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Insurance & Investment
Fortnightly News
MF asset base from small towns rises 46% to Rs 3.5 lakh crore
Contribution of the country's small towns to mutual funds asset base surged 46 per cent to Rs 3.5 lakh crore by June-end due to initiatives taken by markets watchdog Sebi and the sectoral regulator Amfi.
Mutual funds' assets under management (AUM) from B15 locations - small towns beyond top 15 (T15) cities - grew from Rs 2.42 lakh crore in June-end 2016 to Rs 3.54 lakh crore at the end of June 2017, according to latest data available with Association of Mutual Funds in India (Amfi). "Indian mutual fund industry is going through a very exciting growth phase and advertising campaigns started by Sebi and Amfi have helped in increasing penetration of mutual funds in smaller cities," Vidya Bala, Head of MF Research at Fundsindia.com said.
"The increase in investor education programmes has resulted in increasing investor awareness and many first time investors from such towns are investing into mutual funds," Fundsindia.com founder and COO Srikanth Meenakshi said.
He further said Systematic investment plans (SIPs) have been the preferred route for many investors to invest in mutual funds.
To make the move attractive, Sebi allowed more incentives for distribution of funds in B15 (beyond top 15 cities).
Currently, B15 accounts for 18 per cent of the total assets of the industry. Besides, these locations have a better balance of equity and non-equity assets.
Moreover, a large proportion of direct investments were in non-equity oriented schemes where institutional investors dominate. B15 are the locations beyond top 15 (T15) cities namely - New Delhi (including NCR), Mumbai (including Thane and Navi Mumbai), Kolkata, Chennai, Bengaluru, Ahmedabad, Baroda, Chandigarh, Hyderabad, Jaipur, Kanpur, Lucknow, Panjim, Pune and Surat.
About 54 per cent of the assets from B15 locations is in equity schemes, while the same is 31 per cent for T15 assets. About 26 per cent of assets held by individual investors is from B15 cities and 10 per cent of institutional assets come from such places.
About 54 per cent of the assets from B15 locations is in equity schemes, while the same is 31 per cent for T15 assets. About 26 per cent of assets held by individual investors is from B15 cities and 10 per cent of institutional assets come from such places.
On the other hand, institutional assets are concentrated in T15 locations, accounting for a little over 90 per cent of the total.
Further, about 9 per cent of the retail investors chose to invest directly, while over 17 per cent of HNI assets were invested directly.
"About 41.1 per cent of the assets of the mutual fund industry came directly. A large proportion of direct investments were in non-equity oriented schemes where institutional investors dominate," Amfi noted.
Together, all 42 mutual fund houses managed assets worth Rs 19.52 lakh crore at the end of June 30, 2017, a growth of 36 per cent from Rs 14.41 lakh crore managed by the industry by June-end last year.
Mutual fund exposure to bank stocks at record Rs1.47 trillion
Mutual fund managers continued to be bullish on bank shares, as their allocation to the sector reached an all time-high of Rs 1.47 trillion at the end of June, mainly due to cheaper valuations. Mutual fund managers continued to be bullish on bank shares, as their allocation to the sector reached an all time-high of Rs 1.47 trillion at the end of June, mainly due to cheaper valuations. This also marks the sixth consecutive monthly rise in the mutual funds’ exposure to bank stocks. In comparison, the figure was Rs93,885 crore at the end of June 2016.
Banking continues to be the most preferred sector with the fund managers, given the high weightage attached to the index. Kaustubh Belapurkar, Director Manager Research at Morningstar Investment Adviser, said mutual funds (MFs) have been adding exposure to the financial sector, primarily banking stocks because of lower valuations due to price corrections coupled with growth in corporate lending.
“Besides, bank’s NPA (non-performing asset) problem is getting sorted out,” he added.
Further, analysts expect that bank stocks will continue to be in focus in coming months as markets regulator Sebi last month decided to ease its takeover norms for restructuring listed companies with stressed assets.
The relaxation will exempt investors from making a mandatory open offer subject to shareholders’ nod and some other conditions. Sebi’s decision on restructuring in stressed firms comes against the backdrop of the government and the Reserve Bank of India (RBI) stepping up efforts to tackle the menace of bad loans, amounting to more than Rs 8 trillion. Overall, the deployment of equity funds in bank stocks stood at Rs 1,46,861 crore at the end of June 2017, compared to previous high of Rs 1,43,704 crore in the preceding month, latest data available with Sebi showed.
Bank is followed by finance stocks, wherein equity fund managers’ deployment was at Rs 53,186 crore, software (Rs 43,949 crore) consumer non-durables (Rs 43,733 crore) and auto (Rs 42,405 crore). Mutual funds are investment vehicles made up of a pool of funds collected from a large number of investors. They invest in stocks, bonds, money market instruments and similar assets.
