Gold down despite heavy buying on Akshaya Tritiya

Traders said the demand among retailers for the festival had hardly any impact of the sliding precious metals prices despite the ongoing weakening trend in domestic as well as overseas markets

New Delhi: Even as buying activity remained high on the auspicious day of ‘Akshaya Tritiya’, both the precious metals tumbled today on weak global cues. Silver nose-dived by Rs6,000 to Rs53,200 per kg and gold plummeted by Rs225 to Rs22,120 per 10 grams, reports PTI.

Retail customers resorted to active gold buying to mark the day of Akshaya Triitya, considered to be an auspicious occasion in Hindu mythology to make token purchases.

Traders said the demand among retailers for the festival had hardly any impact of the sliding precious metals prices despite the ongoing weakening trend in domestic as well as overseas markets.

“The weakening trend has hardly impacted retailers activity as they are dedicatedly making token buying in gold on every fall in the market,” said Suresh Verma, a Delhi-based jeweller.

“At least the buying has capped any major fall in gold prices, while silver remained unattended, losing substantial ground,” he said.

Trading sentiments remained weak in silver as its prices recorded a steepest weekly fall since 1975 in global markets after impositions of higher margins. Gold also had its biggest weekly drop since 27 February 2009.

Silver in global markets, which normally sets a price trend on the domestic front, fell 12.01% to $34.66 an ounce, taking losses to 28% this week and gold fell by $43.40 to $1,473.10 an ounce in New York.

The Standard and Poor’s GSCI index of 24 commodities sank 6.5% on concern that slower global growth may crimp demand and investors sold to book-profits and shift their funds to surging equity markets.

On the domestic front, silver ready nose-dived by Rs6,000 to Rs53,200 per kg and weekly-based delivery by Rs5,900 to Rs53,100 per kg. Silver coins lost Rs4,000 to Rs59,500 for buying and Rs60,500 for selling of 100 pieces.

In line with a general weakening trend, gold of 99.9% and 99.5% purity plunged by Rs225 each to Rs22,120 and Rs22,000 per 10 grams, respectively.

However, sovereigns, found scattered buying support from retailers and gained Rs100 to Rs18,300 per piece of eight grams.

User

COMMENTS

Anil Agashe

6 years ago

Dear Debashish,

You have been saying this but most people did not believe you as usual, because they did not understand your logic. I think they will realise only when gold corrects as violently as silver has!

Huge mutual fund outflow points to a much deeper malaise

As we had expected, mutual funds have witnessed a massive outflow of Rs1,365 crore in April. But the problem is not just with the fund industry, or investor behaviour, but with the so-called equity cult itself

Just a week back, we had a CEO of a fund house who estimated that the outflow from equity mutual funds for April would be close to Rs1,500 crore. ‘Equity funds may have suffered large-scale erosion in April’. The official figure we now know is Rs1,365 crore. This huge exit from equity schemes is normally blamed by the regulators and the market players completely on investor behaviour. In fact, this is very likely an excuse they are using for not coming up with a well-thought policy to sustain fund inflows.

Equity mutual funds enjoyed rising inflows from December 2010 to February 2011, with collections peaking at Rs2,495 crore in February. It was after this that the decline started. In March, net inflows were just Rs454 crore, which was mainly due to ELSS schemes which collected Rs578 crore, whereas pure equity saw redemptions amounting to Rs124 crore. April has seen the highest outflow since October 2010. But, whether we can expect to see money return to equity schemes anytime soon is still in doubt.

The real problem is that fund mobilisation by mutual funds from the investing public is weak. Investors still prefer bank fixed deposits and categories other than the stock market in spite of the fact that the market has gone up by more than 20 times. Ever since the Securities and Exchange Board of India (SEBI) put a ban on entry load, equity funds have suffered redemptions.

