Mutual Funds
'Direct plans likely to bring down costs for MF investors'

Under the new directives from SEBI, MF products will be sold to investors without the involvement of intermediaries, a move which is likely to reduce expenses incurred by investors under marketing and commissions heads paid to distributors


Mumbai: As mutual fund (MF) houses gear up to provide direct plans in their existing and new schemes from January, total expense ratio for investors is likely to fall in different schemes, reports PTI quoting industry officials.

 

"The move to implement direct plans will help in reduction in total expense ratio under a scheme by around 60-70 basis points," Quantum Mutual Fund Chief Executive Jimmy A Patel told PTI.

 

As per a recent directive of the market regulator Securities and Exchange Board of India (SEBI), fund houses will have to offer direct plans to investors from next month onwards in their existing and new schemes.

 

Under the offering, MF products will be sold to investors without the involvement of intermediaries, a move which is likely to reduce expenses incurred by investors under marketing and commissions heads paid to distributors.

 

Patel, however, said total expense ratio will vary from scheme to scheme and will be different for fund houses.

 

Another official from a fund house promoted by a mid- sized public sector bank said while expense ratio will be lower for investors coming through direct plan route, it is difficult to ascertain the total expense ratio as of now.

 

"While the total expense ratio will be lesser by around 40-75 basis points in equity schemes, it will be around 5-20 basis points lower in case of debt funds. However, it is difficult to give an exact number as it will vary for fund houses," he said.

 

He said different NAVs (net asset value) will be calculated for direct plans.

 

About the impact of direct plans on distributors, the official said it will not be much. "Though institutional investors with the expertise will go for direct plans, retail investors are likely to take the assistance of distributors to make an informed decision."

 

Direct plans are likely to reduce the role of intermediaries in the MF industry, which has been struggling even since the ban on entry load by SEBI two years ago.

 

On the impact on distributors, a fund manager of a large MF house said, "it is difficult to determine how it is going to impact distributors as of now."

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Future Generali ties up with IFMR Rural Finance

Future Generali's shop insurance product covers building and contents against risk of fire as also flood, storm, earthquake and would be sold through IFMR Rural Finance in Tamil Nadu, Uttarakhand and Odisha

Mumbai: Private insurer Future Generali India Insurance has tied up with Chennai-based IFMR Rural Finance for offerings its shop insurance products through its Kshetriya Gramin Financial Services (KGFS) licensees, reports PTI.

 

"We have developed a need based Shop Insurance product in partnership with IFMR Rural Finance. The product will be available at all KGFS branches, across Tamil Nadu, Uttarakhand and Odisha," Future Generali India Insurance COO Easwara Naraynan said in a release issued here.

 

Shop insurance will cover building and contents against risk of fire as also flood, storm, earthquake etc, he said adding contents of the shop are also covered against burglary.

 

"We are keen to see this business model work with efficiency, so that we can replicate it in other rural areas with many more products," he said.

 

Future Generali India Insurance is a joint venture between Future Group of India and Generali Group of Italy.

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SEBI slaps Rs10 lakh on five members of Agarwal family

SEBI said the evidence points that Agarwal family intentionally aided or abetted Empower Industries India's promoter Devang Master in the circular movement of shares and creation of artificial trading volumes

Mumbai: Market regulator Securities and Exchange Board of India (SEBI) has slapped a penalty of Rs10 lakh on five members of one Agarwal family for their alleged role in fraudulent trading in shares of Empower Industries India Ltd, reports PTI.

 

In its order, SEBI said a penalty of Rs10 lakh has been imposed on members of Agarwal family -- Rajendra Agarwal, Lata Agarwal, Indra Agarwal, Shambhu Agarwal and Vasudev Agarwal.

 

The fine would be jointly paid by them, it added.

 

The regulator said that the penalty is "commensurate with the default committed by them".

 

The matter relates to a probe conducted by SEBI in the shares of Empower Industries India during 16th February - 11 March 2005.

 

SEBI found that Devang Master, promoter and director of EIL, transferred 2.13 lakh shares representing 42.6% stake by off market transfers to various entities including the members of the "Agarwal family".

 

The regulator alleged that the entities then sold a large number of shares through broker Ruchiraj Shares and Stock Broker (RSSB) during the probe period.

 

"...it is observed that the broker RSSB had highest concentration on sale side contributing to 49.15% of the total volume during the period, " SEBI said.

 

" The major selling clients of RSSB were the Agarwal family," it added.

 

SEBI in its order observed that the evidence may point towards the conclusion that Agarwal family intentionally aided or abetted Master in the circular movement of shares and creation of artificial trading volumes.

 

"...it appears that the Agarwal family was aware of the circular movement of shares, as alleged in the Show Cause Notice, and has been party to the whole scheme," SEBI said.

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