Nov 9, 2009
The October MF report | Advantage zyaada
The Data is courtesy http://amfiindia.com (AMFI)
October turned out to be buoyant for the entire economy with retail and auto sectors reporting a 30% + uptick in sales and mutual funds also adding a neat INR 20000 Crores or $4.33 billion.
However individual fortunes were mixed as some fund houses managed to lose in Assets under management in the cracker season. UTI MF grew further by INR 3260 Crores or $720 million, and even Tata MF growing by INR 2500 Crores or $550 million. A small player like Kotak grew its corpus by INR 1350 Crores or $ 300 million. It is definitely a market whose time has come.
However Religare lost over 350 crores in AUM in the festive celebrations as it also withdrew from its AIG The newer giant Reliance at INR 116782 Crores also reported a reduction of INR 2000 crores and the growth is favoring the progressive biggies with a good corporate governance score. ICICI Prudential kept losing custom with markets withdrawing their favor after the recent turmoil in its ranks losing a miniscule but significant INR 400 crores, while its larger rival HDFC MF has taken its market share up to 12.23% growing to INR 93.300 Crores
The only other significant player in the Birla Sun Life MF grew rapidly by INR 2000 crores with the AUM of INR 65.500 crores reflecting a market share of 8.5% Ajay as head of the Financial Services business for the group has recently appeared in a a few network interviews to beef up these gains and reiterate BSL’s plan and vision in the upcoming wealth explosion in India. Fidelity MF remained between ICICI and HDFC in the rankings with INR 87000 crores or $19 billion without reporting any close ended schemes in October
UTI MF grew best in its Income funds with INR 5000 Crores adding in its Treasury Advantage plan and HDFC has grown its best performing Prudence ( Balanced ) and Top 200 ( Equity , medium risk ) schemes among others
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The Next Credit Crisis
US credit markets is far from over with over $225 billion of mortgage resets still to come. In Australia $50 billion AUD in commercial lending maturing in 2010. They won’t be able to tap the international markets as overseas Europe has $350 billion in commercial lending coming up for maturity and the US has mortgage resets of over $225 billion this credit crisis is far from over. Check out http://www.jpminvestmentgroup.com.au for more information.
JPM Investment Group
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Over the last 6 months, regulatory bodies have taken a pro-active stance towards reforming the mutual fund industry. Some observations and thoughts:
It all started with the ban on entry load from July 2009. Basically, IFAs (Independent Fund Advisors) used to make anywhere between 1% to 2.25% as commission for selling MFs. This would be directly deducted from the investment and paid by the fund to the distributor. Today, customers are in a position to negotiate a commission with the intermediary and/or go to the agent who offers the least commission.
The last 3-4 months have witnessed a fall in inflows into equity funds. Inflows averaged roughly INR 4000cr over the last 4 months. The same number stood at INR 6000 cr in the Mar-July period. Players like India Post (the post office network) have stopped intermediation in funds till “there is more clarity on the issue”.
Then came a few more announcements from the regulator in November:
1) Stock brokers will be allowed to intermediate in MFs very soon.
2) MFs could become echange traded as soon as the next 6 months, with a common online trading platform
All this is great for the investor – more bargaining power, easy access to products and of course, lower commissions. However, the effect of all this on ‘trail commissions’ – paid annually by funds to intermediaries to keep their clients invested in the fund – is not yet clear. If stock brokers go the churn-route, looking to churn clients in and out of funds, fund managers will eventually see the futuility in offering attractive trail commissions. In any case, this space will witness a lot activity in the coming months.
posted by TEJASVI MOHANRAM on Friday, November 20th, 2009
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