Distributors have found fund-selling unviable and have been moving out of the business. The penetration of mutual funds is so poor that brokers have little incentive to sell mutual funds. The only option for them, to earn some income, has been to make investors churn their portfolios. This earns them a 1% exit load and while it has been an incentive for brokers to make investors churn more frequently, it is a loss for investors. Along with this, the low incentive to sell mutual funds has led many distributors to sell ULIPs, which is terrible for investors. As it turns out, the regulation by SEBI has done more harm than good.

The regulator needs to address the issue of distributor fees, to make AMCs adopt a better pricing system where the commissions are clear and no other payments to distributors allowed. For such a course correction, SEBI and the mutual fund industry, through the Association of Mutual Funds India (AMFI), have to sit together. So far, AMFI has done a lousy job of putting across the industry’s views, which is one of the main reasons that SEBI took the decision without consulting it.

Recently, SEBI created an alternative: fund sales through stockbrokers. But this hasn’t really got going. The cost of running a large countrywide brokerage business is exorbitant, and fixed. Broking companies have to bear the cost of a large back-office staff, compliance, technology and high capital cost of property (or rent). Then there are costs to acquire new clients. All this eats up into the profits they can muster. Research is another item for which they pay heavily. Unfortunately these reports are guided by companies and investment banks and are rarely based on fundamental calculations.

The other serious issue is that of poor retail participation. Volumes in the cash market have declined to historic lows. In April, the daily average cash market turnover dropped to 11% of the overall volume, compared to 18% in the month a year ago. Official studies have shown a decline in the investor population, during a decade which has been the best period for the markets. This is also because of the fundamental problem with the way the market functions.

So, investors are happy to put their money in bank fixed deposits. Data from the Reserve Bank of India (RBI) shows that 50% of the household savings goes into bank deposits. In 1990, the percentage of savings in shares, debentures and investment in UTI was 14%, and this went down to 13% in 2007-08, even while the market has climbed by 20 times in this period.

There has been no shortage of products and manpower to sell these products either. As we have mentioned in previous articles, there is a multitude of investment products to choose from—over 3,000 actively-traded stocks and 230 diversified equity mutual funds, apart from insurance products, pension schemes, PMS and other financial products. To take these to investors, there are over 20,000 independent financial advisors, not to forget the banks, financial planners and a sea of insurance agents.

The issue here is that financial products have been sold like consumer durables. But consumer products are standardised, while financial products are not. The way they are being sold is equally important. This is why financial products are tightly regulated the world over. Had financial institutions and intermediaries sold these products like they should have, and the regulators had done their duty, the last decade would have brought in larger investor participation. Due to the poor performance of financial products and the hidden costs, and scores of complaints regarding mis-selling, investors have developed an aversion to the stock market and any other equity-linked product or investment product. Even the minor rules and amendments introduced by the regulators from time to time have not benefited investors.

Financial products need to be closely regulated. When it comes to protecting investors and eradicating mis-selling, regulators have fallen short. There has, so far, not been any strict punishment for such serious offences. They’ve taken half-thought out steps, hoping these will work wonders, but have in fact ended up choking the business. They have not seriously pursued investor protection, promoting fair business practices and punishment that would force a fundamental change across the industry.

If the regulators don’t act quickly, it would be a long wait before mutual funds see a sustainable trend of inflows.

User

COMMENTS

sunil

6 years ago

mis-selling by individual mutual fund distributors is no 1 cause of all mutual fund problems and not sebi or investor.i too am a victim of that.

iarab

6 years ago

Investors should be given the option of investing EITHER through the agent / distributor OR directly with the AMCs. While in the former, some reasonable commission may be paid to agent / distributor for their services, in the latter case, there should not be any trail commission deduction (Why investor has to bear the burden of investor education of others ?) and to that extent, his annual MF fees (and expense ratio) should come down.

pareshdeshpande

6 years ago

In fact there is one more angle to all of this.Whenever investor changes the distributor as per AMFI guidelines neither new nor old distributor recives the trail commission for existing investment...and AMCs are expected to use this money for Investor education(AMCs themselves know this money is used for investor education or product advertisement under name of investor education..)...