Mutual funds' average AUM touches all-time high of Rs 19.92 lakh crore
The average assets under management (AAUM) of Indian mutual fund industry for the month of June 2017 stood at Rs 19.92 lakh crore, according to the data released by Association of Mutual Funds in India. The assets under management of the industry on June 30, 2017 stood at at Rs 18.96 lakh crore. The asset base of the MF industry rose 7 per cent to Rs 19.52 lakh crore at the end of June quarter.
According to AMFI, the AUM of the Indian MF industry has grown about six-fold increase in a span of 10 years. The assets under management of the MF industry stood at Rs 3.26 trillion as on 31st March 2007. The data shows that the mutual fund industry's AUM has grown from Rs 5.87 trillion on 31st March, 2012 to Rs 18.96 trillion as on 30th June, 2017, more than three-fold increase in a span of five years.
The mutual fund industry crossed the milestone of Rs 10 lakh crore for the first time in May 2014 and in less than three years, the AUM size has touched Rs 19 lakh crore last month. The total number of accounts or folios touched 5.82 crore, while the number of folios under equity, ELSS and balanced schemes, wherein the maximum investment is from retail segment stood at 4.70 crore.
Mutual funds' equity investor base at record high
The number of investors in the country's Rs 19-lakh crore mutual fund (MF) sector has climbed to an all-time high.
At the end of last month, the number of equity MF folios was 42.17 million; total folio count was 57.19 mn. Both are a record. It took the sector nearly eight years to surpass the previous high of 41.13 mn equity folios, touched in March 2009. The previous best count for total folios was 48.17 mn in March 2010.
After the global financial crisis, the equity investor base had shrunk by nearly 30 per cent, to 29.18 mn. In the past three years, equity folios have seen annual growth of 45 per cent, with the rally in domestic stocks and consistent inflow into equity schemes.
Interestingly, MF equity folios are now 50 per cent more than the total of dematerialised accounts, of 28 mn. In other words, many more investors are now accessing the capital markets through the MF route than by direct equity investing.
In the past three years, equity assets under management (AUM) have increased three-fold, from Rs 2 lakh crore to Rs 6 lakh crore. Overall AUM has nearly doubled, from Rs 10 lakh crore to Rs 19 lakh crore.
In the past 12 months, MFs have got a net inflow of Rs 83,469 crore, a monthly average of nearly Rs 7,000 crore.
Motilal Oswal, head of Motilal Oswal Financial Services, says the recent flows have been unprecedented and an equity investment cult is developing rapidly. The increasing popularity of systematic investment plans (SIPs) are helping, say experts.
Sector officials say investor awareness campaigns have borne fruit. "The industry's consistent approach to spread awareness about mutual funds and SIPs, in particular, have helped the sector bring in more investors from across the country," says Sundeep Sikka, chief executive officer at Reliance Nippon MF.
Mutual Funds can now register online with Sebi portal
To improve ease of doing business, markets regulator today launched an online registration mechanism for mutual funds.
The move would help in making it easier for the existing and new fund houses to complete their registration with Sebi much faster and in a cost-effective way.
In a circular, the regulator said it has decided to operationalise 'Sebi Intermediary Portal' for the entities to submit the mutual funds registration applications online.
The portal has been made operational from today.
All the applications for registration of mutual fund would be made through this portal only.
"The applicants will be separately required to submit relevant documents viz declarations/ undertakings required as a part of application form prescribed in relevant regulations, in physical form only for records, without impacting the online processing of applications for registration," it said.
Earlier Finance Minister Arun Jaitley in his budget speech for 2017-18 announced that the process of registration of financial market intermediaries will be made fully online by Sebi.
Sebi issues framework for mutual funds, portfolio managers at IFSC
NEW DELHI: Markets regulator Sebi on Tuesday allowed mutual funds, alternative investment funds and portfolio managers, operating in international financial services centres (IFSC), to invest in securities listed in such centres.
Besides, they are permitted to invest in securities issued by companies incorporated in IFSC, the Securities and Exchange Board of India (Sebi) said in a circular. Further, they can also invest in securities issued by firms incorporated in India or companies belonging to foreign jurisdiction, it added. These investments are subject to conditions stipulated or issued by RBI and government from time to time.
MFs’ trading volume doubles on NSE
Trading volumes on the mutual fund platform of the NSE have doubled last fiscal to Rs.16,563 crore against Rs.7,624 crore logged in FY16, on the back of investors’ renewed interest to tap into the bull-run in equity markets.
