Axis MF adds 1.56 lakh folios in seven months while equity schemes lose 2.87 lakh folios

  Axis MF has added 1.56 lakh folios since November 2009 while JPMorgan, ING Investments and HSBC MF have seen their folios dwindling Equity funds have lost 2.87 lakh investor accounts between November 2009 and May 2010 when the mutual fund (MF) industry witnessed the launch of 10 new equity funds in the same period.

 

Reliance Mutual Fund has lost the most accounts in its equity schemes. Its folios decreased from 63.89 lakh in November 2009 to 61.06 lakh in May 2010, a decline of 2.83 lakh folios. Similarly, L&T MF, Franklin Templeton and Tata MF have seen their aggregate equity folios dropping by 3.27 lakh in the same period. Folios are numbers designated to the investor accounts. Each investor can have multiple accounts. The 37 fund houses lost around 2.87 lakh folios in equity schemes from November 2009 to May 2010.

The 30-share Bombay Stock Exchange (BSE) Sensex has remained flat between November 2009-May 2010. According to the data available on the Association of Mutual Funds in India (AMFI) website, 19 fund houses have lost an average 8% of their folios since November 2009.

Axis MF had 491 folios in November 2009, which increased to 1,56,971 folios at the end of May 2010.

Among the larger fund houses, HDFC Asset Management Co Ltd, UTI Asset Management Company Ltd and Birla Sun Life Asset Management Co Ltd together added 6.53 lakh investor accounts since November 2009. Tata Asset Management Ltd, SBI Funds Management Pvt Ltd, Reliance Capital Asset Management Ltd, LIC Mutual Fund Asset Management Co Ltd, ICICI Prudential and Franklin Templeton together lost 5.81 lakh investor accounts in the same period. The 37 fund houses added just 49,153 folios between November 2009 and May 2010.

Source:Moneylife

How does a Daily SIP work?

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The Systematic Investment Plan is ideal for investors who have a regular flow of money (such as employees). A simple instruction to the fund house and the bank will help them invest regularly at a given time and stay away from the volatility of the stock market. When you invest a fixed amount, such as Rs 5000 a month, you buy fewer units when the share prices are high and more units when the share prices are low. How do you avoid or minimise the effects of an extremely volatile stock market? Given the choice between the asset classes, and the yo-yoing of almost every fund, do you dare to invest in it at all? What if there was a middle path? The Systematic Investment Plan is ideal for investors who have a regular flow of money (such as employees). A simple instruction to the fund house and the bank will help them invest regularly at a given time and stay away from the volatility of the stock market. When you invest a fixed amount, such as Rs 5000 a month, you buy fewer units when the share prices are high and more units when the share prices are low.

The reinvention of the Systematic Investment Plan (SIP) has been a boon for investors with a low risk appetite. Rupee cost averaging and compounding are added advantages. But what exactly is a Daily SIP? And how does it benefit you, the customer? Simply, a Daily SIP collects a small sum from an individual on a daily basis and invests it in the market. It operates like any mutual fund, where the disbursement and handling of the money is the fund manager’s prerogative. Rupee cost averaging occurs when the market goes down, and more units of the scheme can be purchased because of a lower net asset value. However, most companies have SIP schemes that allow you to invest on different dates of the month. Daily SIPs are expected to minimise risk and generate greater risk-adjusted returns while increasing participation.

Daily SIPs: Advantages

Affordability, volatility and convenience are the most obvious advantages of investing in a Daily SIP. With a Daily SIP, your investment is staggered. Instead of a lump-sum amount, you invest a pre-specified amount in a scheme at pre-specified intervals at the then prevailing NAV. Consistent monetary contributions average out the crests and troughs of any market, in the long term. It also captures the daily levels of market volatility. In case of a monthly SIP, you still can lose out if the markets are up on the chosen day of the month. The daily SIP, however, eliminates this flaw and lets you benefit out of equity market volatility. If you’re looking at a lump-sum investment, then going in for a daily SIP would allow you to take advantage of the market volatility, by splitting the lump sum amount in to daily instalments over a relatively short time frame. The Daily SIP is ideal for small time savers, since the threshold investment level is low. Once you start with a Daily SIP, you invest at the appointed time and that makes you a disciplined investor. With Daily SIPs, you capitalise on the periodic dips in the market and accumulate a greater number of units at lower levels-and over time, reduce your average unit cost. You avoid the lure and trap of trying to predict the market.

A word of caution

Usually, a fund charges 2.25% of invested amount as the ‘entry load’. However, in some cases this amount may get reduced. You should also keep in mind the contribution after taking into account the cash flows available. Check if there are any incremental transaction charges attached to each investment. Especially in the case of auto-debit, there may be a fee for every transaction. You need to remain invested in a Daily SIP for at least 3 years to reap the benefits, and monitoring this on a daily basis can be annoying. If you should fail to pay the SIP amount on any particular working day, your investment will not default but your return will be adjusted against the failure of payment for that day.

