Even after the Insurance Regulatory and Development Authority (IRDA) has asked the insurance companies to make a disclosure on the Agent commission, the experts in the industry see little gain coming out of the move as the industry officials are of a view that it will give only a minor benefit for levelling the playfield for mutual funds vis-à-vis ULIPs.
In fact, experts are of a view that the Mutual Funds industry will take a little time more than expected to recover from the dip in distributor revenue due to the entry load ban.
Keeping in mind that infrastructure is one area where India still lags behind as compared to the developed and even some developing nations, it opens up a wide opportunity for the investors to grab in the market. Experts are of a view that the Mutual funds that are investing money in infrastructure projects certainly offer a promising return in the long rather than other options available in the market.
Affirming the investor's right to sue over fees, the U. S. Supreme Court on Tuesday sent a lawsuit over fees in the mutual fund industry back to a lower court.
The Los Angeles Times has reported that in a 9-0 ruling, justices sent a suit against Harris Associates back to the U. S. court of appeals in Chicago, where the suit was dismissed two years ago.
The lower court was instructed to explore if the fees Harris Associates charged showed the firm as having struck a deal with its board of directors.
IDBI Asset Management Ltd. (IDBI AMC) has got approval from the Securities and Exchange Board of India (SEBI) to launch its own mutual fund.
IDBI AMC is the wholly-owned subsidiary of IDBI Bank. It has plans to come up with its fixed income and equity based category of MFs, soon.
Birla Sun Life and the Bank of India (BoI) have signed a Memorandum of Agreement, for distribution of MF schemes. As per the agreement, the public-sector bank would become the distribution partner for selling Birla's mutual fund.
After this deal, Birla will be using all the 3,100 branches of BoI for selling its products, said a press release by Birla Sun Life.
The mutual fund industry's assets declined 4.1% or Rs 32,853.79 crore during January as the banks pulled out following a directive from the Reserve Bank of India.
The industry's average asset under management (AUM) is at 7,61,632.26 crore at the end of January, according to the data released by the Association of Mutual Funds in India (AMFI). This is second month in a row to record a drop in AUM for the industry.
Securities and Exchange Board of India announced on Friday the stockbrokers who are registered will now be allowed to sell mutual funds and undertake all required transactions on behalf of their clients post proper authorization, a move which could widen the mutual funds distribution network even further.
"The infrastructure that already exists for the secondary market transaction through the stock exchanges with its reach over 1,500 towns and cities, through over two lakh stock exchange terminals can be used for facilitating transactions in mutual fund schemes", the SEBI circular detailing the development read.
Kotak Mutual Fund, one of the leading mutual funds in the country, has launched a new fund named as Kotak FMP 18M Series 2, a close ended debt scheme.
The new fund offer (NFO) price for the scheme is Rs 10 per unit, which will open for subscription from Nov. 5, 2009. The fund will close subscription on Nov. 18, 2009.
The minimum application amount is Rs 5,000 and in multiples of Rs 10, and it offers both growth and dividend payout option.
TVS Shriram Growth Fund I, a domestic fund, sponsored by TVS Group and Shriram Group, has acquired more than 18 lakh shares or 25 per cent in Landmark Ltd, a subsidiary of the Tata group firm Trent Limited, for Rs 65 crore.
The deal values Landmark at Rs 260 crore.
Under the arrangement, Trent will sell 14.03 lakh shares to TVS Shriram for Rs 50 crore and will utilize the funds to subscribe to fresh shares in Landmark. In addition, TVS Shriram will be directly issued 4.21 lakh shares for Rs 15 crore.
US-based T Rowe Price has decided to acquire a 26 per cent stake in UTI Asset Management Company (AMC) for around Rs 650 crore.
The sale follows an earlier attempt by UTI AMC which remained unsuccessful last year due to low valuations. The latest deal values the fund house at around Rs 2600 crore.
Under the proposed deal, UTI MF's four stake holders, which include SBI, LIC, Bank of Baroda and Punjab National Bank, would sell 6.25 per cent each to T Rowe Price.
Market regulator, the Security and Exchange Board of India (SEBI), while simplifying the formats of documents and Memorandum of key schemes, has restrained fund houses from charging varying loads based on the value of investment.
