The brothers may not see eye-to-eye but across most of the schemes, Reliance Mutual Fund is a big investor in RIL. Sadly, it has cost RMF investors dearly
One of the most celebrated cases of sibling rivalry in India has been that of Mukesh and Anil Ambani. The two brothers split the Reliance empire and Anil Ambani came to control Reliance Mutual Funds. However, when it comes to investing, Reliance Mutual Fund has Reliance Industries Ltd (RIL) as one of its top picks. The reason is not sibling love. It is the compulsions of fund investing –though it has meant a significant loss for Reliance Mutual Fund investors.
RIL is among the top 10 holdings in eight of the fund’s 11 schemes. Many of these schemes are doing badly for the last one year. One of the major reasons for such underperformance could be heavy investment in RIL, one of the most underperforming stocks among the index heavyweights. Undeterred, the schemes increased their stakes in RIL in September.
One of the biggest investors in RIL was Reliance Regular Savings Fund (RSF). It has actually included RIL in its portfolio in September as a new entry. Reliance NRI Equity increased its stake too in RIL in September as has Reliance Equity Fund.
The reason for such love for is that RIL is a heavyweight in the benchmarks, but it has been grossly underperforming for over two years since June 2009. It is a top 10 holding of more than 100 fund schemes among a total of 215-odd equity schemes and 57 of the 100 largest schemes. The stock was at Rs1,140 at the end of May 2009, after rising from a low of Rs560 in March to over Rs1,200 in mid-May following the big jump after the general elections. From that point onwards, RIL has wilted, belying its size, profile and new initiatives, to Rs713 in August 2011. In the process, it underperformed the Sensex as its retail initiatives hit several roadblocks and the gas reserves turned out to be hard to exploit. When Sensex was at just 9,700 points Reliance was at Rs760 in March-end 2009. When the Sensex was at 15,800 level at its monthly lowest in August 2011, Reliance had hit Rs714. It moved up sharply in October to almost Rs900.
Fund have been slow to avoid RIL when it underperformed and as we can see Reliance MF has been eager to load up in the stock in September.
This is simply because mutual funds are primarily managed with an objective to “stay as close as possible to the benchmark.” One way not to underperform the benchmark is to be substantially invested in benchmark heavyweights.
The initiative between the two institutions was taken on the back of a regulatory directive to LIC to use ePayments as a mode for making payments to policy holders
Private sector lender ING Vysya Bank (ING) has signed an agreement with Life Insurance Corporation of India for ePayments services for all LIC branches across the country.
ING Vysya Bank (ING) has signed a memorandum of understanding with LIC in this regard, the private lender said in a release issued. The initiative between the two institutions was taken on the back of a regulatory directive to LIC to use ePayments as a mode for making payments to policy holders. ING has made technology one of its core investment areas, as a result of which most of the transaction processing systems and electronic banking delivery channels have been built around evolving domestic payments and clearing systems.
Providing speedy, safe and convenient transaction processing environment has been the focal point of all the technological advancements of the bank, it added.
The Allianz Global Investors Pension Sustainability Index showed that Greece is under the most pressure to reform
According to a study conducted by Allianz Global Investors Greece, India, China and Thailand show the greatest need for pension reform, though for different reasons. Increased levels of sovereign debt following the financial crisis have exacerbated the need for reform in many countries. Australia, in contrast, is ranked as the best prepared followed by Sweden, Denmark, New Zealand and the Netherlands.
The Allianz Global Investors Pension Sustainability Index, which tracks the relative sustainability of national pension systems in 44 countries around the world, showed that Greece is under the most pressure to reform. Despite pension reforms initiated as a condition of the austerity packages from the International Monetary Fund (IMF) and European Central Bank (ECB), the retirement age in Greece is still low and public replacement rates (the percentage of a worker’s pre-retirement income paid out by the pension system upon retirement) are too high. However, the greatest challenge facing the Greek pension system is that its old age dependency ratio–the ratio of elderly people to people of working age–is well above the European average.
In contrast, in India and China, the issue is that pension coverage remains extremely low and adequate measures have not yet been implemented to improve this. Thailand takes the fourth ranking as it has sporadic pension coverage and an extremely low retirement age (55 years of age).
In Asia, comprehensive pension systems remain the exception rather than the rule and increasing the coverage of the pension system is still a challenge. The rankings of Asian countries in the Index have not changed significantly compared to earlier studies as they escaped the worse of the financial crisis and have experienced only minor increases in their debt to GDP ratio.
The Pensions Sustainability Index (PSI) analyses the current and future prospects of national pension systems looking at variables such as demographic developments, public finances and pension system design to capture in one figure the need for further pension reform.