Untitled Page
All-India Toll Free number1800 22 22 441800 208 2244 All-India Toll Free number for PMJDY Scheme1800 22 22 43
  Consent form for Aadhar and mobile Seeding new
Dedicated Number for NRI+918025302510 Link your Aadhaar Number new Update your FATCA/CRS Details new
 
 
facebaook twitter Instagram   YouTube
Insurance & Investment
Mutual Fund News
Features
f
Mutual funds trim metals, retail holdings, tank up on financial stocks in September
Mutual funds flocked to financial stocks in September attracted by their growth prospects even as they sold metal and retail stocks to cash in on the recent rally in these sectors. According to data from Value Research, six out of 10 large-cap stocks bought most by mutual funds in September were financials.

“Predominantly, consumer lending is picking up. Due to lower cost of funds, there is uptick in margins for the intermediaries in this segment,” said Gopal Agrawal, chief investment officer (equities) at Tata Asset Management Co. Ltd. “Some corporate lenders were also preferred due to stock-specific positives and valuations,” he added.

Others shared the view. “We believe retail-focused lenders will continue to grow well, and in fact, drive growth the most in the sector, and we remain invested in that space,” said Harsha Upadhyaya, chief investment officer (CIO)-equity at Kotak Mahindra Asset Management Co.

“We are not upbeat on corporate and PSU lenders, as the ghost of NPAs (non-performing assets) still bothers them,” said Upadhyaya.

The most-bought stock was Yes Bank Ltd, with asset managers spending Rs7,267.84 crore on it. Other top preferred stocks were HDFC Bank Ltd, ICICI Bank Ltd, Bajaj Finance Ltd, Housing Development Finance Corp. Ltd (HDFC), and State Bank of India.

“Financials have a huge weight in the Sensex. After demonetisation, the cost of deposits came down faster than that of assets, and that has kept these stocks attractive,” said Ritesh Jain, chief investment officer, BNP Paribas Mutual Fund.

“That said, NPAs (non-performing assets) continue to bother and going ahead, insurance could be one of the preferred pack in the BFSI (banking, financial services and insurance) space going ahead,” Jain said.

Metal producers and retail chains figured were among the most-sold large cap stocks as asset managers locked in gains after the recent rally in the pack.

Fund managers sold Rs346.09 crore of Vedanta Ltd and Rs97.07 crore of Tata Steel Ltd. The BSE Metals index rose 43.8% in the first nine months of 2017.

Avenue Supermarts Ltd, which runs retail chain D-Mart, was the seventh most-sold stock by mutual funds last month, at Rs126.30 crore. The company went public on 21 March, and had gained 291% from its issue price until 30 September.

Fund managers sold Rs105.09 crore of Future Retail Ltd in September. The stock has gone up four-fold since the start of 2017 to the end of September.

“Profit-booking seems to have been triggered for metals and retail-focused stocks, as asset managers trimmed some positions there,” said Agrawal of Tata.
SIPs net Rs 5,516 crore in September, MFs adding 8.8 lakh accounts a month
Retail investors continued to pour money into equity mutual funds through SIPs as monthly collection through such schemes in September touched Rs 5,516 crore. For the first six months of the current year, SIP collections rose 45 per cent, compared with the same period last year, to touch Rs 29,266 crore.

"SIPs have become a success due to word-of-mouth publicity from investors. Those who have made money through the ups and downs of the market are now publicising this and they are the biggest ambassadors of SIPs," said Nilesh Shah, Managing Director of Kotak Mutual Fund..

The industry which had 92.31 lakh SIP accounts in May 2016, has registered 1.28 crore accounts by March 2017, and 1.66 crore by September this year. As per data from AMFI, the industry has added 8.8 lakh SIP accounts every month on an average in the first six months of the current year, with an average SIP size of Rs 3,300 per account. The average ticket size per SIP was Rs 2,322 in March 2014, which rose to Rs 3,121 in March 2017.

Post demonetisation, investors have shifted towards financial savings from physical assets such as gold and real estate. Interest rates on fixed deposits are also on a downward slope, leaving investors with fewer options to invest.