So when investor approaches agent,,agent is trying to sell out investors old portfolio as it has nothing to benefit for him..

Roopsingh

6 years ago

Dear readers & IFAs,please read this link in which MR Sinha has siad that he does not intend to reverse the policy of his predecessor MR bhave by re introducing entry load-this means clearly that IFAs have no hopes now for revival of situation and that MF industry has become a coffin of dead investmenst for investors and IFAs too-thank god i became a distributor of FMCG products six months back and i am able to survive and progressing-i think ditributors should work in any field where online delivery of goods is not possible and physical delivery is essential -so that middle man like us have always a place to survive.
http://articles.economictimes.indiatimes...

REPLY

pareshdeshpande

In Reply to Roopsingh 6 years ago

Mr.Sinha has only said that Entry load is not the only way to pay distributors.They are searching new ways to pay distributors.They have accepted that distributors contribution is needed for deeper penetration of industry.

jaykumar

6 years ago

AMFI & SEBI ARE DOING INJUSTICE TO INVESTORS. THEY PROTECT THE AMCs. THEY MAKE RULES THAT FAVOUR AMCs.

AND THEN GIVE FALSE LIP SERVICE THEY ARE DOING FOR INVESTOR PROTECTION!

GREEDY AMCs WANT TO SUCK INVESTORS & PASS ON TO MIDDLE MEN CALLED AGENTS/DISTRIBUTORS WHO DONT DESRVE SO MUCH MONEY AS THEY HARDLY GIVE ANY ADVICE OR SERVICE EXCEPT POSTAL/MESSENGER SERVICE WORTH ONLY RS. 50-100!

CUT OFF TIME SHOULD BE 4 PM & NOT 3.

REPLY

Shaiwal Agarwal

In Reply to jaykumar 6 years ago

Dear Mr. JAYKUMAR,
You have no knowledge regarding mutual funds and there implications. I think you are
frustrated from any of your agent who has not given you the proper service. Please read all informations regarding mutual fund implications and there regulations and then comment on anything.

SUBHASH MEHTA

In Reply to jaykumar 6 years ago

Dear jaykumar ji,
It seems that u hv some misinformation & misunderstanding. U may first read all the comments and then decide. Ur c omments are going outside the purview of subject matter i.e. "Huge mutual fund outflow points to a much deeper malaise", but u are turning towards petty commission of IFAs.
For ur kind information, I like to inform that earlier the AMCs could charge some entry load from new investors to pay commission to agents. Now this has been discontinued by SEBI. They had dictated that upfront commission should be charged as fee from the investor.
Please think and reply whether u like to pay any fee to ur agent at the time of making an investment? No investor is paying any fee to any agent. Instead investor wants some commission to be parted by agent and pay to investor.
Now when agent is not getting any upfront commission neither from AMC nor from investor, he is not interested to sell mutual funds, thus not provideing any services to investors. This factor and several other factors are responsible for less inflow and more outflow in equity based MF Schemes.
It seems that u r an investor and not a qualified IFA, thus have no deep knowledge regarding rules and regulations of MFs prescribed by SEBI. Before commenting on any subject, please gather all information and do homework properly.
However u r welcome to participate in the debate and get knowledge, atleast from the comments of participants.
Thanks,

Vaibhav Dhoka

6 years ago

Indian regulators usually use soft target like IFA,s as scapegoat to show people that they have surveillance over industry they are regulating.With this they want to hide their own shortcomings and failure to control the Mutual fund industry.The fact is SEBI is mute spectator of Indian securities market,it cannot reign in brokers,fund managers.In fact it turns Nelson's eye towards big fish.So IFA's are made scapegoat.

