PowerMF Blog – Empower Yourself

The Budget has brought out an interesting opportunity for the Indian Mutual Fund Industry. (See Link)  It is proposed that Foreign Investors can invest in Mutual Funds in India. While complete details are still awaited, this could be one of the important milestones in the Indian Mutual Fund Industry. Read the rest of this entry »

The last 3 years has probably seen the most action from SEBI in the Mutual Fund space, probably as much if not more than when the Industry was opened up. We have seen action by the regulator across various activities of the Fund commencing from Distribution to Valuation, Fund Management etc.

Having acted on all these areas and making people who run the business responsible for a large number of activities, SEBI has taken the most important and critical step of arming the Trustees with the knowledge and understanding of their role.

As all of us know, the funds invested in the mutual fund scheme is managed on trust and hence the role of the trustees is extremely important. The Industry on its part have been able to attract the ideal profile of respected individuals from across various walks of life to become trustees. This enables ‘faith’ on the trustees. However, with so much of change in the industry and its regulation over years, there is a need for the trustees to clearly understand their roles and responsibilities in order to fulfill their role effectively.

It is in this background that the action of the regulator to get the trustees and independent directors of various fund houses through workshops (See Link: http://www.livemint.com/2011/02/15213117/Sebi-puts-mutual-fund-trustees.html) is a welcome move.

Sure, that we are moving in the right direction to not only have a well regulated environment for mutual funds but also a well empowered people who know their roles and responsibilities to run the same.

Fundu Vishy

The Regulators & the Exchanges have created Investor Protection Fund in order to provide relief to investors. However, it is understood that the usage of the funds are not effectively being done resulting in the objective of the fund not being achieved though there are funds available. See Link (http://www.moneylife.in/article/how-is-bse-using-its-investor-protection-fund/13856.html). It is time that clear objective based utilisation of funds happen out of this for the benefit of the Investors.

Fundu Vishy

A Background

The Indian Mutual Fund Industry has introduced various products and packages over the last couple of decades. One of the products which was supposed to provide asset allocation option for the investor was the Balanced Fund. In fact, the first open ended scheme in the Indian Mutual Fund market was a Balanced Fund in the form of US64. Keeping in line with the experience of the US64 scheme, the whole category of Balanced Funds seems to have had a roller-coaster ride.

Balanced Funds – A review

To put it in perspective, the table below provides the comparative AUMs between Dec 1999 and Dec 2010 across various asset classes.

Read the rest of this entry »

Over the last year or so, if there was one Industry which saw a continuous wave (and some may choose to call it a Tsunami) of changes hitting, then it should surely be the Mutual Fund Industry.

While there were many reasons and reactions for the changes that took place, specifically from the Regulatory stand point, I believe that the crescendo was reached when the Regulator and the Industry shared the dais on the occasion of the CII Mutual Fund Summit recently.

A good account of the message that came out of the meet has been clearly spelt out by our Mr.Dhirendra Kumar, Value Research, one of the torch bearers of the Industry for decades now (See Link: http://new.valueresearchonline.com/story/h2_storyView.asp?str=14745).

As per his reading on the clash of the titans in the dais (and around), the message seems to have come out loud and clear for the Mutual Fund Industry – You need to Re-Discover yourselves.

This message is strong enough and needs to be taken seriously by the players in the industry.

Yesterday, SEBI came out with an order against one of the leading AMCs and few of its employees for Share Trading Fraud.

The fraud committed is that of ‘Front Running’ wherein the person knows the institution’s order for a stock and before the order gets executed in the market, benefits by taking personal positions on the stock and benefiting by the institutions order.

While such activities are heard to be practice by many traders, pinning the errant has always been a very difficult task.

The case under reference is one of the occassions where Regulator has been able to clearly identify the wrong done and the wrong doer.

This in my view is going to be an importnat  moment, more so by the way the wrong done is planned to be handled – by asking the wrong doer to pay the amount to the investors who have lost the money.

Hope this landmark order will be able to make the markets more efficient and investor friendly.

Draft Direct Tax Code has come out and there are a lot of areas where an Individual Tax Payer has reasons to be happy including the proposed slabs and exemption limits.

However, when it comes to Mutual Funds,  keeping up with the continuous spate of changes and concerns faced by the industry, DTC adds one more: removal of ELSS from the approved investment options for tax saving.

Currently, ELSS schemes have around Rs. 23,700 cr. under management in May 2010, up from around Rs. 11,800 cr. in May 2007. This represents around 60 lacs to 120 lacs investors using the ELSS as a tax saving route which is expected to be foregone by the industry.

Sure, this is probably not the most important issue in the minds of most Industry players only owing to the spate of other immediate issues to grapple with. But one sigh of relief the industry will probably have is that ULIPs may also be treated the same way as ELSS.

Mutual Fund as an investment vehicle is one which will enables retail investors, who do not have either knowledge or time or both for managing their investments to pool in the investments which is managed by professional fund managers. In light of the above, equity investments with its complexities and time Read the rest of this entry »

My hearty wishes for a healthy and wealthy New Year to you and your near and dear ones.

The year 2010, brings along a new decade and it is appropriate for us to look at the decade that went by and also identify the trends and changes that will not only provide us insights of what went by but also will give an understanding of what is in store.

The period 2000-2009 is an important Read the rest of this entry »

One major reason which keeps most savers out of the Equity Markets (either directly or through Mutual Funds) is the Volatility that is part & parcel of the Markets. While most people know that equities provide an opportunity for better returns that most other asset classes over a longer duration, it is the fear of volatility which keeps them out of it. The impact is clearly seen in the number of investors getting into the equity markets. It is understood that there are around 3 cr. investors in Mutual Funds and 1.5 cr. Demat account holders in the country of 120 cr. population and around 10 cr. PAN Card Holders. Read the rest of this entry »