redemption pressure on mutual funds. Investors are still investing in MFs. According to one source, Reliance MF has raised over Rs 5,000 crore in the primary market. Other funds like HDFC Infrastructure has mobilized around Rs 2000 crore. AIG Fund has raised another Rs 450 crore. These funds are likely to start investing in the current week. Besides, funds are mobilizing substantial fund through systematic investment plan (SIP).
FIIs have also started coming back in the market. In February so far, there net investment has increased by Rs 330 crore as against a net sale of Rs 3,200 crore in January.
ICICI Prudential MF files an offer document
Name of Fund: ICICI Prudential Banking and Financial Services Fund
Scheme: An Open ended equity scheme
Objective: The primary objective of the scheme seeks to generate long-term capital appreciation to unit holders from a portfolio that is invested predominantly in equity and equity related securities of companies engaged in banking and financial services.
Investment options: Investors under the ICICI Prudential Banking and Financial Services Fund have a choice of a retail option and an institutional option I. Only growth sub-option is available under institutional option. The retail option has two sub options namely growth and divided with payout and reinvestment facility.
Asset Allocation: The scheme will invest 70-100% of its portfolio in equity and equity related securities. The scheme will invest 0-30% in debt instruments including cash and cash equivalent. The plan may invest up to 70% in derivative instruments. It may invest up to 50% in securitised debt. The scheme may have investment in ADR/GDR 50% of allocation to equity and equity related securities.
Face Value: Rs 10.
Entry Load: The scheme carries an entry load only under retail option. There will be an entry load of 2.25% for investment of less than Rs 5 crore. There will not be any entry load charged for investment of Rs 5 crore and above. Institutional option I does not carry an entry load.
Exit Load:
Under retail option: For investment less than Rs. 5 crore and made during the NFO period and redeemed before 6 months from the date of allotment, there will be 1% an entry load. There will be no entry load levied for investment of Rs.5 crore and above.
Under institutional option I, there will be no exit load charged.
Minimum Investment Amount: The minimum investment amount under retail option is Rs. 5000 and in multiples of Re.1 thereafter. Under institutional option, the minimum investment option I is Rs 10 crore in multiples of Re 1 thereafter.
Minimum target amount: Rs 1 crore
Benchmark Index: BSE Bankex
Fund Manager: Mr. S. Naren and Mr Amit Mehta
Franklin Templeton MF ties up with State Bank of Travancore
Franklin Templeton Mutual Fund and State Bank of Travancore have entered into a pact for distribution of latter's mutual fund products.
The bank has been distributing mutual fund products of SBI Mutual Fund for the last four years. The tie-up arrangement with Franklin Templeton Investments has been made to provide value added services to all its customers and other investors.
Reliance MF files an offer document with SEBI
Name of Fund: Reliance Fixed Horizon Fund IX
Scheme: It is a close-ended income scheme. The scheme offers 12 Series with different maturity. The offers under Series 1 to 4 having 15 to 18 months duration, Series 5 to 8 having 18 months 1 day to 21 months and Series 9 to 12 with maturity period 21 months 1 day to 25 months.
Objective: The primary investment objective of the scheme is to seek to generate regular returns and growth of capital by investing in a diversified portfolio of central and state government securities and other fixed income/ debt securities normally maturing in line with the time profile of the series with the objective of limiting interest rate volatility.
Asset Allocation: The scheme will invest 0-70% in money market instruments. The scheme will invest 30-100% in government securities issued by central and/or state government & other fixed income/ debt securities including but not limited to corporate bonds and securitised debt. Debt securities will also include securitized debt, which may go up to 100% of the portfolio. The average maturity of the securities will be in line with the maturity profile of the scheme.
Face Value: Rs 10 per unit.
Investment Options: The scheme will have retail and institutional plan and each plan will have a growth option and dividend payout option.
Entry Load: Being a close end scheme it will not charge any entry load under all the series during the initial offer.
Exit Load:
Under Series 1 to 4: The scheme charges an exit load of 2.00% if the investment is redeemed on or before completion of 6 months. The scheme charges an exit load of 1.00% if the investment is redeemed between 6 months-1 day and before completion of 12 months. It further reduced to 0.25% if redeemed between 12 months-1 day and before the maturity of the scheme.
Under Series 5 to 8: The scheme charges an exit load of 2.00% if the investment is redeemed on or before completion of 6 months. The scheme charges an exit load of 1.00% if the investment is redeemed between 6 months-1 day and before completion of 15 months. It further reduced to 0.25% if redeemed between 15 months-1 day and before the maturity of the scheme.
Under Series 9 to 12: The scheme charges an exit load of 2.00% if the investment is redeemed on or before completion of 12 months. The scheme charges an exit load of 1.00% if the investment is redeemed between 6 months-1 day and before completion of 18 months. It further reduced to 0.25% if redeemed between 18 months-1 day and before the maturity of the scheme.
Minimum Investment Amount: The minimum investment amount under retail plan is Rs 5,000 and in multiple of Re 1 thereafter. The minimum investment amount under institutional plan is Rs 1 crore and in multiple of Re 1 thereafter.
Benchmark Index: CRISIL Composite Bond Fund Index
Fund Manager: Mr. Amit Tripathi
Escorts MF declares dividend
Escorts Mutual Fund declared dividend under its two schemes namely- Escorts Income Fund and Escorts Opportunities Fund.
| Scheme | Monthly Dividend | Rate of Monthly Dividend per unit (In Rs.) | Record Date | NAV as on 18-02-2008 |
| Escorts Income Plan | 102nd | 0.035 | 26-02-2008 | Dividend Option-10.4912 Growth Option-24.4573 Bonus Option-12.8793 |
| Escorts Opportunities Fund | 70th | 0.160 | 26-02-2008 | Dividend Option-15.1167 Growth Option-31.1914 |
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