Mutual Funds
Mutual fund assets base rises by Rs2 trillion in 2012

The total assets under management of all the fund houses put together has soared by an impressive 30% on strong inflows in categories such as fixed income, gold schemes and liquid funds, the industry estimates show

New Delhi: After two consecutive years of plunge, the mutual fund industry managed to register a smart turnover in 2012, with its assets base seen nearing Rs8 trillion with an increase of about Rs2 trillion this year, reports PTI.


As some wide-ranging reforms initiated by the market regulator Securities and Exchange Board of India (SEBI) and the government are yet to translate into true business gains for the investors and fund houses, the industry is hopeful of even better days ahead in 2013.


The total assets under management (AUM) of all the fund houses put together has soared by an impressive 30% on strong inflows in categories such as fixed income, gold schemes and liquid funds, the industry estimates show.


The total industry AUM stood at Rs6.11 lakh crore at the end of 2011, while the same was about Rs6.26 lakh crore at 2010-end and Rs6.65 lakh crore in 2009.


The mutual funds collect money from investors and later invest the same into various market segments including stocks, IPOs (primary market) and bonds.


The industry expects net inflow into mutual funds to further pick-up in 2013 as the government and SEBI have expressed their intention to revive equity culture in the country and help channelise the household income into stocks, mutual funds and insurance sectors, rather than in idle assets like gold.


“The current market conditions and wide-ranging reforms announced by SEBI to re-energise the mutual funds industry would help the sector to channelise funds in the equity market," Sudip Bandhopadhyay, MD and CEO at Destimoney Securities said.


He also said that stock market and mutual funds stand to attract more investments from Rajiv Gandhi Equity Savings Scheme, after some initial hiccups.


“We have seen the AUMs increase largely in fixed income and gold schemes,” Quantum AMC CEO Jimmy A Patel said.


Birla Sun Life Asset Management Company CEO A Balasubramanian said: “In 2012, the mutual fund industry witnessed growth in fixed income schemes. Within fixed income schemes, actively managed duration focused funds got inflows.”


“In other words, debt funds attracted inflows due to stable to benign interest rate regime. Overnight rates more or less remained above the repo rate. As a result of this, most of the fixed income schemes including money market mutual fund schemes generated higher returns than Bank fixed deposit return,” he added.


Inflows in income and liquid funds have contributed the most to the industry’s rising AUM. With inflows of Rs89,302 crore, money market funds AUM surged to Rs1.77 lakh crore. A similar trend was seen in liquid funds, where inflows rose to Rs80,880 crore taking the assets managed by the fund to Rs3.87 lakh crore.


Similarly, equity funds’ AUM rose to Rs1.65 lakh crore despite registering outflows of more than Rs9,300 crore. AUM of equity linked savings scheme too increased to Rs25,027 crore though it saw investors pull out over Rs1,400 crore this year.


Interestingly, equity fund managers of mutual fund industry has betted big on banking space with investments worth more than Rs42,000 investment, which was 20.59% of the industry's total equity assets under management.


Diversified large cap focused equity funds did well during the year, but few sectors such as private sector banks, MNC companies in the space of FMCG and select pharma have delivered substantially higher than even the index.


Gilt funds saw a rise in assets to Rs5,426 crore due to inflows of Rs1,567 crore this year as investors interest in the category has risen in recent months.


Incidentally, Gold ETF assets neared the Rs12,000 crore mark as the category has seen inflows of Rs954 crore. The rise in assets was due to inflows and mark to market gains in the underlying commodity.


“Gold AUMs have increased due to a combination of increase in the price of gold as well as continued inflows into Gold ETFs and Gold Fund of Fund Schemes. India has always been natural buyer of gold and with the advent of ETFs, more investors are looking at investing in this option (ETFs). Physical gold still retains its charm in India for ornamental purposes,” Patel said.


In order to boost the mutual fund industry, SEBI has announced a slew of measures including expanding its distribution network and making investment simpler and safer, among other steps.


The regulator has made it compulsory for fund houses to make more disclosures in the interest of investors. They are also required to shift to the one plan per scheme model, moving away from the present practice of cluttering one scheme with numerous plans.


At the same time, SEBI decided that any service tax would be charged to the ultimate investor, not to the asset management company (AMC), as is the practice at present.


Although, fund houses would be able to charge their investors a little bit more as incentive for expanding to small cities, but they would also have to set aside a small portion of their assets for investor education and awareness.


Speaking about the next year, Balasubramanian said, “On the basis of change in fundamentals, opportunities would arise from sectors in telecom, power and Industrials as we move into the year 2013.”




