Mutual Funds
Equity mutual funds rake it in despite bearish mood

Equity mutual funds record Rs1,440 crore in September inflows after a great August, thanks to the success of systematic investment plans

Much to the relief of fund managers, the equity mutual fund schemes have seen net inflows for the second successive month. According to statistics available from industry body Association of Mutual Funds in India (AMFI), pure equity funds witnessed a net inflow of Rs1,440 crore during the month. As compared to the last month, which saw equity inflows of Rs1,986 crore, September inflows registered a 27% drop. Almost 98% of this amount was from existing schemes. This has taken the overall net inflows in FY12 to Rs2,610 crore, against a net outflow of a massive Rs15,361 crore during the same period last year.

This large positive inflow belies the mood prevailing among investors and the marketplace. The market is in a bearish mode (the Sensex has fallen by 21% from its all-time high in November 2010 at 21,000 to around 17,000 now).
Still, in such a scenario, a lot of investment is happening through mutual funds. This shows investor maturity and the awareness of the concept of systematic investment. Earlier, money used to flow in only in a rising market. But it could well be that the idea of getting wealthy through systematic investment plans (SIPs) has started penetrating the minds of investors.

Despite having a net equity inflow of Rs2,557 crore for the quarter ended September 2011, the average assets under management (AUM) fell by 4% to Rs712,742 crore for the quarter ended September 2011, as compared with Rs743,502 crore for the quarter ended June 2011. As per a CRISIL report, fall in the average AUM can be attributed to a steep 13% fall in the domestic equity markets (S&P CNX Nifty). Further, higher redemption by corporates on account of higher advance tax outflow during the July-September quarter, as against the previous quarter, also resulted in the decline.

The bulk of equity assets are coming into well-performing funds. According to a business newspaper, HDFC Mutual Fund, one of the best-performing fund houses, receives Rs600 crore by way of SIP money every month.

The breakup for various funds for September 2011, available from AMFI, indicates that there was an outflow of Rs15,263 crore from income funds; balanced funds saw a net inflow of Rs99 crore; liquid/money market funds had an outflow of Rs41,078 crore; gilt funds also had an outflow of Rs117 crore; gold ETF (exchange-traded) funds received a net inflow of Rs988 crore; whereas other ETFs saw an outflow of Rs186 crore, and fund of funds (FoFs) investing overseas had an outflow of Rs56 crore.

One of the reasons for the net equity inflows consecutively in the last two months may be because mutual fund houses are leaving no stone unturned to keep distributors in good humour. Asset Management Companies (AMCs) are paying a higher upfront fee to distribution subsidiaries of foreign & private banks nowadays to drive ‘exclusive sales’ of their schemes, mainly equity schemes. This commission is in addition to the upfront and annual trail fees that mutual funds pay distributors for selling their schemes.

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COMMENTS

Muthu

5 years ago

The SIP book size of the industry is estimated to be Rs.1300 crore per month, as of September 30th. This is as per SEBI. In August, Valueresearch estimated the SIP book size to be Rs.1500 crore per month.

It is unlikely that HDFC may have a 46% market share of SIP book Size. The market grapevine is that HDFC & Reliance put together may have a market share of 45%, the rest shared by all the other AMCs.

In the recent Reliance Capital AGM, I vaguely recollect their CEO saying that they have a corpus commitment of around Rs.18,000 crore for next 5 years through their SIP book. This works out to Rs.300 crore per month. We need to remember, HDFC was relatively a late entrant when compared to Reliance on SIP focus.

If one adds up what each AMC says as their SIP book size, the amount crosses well above Rs.3000 crore which is misleadingļŠ

Would it be possible for Moneylife to obtain the SIP breakup across fund houses?

Bharti AXA Life Triple Health Insurance plan: How does it measure up?

Bharti AXA’s plan offers cover of a maximum of three times the sum assured under the policy, while covering three critical illnesses. The premium is waived by the insurance company after payment for the first critical illness. But it comes with some riders

Bharti AXA Life Insurance has launched its ‘triple benefit’ critical illness plan, called the Triple Health Insurance plan. This plan covers 13 critical illnesses that have been classified into three groups. The policy pays the sum assured (SA) on the diagnosis of one of the illnesses. The policy continues and can pay for additional critical illnesses as long as they are in other groups. The maximum coverage is for three critical illnesses.

As with all the insurance plans being offered by various insurance industry players, this one also has its advantages and shortcomings. Here are few of the advantages:

  • The plan offers cover of a maximum of three times the SA under the policy. This is a distinctive feature of the product, as other critical illness policies end, once the claim is paid for a single critical illness.
     
  •  Future premium payable by the policyholder is waived. The policy continues as the policyholder is still covered for illnesses under the remaining two groups.
     
