Refer website to a friend


Invest
in
Mutual Funds

Join The Discussion Now
Visit Mutual Fund Forum to discuss about MF's entry load, exit load, NFO's, fund managers and more
print Email

Mutual Fund Industry Update February 2009

February 2009

For the interest of investors, SEBI has revised certain regulations and is considering new regulations. These regulations are revised due to recessionary global scenario, bad performance of stock market as well as certain debt mutual fund schemes. An Advisory Committee is formulated by SEBI to revise or formulate the regulatory provisions. Lets discuss some revised regulations and the industry trends in 2009

Changes in Nomenclature of Liquid Plus Funds

  • The Asset Management Companies are recommended to discontinue the use of term Liquid Plus Funds because this nomenclature gives a wrong impression of added liquidity in the scheme
  • Please watch out for the changes in names of Liquid Plus Schemes by various Asset Management Companies. Few examples are Principal Liquid Plus Fund renamed as Principal Ultra Short Term Fund and LIC Liquid Plus Fund renamed as LIC Income Plus Fund

Revised Guidelines on Portfolio of Liquid Schemes

  • As per revised SEBI guidelines, the 'liquid fund schemes and plans' shall:
    • With effect from 1st Feb 2009, make investment in debt securities with maturity of upto182 days only.
    • With effect from 1st May 2009, make investment in debt securities with maturity of up to 91 days only.
  • The objective of investing in liquid schemes is limited to the time horizon of 3-6 months. This will help reducing the volatility of yields in liquid schemes caused by mismatch of maturities.

Disclosure of Indicative Portfolios and Yields in Mutual Fund Schemes

  • Mutual Funds shall not offer any indicative portfolio and indicative yield in their debt /fixed income products. This practice is prohibited because the indicative portfolio and indicative yield can be misleading to the investors.
  • It is, therefore, decided that the Mutual Funds shall not offer any indicative portfolio and indicative yield. The compliance of the same shall be monitored by the AMC & Trustees and reported in their respective reports to SEBI.

MUTUAL FUND INDUSTRY TRENDS

  • Increase in Mutual Fund Asset Under Management (AUM) in January 2009:
    The AUM of the Indian mutual fund industry has increased by 35% in Jan 09 reversing the earlier trend of declining AUM in last 6 months. This AUM increase is mainly due to large inflows in Liquid Funds and the main recipients were Reliance and HDFC mutual fund; their combined AUM has increased by Rs 10,000 cr in Jan 09. Fresh investment is expected to boost this AUM further in the coming quarter mainly contributed by tax saving Equity Linked Saving Schemes and Debt Schemes
  • Benchmark AMC launches Shariah-Complaint ETF:
    • Benchmark AMC is launching a Shariah-compliant open ended exchange traded fund that will enable millions of Muslims and other investors to take the benefit of mutual fund investment. The scheme opens for subscription on February 4 and closes on February 25.
    • The Benchmark ETF will refrain from having any exposure to business activities related with pork, alcohol, gambling, financials, advertising and media (newspapers are allowed, sub-industries are analyzed individually), tobacco and trading of gold and silver as cash on deferred basis
  • Sectoral Picks of Fund Managers:

    • Banking & Financial Services, Oil & Gas, Engineering, Pharmaceutical and Telecom sector are the top 5 sectors where approx 57.6% of total net assets of the various fund houses are invested.
    • Services, Real Estate and Consumer durable are the ignored sectors for this quarter as minimal exposure is taken by the fund managers in these sectors
    • Reliance, HDFC and UTI have taken the maximum exposure in Banking & Financial Services and oil & gas sector totalling to approx Rs 14,623 cr and Rs 8,355 cr each respectively

If you liked this article, you might also want to read:

Comments
post new comment      Ask a question