On the other hand, they have been attracted by higher returns from equity mutual funds.

"Investors are shifting from physical savings to financial savings, as many believe equity is no longer a bad word. First-time in vestors prefer to take the equity SIP route to begin their investment journey as they believe that they get services of a professional fund manager," said Satish Menon, executive director at Geojit Securities.

The operational ease of a systematic investment plan (SIP) has also led to its popularity. With the NACH (National Automated Clearing House) mandate, registration of SIP has become faster and can be completed in 20 days, against a month earlier. Investors can start a SIP with as little as Rs 500 per month and have the flexibility of adding or deducting to their SIP accounts at any given time.

"People have taken well to the discipline of investing that comes with the process. Many investors are now running SIPs to meet their long-term goals such as child's education or their retirement, said Swarup Mohanty, CEO, Mirae Asset Mutual Fund.

Cut in deposit rates drives investors to MFs
Every time a bank cut its term deposit rate in the last year or so, it pushed desperate customers to increasingly look elsewhere for better-yielding assets, including mutual funds and the stock market.

This is highlighted by the fact that the mutual fund industry’s average assets under management (AAUM) shot up 30 per cent year-on-year in September 2017 (against 22 per cent y-o-y in September 2016).

The banking industry’s deposit accretion, by contrast, was slower at 9 per cent in Q2 ( 11 per cent in Q2 September 2016). The AAUM of the mutual fund industry and deposits of all scheduled banks stood at about ₹21 lakh crore and ₹112.587 lakh crore, respectively, as at September-end.

Demat shift
Another indication that investors are veering towards equity markets is the increase in the number of demat accounts. The number of accounts with the NSDL rose 7.73 per cent y-o-y in September 2017 (to 1.63 crore) against 6.52 per cent in September 2016 (to 1.50 crore).

Similarly, the number of demat accounts with CDSL, according to latest available data, increased by 15.17 cent y-o-y in the current year’s Q1 (to 1.29 crore) against 13.13 per cent in July 2016 (to 1.12 crore).

The push towards equity market investments comes in the backdrop of bank term deposit rates of more than one-year duration coming down to 6.25-6.75 per cent this September from 7-7.30 per cent in September 2016. During this one-year period, the bellwether BSE Sensex jumped about 2,900 points.

“The macro (economic) environment is favouring financial savings now much more than before. There is a lot of liquidity in the system. A lot of money is lying in low-yielding savings and fixed deposits. That is why we are seeing a lot of money flowing into risky assets.

“Mutual funds are doing well. The life insurance industry as a whole is growing… and we think this trend could continue for the next two to three years at least as money moves away from real assets to financial assets,” said S Sreenivasan, CFO, Bajaj Finserv.
Equity MF inflow triples to Rs 80,000 crore in April-September FY18
Equity mutual funds registered an inflow of over Rs 80,000 crore in April-September 2017, a three-fold growth from the year-ago period, mainly due to the ongoing shift of household savings from real estate and gold to such financial products.

The strong inflows have pushed the asset base of equity mutual funds (MFs) by over 21 per cent to Rs 6.59 lakh crore at the end of September from Rs 5.43 lakh crore in March-end, according to data of the Association of Mutual Funds in India (Amfi).

As per the data, equity funds, which also include equity-linked saving schemes (ELSS), saw net inflows of Rs 80,357 crore in the first six months of the ongoing fiscal, much higher than Rs 22,233 crore infused in April-September 2016-17.

"The increased flow of domestic investor capital in equity mutual funds is a part of the ongoing shift of household savings from physical assets like property and gold to financial assets like equities and bonds, a process that has been accelerated post demonetization," Bajaj Capital CEO Rahul Parikh said.

"Increased awareness about the principles of asset allocation and financial planning, coupled with the optimism on the long-term growth potential of the Indian economy and its favorable impact on corporate earnings and share prices, has helped drive interest for equities among domestic investors," he added.

Parikh further said lower interest rates on bank deposits and stagnancy in property, as well as gold prices, have driven domestic investors towards equity mutual funds, in their search for higher returns.