REPLY

SUBHASH MEHTA

In Reply to Vaibhav Dhoka 6 years ago

Lobby of stockbrokers is well organized and influencial. This lobby can infulance the regulators, politicians, bearucrats, bankers, corporate houses etc. While poor IFAs, which r unorganized, have no means to influence anybody in the Govt. and always use as scapegoat.
Now come to the subject matter of debate. All other means recommended by SEBI and used by MFs for sale of their schemes had not find favour of investors resulting reduction in MF investment in MF Schemes is under progress. I hope that they will realize their mistake when there was less inflow and more outflow.

Roopsingh

In Reply to SUBHASH MEHTA 6 years ago

The regulator removed entry load which was used to pay IFAs as commission but did not touch the AMC charges which is handsomely up to 2.25% annually without any responsibilities like FUND PERFORMANCE,timely dispatch of statements etc etc,instead SEBI gave one more tool for benifit of AMCs in form of exit load for extra income and penalty to investors( though SEBI claims that it is working for benifit of investors but it did it exactly reverse by incresing load to investor and that to in the wallet of AMC's)-then why will AMC guys will care for IFAs when big boss SEBI is looking to their interest with harming interes of investors-
again SEBI never questioned AMCs or fund managers about poor performance -many fund mangers are in nexus with HNIs and stock broking house who use MF money to purchase dead stocks of HNIs giving then high price specially in mid-small cap segment and when the HNI or FII sells his stock entirely-then the stock price falls to new low-(which is evident after 2008 fall when sensex is alomst near to peak but many small and mid cap funds are still under performing by huge margins-has SEBI ever questioned fund house or fund manager for all this game wheich is carried under its nose?but it always makes AISI TAISI of IFAs which are weakest to respond and the SEBI knows it is not going to gain anything from them which it gains from stock broker lobby (to be understood well by readers).

Madhusudan Thakkar

In Reply to Roopsingh 6 years ago

Roopsingh Ji please go through following link http://www.livemint.com/2011/05/08224112...

SUBHASH MEHTA

In Reply to Roopsingh 6 years ago

Dear Roop Singh Ji,
At present AMCs are paying to distributors out of the amount charged from schemes which has also been capped at various slabs, average may be 2.25%, as mentioned by you.

Please think when there is no entry load, expense limit and management fee capped, no exit load for repurchase after 1 year and cap of 1% exist load for repurchase within one year, from which source AMCs will pay brokerages to distributors?

U may please read the link provided by Sh. Madhusudan Thakkar and my reply given below.

So net result is :-
1) Govt. & Regulators should do something in favour of investors and distributors.
2) There should be reintroduction of reasonable entry load or increase in cap of expense limit of AMC, which will enable them to pay some more incentives to distributors.

in order to bring more inflow in equity oriented schemes of MFs.

All distributors should also be prepared for worst.

After introduction of Direct Tax Code w.e.f. 2012-13, there will no 80-C Rebate available for investment in MFs ELSS & ULIPs. Further Capital Gain Tax will also be introduced from repurchase of equity oriented MFs, which is still exempted from tax.

There is possibility that there may be more outflow during current FY. The investors can encash their holding in equity schemes of MFs to avoid capital gain tax introduced w.e.f. 2012-13.

If Govt. & Regulators will not do something positive in favour of investors & distributors, MF industry will suffer more setback in their equity related schemes, in future.

sukumaran

6 years ago

funnily the employees are still paid very well, mutual fund offices are plush, shareholders of asset management companies are optimistic about the future, trustees, directors, and everybody else is happy and fine. So what if the stupid investors lose a little? LOL

REPLY

GOVIND SHANBHAG

In Reply to sukumaran 6 years ago

Dear Sukumaran - I fully agree with you- I had been to the office of FIDELITY3-4 years back, posh office, free unlimited mineral brand best possible brand, flow of cold drinks, tea coffee and I am told the salary of each employee and bonus willo shame many bureaucrats. At whose and what cost ???

