SEBI may scrap entry load on MF investors

The Indian mutual fund industry is set to change forever. Tilting towards a more investor-friendly mode with market regulator SEBI set to bring one of the biggest reforms the industry has ever seen - the power to investors to decide the commission they pay and scrapping entry loads.

It’s time for reform. For long investors have had to pay commissions every time they bought a mutual fund, without knowing the extent of it. Distributors, on the other hand, have happily pushed funds depending on the commission they earned from a mutual fund. All that is set to change, perhaps, as early as June 18, when the Securities and Exchange Board (SEBI) board meets.
SEBI is planning to scrap entry loads on investors and, more importantly, make it mandatory on distributors to disclose how much of what the investor is paying is going into the distributor's pocket.

In other words, when you buy a mutual fund, you would cut two cheques—one towards investment and the other towards the commission you need to pay.

Needless to say, once charges are out in the open, an investor would have the right to decide and dictate commissions. A transparent regime could also fuel intense competition and bring down commission rates, as was the case in the broking industry.

And even though mutual funds and distributors have been lobbying hard to keep this reform in abeyance, sources tell CNBC-TV18 that SEBI is determined to empower investors with greater transparency.

Source: http://www.moneycontrol.com/india/news/cnbc-tv18-analysis/sebi-may-scrap-entry-loadmf-investors/401296

Tushar Pradhan appointed CIO, HSBC Asset Management (India)

HSBC Asset Management (India), today announced the appointment of Tushar Pradhan as CIO of HSBC Mutual Fund from June 15.
As CIO, Pradhan will be responsible for all investment activities and investment strategy, a press release issued here stated.
Pradhan, an MBA in investment finance, has over 17-years of experience in fund mangement.
He has worked in the US for a couple of years before returning to India to work with HDFC Asset Management and more recently with AIG Global Asset Management, the release said.
HSBC Asset Management (India) CEO, Vikramaaditya, said that "the mutual fund industry has huge potential in India and this key appointment underlines our commitment to become one of the leading asset management companies in India."

Source: http://www.business-standard.com/india/news/tushar-pradhan-appointed-cio-hsbc-asset-management-india/64413/on

Infrastructure stks may correct in short term: Chaturvedi

Ved Prakash Chaturvedi, MD, Tata Mutual Fund is of the opinion that one bright spot in the Indian market over the next 5 years and 3 years will continue to be infrastructure. In shorter term the valuations are stretched and there will be a correction. Lot would depend on what comes out in the Budget for infrastructure.
Chaturved told CNBC-TV18, "I have been a very long term infrastructure bull. I think the one bright spot in the Indian market over the next 5 years and 3 years will continue to be infrastructure. In shorter term I think the valuations are stretched and I think there will be a correction. Lot would depend on what comes out in the Budget for infrastructure. But this is in my view one of the bright spot in the Indian markets."

Source: http://www.moneycontrol.com/india/news/stocks-views/infrastructure-stks-may-correctshort-term-chaturvedi/401149

Shinsei to enter AMC space in India; to launch 3 funds by July

Shinsei Mutual Fund, an arm of Japan-based Shinsei Bank, will launch three fund offers in India by July-end this year, marking its foray into the country's asset management space.

"Timing is opportune to enter as investors are regaining confidence in the mutual fund space. By July end we would come out with three new fund offers for India," Shinsei AMC, India, Chief Executive Piyush Surana said.
The company plans to launch three new fund offers — Shinsei Liquid Fund, Shinsei PSU Bonds Funds and Shinsei Industry Leaders Fund — within two months, for which it has got the clearance of market regulator Sebi last week.
"We aim to achieve break-even within 3-5 years," he said, adding "currently we are assessing the market scenario and Shinsei AMC would bring in another 6-8 funds in next 18 months accordingly."
Of the new fund offer, the liquid fund and the PSU Bond fund would be in the ultra-short term fund category with a lock-in of one year, while the Industry Leaders Fund would be a equity fund and invest in companies with track record of growth in profit, sales and having substantial market share.
At the end of May, the 35 fund houses in the country had a cumulative average assets under management (AAUM) of Rs 6,39,129.82 crore.

Source: http://www.business-standard.com/india/news/shinsei-to-enter-amc-space-in-india-to-launch-3-funds-by-july/64287/on

SEBI allows mutual funds to invest in IDRs

Market regulator SEBI on Tuesday allowed mutual funds to invest in Indian
Depository Receipts - instruments through which investors here can invest in foreign company's equity.
"It is hereby clarified that mutual funds can invest in Indian Depository Receipts (IDRs)," Securities and Exchange Board Of India (SEBI) today said in a statement here.
As per the SEBI regulations, mutual funds are allowed to invest in securities issued by the domestic entities and with this clarification by the market regulator, fund houses would now also be able to invest in IDRs.
IDRs are Indian counter parts of ADRs or GDRs through which several Indian companies have raised funds from the overseas investors.
Through IDRs it may be possible for the foreign firms to raise funds from Indian investors and it would be possible for the Indian investors to invest in equity shares of foreign companies.
The shares issued by the overseas company would be held by an overseas custodian bank and on the basis of these underlying shares the Indian depository bank would issue IDRs to the Indian investors.

