Onus on AMC trustees to enforce MF code

MUMBAI: Capital market regulator SEBI plans to frame regulations for mutual fund distributors in a manner that the onus will be on trustees of ass
et management companies to ensure that norms are enforced. SEBI has taken this view since the trustees are the first level regulators of the industry at the fund level.

SEBI has already held one round of meeting with mutual fund trustees on this issue. Another meeting is likely to be held shortly to discuss this issue further.

“It is high time distributors are regulated, it has been one of our major concerns for sometime,” said a SEBI official, who was present at the meeting.

“The AMCs are regulated..but then the distributors who are violating all code of conducts are not regulated,” he added.
At present, there are no regulations for the distribution industry. However, distributors of financial products have to pass the AMFI or the IRDA exam and get themselves registered in order to sell any financial product. As per industry estimates, there are more than 45,000 mutual fund distributors in the country.

As part of its efforts to safeguard the interest of retail investors, SEBI had ruled that new schemes launched by mutual funds should be called New Fund Offerings (NFOs) and not initial public offerings (IPOs), which seemed to suggest an offering of shares rather than a mutual fund scheme.

The regulator had also changed the fee structure and accounting norms of the industry so that retail investors were not shortchanged.

“We may have to frame a new code of conduct on compliance for distributors,” the SEBI official said.

Financial sector regulators are aware of the fact that there has always been mis-selling of financial products such as mutual funds, insurance, equities, fixed income and deposits happening in the country. In recent times, the situation has been exacerbated, due to the boom in financial markets.

In other developed markets such as in the US, the Securities Exchange Commission (SEC) doesn’t regulate distributors but the NASD (National Association of Securities Dealers), which is a SRO (self-regulatory organisation) does. In India, the tradition of a SRO is yet to evolve. SEBI has held discussions in the past with trade bodies in the country to become a SRO, which is next on its agenda.

According to sources, SEBI will be initiating dialogues with IRDA and RBI officials on strengthening this mechanism as there is a need for co-ordination between financial sector regulators. Market players say 30% of the mutual fund distribution is done by banks, which comes under RBI’s jurisdiction.

A case in point is the recent issue on mutual funds offering insurance cover, which SEBI took up with the government and IRDA as it was felt that the Life Insurance Council had taken a unilateral decision on it.


(Source: Economic Times)

Dividend yield funds perform better than Sensex, Nifty

MUMBAI: As the market brings in fall in share prices, returns and sentiments, there are funds that haven't much borne the brunt of the massive dip. These are dividend yield funds.

At a time when the Sensex has fallen to more than 27 per cent in one year, these funds have fallen not more than 21 per cent on an average.

Says Manish Bhandari, fund manager, ING Dividend Yield Fund, "The foremost strategy that has worked for dividend yield funds is selecting stock and constructing portfolio of stocks having dividend yield of more than Nifty, and being true to the mandate of investing in dividend yield stocks only."

Of all the six funds having exposure to dividend yield stocks, ING Dividend Yield Fund has emerged as the less-destroyed fund in terms of returns, with only 15 per cent fall in its returns for one-year period.

Adds Bhandari of ING Dividend Yield Fund, "Our value-investing approach in stock selection has helped us to deliver superior returns, which have beaten the index by more than 10% in one-year time frame. We wouldn't invest in momentum or high P/E stocks."

(Source:Economic times)

Mutual funds assets fall 3 pc in Sept

NEW DELHI: The mutual fund industry witnessed nearly 3 per cent drop in its assets under management in September, led by country's top fund house
Reliance MF, which lost over Rs 2,122 crore during the period.

The combined average assets under management (AUM) of the 35 fund houses in the country dropped to Rs 5,29,121.76 crore at the end of September, compared with Rs 5,44,173.96 crore in August, according to the data released by the Association of Mutual Funds in India.

Analysts believe the bearish sentiment in the market and the credit crisis in the global market have taken a toll on the assets of mutual funds, even as investors have turned their attention fixed maturity plans and liquid schemes.

Reliance MF registered the biggest drop of over Rs 2,122 crore or 2.39 per cent in its average AUM in September. However, Reliance MF continues to be the top fund house with assets valued Rs 86,494.46 crore at the end of the month.

Further, HDFC MF, which tripped ICICI Prudential MF to grab the second notch last month, retained the ranking with an AUM of Rs 51,998.28 crore, while ICICI's AUM fell 6.25 per cent to Rs 49,772.48 crore.

While HDFC MF's AUM declined from Rs 53,858.63 crore, ICICI Prudential MF's assets dropped from Rs 53,092.78 crore.

UTI MF continued its fall in the average AUM, which was Rs 44,623.18 crore at the end of September, down 5 per cent from August's figure of Rs 46,947.32 crore.

Besides, AUM of Franklin Templeton MF rose marginally to Rs 28,356 crore in September, against Rs 27,715.32 crore in the previous month.

Meanwhile, about 11 fund houses managed to increase their AUM in September which include -- ABN Amro MF, Taurus MF, Sahara MF, Deutsche MF, Benchmark among others.


(Source:Economic times)