SUBHASH MEHTA

In Reply to GOVIND SHANBHAG 6 years ago

There are limitations prescribed by SEBI for expenses by MFs for management fee and expenses for maintaince of offices, selling & distribution expenses, Fees to various agencies like RTA, custodian etc. U may check my earlier comments given below. In case less inflow and greater outflow will continue, they'll have to curtail their expenses too. Before this happens, they may like to rethink their policies for selling of their products, sincerely.

GOVIND SHANBHAG

In Reply to SUBHASH MEHTA 6 years ago

Dear Subhash Mehta Jee - At hind sight now I feel I should have put my money in NSCs, where I would have got better returns. 1. UTI Infrs growth fund investment of Rs.57,289.16 on 8.4.2008 - present value is Rs.54,904.85. Whether u make profit or loss they do not fail to recover entry load. I had shifted my ULIP maturity proceeds of UTI in this fund as per advice of my adviser.(2) Purchase of JM Tax shield growth plan for Rs.20,000/-on 31.3.2008 - present value is Rs.13,076.58. Visit both the offices, very posh office, all sorts of facilities to employees ( even for bath these employees use mineral water), huge salary. Some body had said industry is sick but not industrialist.

SUBHASH MEHTA

In Reply to sukumaran 6 years ago

AMCs get upto 2.5% of AMU every year from the investors for managing the schemes of MFs.,besides exit load. There bill reached to hundreds crores every year. Now when investors is getting less or negative return on their hard earned money, they'll fell shy to invest in equity schemes of MFs. So outflow in MF schemes is being noticed. If such situation will continue, the MFs will survive only by investment in Debt Schemes of MFs by corporates or HNIs. This will surely effect the salaries, perks etc. of staff and maintaince of offices etc., if regulators will not awaken in time.

C S WARRIOR

6 years ago

In India Mutual funds are mainly selling products, not buying. if IFAs get reasonable returns they will collect sufficiant funds. Otherwise in future this industry will suffer a lot

REPLY

SUBHASH MEHTA

In Reply to C S WARRIOR 6 years ago

Yes Sir, u may be right. This may be one of various reasons due to which more outflow is noticed, which is subject matter of discussion. I afraid that situation will be worst from next FY 2012-13, when rebate u/s 80-C will not available on MFs ELSS, ULIPs & introduction of long terms capital gain tax on MFs (for which I think that practically the Govt. will gain nothing because under present scenerio, there is very less or negative return, as pointed out by some commentators under this discussion). If the SEBI is serious to promote MF Industry in India, it should remove all unncessary hindrances for IFAs working in the fileld. Promote selling by extensive use of independent IFAs, working in the streets of this big country, as was done by LIC and erstwhile Unit Trust of India. Pay them reasonable remuneration, try to curb and control volatility in Stock Markets. Regulators must be refrained from its hidden agenda to bring entire sale and purchase through stock exchanges only.

Dr Vaibhav Dhoka

6 years ago

SEBI overall view about distributors is shoddy because of its own regulation which are time barred.like self certification etc.Then there is service tax on brokerage earned and is directly deducted.all this add to unnecessary work for distributor,AMC,registrar,fund manager etc.And service already erodes meager earning of disributors.

REPLY

SUBHASH MEHTA

In Reply to Dr Vaibhav Dhoka 6 years ago

Please see my reply given to C S WARRIOR, above. The same is also applicable to ur comments too.

am

6 years ago

Investments in equity / market linked products are subject to market risk.
Why get into blaming AMC's Distributors, IFA's or anyone.
1000's of views and artcles focusiing on 2.25% comission , Have investors gained in anyway. has abolisinhg comission resolved or improved returns on schemes ?? and those who have paid for the services in the past lost heavely due to the comission. People should demand service and pay for it. We are in a society that is always looking for free bees / jugar.All the lens on IFA's distributors , AMc's - in a manner that all concerned are cheats. As if no investor has ever gained ?? It is all about asset allocation - not all asset classes perform well in the same period - different assset classes carry different risk levels - so one should focus on good selection of assets and care for good allocation - nothing else is in anybody's control.