Systematic Investment Plans (SIPs) have been the preferred route for retail investors to invest in mutual funds as it helps them reduce market timing risk

Mutual funds register Rs2 trillion inflows in April-September
Investors have pumped in over Rs2 trillion into various mutual fund schemes in the first six months of the current fiscal, with equity and balanced funds accounting for most of the inflows. According to data from Association of Mutual Funds in India (Amfi), equity and equity-linked schemes attracted over Rs80,000 crore, and balanced funds received more than Rs47,000 crore. Besides, Rs28,600 crore was invested in liquid or money market fund category.

In contrast, gold exchange-traded funds (ETFs) continued to see net outflow of Rs388 crore. “The huge inflow could be attributed into equity, balanced and money market funds with robust participation from retail and HNI investors,” said Anshul Saigal, portfolio manager at Kotak Mutual Fund.

Bajaj Capital chief executive officer Rahul Parikh said Indian investors have now assimilated mutual funds and the credit goes to awareness programmes and endeavours by regulators and asset management companies. In all, investors poured in a net of Rs2,02,001 crore in mutual fund schemes in the first six months of the ongoing fiscal, as compared to Rs2,34,564 crore in April-September 2016-17. Liquid and money market funds invest mainly in money market instruments like commercial papers, treasury bills, term deposits and certificate of deposits.

These funds have a lower maturity period and do not have any lock-in period. Saigal said that investors are taking the systematic investment plan (SIP) route to invest in mutual funds. At present, the industry receives about Rs5,000 crore every month through SIPs — an investment vehicle that allows investors to invest in small amounts periodically, instead of lumpsum.

The frequency of investment is usually weekly, monthly or quarterly. Over the last few years, markets regulator Securities and Exchange Board of India (Sebi) has been taking measures to increase mutual fund penetration in smaller cities and getting newer investors into the fold by allowing for an additional 30 basis points expense and two basis points towards investor education.

The move seems to be paying off as there has been a rapid rise in the number of new folios as well as increasing share of assets from smaller cities (termed at B-15 cities), which now account for 18% of the overall assets base. Overall, the assets under management (AUM) of the mutual fund industry, comprising 42 players, reached a staggering Rs20.4 trillion in September-end from Rs17.54 trillion at the end of March.

SIP inflows grow 50% in one year

Inflow into mutual funds(MFs) through systematic investment plans (SIPs) has hit another historic high in September. The sector collected Rs 5,516 crore during the month as the number of SIP accounts touched 16.6 million, compared with 13.5 million at the beginning of this financial year.
A year before, the sector got less than Rs 3,700 crore. In a year, SIP monthly contribution has increased by about 50%. 
According to sector officials, every month Rs 250-300 crore worth SIPs were added and this trend would continue. With this, the current financial year is likely to surpass Rs 7,000 crore of consistent and steady investments on a monthly basis by March. This means a massive Rs 84,000 crore of sticky inflows into MFs every year. 

Equity funds’ AUMs log a new high on the back of strong inflows
Equity mutual fund’s assets under management (AUMs) soared to a new record, of Rs6.59 trillion, on the back of continued strong inflows in equity schemes, and as markets were a bit subdued.
The net inflows in equity schemes for September totalled to Rs18,936 crore – a tab below August’s record high of Rs20,362 crore, but the second-highest ever. Meanwhile, benchmark indices Sensex and Nifty shed 1.41% and 1.3% in the month respectively.

“There has been some amount of profit booking too in the equity schemes, but overall it is still going,” said Harsha Upadhyaya, chief investment officer (CIO)-equity at Kotak Mahindra Asset Management Co. Ltd.
“All eyes are now on the earnings season, and investors hope they are not worse than June quarter numbers. The commentary along with the earnings will be keenly watched for the path ahead,’ added Upadhaya.
Kaustubh Belapurkar, director of fund research at Morningstar Investment Adviser India Pvt. Ltd, pointed that equities have been an under-penetrated asset class, and seeing the good run up, investors have been coming in. “Money is moving from physical assets to financial assets, and to that extent equity as well as debt funds are benefitting. Luckily, these flows are coming into equities at a time when there are net outflows to foreign investors,” said Belpurkar.

