Mutual Fund industry assets up by 9.5%

The Indian Mutual Fund industry is on front foot once again. The industry’s assets under management (AUM) have risen by about 9.5% in Jan ’09 vis-à-vis Dec ’08. This is the second consecutive monthly rise in the AUM after a series of downfalls witnessed in the last quarter of 2008. Earlier the assets had risen by around 5% in Dec ’08.
With an asset base of Rs 4,60,949 crore, the industry may still have a long way to go to regain its highest absolute peak ever of Rs 6 lakh crore. However, in percentage terms, this rise is pretty significant as growth in January ’08 is second highest after Oct ’07. In last 15 months, growth in AUM has been over 10% on only two occasions.
LIC Mutual Fund is once again the biggest AUM gainer in percentage terms. Its assets are up by over 30% since last month to Rs 18,731 crore. This AMC had earlier reported a rise of over 23% in AUM for the month ended Dec ’08.
Other asset management companies (AMC) to have recorded significant rise in assets include IDFC, DWS Investments, Birla Sun Life, Tata, Principal, ICICI Prudential and Kotak. Each of these AMCs has recorded an increase of over 10% in their AUM.

 

Investors flock to big, PSU MFs for investment safety

After a tumultuous time during the October liquidity crisis, investors 
might just be taking a “flight to safety”, banking on public sector 
mutual funds and the bigger names in the industry. 

Corporate investors are shifting preferences in their choice of fund 
houses instead of chasing returns, distributors and officials said. 
Investors are rushing to invest in public sector entity-sponsored fund 
houses with a view government may come to rescue and bail out in case 
of any unforeseen circumstances. 
While PSU-sponsored fund houses are cashing-in on money, top mutual 
funds are also benefiting due to their brand name, expertise and fund 
management skills, industry officials said. “There has been a complete 
shift in the choice of investors. People have begun associating more 
with the bigger names. Choice of fund house has become the first 
criteria for investment followed by better fund managers and lastly, 
returns,” a senior official at a distribution house said. 
October witnessed unprecedented redemption in liquid, short-term debt, 
and fixed maturity plans amid acute liquidity crisis that pushed 
interbank call money rate close to 22 per cent. 
Doubts over FMP portfolios further added to the pressure leading to 
the investor sentiment taking a rough bruise. In the course of events, 
a study by Mumbai-based distribution house, which is famous for 
corporate reach, notes how only the big players have been consistent 
with their inflows. 
According to this study, fund houses that have garnered sizeable 
business in November include Birla Sun Life Mutual Fund, ICICI 
Prudential Mutual Fund, HDFC Mutual Fund, Tata Mutual Fund and 
Reliance Mutual Fund. 
What must be noted that the fund houses listed are among the top ten 
of the country and that in spite of witnessing a drop in their monthly 
average assets have remained in the good books of investors. 
In November, average assets under management of the 35 fund houses in 
India fell by 6.91% to Rs 4.02 lakh crore over the previous month. The 
top 10 mutual funds’ average assets dropped 4.46% to Rs 3.074 lakh 
crore. Barring UTI Mutual and Tata Mutual, rest all fund houses 
suffered fall in average assets. 
UTI Mutual Fund, LIC Mutual Fund and SBI Mutual that are among the 
public sector fund houses have seen sizeable inflows, a distributor 
said. An example of which would be the last quarterly FMP launched by 
SBI Mutual Fund that garnered Rs 1,700 crore in its new fund offer 
(November 20-25). 
This huge success comes at a time when investors shunned FMPs due to a 
lack of clarity on likely norms. The crisis faced by the industry led 
to Securities and Exchange Board of India getting into the act and 
revising norms for close-ended mutual fund schemes. 
“The mindset might be changing. Investors are sticking to Indian 
mutual funds while new money is definitely going to big names,” said 
the executive director of an investment advisory firm. 
On Thursday, the regulator banned premature exits in close-ended 
schemes and made listing of such schemes compulsory. Among the other 
fund houses that held fort were JP Morgan Mutual Fund, DWS Mutual 
Fund, Kotak Mahindra Mutual Fund and Canara Robeco Mutual Fund, a 
distributor said. “Smaller fund houses will face problems,” said Juzer 
Gabajiwala, head, mutual fund distribution, Ventura Securities. 

