FUND FULCRUM

September 2014

The asset base of the mutual fund industry rose by more than Rs 6,300 crore to Rs 10.12 lakh crore in August 2014 boosted by inflows in equity funds. Assets Under Management of the country's 45 fund houses increased from Rs 10,06,452 crore in July 2014 to Rs 10,12,824 crore in August 2014 - up Rs 6,372 crore, according to the monthly numbers released by the Association of Mutual Funds in India. The asset base had crossed the Rs 10 lakh crore mark for the first time in May 2014, when the markets rose after Prime Minister Narendra Modi led BJP government came to power. The rise in AUM during August 2014 was primarily due to inflows in equity funds, aided by a strong stock market. The equity mutual funds witnessed an inflow of Rs 5,217 crore taking the assets base to Rs 2.35 lakh crore. In addition, balanced funds saw an inflow of Rs 448 crore to take the AUM to Rs 17,293 crore. Liquid funds' AUM grew to Rs 2.45 lakh crore in August 2014 from Rs 2.44 lakh crore in July 2014. On the other hand, income funds' asset base fell to Rs 4.61 lakh crore in August 2014 from Rs 4.71 lakh crore in July 2014, led by outflows of Rs 12,696 crore.

The latest SEBI data shows that the industry has added over 1 lakh folios across all scheme categories in August 2014. The folio count has increased to 3.92 crore in August 2014, from 3.91 crore in July 2014. The mutual fund industry has managed to grow its investor base in equity funds by adding over 1.28 lakh folios in August 2014. The total investor count in equity funds stands at 2.94 crore now. Likewise, balanced funds saw a marginal increase of 11,000 folios in August 2014. Meanwhile, the industry has lost close to 26,000 folios in debt funds due to revision in tax structure of debt mutual funds. While gilt funds have lost over 900 folios, liquid funds added 3200 folios in August 2014.

Investors pumped in over Rs 1 lakh crore in various mutual fund schemes in August 2014, making it the second consecutive monthly inflow. According to the latest data available with the Securities and Exchange Board of India, investors have put in Rs 1,00,181 crore in mutual fund schemes in August 2014 after pouring in a staggering Rs 1,13,216 crore in July 2014. Prior to that, there was an outflow of Rs 59,726 crore in June 2014. At gross level, mutual funds mobilised Rs 43.67 lakh crore in August 2014, while there were redemptions worth Rs 42.67 lakh crore as well. This resulted in a net inflow of over Rs 1 lakh crore. This significant level of funds mobilisation has also led to increase in the total assets under management of mutual funds that surged to Rs 10.12 lakh crore as on August 31, 2014 from Rs 10.06 lakh crore in July 2014. Overall, during the current financial year so far (April-August), mutual funds on a net basis have mobilised around Rs 3 lakh crore as compared to Rs 53,783 crore garnered in the entire 2013-14 fiscal.

Piquant Parade

Taking forward its deal to acquire the assets of ING Investment Management India, Birla Sun Life Mutual Fund has begun the process of merging all the schemes of the target entity with its own portfolios. Birla Sun Life Mutual Fund, part of Aditya Birla Financial Services Group, will merge all the 26 schemes offered by ING Mutual Fund with its own funds, according to a public notice. Besides, Birla Sun Life Mutual Fund has given an exit option to the unit holders of ING Mutual Fund. The option to exit is available to all unit holders except for unit holders who have pledged their units. The option to exit the schemes without any exit load can be exercised from September 8, 2014 and is valid up to October 9, 2014. The Board of ING Investment Management India, ING Trustee, Birla AMC, and Birla Trustee have approved the merger and the market regulator SEBI has also given its nod to the proposed deal.