Foreign institutional investors pulled out a net of Rs11,836.18 from Indian shares in the month of September.
The total AUMs of the mutual fund industry edged lower to Rs20.4 trillion at the end of September, from Rs20.6 trillion, mainly on outflows from income schemes.
The income schemes witnessed net outflows to the tune of Rs50,090 crore in the month of September, the highest since March.
“I suspect most of this would be outflows form corporates from the ultra-short bond funds. In September, when advance tax instalment is due, such outlflows are pretty normal at the end of each quarter,” said Belapurkar of Morningstar.

MFs' AUM rises 7.6% to Rs 21 lakh crore in September quarter
Mutual fund industry's asset base surged 7.6 per cent to a record high of Rs 21 lakh crore at the end of September quarter, driven by strong participation from retail investors. In comparison, assets under management (AUM) of the MF industry, comprising 42 players, were at Rs 19.52 lakh crore during the April-June quarter, as per latest data with Association of Mutual Funds in India (Amfi).

The industry's AUM had crossed the milestone of Rs 10 lakh crore for the first time in May 2014 and in a short span of three years, the asset base has more than doubled to Rs 21 lakh crore at the end of September 2017, it added.

Prior to this, it had touched a record high of Rs 20.6 lakh crore in August-end. Industry insiders attributed rise in assets base to increased participation from retail investors and high net worth individuals that attracted investments in both debt and equity segments.

The next phase of mutual fund growth

Over the last 10 years, the mutual funds industry has grown sixfold. The next phase of growth will need new ideas. Industry CEOs discuss some of these ideas.

The mutual fund industry is witnessing an unprecedented pace of growth with total assets under management increasing sixfold to Rs20 trillion in a matter of 10 years. Given the market scope, there is an exciting buzz in the industry about the future. Last week at the Cafemutual Confluence 2017, the question of accelerating incremental growth was addressed by some of the industry’s chief executive officers (CEOs). Cafemutual.com caters to mutual fund industry stakeholders with information about the industry. A panel of six CEOs gave radical ideas on how to add investors at an even faster pace.

The industry currently has several stakeholders: asset managers, distributors, advisers, investors and the regulator. Although the objective should largely be around asset managers providing suitable choices and investors seeking performance, there are smaller debates which crop up. Some of the ideas talked about in the conference were an attempt to iron out such debates to enable faster growth.

Every asset manager has an internal sales team. While the institutional sales have largely been direct, retail sale has depended more on distributors. Over the last 4-5 years, however, with direct plan options, the asset management companies (AMCs) are also seeking retail investors directly. AMCs do not have to pay distributor commission on direct plans. They also save on the costs of servicing distributors. This helps investors too as distributor commissions are part of the total expense ratio charged to them. Without it, direct plan returns are higher than those of corresponding regular plans. However, this has created some friction between distributors and AMCs. According to a senior executive with a domestic asset manager, not authorised to speak to media, “Distributors don’t like low expense direct plans. Retail investors do come through distributors but AMCs also want direct clients.”

At the Cafemutual event, Sunil Subramaniam, chief executive officer, Sundaram Asset Management Co. Ltd, spoke about changing the perception. “It should not be ‘them versus us’, rather ‘us plus them’. We can do away with the AMC sales force completely and rely on distribution networks to reach investors. It can help save costs and focus on launching products that deliver what is promised,” he said.

An aggressive internal sales team may push for launching too many products, which aren't always relevant for long-term investing. On the other hand, the cost argument might favour direct plans for large-sized asset managers. Some asset managers now also have dedicated service to direct investors.
Technology can take over

Bring in technologies, like robo-advisors, and one can talk of doing away with internal sales teams, especially for smaller asset managers. This threat is real and impacts not only AMC sales teams but also distributors who haven’t adapted to change. Large distributors and clients, in any case, call for meetings with fund managers. The salespersons may have a small role in acquiring those transactions. Kailash Kulkarni, chief executive officer.
Make experience important

Fixed deposit investors don’t know what to expect from market-linked mutual funds. To ease in new investors, one should be able to experience the product before buying, alluding to free samples of FMCG products. “Along with investor awareness, we can...give free units to every new unique PAN that gets registered. These investors can then see the benefits of investing though mutual funds. New (distributors) can be given some of these new unique PAN folio holders as investors who need help and advice with future decisions.” Experience is also dictated by expectations. Many times too much focus on the market environment can create unattainable return expectations. Mutual funds need to be presented not just as market-linked products, rather as concepts and solutions towards a goal.”

