Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
07Sep2012
Regulatory
changes for the
Mutual Fund industry
- Srikanth
Meenakshi
At this time, what we know about these changes are in the form of a press release. There have been a lot of
opinions in both print and online media about these changes, and SEBI is yet to issue clear circulars clarifying many aspects of the proposals. Along with the mutual fund investors around the country, we at
FundsIndia await such clear directions so we can formulate the way forward. Our compact with the investors is to provide innovative, unbiased, free online service to mutual fund investors across the country
backed by high-quality customer services and technology-empowered operations. Well hold steadfast to
that promise.
Higher Expenses
Must Not Become
Money for Nothing
Dhirendra
Kumar
In other news, we are happy to announce that we had the first winner of our IPad contest for new account
openings last month. A gentleman named Sushil Kumar from Pune won a brand new Apple IPad (3rd
generation) just by opening and getting his account activated with us.
As expected, last month SEBI rolled out a series of regulatory changes for the mutual
fund industry. The impact of these changes will have a modest increase in the cost of
mutual fund investing in the form of higher expense ratio. The promise is that these
changes and increase will make the industry stronger and sustain it better over the
long term.
Now, we are extending this to the month of September as well, and interestingly, also including account
referrals as eligible for this prize yes, all you have to do is refer a person to open an account with
FundsIndia, and if the account gets activated in the month of September, both of you would be eligible for
the draw! Good luck!
Also, in the month of August, we did a fresh launch of our NPS for corporates program. This program enables corporates to offer additional
tax benefits to their employees in the form of NPS contributions. Please check out http://www.fundsindia.com/npsforcorporates for more
details. If youd like to have your company participate, please let your HR team get in touch with us ASAP!
Happy investing!
Disclaimer: Mutual Fund Investments are subject to market risks. Please read all scheme related documents carefully before investing.
Volume 4, Issue 9
Page 2
This month, we take a look at a couple of stocks from the cement sector. The popular names such as ACC, Ambuja Cements, Grasim and Madras Cement come across as promising investment candidates. We discuss the outlook for ACC and Ambuja Cement. Investors may buy these
two stocks for quick 15-20% returns from a short-term perspective.
Ambuja Cements is one of the most efficient cement companies in the country and has been a steady performer at the stock market as well.
After a sharp rally, the stock has corrected in the past few days, offering an opportunity to buy.
Similar to Ambuja Cements, ACC too has resumed its uptrend after having been in a short-term corrective phase. As observed in the daily
chart featured below, the stock could rally to Rs.1,600.
Continued on page 3 . . .
Disclaimer: Mutual Fund Investments are subject to market risks. Please read all scheme related documents carefully before investing.
Volume 4, Issue 9
Page 3
Investors may buy ACC on weakness with a stop loss at Rs.1,240, for a target of Rs.1,610. A breakout past the initial resistance-cum-target
level of Rs.1,610 would lend momentum to the uptrend and the stock could then rally to Rs.1,675.
Mr. B.Krishnakumar is the Head of Equity Research at FundsIndia. With extensive experience in tracking the stock market (over 15 years) he has
worked with companies such as The Hindu , Business Line and Dow Jones Newswires. He will be contributing to our monthly newsletter with his
stock market outlook which shall hold good for a month. Mr.B.Krishnakumar can be reached at b.krishnakumar@fundsindia.com
Mr.B.Krishna Kumar also hosts a weekly webinar that discusses the market outlook
for the following week. You can register for the webinar by clicking here:
https://www4.gotomeeting.com/register/927617871
Disclaimer: Mutual Fund Investments are subject to market risks. Please read all scheme related documents carefully before investing.
Volume 4, Issue 9
Page 4
Consistent Performers
FundsIndia Research
In this page, we feature mutual fund schemes in popular categories that have stood the test of time and delivered performance consistently. These
schemes have consistently featured in the top quartile of their category in terms of performance over multiple time periods in the past. For equity funds
and income funds, we have chosen three, five and seven year time periods for such ranking. For short term and ultra-short term funds, we have chosen
shorter time frames. Please note that in some cases, we have pruned the list for length - we have removed institutional schemes and those that have
very high initial investment amounts (in the debt side) from this list. This list will be updated every month, although we do not anticipate significant
changes on a month-on-month basis. Rankings data for this report has been sourced from Value Research Online.
