The market regulator, Securities and Exchange Board of India (SEBI) may separate the mutual fund advisors from running the business of distribution. The SEBI chairman, U K Sinha, has already indicated this raising concern over the same and a paper for discussion on regulation of investment advisors and distributors is on the cards for public comments.
The step is being contemplated owing to the fact that the investment advisor might indulge in miss-selling of products being the distributor also depending upon the brokerage commission. The advisor cum distributor could advise and push for the products in which he would earn higher commission. The regulator is looking at ensuring that the advisory is not influenced by commission. While doing so, the regulator also might refer the rules in other countries on the same issue.
On the one hand, where the regulator is looking at improving investor confidence by such measures, an independent survey by Cafemutual reveals that the flat transaction fee being introduced by SEBI is too insignificant. About 75% advisors believe that the new norms of fees would not help pushing the MF sales. The survey was conducted among 756 independent financial advisors. This was following the SEBI allowing distributors to charge a fee on investment of Rs. 10,000 or more. The charges are Rs. 100 per transaction and Rs. 150 for a first-time customer.
The entry-load ban in mutual fund investments in 2009, has resulted into lower inflows into the MF industry. In the equity scheme segment, the net inflow has been declining continuously. According to data provided by the Association of Mutual funds in India (AMFI), an industry body, the net inflows at Rs. 1,056 crore in 2008-09 declined to Rs. 595 crore in 2009-10. In 2010-11, the industry has reported a negative inflow or net outflow of Rs. 13,405 crore. Moreover, the number of investors in MFs too has remained almost stagnant over the last few years.
ICICI Prudential revises exit load structure under its Banking and PSU Debt Fund
ICICI Prudential MF has decided to revise the exit load structure under ICICI Prudential Banking and PSU Debt Fund, an open ended income scheme. As per the revised structure an exit load of 0.50% will be charged if units are redeemed or switched out within 6 months from the date of allotment under all options of the scheme. The investment objective of the scheme is to generate regular income through investments in a basket of debt and money market instruments consisting predominantly of securities issued by entities such as Banks and Public Sector Undertakings (PSU) with a view to providing reasonable returns, while maintaining an optimum balance of safety, liquidity and yield. The revised exit load structure will be effective from 12th September 2011.
Franklin Templeton announces dividend under its scheme
Franklin Templeton MF has announced dividend under Templeton India Equity Income Fund on the face value of Rs. 10 per unit. The quantum of dividend for distribution will be Rs. 0.70 per unit. Templeton India Equity Income Fund is an open ended diversified equity fund that seeks to provide a combination of regular income and long-term capital appreciation by investing primarily in stocks that have a current or potentially attractive dividend yield. The record date for dividend distribution is 16th September 2011.
LIC Nomura launches 18 months Fixed Maturity Plan
LIC Nomura MF has launched a new fund namely, LIC Nomura MF Fixed Maturity Plan – Series 49, a close ended income scheme with the duration of 18 months. The new issue will be open for subscription from 12th September to 19th September 2011 at an offer price of Rs. 10 per unit. The investment objective of the scheme is to minimize interest rate risk by investing in a portfolio of fixed income securities which mature on or before the date of the maturity of the scheme. No exit load will be charged under the scheme. The performance of the scheme will be benchmarked against CRISIL Short Term Bond Fund Index and managed by Y.D. Prasanna.
Tata launches Tata Fixed Maturity Plan Series – 37
Tata MF has launched a new fund namely, Tata Fixed Maturity Plan Series - 37 Scheme A, a close-ended debt scheme with the duration of 369 days from the date of allotment. The new issue will be open subscription from 12th September to 20th September 2011, at an offer price of Rs. 10 per unit. The investment objective of the scheme is to generate income and / or capital appreciation by investing in wide range of debt and money market instruments having maturity in line with the maturity of the scheme. No exit load will be charged under the scheme. The fund will be managed by Murthy Nagarajan and benchmarked against CRISIL Short Term Bond Fund Index.
Birla Sun Life revises exit load structure under Birla Sun Life Income Fund
Birla Sun Life MF has decided to revise exit load structure for Birla Sun Life Income Fund, an open ended income scheme. As per revised structure of an exit load of 0.50% will be charged if units are redeemed or switched out within 30 days from the date of allotment. The investment objective of the scheme is to generate income and capital appreciation by investing 100% of the corpus in a diversified portfolio of debt and money market securities. The revised exit load structure will be effective from 16th September 2011.
DSP BlackRock announces change in Fund Managers under its three schemes
DSP BlackRock MF has announced change in fund manager for DSP BlackRock Focus 25 Fund, DSP BlackRock Technology.com Fund and DSP BlackRock Opportunities Fund, with effect from 15th September 2011. Accordingly, Harsh Upadhyaya and Mehul Jani will jointly manage DSP BlackRock Focus 25 Fund. Under DSP BlackRock Technology.com Harsh Upadhyaya has replaced Apoorva Shah. Furthermore, Anup Maheshwari and Harsh Upadhyaya will jointly manage DSP BlackRock Opportunities Fund.