Some of this is already getting done at industry level and by individual asset managers. However, measuring the efficacy of this strategy in adding new investors is not an easy task.
Unity of action

A combined effort by all the asset managers might see a faster pace of growth in assets and investor folios, some CEOs believe. Ashutosh Bishnoi, chief executive officer, Mahindra Asset Management Co. Pvt. Ltd, said that AMCs too need take risks and reach out further into the interiors of the country. This is being done to an extent. Internal distribution channels, through affiliated banks and non-banking finance companies, are being leveraged for better sales. Nilesh Shah, managing director, Kotak Asset Management Co. Ltd, talked of a collective vision: “Our vision can be to make each Aadhaar holder an investor, but the vision communicated to the government has to be that all Aadhaar holders need to be turned into income tax paying mutual fund investors. The caste system in MFs where some funds are Brahmins and others are Shudras needs to stop...start small then implement on large scale.

It has happened that schemes that are perceived to be of better pedigree (or Brahmin) are more sought than others with comparable or even better returns but a lesser brand foothold. Practically speaking, asset management is not about having similar products on similar platforms. Each asset manager will come with its own processes, product ideas and distribution channel. Ultimately the investor will choose those which offer better in performance, service and overall experience. An industry which offers relatively easy entry for managers and distributors, is unlikely to see any major joint effort being undertaken on too many fronts.
Sebi to allow MFs, PMS in commex derivatives soon
Commodity derivatives markets (CDM) could see a deepening of participation within the next six months, with the regulator in advanced stages of permitting mutual funds and portfolio management service (PMS) providers to trade on the 14-year-old platform, Sebi ED SK Mohanty said on the sidelines of FICCI conference here on Tuesday.

Mohanty also called upon big corporate houses to hedge on domestic exchanges in the light of the upcoming institutional participation instead of participating in overseas exchanges.

PMS is provided by wealth management arms of brokers. In June, Sebi allowed commodity exchanges such as MCX and NCDEX to launch options on commodity futures and permitted Cat III AIFs -hedge funds and private equity funds that invest in listed companies -to participate in the CDM. Much of the participation is currently confined to retail and wholesale traders, speculators and a few corporate hedgers, including jewellers, bullion dealers, grain dealers, etc.

Since both mutual funds and PMS are regulated by Sebi, the decision to allow their participation can be taken much before that on opening the market to foreign portfolio investor (FPI) participation and that by banks and insurance companies subject to regulatory consultation and approval of RBI and IRDA. While allowing FPIs will take time and changes in regulatory framework for commodities, Sebi is considering permitting foreign firms with exposure to but no presence in India to hedge their price risk on domestic commodity bourses.