Roopsingh

6 years ago

many IFAs who think increasing trail commission is a good step forget few basics of any business.
1-with no upfront commission new agents will not come to canvass MF business.
2-new AMC's will never be able to collect AUMs if there is no upfront(why any fool will sell a fund which does not give any upfront commission.
3-IFAs will not advice investors to book profits even in best situation because he will loose AUM and there will be lesser chances of that money coming to him.
4-equity markets are not fix return oriented-so most of players come here to make profits through trading,so such people in lack of advisory from IFAS will go to terminal broker instead of getting locked their money with MF cos.
5-there will be pull of funds among IFAs as was done in past by national distributors by offering pass backs to HNIs because they will get more AUM and this will lead to more removal of indivdual advisors.
6-even AMC's will compete in offering more and more trail to get maximum AUM accumulation-this is same as competetion of upfront among AMC's.
so i dont find it any way logical of purely trail based structure.
to my opinion 1% upfront and 1% trail can be good option which will satisfy all sections of investors,IFAs and AMCs.

NANU NATVERLAL MEHTA

6 years ago

I had Invested a very Substancial fund of my Retirement Corpus with Mutual Fund Industry through well known Distributors like Way 2 Wealth & others but have lost so heavily along with no service from WELL KNOWN AMCS that Istrongly advise people not to be lured by any Promises by these CHEATERS.They are bunch of sophisticated Crooks.

Shabbir Haidermota

6 years ago

I need to ask this question to SEBI, AMFI and AMCs : In order to increase retail participation in equity mutual funds (which are the only purportedly long term investments) what steps have you taken ?
The crying need today for the MF industry is increasing retail participation I am sure all will agree.
One suggestion I have given repeatedly to Heads of AMCs is to get together and lobby with SEBI and the Ministry of Finance to ensure that ELSS funds retain their eligibility under Section 80 C of the Income Tax Act, 1961. But I have received absolutely no concrete replies with regards to what they are trying to do to ensure this stays on when the New Direct Tax Code kicks in from April 2012 and removes the eligibility of ELSS Funds. In fact, I would go so far as suggesting that the limit of Rs.1 lakh be increased to at least Rs.3 lakhs so that greater retail participation in equity mutual funds is achieved this way.
Let's hope good sense prevails, otherwise the future does not bode well for the MF industry.
Shabbir Haidermota, ARMFA - Pune.

Muthu

6 years ago

What I’m writing is my personal opinion and do not represent the advisory channel or associations I belong to.

First and foremost, it is not that distributors are not earning anything out of mutual funds now. As a recipient of commission from fund house, I can tell you that, AMCs pay between 0.5% to 0.75% as upfront incentive from their P&L A/C.

A trail income of around 0.5% is paid per annum out of the expense ratio as long as the asset remains in the system under advisor’s code.

Because of the above upfront incentive, banks and national distributors still keep churning a lot and most of the mis-selling happens in this segment. Added to that, stock brokers who are wired to only buy and sell are brought into the system to sell mutual funds.

Prior to August’09, IFAs who had say around Rs.50 lakhs corpus, kept churning the same between different NFOs, few times a year, earned a commission of around 3% to 4% every time he churned the same.

Many of the IFAs who have quit the market post abolition of entry load belong to the above category. It is unfortunate that we lost some genuine ones also in the process.

Paying a commission of even upto 6% in case of certain closed ended NFOs has not helped the industry in any way.

If lack of entry load is the core issue now, the investor base should have grown bigger before August’09. It did not happen. All channels (ofcourse with some exceptions) merrily tapped the same investor base by asking them to book profit in a NFO and enter another NFO.

The sad truth is that industry did not make any efforts to expand the investor base and penetrate even when the financial incentives were good.