Source : Bank Bazaar

Related articles

• Find out: Top systematic investment plans to invest in (moneycontrol.com)
• Systematic Investment Plan – FAB (slideshare.net)

SEBI asks for better disclosure of mutual fund performance

SEBI has proposed wide-ranging changes in the way fund performance is currently presented. But it is not clear whether investors will know how to use it and whether they will Market regulator Securities and Exchange Board of India (SEBI) has proposed a new set of quantitative measures for disclosing an equity scheme’s performance. SEBI has proposed that fund returns will be calculated and disclosed in an annualised manner by using both capital gains (change in NAV over a period of time) and the dividend paid out per unit. The returns are proposed to be compared to a popular index such as Nifty and Sensex apart from the scheme’s own chosen benchmark. This will give a clearer picture of comparison between absolute returns of a scheme, benchmark returns and the market indices (Nifty or Sensex), especially since index funds are proving to be a better bet than many actively-managed funds. SEBI wants risk-adjusted return to be disclosed as well. The volatility of benchmarks and the schemes is also proposed to be disclosed which will provide a comparison between risk of the scheme, benchmark and the market. Funds may be asked to disclose the beta of a scheme to show the volatility of portfolio and that of the Nifty or Sensex. Expense ratio will also be a part of disclosure as expenses have a direct bearing on the fund performance. SEBI also wants portfolio turnover ratio disclosed. A higher turnover indicates that the fund manager is churning the portfolio very often. Reacting to the SEBI proposals, Ajit Dayal, director, Quantum Mutual Fund told Moneylife: “It’s very good that SEBI is trying to standardise performance which has become a racket in the industry where people are using performance numbers to fool investors. Unfortunately over 15 years of existence, many of the large fund houses in the industry have chosen not to bother about their investors and worry more about the assets that they can gather.” However, another CEO of an asset management company felt that while all this information is completely useful, it is impractical to expect the investors to understand them and act upon them. “This information is useful for financial planners and advisors. And they already have access to this data. To put all this sophisticated information in the public domain is simply overkill.” “It’s great that there is more transparency from what has largely been a most unfriendly stance towards the investor industry. But it does not take away the fact that risk is different for different investors,” added Mr Dayal.

Sebi scraps entry load for MFs, cuts fees of intermediaries

The Securities and Exchange Board of India has rationalised disclosure norms for rights issues. The market regulator has allowed investors to choose commission payable to mutual fund distributors and has cut fees for financial intermediaries by 50%. It has also approved the concept of anchor investor. CNBC-TV18 was the first to report these changes on June 16.

The Sebi board which met today approved the concept of anchor investor, which are long-term strategic investors. An anchor investor has to be a qualified institutional buyer and can subscribe up to 30% of the institutional quota. The promoter group cannot be an anchor investor. There will also be a 30-day lock-in period for anchor investors.

On rights issue:

The Sebi board has also rationalised disclosure norms for rights issues. Henceforth, there will be no preferential issue for superior voting rights. Also, no listed company can issue shares with superior rights.

On mutual fund schemes:

Mutual fund investors have a reason to cheer. There will be no entry load on any mutual fund schemes from now on. Distributors will now have to disclose commission for schemes. In a landmark move, mutual fund investors will now decide on the commission payable to distributors.

Fee cut for intermediaries:

The board has decided to rationalise the fees charged by intermediaries. It plans to cut fees for financial intermediaries by 50%. Broker fees for debt deals have been cut to Rs 2.5 per Rs 1 crore of turnover.

On initial public offerings: From here on, companies planning an initial public offering will have to list on at least one national exchange.

NFO: Edelweiss Nifty Enhancer Fund

Scheme Type:  An Open Ended Equity Scheme

Investment Objective :

The primary objective of the Fund is to generate capital appreciation and income distribution by investing in a portfolio that endeavors to outperform the S & P CNX Nifty Index.
However, there is no assurance that the investment objective of the scheme will be realized and the scheme does not assure or guarantee any returns.
"Edelweiss Nifty Enhancer Fund" is only the name of the Fund. The scheme is not an Index Fund. The equity stocks/ weightages of the equity stocks in the scheme Portfolio may differ vis-à-vis the underlying stocks of Nifty Index.

Benchmark Index : S& P CNX Nifty
The fund reserves the right to change the benchmark for evaluation of the performance of the scheme from time to time, subject to SEBI Regulations and other prevailing guidelines if any.

Fund Manager : Mr. Gaurav Khandelwal

Plans / Options:

The scheme will have a single Plan with Dividend & Growth Options. Dividend Option shall have Reinvestment, Payout & Sweep Facility. Default Option / facility-Growth Option /Dividend Facility / Dividend Re-investment frequency. If dividend is less than Rs. 100 then no payout but compulsorily re-invested.
The AMC reserves the right to introduce further Plans / Options as and when deemed fit.

Application Amount / No. of Units:

Purchases	Additional Purchases	Redemtions
Minimum Rs. 5,000/- and in multiples of Re.1/- thereafter.	Minimum of Rs. 1,000/- and multiples of Re. 1/- thereafter.	Minimum of Rs. 1,000/- and multiples of Re. 1/- thereafter

Dispatch of Repurchase (Redemption) Request:

Within 10 business days of the receipt of the redemption request at the designated Investor Service Center of Edelweiss Mutual Fund.

Load Structure:

The Load Structure would comprise of an Entry Load and /or an Exit Load / CDSC, as may be permissible under the Regulations. The load structure is stated as under:

Entry Load: NIL

Exit Load: Normally, the Exit Load will be as stated below:

1) Redemption request received on any business day within & including 180 days from the date of allotment in the scheme.
Load Chargeable (as %age of NAV):1.00%

2) Redemption request received on any business day after 180 days(from 181 days) but before & including 365 days from the date of allotment in the scheme.
Load Chargeable (as %age of NAV):0.25%

3) Redemption request received on any business day within & including 180 days from the date of allotment in the scheme.
Load Chargeable (as %age of NAV):Nil