Sebi took over regulation of the CDM in September 2015, after the government decided to merge the erstwhile regulator Forward Markets Commission with it.
MFs’ assets cross Rs.20 lakh cr
The highest ever inflow of Rs.20,362 crore in equity-oriented schemes of mutual funds has pushed the industry’s asset under management to Rs.20.59 lakh crore in August.
The net inflow into equity schemes more than doubled compared to last year, reflecting the structural uptrend driven by an improvement in financial savings and investors’ shift from physical to financial savings.
With the latest cuts in bank deposit interest rates, investors are taking to the stock market through equity and balanced schemes. Net inflows through Systematic Investment Plans also hit an all-time high of Rs.5,206 crore in August 2017.
In fact, inflows through SIPs rose 44 per cent to Rs.23,750 crore in the past six months. The industry on an average added 8.55 lakh SIP accounts with a ticket size of about Rs.3,275 per account.
With strong retail participation and high net-worth individuals, the AUM of the mutual funds industry increased 3 per cent to Rs.20.59 lakh crore in August from Rs.19.97 lakh crore in the previous month, according the Association of Mutual Funds in India.
Over the past three years, the industry AUM has doubled from Rs.10 lakh crore.
Money market leads
The money market segment witnessed the highest net inflow of Rs.21,352 crore followed by equity (Rs.20,362 crore), balanced (Rs.8,783 crore) and income funds (Rs.8,390 crore).
The total folio count increased 2.4 per cent to 6.08 crore in August, according to SEBI data. The growth was primarily on the back of 10.9 lakh new folios added to the equity category and 2.36 lakh new folios to the balanced category.
Being a popular tax-saving instrument among investors, equity-linked saving schemes alone added 1.21 lakh new folios between April and August. However, the folio count dropped by 3,580 and 1,546 in Gold ETFs and Fund-of-Funds investing overseas, respectively, from July-end levels.
Investments from beyond the top 15 (B15) cities accounted for 17.6 per cent of the total industry AUM in August.
In the past 12 months, B15 towns have witnessed AUM growth of 39 per cent or Rs.1.04 lakh crore in August to touch Rs.3.70 lakh crore, against Rs.2.66 lakh crore a year ago.
MFs get record monthly SIP inflows
Inflows into mutual fund schemes through the so-called systematic investment plan (SIP) route hit a record high of Rs 4,584 crore in May. SIP inflows were 44 per cent higher compared to the corresponding month of last year and 20 per cent more than one-year average.
SIP is an option wherein an investor makes a recurring commitment to put in a fixed income periodically. SIPs, as opposed to lump sum investments, help mitigate risk, particularly when the markets are trading at near record levels.
Even the mutual fund industry benefits from SIPs flows as they are consistent in nature. The industry has been creating a lot of awareness investing through this route. Market players say inflows through the SIP route will only increase from current levels. Broking firm Geojit Financial Services in a recent note said SIP flows could double to Rs 10,000 crore in next two years. “Investors are increasingly coming to equity markets through SIP route, leading to a sudden spike in SIP folios in the past one year and the trend is likely to gather more speed over the next couple of years,” the brokerage says.
why domestic investors are becoming more relevant in Indian markets
The clout of domestic investors on Indian stock markets has augmented more than ever before, with the benchmark indices recurrently scaling new highs. The upsurge in mutual fund equity flows has given a new connotation to Indian equity markets. The mutual fund equity inflows and stock market performance are developing a positive correlation, which was not the case till a couple of years ago, because hitherto the quantum of foreign fund flows used to determine the equity market performance. Hence, one can rightfully claim that Indian equity market valuations are increasingly getting Made-in-India, given that household savings are incrementally being channelized towards financial products.
John Maynard Keynes, British economist and champion of free markets, said, “The importance of money flows is a link between the present and the future.” Keynes believed that the unique function of money is to carry us from where we are currently to where we are destined to go. The increased participation from domestic investors in Indian equity markets submits that they are scripting a promising future for themselves.
A study reveals that between 2004 and April 2014 (pre-general elections), monthly equity flows and MSCI India Index performance had a strong correlation. MSCI India (US$ Index) performance declined 7% (median) over the same period in concurrence with foreign fund selling. However, the trend has altered since May 2014—MSCI India Index has declined less than 1% (median) during periods of foreign institutional investors (FII) selling, and this illustrates the increasing might of domestic flows.
Of these, Indian household savings have become a dominant driver of local institutional flows. Mutual funds had pumped in Rs48,005 crore, as against Rs18,783 crore by FIIs in 2016, shows investment data. This reflects the appetite of domestic investors for equity markets (Source: NSE, BSE, Sebi and Amfi).
Peter Lynch, legendary value investor, mutual fund manager, and philanthropist, said “There are substantial rewards for adopting a regular routine of investing, and following it no matter what, and additional rewards for buying more shares when most investors are scared into selling.” Hence, investors planning to participate for long term in Indian equity markets should follow Lynch’s counsel for rich dividends.
Mutual funds have unfailingly received significant inflows through systematic investment plans (SIPs), which were deployed in equity markets. Incidentally, demonetization has been a game changer for the mutual fund industry, as equity inflows have touched new highs after the November move. This was also at a time when large section of investors had turned cautious about investing in other asset classes like gold and real estate. This has been reflective in the subscriptions into SIPs, which has been rising consistently. Data from the Association of Mutual Funds in India (Amfi) shows monthly inflow of Rs4,269 crore through SIPs in April 2017, as compared to just Rs980 crore per month in 2012, aptly reflecting the increased interest in recurring savings allocations.