5-Y
3-Y Return
Return
7-Y Return
(%)
3-Y Rank (%)
5-Y Rank (%)
7-Y Rank Average
Rating
8.48 5/65
7.12 2/45
15.35 2/37
5.85%
5 Star
6.84 15/65
8.03 1/45
17.24 1/37
9.33%
5 Star
7.92 6/65
6.3 4/45
14.79 4/37
9.64%
4 Star
7.85 7/65
5.42 8/45
13.59 5/37
14.02%
4 Star
7.09 13/65
5.56 7/45
15.34 3/37
14.55%
5 Star
5-Y
3-Y Return
Return
7-Y Return
(%)
3-Y Rank (%)
5-Y Rank (%)
7-Y Rank Average
Rating
10.72 5/63
10.9 3/47
15.49 5/31
10.15%
5 Star
10.15 7/63
7.67 9/47
15.99 4/31
14.39%
4 Star
9.7 11/63
7.48 10/47
16.22 3/31
16.14%
4 Star
5-Y
3-Y Return
Return
7-Y Return
(%)
3-Y Rank (%)
5-Y Rank (%)
7-Y Rank Average
Rating
8.66 7/34
7.96 4/31
16.51 2/20
14.50%
5 Star
Continued on page 5
Disclaimer: Mutual Fund Investments are subject to market risks. Please read all scheme related documents carefully before investing.
Volume 4, Issue 9
Page 5
Hybrid: Equity-oriented
Funds
Fund Name
HDFC Prudence
HDFC Balanced
Canara Robeco Balance
Tata Balanced
3-Y Return
5-Y Return
7-Y Return
(%)
3-Y Rank (%)
5-Y Rank (%)
7-Y Rank
11.63 3/26
9.88 4/25
15.94 2/23
14.53 2/26
11.93 1/25
13.85 6/23
9.98 7/26
9.21 5/25
16.07 1/23
11.03 5/26
9.03 6/25
14.49 3/23
Average
Rating
12.08%
4 Star
12.59%
5 Star
17.09%
4 Star
18.76%
4 Star
Average
7.71%
13.12%
Rating
5 Star
4 Star
MIP
Fund Name
ICICI Prudential ChildCare-Study
6-M
Return 6-M
(%)
Rank
4.61 4/60
1-Y Re3-Y Return (%) 1-Y Rank turn (%) 3-Y Rank Average Rating
9.07 10/58
9.67 3/47
10.10%
4 Star
Fund Name
Birla Sun Life Short Term Opportunities Ret
HDFC Floating Rate Income LT
IDFC Ultra Short Term
Tata Fixed Income Portfolio
Scheme C3 Reg
Taurus Short Term Income
Peerless Short Term
Religare Short-term Plan A
Tata Fixed Income Portfolio
Scheme B2 Reg
Templeton India Low Duration
Birla Sun Life Floating Rate LT Ret
3-M
Return 3-M
(%)
Rank
3.19 2/180
2.87 3/180
2.76 5/180
6.18 2/178
5.91 3/178
5.59 9/178
10.84 4/176
10.88 3/176
10.43 14/176
1.50%
1.69%
5.26%
2 Star
1 Star
3 Star
2.67 15/180
2.63 25/180
2.56 34/180
2.55 35/180
5.64 6/178
5.32 30/178
5.33 28/178
5.25 38/178
10.15 41/176
10.43 13/176
10.54 8/176
11.17 1/176
11.67%
12.71%
13.05%
13.79%
1 Star
5 Star
5 Star
1 Star
2.65 21/180
2.52 38/180
2.5 42/180
5.34 26/178
5.37 22/178
5.27 35/178
10.26 28/176
10.28 24/176
10.19 37/176
14.06%
15.70%
21.34%
3 Star
5 Star
4 Star
Continued on page 6 . . .
Disclaimer: Mutual Fund Investments are subject to market risks. Please read all scheme related documents carefully before investing.
Volume 4, Issue 9
Page 6
Fund Name
Birla Sun Life Medium Term Retail
Templeton India Income Builder
SBI Magnum Income
Birla Sun Life Short Term
Principal Income Long Term
IDFC SSI Medium-term Plan B
Average
Rating
4.30%
5 Star
7.60%
4 Star
12.08%
3 Star
12.46%
4 Star
20.52%
3 Star
21.01%
5 Star
Get upto 11.75% when you invest in Shriram City Union Finance Limited - NCD
Shriram City Union Finance, a non banking finance company, plans to raise money through a public issue of secured non convertible
debentures of face value of Rs 1,000 each aggregating up to Rs 250 crore with an option to retain over-subscription up to Rs 250
crore for issuance of additional NCDs aggregating to a total of up to Rs 500 crore. The Issue opens on September 12, 2012.