Before considering bringing in something like variable load, SEBI need to rethink twice. Mis-selling by banks would become rampant and we can safely assume they would tick the highest slab in the variable load structure.

Most of the IFAs in the market are now serious about this profession and is building long term relationship with clients.

Variable load may bring back people who would prefer to make more money in short term by churning.

It would be better if mutual funds become a pure trial play. Say trial of 1% per annum for equity and 0.5% p.a for debt.

The above trail income is the portfolio advisory (and related services) fee for an advisor. An advisor may charge a fee from clients for overall financial planning and any other service / advice he provide.

Pure trial would eliminate mis-selling done by many banks and irrespective of channels, only those who are serious about this profession would be in this space.

The industry has not grown because starting from AMCs; we all wanted instant gratification and did not believe in growing along with the clients.

AMCs were hyper active in bringing NFOs and giving all kind of rewards- monetary and non monetary linked to assets gathered during NFOs. Mis-selling always start from a product manufacturer.

Many are behaving better today not because we want to behave better but we are made to behave better.

When we see a 5 year return, 10 year return or since inception return – we should be asking how many would have actually made these returns.

I doubt whether it would even be handful because as an industry we gathered assets by churning; depriving the customers the benefit of compounding.

REPLY

Milind Chitnis

In Reply to Muthu 6 years ago

Very nice article & I completely agree with problems realted to "churning" whose genesis is in upfront commission.

However "trail" model for income does not consider one issue. In this model, break even point for a new IFA is very very long. A person starting this profession will not make any meaningful money until substantial AUM created under his ARN code. This will deter new people from entering the profession as IFAs & i think that good IFAs are best placed to spread mutual funds.

So how do we overcome this dilema?

Muthu

In Reply to Milind Chitnis 6 years ago

Very valid point. I’ve thought about this many times. AMCs should be able to hand hold new entrants financially by providing reimbursement in the form of marketing support (petrol, phone expenses etc.) till they reach a critical mass.

A reasonable time frame should be given for new entrant to establish himself. Fund houses should not hesitate in providing this kind of support as it would be cheaper than direct selling and retail penetration cannot happen unless many people take it as self employment.

Providing an online platform would reduce the transaction cost of an IFA and help him break even.

I know about IFAs who target the bottom of pyramid and has build sizeable corpus over a period of time. What I hear is that some AMCs took special interest in them and nurtured them by providing marketing support till they became self sufficient.

This needs to be replicated in larger numbers across various cities and towns.

If industry wants to grow, it has to invest in people, nurture, educate and monitor them.

In my opinion, the industry has been going so far only on low hanging fruits with absolute short term focus. They need to change their perspective and approach towards the business.

The change has to start from top. Like investing in equities, investing in people also should be done with long term focus.

Milind Chitnis

In Reply to Muthu 6 years ago

Very good suggestion. I wish there are AMCs reading this & who take real interest in expanding market by hand holding new entrants.

Jeevan Pendhari

In Reply to Muthu 6 years ago

I am fully agree with views expressed by Muthu. Root Cause Problem in the industry is that all incentives are for short term. AMC should have increasing Trail Commission Structure if investors money held more than 1, 2, 3, 4, 5 years and above. This will increase tendency in distributors to keep investors money for longer term as they are going to make money with this. AMC will get Long Term Money. Investor will be held Long Term investments. Win-Win situation for ALL.