Hearteningly, it is the balanced fund category that has witnessed strong momentum as Indian savers are gradually gravitating from physical to financial savings with first billion dollar-plus monthly inflows into balanced funds (aggregate net subscription for April 2017 stood at a historic high of $1.1 billion). Mutual funds’ equity and equity-linked savings schemes (ELSS) witnessed an aggregate net inflow of Rs94 billion ($1.5 billion) in April 2017, which is more than twice the April 2016 inflows, and 61% higher than the past 12-month average. However, Indian stock market valuations currently appear somewhat expensive, against historical averages. The trailing price-to-earnings (P-E) multiple for S&P BSE 500 Index is currently trading at 26 times or close to 2 standard deviations above the long-term average. In addition, more than a quarter of stocks are trading at over 40 times trailing 12-months earnings, the highest ever. To provide a perspective, in December 2007, the median P-E for the market was 21 times, and 24% of the stocks were trading over 40 times trailing P-E. However, historical market patterns point that sooner than later, markets tend to realign to historical valuations, typically as and when earnings growth materializes.
Nevertheless, one should always remember that no one asset class has ever moved in a straight ascending line, and, when it comes to financial assets in particular, the exhibition of volatility is even more prominent. Indian equity markets are trading around all-time high, and given the interesting and dynamic market environment, it calls for a rebalancing of portfolio, Hence, a suite of products such as dynamic asset allocation or balanced advantage category of funds are recommended for investors as they prepare to navigate the probable volatile times in the days ahead.
We anticipate the Indian market performance to be determined by the earnings growth trajectory and GST implementation. Surging domestic liquidity and high secondary market valuations also bode well for corporate deleveraging or reduction in cost of capital, which may further bolster equity market sentiments. Also, the recent domestic and international political developments have been favourable for investor risk appetite. Interestingly, these are good times to remain invested in stock markets, as Indian economic growth soars to a robust 7%-plus, making it the fastest growing emerging market globally.
Nimesh Shah is managing director and chief executive officer, ICICI Prudential Asset Management Co. Ltd
MFs investment in bank stocks hits all-time high of Rs 1.44 lakh cr in May
Mutual fund managers continued to be bullish on bank shares, with their allocation to the sector reaching an all time-high of over Rs 1.44 lakh crore at the end of May, mainly due to cheaper valuations.
In comparison, the figure was Rs 90,014 crore at the end of May 2016.
Banking continues to be the most preferred sector with the fund managers as they cannot afford to take a bearish call on banking stocks, given the high weightage attached to the index.
“MFs have been adding exposure to the financial sector, especially banking stocks because of lower valuations due to price corrections and growth in corporate lending. Besides, banks' NPA (non-performing asset) problem is getting sorted out,” said Kaustubh Belapurkar, Director Manager Research, Morningstar Investment Adviser. Further, experts expect that bank stocks would continue to be in focus in the coming months as SEBI had yesterday eased 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 lakh crore.
Overall, the deployment of equity funds in bank stocks stood at Rs 1,43,704 crore at the end of May 2017 compared to the previous high of Rs 1,34,596 crore in the preceding month, according to SEBI data.
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 AUM increases for fifth straight year in FY17
Asset under management of domestic mutual fund industry rose for the fifth straight year by 35 per cent year-on-year, or Rs 4.8 lakh crore to an all-time high of Rs 18.3 lakh crore in FY17.
Equity AUM climbed for the fourth consecutive year in FY17 to touch a new high of Rs 4.8 lakh crore, registering a jump of 40 per cent year on year.
Benchmark NSE Nifty advanced nearly 19 per cent during the previous financial year ended March 31, 2017. The 50-share NSE Nifty index jumped to 9173.75 on March 31, 2017 from 7713.05 on April 1 last year.
The second half of FY17 tumultuous after Prime Minister Narendra Modi banned higher-end currency notes in November amid surprised victory of Donald Trump in the US Presidential elections. However, sentiments again turned in favour of D-Street after BJP win the most populous state Uttar Pradesh.
Equity AUM, as a percentage of India’s market capitalization, increased 40 basis points year-on-year to 4 per cent in FY17, while equity ELSS AUM of the industry rose 47 per cent in FY17 and 21 per cent over last five years.
Equity MFs log Rs 70,367 cr inflow in 2016-17
Investors pumped in more than Rs. 70,000 crore in equity-oriented mutual fund schemes in 2016-17, making it the third successive year of net inflows.
The strong inflows have pushed the asset base of equity MFs by 41 per cent during the period under review.
Market players attributed the phenomenon to continuous participation from retail investors through systematic investment plans (SIPs), along with positive returns from equity funds and steps taken by asset management companies to create awareness among investors.
“2016-17 has been a golden year for the mutual fund industry as net inflows into equity MFs have been positive in each month without exception,” Bajaj Capital Group Director Anil Chopra said.
“Much of the credit can be given to maturity of retail investors who have come up in the ‘learning curve’ by contributing 1.3 crore monthly SIPs adding more than Rs. 4,000 crore per month in various top-performing equity mutual fund schemes.”
According to data from the Association of Mutual Funds in India (AMFI), equity funds, which also include equity-linked saving schemes (ELSS), saw net inflows of Rs. 70,367 crore in 2016-17, a slight drop from Rs. 74,024 crore infusion in 2015-16.
These funds had seen net inflows of Rs. 71,029 crore in 2014-15 and withdrawal of Rs. 9,269 crore in 2013-14.