The NSE mutual fund platform (NMF) is only for Association of Mutual Funds of India-registered MF distributors and Registered Investment Advisors. The number of distributors registered on the NSE has increased to 2,150 against 1,500 in March, 2016.
Thanks to the efforts put in by MFs, the number of transactions on the platform more than tripled to 26.94 lakh from 7.69 lakh in FY16. Interestingly, the number of systematic SIPs registered on the platform have almost quadrupled to over 2.30 lakh (60,000).
Mukesh Agarwal, CEO — Mutual Funds, NSE, said apart from the wide reach the exchange commands, the volumes on the mutual fund platform were boosted by the convenience it provides to distributors, particularly in rural regions where reaching out to different mutual funds separately becomes an issue.
“We aim to develop the platform as a one-stop-shop for mutual fund houses and distributors while striving to improve the efficiency in the mutual funds space by introducing new facilities,” he said.
Of the existing 42 MFs registered with the AMFI, 35 are listed on the NMF. While there are no specific charges on distributors for trading on the platform, individual distributors have to make a deposit of Rs.15,000 and it is Rs.25,000 for corporate distributors. The platform also reduces the IT infrastructure expenses substantially for the distributors.
Instant redemption
Agarwal also said the platform is aiming to speed up redemption. “Our aim is to speed up the redemption process for investors. Currently, we are providing instant redemption on a specific fund floated by Reliance MF and will be open to list more such schemes,” said Agarwal.
SEBI has mandated instant redemption up to Rs.50,000 per investor in liquid funds. Reliance Mutual Fund and DSP Black Rock provide instant redemption facility. Just like offer-for-sale done by corporates, the NSE is planning to introduce ‘Sovereign Gold Bonds’ on the NMF platform.
Mutual funds' AUM inching towards Rs 20 trillion mark
Backed by a booming stock market and increasing interest from retail investors, the assets under management (AUMs) of the mutual fund industry is likely to touch the magical mark of Rs 20 trillion next month.
Moreover, investment by the MF players in the equity market has surpassed that of foreign institutional investors, figures from industry body AMFI have revealed.
The AUM of the country's MF industry grew 9.8 per cent to Rs 19.26 trillion in April, from Rs 17.54 trillion in March, and it was likely to cross the Rs 20 trillion milestone in the next month itself if the assets grow by another 4 per cent, according to AMFI data collated by rating agency Icra
AMFI, or the Association of Mutual Funds in India, is a nodal association of MFs across the country.
Of the Rs 1.5 trillion that investors pumped in different categories in April, liquid, income, and equity funds (including equity-linked savings schemes or ELSS) saw the highest inflows, it said.
The three categories saw net inflows of Rs 0.99 trillion, Rs 0.35 trillion and Rs 0.09 trillion, respectively.
Equity funds also got support from the broader market rally as the BSE Sensex hit an all-time high of 30,000 in April.
Equity funds (including ELSS) witnessed net inflows of Rs 9,429 crore in April, an increase of 14.8 per cent MoM and 112.5 per cent YoY. This comes on top of over Rs 70,000 crore investments in equities in the fiscal 2017.
In April, net inflows via the SIP route hit an all- time high of Rs 4,200 crore, the data showed. According to the AMFI, the industry added around 6.26 lakh SIP accounts every month on an average during the last fiscal with an average ticket size of Rs 3,660 per account.
MFs pumped in Rs 54,912 crore into the country's equity market as against Rs 52,977 crore by FIIs/FPIs during the year gone by.
The trend continued in April where MFs' quantum of net investment in equities stood at Rs 9,918 crore compared with Rs 2,417 crore by FIIs/ FPIs, the report said.
Total folio count at the April-end grew 1.3 per cent at 5.61 crore from March, a SEBI data said.
Folios are numbers designated for individual investor accounts, though one investor can have multiple accounts.
The growth was primarily on the back of 5.85 lakh new folios added to the equity category (including ELSS) and 1.5 lakh new folios to the balanced category. Exchange-traded funds were the only category to witness a decline of 20,000 folios, which could be due to the category's underperformance compared with the actively-managed funds, it added.
In the last 12 months, assets from beyond 15 cities, or B15 towns, have grown 43.9 per cent due to investor- friendly initiatives by the regulator and awareness campaigns by asset management companies (AMCs).
The B15 assets grew Rs 98,525 crore to Rs 3.23 trillion in April from Rs 2.24 trillion a year ago. Currently, B15 towns account for 16.9 per cent of the total assets of the MF industry. However, the share of direct plans in B15 towns is only 22.3 per cent as against 45.6 per cent in top 15 cities.
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