  • Premium rates are guaranteed for the first three policy years.

However, the plan does suffer from a few shortcomings.

  •  The product will not pay a claim if the diagnosed critical illness falls in the group under which the policy has already paid out. Group ‘A’ includes conditions like heart attack, coronary artery bypass, kidney or heart transplants, kidney failure and paralysis. Group ‘B’ has coma, multiple sclerosis, liver or lung transplants. Group C covers cancer, benign brain tumours and bone marrow transplants.
     
  •  There has to be a gap of 365 days between the diagnoses of two illnesses for the subsequent claims to be admissible.
     
  •  The product is available for customers with no pre-existing illnesses at the time of application.
     
  •  The total policy and premium paying term is 15 years—which is unlike most critical illness products, which have lifelong renewal.

HOW THE PLAN MEASURES UP AGAINST OTHER SIMILAR PRODUCTS

There will be a waiting period of 90 days from the policy’s inception. The policyholder needs to survive for 30 days after the diagnosis of the critical illness to claim policy benefit. This is standard in critical illness products.
The minimum and maximum ages at entry are 18 and 50, respectively, with the upper age limit at maturity being 65 years. You have to buy a cover of at least Rs2 lakh, while the highest cover available under the policy is Rs30 lakh.

The product offers option of return of premium at increased premium. It gives survival benefit and a death benefit in case you have made no claims during the term. The policyholder gets 15 times the first year premium on survival. In case of death, the nominee gets a sum equal to the first-year premium multiplied by the number of years the policy has completed.

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What else can you and I do for Shehla Masood? Lodge a complaint with the Central Information Commissioner

In a visionary resolution, the CIC has taken the onus of examining the pending RTI applications of a victim who has been assaulted or killed while seeking information and ordering the concerned department(s) to publish that information within four weeks. Here’s how you can register a complaint under the RTI Act

Shehla Masood was shot dead in her car, outside her house, on 16th August. She was asking uncomfortable questions under the RTI (Right to Information) Act regarding illegal diamond mining in Madhya Pradesh by international mining companies. We are now in October, and predictably, police investigations have drawn a blank. Same is the case with nearly two dozen or more RTI activists who have been brutally killed but the police have not traced the killers.

It is indeed frustrating particularly for family members to silently bear the death of their near and dear one who was working to expose corruption but not have the satisfaction of the culprit being punished by law as the
law-enforcing authorities never find these killers. However now, there is a relief in the form of a historic resolution by the Central Information Commission (CIC) last fortnight, wherein, on receiving a complaint either by or on behalf of the RTI activist who has been assaulted or killed, the CIC will order the respective government department(s) to publish the information that the activist had sought for, within four weeks. The CIC will also order the relevant police department to put up the status of its investigations on the case on a monthly basis.

All you and me need to do is send the complaint as per the format (given below this article) drafted by the CIC. You need to send the RTI applications of the activist, police and medical records to the CIC. Thus, even if the killer or the attacker is not found by the police, the information which the killer wanted to wipe off by killing the activist will be placed in the public domain for all to see, thus defeating the purpose of the crime.

Kudos to CIC Shailesh Gandhi, who has worked hard towards bringing some hope on the issue of assaults & killings of RTI activists. I would also like to suggest that such a complaint should also apply to RTI activists who receive threats.

In his note to other members of the CIC, Mr Gandhi stated: “Demanding information, especially at the grassroots, is often met by intimidation and reprisals. Many citizens face grave physical assaults on a regular basis. Several threats and attacks including murder do not even make news. The police response is often not adequate. When Parliament enacted the RTI Act, it could not have envisaged that the process of achieving transparency and accountability in the Government machinery would result in attacks of retribution and even death. Necessary steps now need to be taken to protect such citizens who seek to protect our democratic ideals.’’

So, what can you do? Simply send a complaint to the CIC. Mr Gandhi says that “a body which is set up for the purpose of safeguarding the citizens’ fundamental right to information, the Information Commission has a responsibility to take measures to protect RTI users” and elaborates the method of how RTI users and the Commissions could work together to reduce the danger of assaults and murder of RTI users:

“1. When an RTI applicant is physically assaulted he, or someone else, can immediately file a complaint under Section (18) to the concerned Information Commission.

“2. Such a complaint should give details of the attack, hospital and police reports, and details of the RTI applications, which may have been the cause of the attack and list of pending RTI applications.

“3. Since the physical assault or murder is prima facie alleged to be in relation to the information sought, the communication received by the Information Commission must be registered as a Complaint under Section 18(1) (f) of the RTI Act.

“The Information Commission should enquire into the matter vide its powers under Section (18) of the RTI Act and ensure that a decision is given within four weeks of the complaint being filed.