4 years ago

1) Who are these agents selling MFs?

2) Is flood of money coming from Tier 2 cities?

3) If assets have grown by 30% then how many new folios have been added? and overall how many folios have been added.

4) For all you know, this could be surplus funds from Financial Institutions, Banks and Corporates who have parked funds to take advantage if interest rates were to fall. (This category has no business to invest in mutual funds.)

5) How much of this growth in AUM can be attributed to marked to market gains? In the calendar year, returns from Debt would be 8-10%; returns from equity have been around 20-25%

Curiously none of the above finds any mention in the above report. . . It could well be a case blind leading the blind.

Anil Agashe

4 years ago

This is contrary to what Money Life has been saying that there is huge outflow from equity funds. Above figures show net increase. What is correct?


Jason Monteiro

In Reply to Anil Agashe 4 years ago

There has been a huge net outflow from equity schemes, but the total asset base of the industry has increased due to strong inflows from fixed income, gold schemes and liquid funds.

Max Life announces special bonus for policyholders

Max Life Insurance will distribute Rs130 crore as ‘First Ever Special Bonus’ for policyholders. For the eligible policies, the longer the policyholder has been with the company, the higher will be the percentage of the special bonus

New Delhi: Max Life Insurance announced a “one-time” special bonus to all its active policyholders who have participating policies issued on, or before, 31 December 2005, according to a press release from the company. The special bonus will be paid at the respective policy anniversaries commencing 1 February 2013. The special bonus would be calculated as a percentage of the annual premium paid.  For the eligible policies, the longer the policyholder has been with the company, the higher will be the percentage of the special bonus.


Rajesh Sud, CEO & managing director, Max Life Insurance said, “Max Life Insurance has experienced robust and profitable growth. We wanted to share the result of this improved performance with our loyal policyholders in the form of special bonus. The older the eligible policy, the higher the special one-time bonus it will be eligible for. We will continue delivering true value to our policyholders by focusing on long-term savings and protection.”


All the policies which were issued on, or before, 31 December 2005 and are active at the time of their policy anniversaries falling due in the 12-month period from 1 February 2013 and 31 January 2014, will be eligible for the special one-time bonus. During this period, if there is a reinstatement which causes the policy to become active, that policy would also be eligible for special one-time bonus. Policies that have been surrendered will not be eligible for this special bonus. 


Over 2.6 lakh policyholders would receive payments ranging from 100% to 20% of their annual premiums, irrespective of the premium term or the policy term of the policy. The total payout is estimated to be around Rs130 crore


The special one-time bonus payment would be made through cheque irrespective of the bonus option chosen by policyholder.



Anil Agashe

4 years ago

What is the purpose of special Bonus? Does the co have excess cash that cannot be deployed profitably and hence cash payment to policy holders? What would be the tax treatment for this receipt in the hands of the policyholder? Should this not get credited to policy itself?

Rajaratnam to pay $1.45 million to settle SEC suit on Gupta tips

Under the consent agreement signed by Rajaratnam, he would pay a total of $1.45 million, which includes $1.3 million in disgorgement and about $147,000 in prejudgment interest

New York: Jailed hedge-fund founder Raj Rajaratnam has agreed to pay $1.45 million to settle a civil lawsuit filed by US regulator SEC against him and India-born former Goldman Sachs director Rajat Gupta for their roles in one of the largest insider-trading schemes in US history, reports PTI.


55-year-old Rajaratnam, Galleon Group’s Sri Lanka-born co-founder, has also agreed to waive his right to appeal this judgement, court papers showed.


US district judge Jed Rakoff approved the final judgement in the Securities and Exchange Commission’s (SEC) case against Rajaratnam, who is serving 11 years in prison for insider trading, and 64-year-old Gupta.


Under the consent agreement signed by Rajaratnam earlier this month, he would pay a total of $1.45 million, which includes $1.3 million in disgorgement and about $147,000 in prejudgment interest.


Rajaratnam has been ordered to pay the amount within 90 days.


The final judgement in the SEC’s case orders Rajaratnam to disgorge his share of the profits gained and losses avoided as a result of the insider trading as well as the prejudgment interest on that amount.


The SEC’s claims against Gupta remain pending.


The US regulator had filed its complaint in October 2011, alleging that Gupta had passed on to Rajaratnam confidential information he had learned as Goldman board member about Berkshire Hathaway's $5 billion investment in the financial giant in September 2008, as well as about Goldman's financial results for the second and fourth quarter of 2008.


Rajaratnam used the information he learned from Gupta to trade profitably in certain Galleon hedge funds.


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