Jeevan Pendhari
CERTIFIED FINANCIAL PLANNER(CM)

citizenindia

6 years ago

insurance cos have killed golden goose. as lincoln said you can fool all the people sometimes, some people all the time but not all people all the time. isnruance coz have had a free run , have missold so many products , have earned stupendous fees for financial jugglery but know their loot is well documented. they have hardly managed to penetrate . as a result premiums are high and they are loosing business. few insurance guys are safe as they wernt short sighted and greedy. IRDA is behaving like raja for insurance cos. ulips still continue to be the most pushed product in the market. unless ulips are banned or charges strictly regulated, why would anyone sell mutual funds? wrong is not in removing entry load on mutual fund, wrong is allowing insurance guys to still earn on ulips. sebi should have been allowed to have sole say in equity related matters but insurance guys have entered thru backdoor. and irda is very happy to oblige.
indian investors in equities are treated like servants of promoter. promoter is always dynamic, always has banks lining up, always has the right to issue shares to himself, has the right to run company like family property, has right to go into bifr and dump liabilities on lenders, many a times by greasing palms, wipe out equity , raise own holding and become kings again. minority shareholders can do nothing. do a case study on anil ambani companies and youd know kuch bhi ho sakta hai. loot is legalised. thats why inspite of india being such a promising market , the wealth effect is not to be seen through equities. FIIs hold stakes in all major blue chips. indians hardly. FIIs will dump it on indian investors if pension money flows in at elevated levels. auditors , merchant bankers , rating agencies , all are batting for the promoters. people in india never go bankrupt. the banks respect you more if you have borrowed more from them. small defaulters get harassed while big ones can convert loans into equity , defer payments and yet continue to fly pvt jets. businessmen in india know only one way to make money. licences. be it mining, telecom or air travel. read the list of billionaires and all have grown in businesses where 'govt help' is needed. those who can manage the system can be billionaires. an avg indian is expected to give multi crop land for industrialisation . after all we need to catch up with china. there are few who want to work the right way but they just cant as loot is systemic. the only hope is current spotlight on corruption and bigwigs going to jail. that would finally send a message that do business the right way if you want to go into the next growth trajectory.

Flood of cross border deals takes April M&A tally to $4.4 billion

Out of the total $4.4 billion, the total value of outbound deals wherein Indian companies acquired businesses overseas in April was $1.91 billion through 21 deals and the total value of inbound deals was $2.28 billion (17 deals)

New Delhi: Foreign companies and their subsidiaries continued to remain bullish on Indian businesses, as inbound transactions worth $2.28 billion were announced in the month of April, taking the total merger and acquisition (M&A) deal value to a whopping $4.4 billion (around Rs19,800 crore), reports PTI.

According to global consultancy firm Grant Thornton, as many as 64 M&A deals worth $4.4 billion were announced in the month of April.

Out of the total $4.4 billion, the total value of outbound deals wherein Indian companies acquired businesses outside India in April was $1.91 billion through 21 deals and the total value of inbound deals was $2.28 billion (17 deals), the report added.

“We are seeing a flood of cross border deals in the market and they comprise almost 95% of the total value of M&A deals for April and 88% for the period January to April 2011. Inbound deals have picked up significantly over outbound,” Harish HV, partner, India Leadership Team at Grant Thornton India said.

The fears of the global recession have gone and corporates are back to looking for deals on a global platform, he added.

Domestic transactions have taken a back seat, as the total value of domestic deals in April this year was $0.21 billion via 26 deals as compared to $1.03 billion through 60 deals.

A sector-wise analysis shows that oil & gas was the most targeted sector accounting for 43% of the total deal value driven by Vedanta’s 11% stake acquisition in Cairn India from Petronas for $1.5 billion.

The other major deals include Genpact’s acquisition of Headstrong Corporation for $550 million, Essar Energy’s acquisition of Royal Dutch Shell’s Stanlow refinery in northwest England for $350 million and the Aditya Birla-Domsjo Fabriker buyout for $340 million.

The top five M&A deals accounted for 69% of the total M&A deal values, Grant Thornton said.

In the private equity segment, the deal values in the month of April amounted to $0.73 billion through (38 deals) as compared to $0.83 billion via 35 deals in the corresponding month last year.

“Private equity (PE) is growing in a steady manner and has touched a three-year high of $2.6 billion with an increase in deal numbers. PEs are looking at spreading themselves quite well by increasing number of transactions and hence average deal sizes have come down,” Mr Harish said.

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