However, Fund houses may charge the differential exit load up to 7 per cent by a fair manner without affecting existing unit holder. SEBI has asked for parity among all unit holders while charging loads based on the amount of subscription.
Japan based asset management company, Nomura has acquired 35 per cent stake worth Rs 308 crore in LIC Mutual Fund, becoming a strategic partner of LICMF Trustee and LIC Mutual Fund Asset Management Company Limited (LICMF AMC).
LIC sold stake through fresh issue of equity and secondary sale. LIC and LIC Housing Finance will hold 45 per cent and 20 per cent respectively in the AMC as per agreement. The move will enable LIC to take advantage of Nomura's expertise in the area of equity management and capital generation.
Reliance MF has emerged as the top gainer and the largest fund house in the country in June, raising funds worth Rs 5,000 crore and increasing assets under management (AUM) to Rs 1,08,332.36 crore. The MF industry reported five per cent increase in its average assets under management with its AUM growing by Rs 31,863.31 crore.
The combined average AUM of the 35 fund houses was Rs 6,37,609.41 crore in May, which stood at Rs 6,70,993.13 crore in June, according to the figures released by the Association of Mutual Funds in India (AMFI).
Market regulator, the Securities and Exchange Board of India (SEBI), has decided to scrap entry load on all mutual fund schemes from August 1 onwards. The entry load is the amount paid by AMCs - from total paid amount in the scheme - as marketing and distribution expenses.
The Indian market watchdog, through its June 30 circular, has also directed AMCs to pay upfront commission directly to the distributors. According to new norms, SEBI said AMCs are required to have a maximum of 1% of the exit load in a different account. The AMCs are free to pay commissions to the distributor from the prescribed amount.
The world's largest private equity (PE) investment firm, Carlyle Group, has said that it will spend a substantial amount raised from fourth Asian growth capital fund, in Indian and Chinese companies.
The fund, Carlyle Asia Growth Partners IV (CAGP IV), managed to raise $1.04 billion in only 14 months, despite unfavorable conditions of the financial market. Investors from all corners of globe have shown interest in the fund, and the firm would now lay special focus on domestic consumption and outsourcing.
The new rules pertaining to Mutual Funds by the market regulator, the Security and Exchange Board of India may lead to tax losses, besides affecting the tax system. The regulator recently announced new rules for MFs, including the abolition of entry loads in all mutual fund (MF) schemes and change in fee structure.
With the aim to enter Indian market, Bank Sarasin & Co Ltd, a leading Swiss private bank headquartered in Basel, has decided to establish offices in Mumbai and Delhi.
The Sarasin Group will be known in the market as Sarasin-Alpen (India) Private Limited, which will operate as a Non Fund Based Non Banking Financial Company (NF-NBFC).
The sources said that the new operation will offer financial advisory and consultancy services to wealthy private clients in India and distribute third-party products such as mutual funds.
Birla Sun Life Mutual fund (BSLMF), a joint venture between Aditya Birla Group and Sun Life Financial, has announced the introduction of internet based systematic investment plan (iSIP).
The company authorities said that iSIP is a mode of transaction facility through which investors can make purchases, renew their SIP and also have the option to cancel it online.
The sources said that this newly launched service will not only allow investors to start their SIP investments online but it will also offer paper less management of SIPs.
Leading mortgage financer, LIC Housing Finance plans to sell 19.3% of its stake in LIC Mutual Fund Asset Management Company (LIC MF AMC) to Japan's Nomura for about Rs 138 crore (US$29mn).
The deal is considered as a part of company's strategy to sell its 35% stake in LIC MF AMC to Nomura by stakeholders.
Presently, LIC Housing holds 39.3% stake in LIC Mutual Fund AMC. Post offloading, the company will hold 20% stake in it, while the balance stake will remain with Nomura.
Kotak Mahindra Asset Management Company, one of India’s leading mutual fund houses, has entered into a distribution tie-up with Bank of Baroda.
Under the agreement, Bank of Baroda will offer the entire bouquet of Kotak Mutual Fund products from the bank’s branches.
Kotak AMC claims that with this tie-up, customers will gain easy access to company’s various schemes at the branches where they do their banking transactions. Therefore, the tie-up would help both partners in leveraging synergies and creating value for customers.