MFs assets jump 4% in December 08

Total assets under management of the country’s 34 mutual fund houses have soared to Rs418,334.65 cr

After a gap of three months, the mutual fund industry witnessed an increase in assets under management by over Rs16,000 crore in December on moderate recovery in the stock markets.
The total assets under management of the country’s 34 mutual fund houses have soared to Rs418,334.65 crore following an increase of Rs16,307 crore at the end of December 2008, according to the data of the Association of Mutual Funds in India.
The total assets under management (AUM) were Rs4.02 lakh crore in December 2008.
“With the stock markets recovering 10-15% in a month, mutual funds assets increased in the terms of mark to market valuation,” Taurus Mutual Fund Managing director RK Gupta said.
Reliance mutual fund retained its position as the country’s top fund house with an AUM of Rs70,208 crore. The AUM rose by over Rs2,392.24 crore in December 2008.
HDFC mutual fund maintained its second position with an AUM of Rs46,757.45 crore in December, an increase of Rs2,495.45 crore from November 2008.
“Some fund houses also saw fresh inflows, which were coupled with positive market sentiments,” Gupta added.
Meanwhile, UTI mutual fund added Rs4,190.03 crore at Rs42,548.17 crore in December to retain its third position.
Meanwhile, the AUM of ICICI Prudential mutual fund rose the most by Rs4,821.84 crore to Rs41,877.52 crore.

Source: http://www.livemint.com/2009/01/02163500/MFs-assets-jump-4-in-December.html

Crisis to continue, but Indian economy to grow by 7pc: Montek

Warning that the global economic crisis would continue through this year, Planning Commission Deputy Chairman Montek Singh Ahluwalia said India would still manage 7 per cent growth in FY'09 which should be a "good performance." 

Announcing the second stimulus package to reverse the economic slowdown in the country, he said the focus was on public investment, particularly in the infrastructure sector, which according to him should be a big booster. 

The package, the second in a month albeit last for the fiscal, would take the total revenue loss to about Rs 40,000 crore for the exchequer by way of various concessions and sops given to various sectors of the economy, Finance Secretary Arun Ramanathan said. 

"Expansion of infrastructure investments in PPP area is a very important part of the effort to mark the contra-cyclical thrusts at a point when there is a bit of global slowdown," he said, while commenting on additional facility for IIFCL to issue tax free bonds worth Rs 30,000 crore. 

It is something that will not only stimulate demand in the short term, but lay the foundation for broader investment revival and for broader growth. 

Ahluwalia said while the current economic crisis has not seen its end, this year could be a difficult one but expressed the hope that the economy would still achieve 7 per cent growth. 

"A growth of seven per cent should be a good performance," he said.

Source:http://www.hindu.com/thehindu/holnus/002200901022023.htm

India - SEBI urged to launch IRA scheme for households

Apex chamber Assocham has urged the Securities and Exchange Board of India (SEBI) to introduce individual retirement account (IRA) scheme for large households to enable investment in equity market through various mutual funds. 

In a representation to the market regulator, the chamber has underscored the need for promoting long-term inflows into equities by floating IRA schemes so that households make their investments through various mutual funds to reap the benefits of their long-term plans. 

The IRA scheme concept, prevalent in developed economies such as the U.S. and some countries in Europe, is broadly aimed at savings plans to create wealth over a period, which could then be available for the individual’s post-retirement period. 

To incentivise individuals to join the IRA schemes, the chamber has suggested tax concessions such as a deferred tax system under which each contributor to the proposed IRA could invest up to Rs 5 lakh in a year in a mutual fund scheme for investment in equity or in a combination of equity and debt, as per the investor’s choice. 

Lock-in period 


The lock-in period recommended for such investment is a minimum period of 10 years which can be withdrawn only after the investor attains the age of 58 or 10 years after investment, whichever is earlier. 

Assocham has suggested that while the amount invested in the IRA scheme should be tax deductible, dividend and capital appreciation should be exempted from taxes when the investor withdraws the amount, as is permitted under the EET (‘Exempt, exempt tax’) facility. 

According to the chamber, such a scheme will promote long-term investments in equity and debt and also ensure a reasonable post-retirement income when the individual investor would be on a relatively lower tax bracket. 

For the non-tax paying category also, the IRA scheme could be promoted by permitting mutual funds to offer such investment avenues.

The IRA scheme, the chamber said, would thus help individuals to build their retirement benefit schemes and, at the same time, channelise the savings of the community to the capital market. The diversion of savings of the household sector to the capital market would provide a steady flow of substantial amounts that would also act as a buffer against volatile inflows and outflows of foreign institutional investors (FIIs). 

Assocham also pointed out that though the Government has permitted provident funds (PFs) to invest 10 per cent of their corpus in equity-based mutual fund schemes, the guidelines have not been finalised as trustees of these funds are not permitting such investments. “It is time that the difficulties, if any, are removed and provident funds and gratuity funds are allowed to be invested in mutual funds also,” it said.

Source:http://spoonfeedin.blogspot.com/2009/01/india-sebi-urged-to-launch-ira-scheme.html

Mutual funds give up 2 yrs of gains in 2008 crash

Net values of Indian equity funds fell more than half in 2008, giving up the entire gain made in the previous two calendar years, as the main stock index plunged 52.4 percent to record its worst annual performance ever.

"The fall was stunning and one of the major losses that we would have suffered in any calendar year," said Aditya Agarwal, managing director and head of Indian markets for fund research firm Morningstar.

Indian shares recorded their first annual drop since 2001, surpassing the previous worst fall of 20.8 percent in 1995, slammed by foreign fund outflows and a sagging domestic economy. 