Source: http://indian-mutualfund.blogspot.com/

 

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Coming Soon: E-Trade of Mutual Funds

The Association for Mutual Funds in India (AMFI) is mulling over a proposal to start Web-based trading platform for mutual funds (MFs).
The platform will be a common channel for buying and selling of mutual funds and also to gel various schemes over the Internet, said A.P. Kurien, chairman of AMFI.
Terming the platform as a revolution in the financial sector, he said that the mutual fund industry has seen operational changes over the last few years. The changes were for a well functional trading-custodial system, which is also reflective of a tech-oriented market.
As the fastest growing segment of the Indian economy, the need of the hour is to have tech service standards for accounts, delivery and registration. This can be coupled with electronic movement of money across cities, and at the same time do away with paper flow. Fund flow will be electronically linked, and the platform will also be an online channel for data capture, said Kurien.
An AMFI committee is currently evaluating a platform that can be used by mutual funds to download statement, transfer from one scheme to another. It will then draft a matrix before scouting vendors for the project. At present, the mutual funds industry in US and the UK uses trades mutual funds over the Internet.

 

Coming Soon: E-Trade of Mutual Funds

The Association for Mutual Funds in India (AMFI) is mulling over a proposal to start Web-based trading platform for mutual funds (MFs).
The platform will be a common channel for buying and selling of mutual funds and also to gel various schemes over the Internet, said A.P. Kurien, chairman of AMFI.
Terming the platform as a revolution in the financial sector, he said that the mutual fund industry has seen operational changes over the last few years. The changes were for a well functional trading-custodial system, which is also reflective of a tech-oriented market.
As the fastest growing segment of the Indian economy, the need of the hour is to have tech service standards for accounts, delivery and registration. This can be coupled with electronic movement of money across cities, and at the same time do away with paper flow. Fund flow will be electronically linked, and the platform will also be an online channel for data capture, said Kurien.
An AMFI committee is currently evaluating a platform that can be used by mutual funds to download statement, transfer from one scheme to another. It will then draft a matrix before scouting vendors for the project. At present, the mutual funds industry in US and the UK uses trades mutual funds over the Internet.

 

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IDFC bags Standard Chartered AMC for USD205 million

Standard Chartered PLC announces that it has agreed to sell Standard Chartered AMC Private Limited, including minorities, to Infrastructure Development Finance Company Limited (IDFC) for a total cash consideration of approximately USD205 million. The consideration is before deductions for local taxes and deal expenses. The transaction does not include Standard Chartered’s mutual fund distribution business which Standard Chartered will continue to pursue.

Jaspal Bindra, Chief Executive Officer, Asia, Standard Chartered, said: “IDFC is a well respected financial services company and we are delighted to have reached an agreement with them for the sale of this business. Standard Chartered will remain a distributor of asset management products in India. India is a key market and delivered record results in 2007.”

This was for the second time that Standard Chartered Asset Management business was up for sale after the UBS deal was called off by the Reserve Bank in December last year, citing regulatory issues. This time Standard Chartered did manage to up the price by USD87 million from USD118 million agreed upon earlier with UBS.

IDFC will be paying USD205 million for Standard Chartered’s USD3.25 billion AUM. The transaction of course subject to certain regulatory approvals and other closing conditions, and both parties expect to seal the deal in the second quarter of 2008.

Dr. Rajiv Lall, Managing Director and Chief Executive Officer of IDFC said: “We are pleased to acquire a quality asset management platform. This is in line with our wider strategy of broadening our footprint in the asset management business and diversifying our fee-based revenue streams.”

Incorporated in March 2000, Standard Chartered AMC had a total of USD3.25 billion, as on January 31, 2008 out of which 22 per cent was in equities and the remaining in debt.

 

Quotes Of the day

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