Kotak Mahindra Asset Management Company Ltd, a wholly owned subsidiary of Kotak Mahindra Bank Ltd, announced that it has executed definitive agreement to acquire the domestic schemes of Pine Bridge Mutual Fund, subject to regulatory approvals. The assets included are equity oriented which provides a further enrichment to Kotak’s equity base. The fund houses share common investment philosophies of selecting robust companies with good management quality. This provides an optimal platform for smooth and efficient integration of the schemes. As of August 31, 2014, the Asset under Management of Kotak Mahindra Mutual Fund is approximately Rs. 37,000 crore and the AUM of Pine Bridge Mutual Fund is approximately Rs. 660 crore. US-based Prudential Financial Inc., which manages $1.3 trillion globally, will sell a 50% stake in its Indian asset-management company Pramerica Mutual Fund to Dewan Housing Finance. The move is aimed at expanding the asset management business, leveraging the mortgage lender's vast network across the country. Industry’s much-awaited order routing platform MF Utility has started onboarding advisors. The platform is currently at the testing stage and is awaiting approval from SEBI. The system is undergoing multiple levels of testing to ensure smooth functioning on launch. The platform will provide investors a Common Account Number (CAN) which can be used to invest across all AMCs. This common number will enable distributors and their clients to submit multiple requests across schemes of various fund houses using a single application. With the availability of a CAN, static details like bank mandate, nomination, email id, etc., can be maintained at one place. Thus, any change in these details can be registered at one place, i.e. with MFU and the same shall be automatically reflected in all AMCs where the CAN is registered, instead of submitting multiple requests to multiple AMCs for each such change. Chennai based software firm Polaris has developed the platform. The MF Utility will provide order routing and payment mechanisms with connectivity to RTAs, AMCs, stock exchanges, DPs, banks, and centralized KYC repository. The software is expected to have in-built features like web based front end for distributors which will give one-view of their assets across industry, their investors' investments across AMCs, submission of transactions either individually or in bulk, scanning of documents, and placing of service requests for distributors, web based front end for investors to permit one-view of investments across the industry, submission of transactions and placing of service requests, and web based front end for RTAs & AMCs for information exchange, data uploads, MIS access, data maintenance, etc. CAMS announced the launch of its ‘Anytime, Anywhere Mutual Funds’, mobility enabled technology solutions for mutual funds. The introduction of ‘Anytime, Anywhere Mutual Funds’  using  tablets, digital pens, hand held devices, and smart phones would facilitate mutual fund  relationship managers and distributors  in reaching out to investors across the country at their doorstep, accept and submit mutual fund transactions and deliver a delightful investing experience. These devices enable digitization and near real time data transfer from virtually any part of the country, assuring same day NAV to investors. The mutual fund investors would be spared from elaborate form filling, rushing to time stamp, anxiety about transaction completion, which now would be a thing of the past. CAMS has launched four solutions – CAMS slate, CAMS swift, CAMS scribe, and my CAMS. CAMS slate can be used on any tablet / smart phone and acts as an official point of transaction which is ideal for AMC market representatives, relationship managers, and distributors. This app provides CRM, image capture, KYC completion, additional purchase, redemption and switch, time stamping, etc. CAMS swift is a customizable hand held device which can be used from anywhere in India where a mobile phone works to accept and submit mutual fund transactions. It is suitable for B-15 penetration where physical official points of transactions are not available. It is a 2G / 3G enabled device which has in-built camera, USB Port, Printer, SIM and biometric app. It enables KYC and biometric authentication using Aadhar database. It also has a debit card swipe facility which will enable users to accept cash and issue receipts. The device is designed especially for new cadre of distributors who accept small ticket/micro SIPs. CAMS scribe is a digital pen which uses ICR technology which does away with the process of digitising hand written forms and instructions. It facilitates instant data and image capture and is ideal for AMC sales force and distributors. My CAMS is an app which runs on Android and iOS devices which helps in transacting and managing information in a faster, easier, and smarter way for mutual fund investors. Through this app one can submit query or register complaint to CAMS customer care centre, order encrypted statements, access account profile, see portfolio details, redeem, invest, switch and do much more.  To be continued….