Seventeen stocks in the BSE index lost more than half their value during the year as foreign funds withdrew more than $13 billion after record inflows of $17.4 billion in 2007.

Net asset values of all stock funds fell in 2008, recording their worst annual fall of 54.7 percent during the year, according to data from global fund tracker Lipper.

Nearly half of the actively managed diversified stock funds also underperformed the benchmark index despite maintaining a double-digit cash levels almost through the year as their large mid and small-cap holdings plunged even more than the main index.

The funds' monthly allocation to mid-cap and small-cap shares ranged between 33.6 percent to 43.8 percent during the year, delivering a blow to their portfolios as the BSE Mid Cap and BSE Small Cap indices slumped close to 70 percent.

Their top bets in capital goods and financials were also hitby high interest rates and a slowing economy.

Funds had parked more than a fourth of their equity assets in the two sectors through 2008 on an average, data from fund tracker ICRA showed.


YEAR OF DEBT, GOLD FUNDS

India's gold exchange traded funds rose 25 percent in 2008, the highest by any category of funds, as the dollar weakened against the euro and crude oil rose to record high, improving the yellow metal's appeal as a hedge against inflation.

Gold prices on the Multi Commodity Exchange soared to a record 14,320 rupees per 10 grams on Oct. 10, up 35.1 percent from the close in 2007 and ended 2008 up about 29 percent.

Fixed income funds improved performance over previous year with those investing in government securities recording a stunning 19.77 percent rise in net values as yields saw their biggest yearly fall in seven years in 2008.

The 10-year benchmark bond yield ended the year down 254 basis points at 5.25 percent, plummeting from a seven-year peak of 9.55 percent hit in July as expectations for monetary easing continued to prompt investors to buy debt.

Source: http://in.reuters.com/article/businessNews/idINIndia-37259420090102?sp=true

Don't give up on the bulls

The year 2009, for the stock market, is expected to be a year with two distinct trends:
consolidation during the first half and then building on that consolidation, slow growth in the second half. Market participants feel 2009 will be a year markedly different from 2008, which saw value destruction of unimaginable proportions.
"The market has corrected dramatically this year (2008). So I don't expect any major correction next year,'' said UK Sinha, CMD, UTI Mutual Fund. "We are near the bottom now,'' Sinha added.
The first half of the year is expected to be the phase of adjustment. Once that is over, the stock market could start looking up from the second half.
"The market usually turns 6-9 months ahead of the actual economy. So we are expecting the markets to turn in the second half of 2009,'' said Naresh Kothari, president & co-head, institutional equities, Edelweiss Securities.
"From the third quarter, we would begin inching up, but a V-shaped recovery is ruled out,'' feels Aseem Dhru, MD, HDFC Securities.
One of the main reasons for the recovery is the impending Lok Sabha elections by April 2009. In India, general elections mean some amount of uncertainty with inherent downside risks and investors, including foreign fund managers do not like uncertainty. Brokers and fund managers expect recovery to start after the new government is in place.
The year would also see the Indian market in a different league than most of the other popular investment destinations. Officially a number of developed nations are already in recession. But in India, everyone is talking about the pace of growth coming down. "While the world has to battle negative growth (recession), India has to deal with a slowdown,'' said Dhru.
The marked difference between India and the West could be gauged from a conversation with the head of a UK agency. "You (India) are sorry that growth could be 5-6-7% next year. Come on. Give us that kind of growth and we will be on top of the world,'' said the official.

Equity allocations to rise in '09: Benchmark MF

Sanjiv Shah, Executive Director, Benchmark Mutual Fund, feels equity allocations will be on a rise in 2009. “You have to be more invested in equity as compared to what have you been in the last few years, so in a sense 2009 would be better for investors in equity markets.”

2008 has been a tough year for all stocks, large, small caps etc. but our view is that when the markets turn around the broader market turns around the first with the large caps and they become leaders in a sense. So you have to be mostly in the larger sector of the economy right now.

Source: http://news.moneycontrol.com/india/news/mf-interview/equity-allocations-to-rise09-benchmark-mf/16/16/373337

Central Bank of India enter into an agreement with Kotak Mahindra AMC

State-run, Central Bank of India has entered into an agreement with Kotak Mahindra Asset Management Company (AMC) to distribute latter's mutual fund products through its network.

"Under the agreement Central Bank of India will offer the entire bouquet of Kotak Mutual Fund products from the bank's branches," said Central Bank of India.
CEO of Kotak Mahindra AMC, Sandesh Kirkire said, "The banking channel is one of the best platforms to reach out to retail investors. Offering advice on mutual fund investments is an extension of the value added services that are offered by banks. With this tie-up, customers will gain easy access to the various schemes of Kotak Mahindra AMC at the branches where they do their banking transactions."
Commenting on the tie-up, General Manager of Central Bank of India, Mr G.P. Chitnis said, "In the Indian financial markets, mutual funds have established themselves and gained popularity amongst the retail investors. For us, this tie up will open up further opportunities to provide our vast client base with a wider choice of products to meet their diverse financial needs. It will also give a boost to bank's fee-based income."
Central Bank of India was established in 1911 and since then it has established itself as a one of the popular brand names. The bank has a strong network of more than 3416 branches, 230 extension counters and 400 ATMs. Presently it has a business of about Rs 197,000 crore and it will cross Rs 2 lakh crore shortly, said Mr Chitnis.
Kotak Mahindra Asset Management Company which started its operations in December 1998 is a wholly owned subsidiary of Kotak Mahindra Bank Ltd. It offers a wide range of products and services suiting the diverse and varying needs of its investors.

Source: http://www.rupeetimes.com/news/car_loans/central_bank_of_india_enter_into_an_agreement_with_kotak_mahindra_amc_1998.html