“4. On completion of enquiry, where the Information Commission is of the view that the physical assault or murder was in relation to the information sought by the RTI applicant, it should pass the following directions:

“a. As per Section 19(8) (a) (iii) of the RTI Act, the Information Commission has the power to require the public authority to take steps necessary to secure compliance with the RTI Act including—publishing certain information or categories of information. Further, Section 8(2) of the RTI Act states that even where disclosure of information is protected by the exemptions under Section 8(1) of the RTI Act, if public interest in disclosure outweighs the harm to such protected interests, the information must be disclosed under the RTI Act.

“During the course of the inquiry, if any exemption from disclosure under Sections 8 (1) or (9) has been claimed by the public authority, the Commission must consider the public interest in disclosing the information. This balancing act is particularly crucial because where information sought by an RTI applicant was of such nature that it led to his physical assault or even demise, it is very likely that there may be significant public interest in its disclosure in public domain.

“Furthermore, by allowing disclosure of such information, it may deter attacks on information seekers which would also serve a greater public interest. The Commission could consider disclosure of information as per Section (8) (2) of the RTI Act, if the public interest in disclosure is larger than any potential harm to a protected interest.

“After conclusion of the inquiry, the Information Commission should direct the public authority to publish information sought by the RTI applicant, on the website of the department under Section 19 (8) (a) (iii) of the RTI Act. Such a direction should normally direct that the information should be displayed on the website in less than four weeks.

“b. Section 4 (1) (b) (xvii) of the RTI Act obligates a public authority to publish such other information as may be prescribed. In view of the same, the Information Commission can also direct the relevant police/ investigation department to publish on a monthly basis the action taken regarding the investigation of the physical assault or murder of the RTI applicant.

“5. It is relevant to mention that there may be instances where physical assault or murder of an RTI applicant is reported, but no person files a complaint with the Information Commission. In such cases also, the Information Commission could suo moto initiate an inquiry and it may then direct as follows:

“a. Under Section 4 (1) (b) (xvii) of the RTI Act, direct the public authority to publish information sought by the RTI applicant, on the website of the department.

“b. Under Section 4 (1) (b) (xvii) of the RTI Act, direct the relevant police/ investigation department to publish on a periodic basis the action taken regarding the physical assault or murder of the RTI applicant.’’

This historic resolution was passed by the Central Information Commission. Those present at the meeting were Satyananda Mishra, Chief Information Commissioner, Annapurna Dixit, Information Commissioner, ML Sharma, Information Commissioner , Shailesh Gandhi, Information Commissioner and BB Srivastava, Secretary and other officers attached to the Commission.

The resolution stated, “The Central Information Commission expresses regret and takes note of the reported killings of and assault on the RTI users across the country. The Commission underlines the need to take urgent steps by the respective Governments for the safety and protection of RTI users. The Commission strongly believes that it is the duty and responsibility of the respective Governments to safeguard the life and liberty of the RTI users for which purpose they should invoke the relevant penal provisions for the prevention and detection of such heinous crimes.

“This Commission, therefore, resolves that if it receives a complaint regarding assault or murder of an information seeker, it will examine the pending RTI applications of the victim and order the concerned Department(s) to publish the requested information suo moto on their website as per the provisions of law.

“This Commission also resolves that it will take proactive steps in ascertaining the status of investigations/prosecutions of the cases involving information seekers and endeavor to have these processes expedited.”

Mr Gandhi believes that “by adopting the above guidelines, attacks on RTI activists may be deterred fairly effectively. If the purpose of the attack on the RTI user was to stop the release of information being sought by him, an attack would ensure release of such information on the websites. After some time criminals would realise that an attack on an RTI user would be counter-productive, since it would lead to a release in public domain of the information which they wish to hide. The Commission asking police to give details of the investigations monthly would also put pressure on the police to work diligently and speedily. This could offer significant protection to RTI users, if Commissioners pursue this path. It would be useful if various State Commissions pass resolutions on the lines of the one passed by the Central Information Commission.”

Undoubtedly, it is a great hope to scuttle and kill the very motive of the killers and attackers on RTI activists. Let us all be a part of this proactive gesture by the CIC and start sending complaints.

HERE’S HOW YOU CAN SEND YOUR COMPLAINT



(Vinita Deshmukh is consulting editor of Moneylife. She is also an RTI activist and convener of the Pune Metro Jagruti Abhiyaan. She can be reached at [email protected]).

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COMMENTS

Vikas Gupta

5 years ago

A right step. Keep it up.

Nagesh Kini FCA

5 years ago

Vinita has made out a strong case of dealing with the murderers of activists.

What is the Govt. doing about the cases that have taken place?. They need to be fast tracked.

Mohammed Vilayath Ali Haqqani

5 years ago

Good move.Catch the culprits!

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