Source: http://economictimes.indiatimes.com/Market-News/SEBI-allows-MFs-to-invest-in-IDRs/articleshow/4636795.cms

Stocks surge nudges investors back to equity funds

Indian fund investors are flocking back to stocks on hopes market-friendly reforms by the new government would help sustain the stunning 85 percent surge in the benchmark index since early March.
Net inflows into domestic equity funds rose to 19.3 billion rupees in May, the highest in 14 months, and more than twice the amount in the first four months of 2009, according to data from the Association of Mutual Funds in India.
It includes more than 8 billion rupees collected by a fund from ICICI Prudential Asset Management -- more than what 18 stock funds collected in the last eleven months, marking a significant shift in investors risk appetite.
"There is certainly a revival in sentiment and interest from investors," said Anthony Heredia, chief executive of Morgan Stanley Investment Management.
The revival comes in the backdrop of a tough 2008/09 for the Indian mutual fund industry, which saw assets shrink by nearly a fifth to 4.2 trillion rupees in the year to March. More ominously, profitable equity assets shrunk by more than a third.
"The current surge in investor interest and also markets are firstly because of the way the election result has turned out to give us a majority government for the next five years," Heredia said.
A return of risk appetite globally, sending billions of dollars into stocks of emerging markets, and hope the worst might be over for India's corporate earnings was also fuelling a revival in flows into domestic stock funds, he added.
Indian shares surged 28.3 percent in May, the highest in 17 years, after the Congress-led coalition won an unexpectedly strong mandate in the polls.
Hopes are also high on a revival in stalled reforms such as higher foreign investment limits in retail, airlines and banks, pension, land and agriculture reforms and a fresh lease of investments in infrastructure.
However, data also indicate investors pulling out more money from stock funds to take advantage of rising share valuations.
Redemptions at 38.22 billion rupees in May was about 80 percent more than the previous month and highest in 13 months.
However, investors allocated 57.5 billion rupees, nearly three times they invested in April, boosting prospects of better flows into the 6.6 trillion rupees Indian mutual funds industry.

Source: http://in.reuters.com/article/businessNews/idINIndia-40184420090609?pageNumber=2&virtualBrandChannel=11557&sp=true

R-Life to raise Rs 2,000 cr via IPO

Reliance Life Insurance, an Anil Dhirubhai Ambani Group (ADAG) company, has decided to enter the capital market to mop up Rs 1,500-2,000 crore through an initial public offer (IPO). This will be the first instance of listing by a life insurance company on any Indian bourse.

According to sources, the company is planning to issue fresh shares amounting to 15-20 per cent of its expanded equity, which would value the company between Rs 12,000 crore and Rs 15,000 crore.
Some leading investment bankers such as Deutsche Bank and Enam Financial had already been informally appointed, sources said, adding that some more bankers would be roped in soon.
Reliance Capital Chief Executive Officer Sam Ghosh said, “We are evaluating various options, including listing on stock exchanges or even a strategic sale of a minority stake.”
According to sources, the company planned to file the draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi) by the end of this month or early next month.
However, much depends on the clarification for disclosures and other issues from the Insurance Regulatory and Development Authority (Irda). “Since this is the first IPO by an insurance company, the regulator needs to clarify certain issues, particularly on disclosure norms. The company is in the process of getting some clarification from Irda,” sources said.
Last year, ICICI Bank made an attempt to list its insurance business by creating a holding company structure. However, the Reserve Bank of India (RBI) gave it a thumbs down.
Under the current norms, it would be difficult for other Indian insurance players to list on exchanges as in most of the cases, the limit of 26 per cent foreign investment has been exhausted. Barring Reliance Life Insurance, Sahara Life Insurance and Life Insurance Corporation of India, foreign strategic investors have 26 per cent stake in almost all insurance companies in the country.
As a result, foreign institutional investors would not be allowed to participate if these companies went public, said a leading banker.
However, once the pending Insurance Bill is passed and the limit for foreign investment is increased to 49 per cent from the current level of 26 per cent, many joint ventures would explore the possibility of entering the capital market.
Reliance Life Insurance is a wholly-owned subsidiary of Reliance Capital. With 10.3 per cent market share among the private insurance players, Reliance Life is ranked fourth in terms of total premium and third in terms of weighted premium. The top three private players in terms of total premium are ICICI Pru Life, SBI Life and Bajaj Allianz.

Source: http://www.business-standard.com/india/news/r-life-to-raise-rs-2000-cr-via-ipo/02/42/360214/