The gone-by fiscal saw a surge in the number of retail investor accounts, or folios, in equity, equity-linked saving schemes and balanced categories, which grew more than 58 lakh to 4.4 crore.

 
“The mutual fund industry is at a take-off stage in terms of growth and Indian investors are focussing on investments in equity as an asset class,” said SrikanthMeenakshi, COO, FundsIndia.com, an investment portal for MFs.
The assets under management (AUM) of equity MFs scaled to a record high of Rs. 5.43 lakh crore at the end of March 2017 from Rs. 3.86 lakh crore at March 2016-end.
MF investments in bank stocks hit all-time high of over Rs 1.26 lakh cr
Mutual fund managers continued to be bullish on bank shares, with their allocation to the sector reaching an all-time high of over Rs. 1.26 lakh crore at the end of March, mainly due to cheaper valuations.

In comparison, fund managers’ investments in bank shares stood at Rs. 80,468 crore at the end of March 31, 2016.

“MFs have been adding exposure to financial sector, especially banking stocks due to several reasons — lower valuations due to price corrections, expectation of corporate lending growth returning and better net interest margins, especially after the demonetisation announcement which lowered the cost of funds for many banks,” said KaustubhBelapurkar, Director Manager Research at Morningstar Investment Adviser.

During the past fiscal, many private sector banks, NBFCs and select PSU banks witnessed fresh purchases. Stocks like ICICI Bank and SBI witnessed significant additions, at the same time Axis Bank saw consistent selling, he said.

Besides, fund managers subscribed to the initial public offering of Ratnakar Bank, he added.

Overall, the deployment of equity funds in bank stocks stood at Rs. 1,26,587 crore at the end of March 2017 compared to the previous high of Rs. 1,19,796 crore in the preceding month, as per Morningstar data.

Banking continues to be the most preferred sector with fund managers as they cannot afford to take a bearish call on the banking stocks, given the high weightage attached to the index, he added.

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 Fund Units involve Investment risks including the possible loss of principal. Please read SID carefully for details on risk factors before investing.

10-09-2017
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.
‘One-stop-shop’
“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.
I am a contractor and maintain Current Account with your Branch since the Branch was opened.
Untitled Page