The NCDs proposed to be issued under this issue have been rated 'AA' by CARE for an amount of up to Rs 500 crore, and 'AA-/
stable' by CRISIL for an amount of up to Rs 500 crore. The rating of the NCDs by CARE indicates high degree of safety regarding
timely servicing of financial obligations and carrying very low credit risk. The rating of NCDs by CRISIL indicates high degree of safety
regarding timely servicing of financial obligations and carrying very low credit risk.
Effective
Yield (per
annum)
NCD Holders
who are Individuals
11.50% p.a
NCD
Holders
who are
Individuals
11.75% p.a
None
36
Months
36
months
from the
Deemed
date of
Allotment
NCD Holders
who are Individuals
11.50% p.a
10.60% p.a
11.75% p.a
10.75% p.a
None
60 Months
None
36 Months
None
60 Months
60 months
from the
Deemed
date of
Allotment
Listing
Volume 4, Issue 9
Page 7
Under SEBI's new rules, investors will have to pay more for fund investments but the fund industry must
keep its end of the bargain
The latest round of mutual fund reforms that SEBI has announced have generally been welcomed in the media and investment analysts. The new rules could re-vitalise the mutual fund industry and create an incentive
for fund management outfits to expand to smaller cities and towns. However, theres no doubt that the price
of all this activity will have to be paid by investors. Funds are going to be more expensive than they used to be
by a margin ranging from 0.1% a year to 0.3% a year. Apart from this, investors will also have to bear service tax on at least some part
of the expenses that are charged from them. This is undoubtedly a negative. It hardly needs be pointed out that higher expenses are
never a good thing for investors.
However, I have no hesitation in saying that on balance, the current round of reforms are a positive force and the higher expenses are
a justifiable side-effect of achieving some desirable outcomes. The main point here is that higher expenses are contingent upon fund
management companies successfully expanding their reach to a greater proportion of the countrys population. It does mean that if a
fund so expands its reach, then its existing investors will have to pay some of the cost of expansion to smaller cities. On the face of it,
this looks like a sort of a subsidy charged to investors from larger cities.
This is not different from similar cross-contributions in other areas. For instance, banks agricultural and other priority sector business
is subsidised by more affluent customers. In life insurance, longer-lived customers implicitly pay for less healthy ones. There are many
more examples like this. No financial service, probably no business, runs on the basis of charging from each customer precisely what
that particular customer costs.
Having said that, there is now greater responsibility on SEBI for ensuring that fund companies live up to the task that they are charged
with. The better economics of the business must contribute to a genuine broad-basing of the business. This will mean that AMCs, specially the larger one, will have to spend more on business development in the real sense of the word; and SEBI will have to make sure
that they do.
Another way in which costs can be kept under control and that is by making sure that SEBIs new direct plan initiative meets with a
broad response from funds. The idea is that AMCs should launch separate plans under various funds which can only be bought directly
by investors without going through distributors. Since distributions costs get greatly reduced, these plans should have lower expenses.
They will thus have a different (higher) NAV than the distributor-sold plans and thus higher returns.
According to what SEBI has said so far, it appears that the AMCs are under no obligation to launch direct plans for every single fund.
On the other hand, its very likely that AMCs will be under pressure from distributors, especially large and powerful ones like banks to
not launch direct plans. This is something that the regulator and even the media will have to guard against. AMCs must launch direct
plans for their equity and hybrid funds and the expense levels of these funds must genuinely reflect the absence of distributor remuneration.
SEBIs new set of regulations begin a new phase for Indian mutual fund investors as well as the industry. The regulator has made clear
its intentions of treating higher expenses as an incentive to create a new kind of fund industry, which will ultimately benefit the investor. As in all new regulations, there will be weak points that no one could have visualised beforehand. However, it would be good if all
stakeholders can appreciate the underlying spirit of the changes and work towards genuinely expanding funds. It would conversely be
very bad if the usual suspects set about to figure out loopholes and ways to game the system.
Syndicated from Value Research OnlineArticle can be viewed online herehttp://www.valueresearchonline.com/story/
h2_storyview.asp?str=20776
Disclaimer: Mutual Fund Investments are subject to market risks. Please read all scheme related documents carefully before investing.