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What Investors Can Learn From SEBI?

Monday, June 25, 2012
By Anand Birai

When the Securities & Exchange Board of India (SEBI) has raised concerns over the non-performance of select mutual funds, the message for the investors is clear that what they should look for in a scheme while selecting the one.

Without naming, the SEBI chief, U. K. Sinha recently questioned the non-performance of 9 mutual funds and the reasons behind it. Sinha also pointed out that the non-performance was checked on the parameter of consistency and time period.

In another way, there is a subtle message for the investors that they need to be cautious while selecting the fund. The information that the investors can use from the SEBI’s step include, looking at the fund performance for over three years.

Unlike direct equity and individual scrip, the investor should look at the particular fund category’s performance for at least three years. If the records for three years are not available, the history of similar category funds by the same Asset Management Company (AMC) can be evaluated to judge the company’s achievement in the respective category.

As SEBI has questioned the performance of the fund managers, the investors should also look at the background of their fund manager. Check how the manager has performed across various schemes that he is handling. Also, his performance at other AMCs in the past also can help in making investment decision.

When SEBI has put up a criterion of fund’s performance against the average performance of the similar schemes, the investors should look at the average returns generated by other funds. It is advisable to go for the fund which has at least managed to remain at par with the average return. The fund which you are evaluating might have beaten the average return in short term but might be a worse performer in the past. In such a case, one should look at the reasons why the fund performed better than others in the short term.

FUND UPDATE
Taurus declares dividend for its scheme  
Taurus MF has declared dividend under Taurus Dynamic Income Fund. The quantum of dividend will be 100% of distributable surplus as on the record date. The record date for dividend distribution has been fixed as 22nd June 2012.

Franklin Templeton announces dividend
Franklin Templeton MF has announced dividend under Franklin India Prima Fund. The quantum of dividend will be Rs. 4 per unit on the face of Rs. 10 per unit. The record date for dividend distribution has been fixed as 22nd June 2012.

ICICI Prudential launches ICICI Prudential US Bluechip Equity Fund  
ICICI Prudential MF has launched a new fund named as ICICI Prudential US Bluechip Equity Fund, an open ended equity scheme. The face value of the scheme is Rs. 10 per unit. The new issue will be open for subscription from 18th June 2012 and closes on 2nd July 2012. The investment objective of the scheme is to provide long term capital appreciation to investors by primarily investing in equity and equity related securities (including ADRs / GDRs issued by Indian and foreign companies) of companies listed on New York Stock Exchange (NYSE) and / or NASDAQ. The performance of the scheme will be benchmarked against S&P 500 and will be managed by Atul Patel and Chaitanya Pande.

Reliance announces dividend
Reliance MF has announced dividend under the quarterly dividend option in retail and institutional plan of Reliance Regular Savings Fund-Debt Option. The quantum of dividend will be Rs. 0.2349 per unit for retail plan and Rs. 0.2615 per unit for institutional plan as on the record date. The record date for dividend distribution has been fixed as 21st June 2012.

HSBC revises exit load structure
HSBC MF has announced to revise the exit load structure of HSBC Income Fund and HSBC Flexi Debt Fund. In HSBC Income Short-Term Plan, the present exit load of 0.50% (if switched out within 6 months from the date of allotment) will be waived off if switches are made from HSBC Income Short-term plan to certain schemes i.e. HSBC MIP, HSBC Dynamic, HSBC Emerging Markets, HSBC Flexi Debt, HSBC Income Investment Plan, all equity and fund of fund schemes. However, it will still charge 0.50% if redeemed out within 6 months from the date of allotment. In HSBC Income Investment Plan and HSBC Flexi Debt Fund, the existing load structure will increase from 0.50% to 0.75% if units are redeemed or switched out on or before 6 months from the date of allotment 

Baroda Pioneer declares dividend

Baroda Pioneer MF has declared dividend under Baroda Pioneer Public Sector Undertaking (PSU) Bond Fund and Baroda Pioneer MIP Fund, on the face value of Rs. 10 per unit. The quantum of dividend will be Rs. 0.30 per unit for Baroda Pioneer Public Sector Undertaking (PSU) Bond Fund and Rs. 0.20 per unit for Baroda Pioneer MIP Fund. The record date for dividend distribution has been fixed as 25th June 2012.

Pramerica announces dividend
Pramerica MF has announced dividend for Pramerica Credit Opportunities Fund, Pramerica Short Term Income Fund and Pramerica Dynamic Bond Fund under its quarterly dividend option. The quantum of dividend will be Rs. 22.50 per unit for all three schemes. The record date for dividend distribution has been fixed as 26th June 2012.

Fidelity announces change in fund manager  
Fidelity MF has announced that Shriram Ramanathan will cease to be the fund manager of Fidelity Wealth Builder Fund, Fidelity India Childrens Plan - Education Fund and Fidelity India Childrens Plan - Marriage Fund all Fixed Income schemes. The changes will be effective from 23rd June 2012.

Pramerica revises exit load for its scheme  
Pramerica MF has announced to revise exit load structure under Pramerica Treasury Advantage Fund, an open ended debt scheme. Accordingly, an exit load of 0.50% will be charged if units are redeemed or switched out on or before 30 days from the date of allotment. The revised exit load structure will be effective from 25th June 2012.

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