MF industry's assets cross Rs 7 lakh cr-mark

The mutual fund industry's breached Rs 7 lakh crore-mark in assets in August, with the country's largest fund house Reliance MF maintaining its top position with an average assets under management (AUM) of over Rs 1.17 lakh crore.

The mutual fund industry's total AUM grew by Rs 59,965.79 crore, or 8.69 per cent, which analysts believe was mainly propelled by the inflow into the fixed income plans.
The combined average AUM of the 36 fund houses in the country hit the historic Rs 7 lakh crore-mark at the end of August at Rs 7,49,911.91 crore, according to the data released by Association of Mutual Funds in India (AMFI).
The MF industry had an AUM of Rs 6,89,946.12 crore at the end of July.
"Income funds were in demand in August. Banks and corporate houses have parked their surplus cash with the fund houses, thereby leading to an increase in the AUMs," Taurus Mutual Fund Managing Director RK Gupta said.
HDFC MF registered the biggest jump of Rs 10,508.09 crore in its average AUM during the period, taking its total assets to Rs 93,874.19 crore at end of August.
The country's largest fund house Reliance MF saw an addition of Rs 8,979.40 crore during the month to its assets. At the end of August the average AUM of Reliance MF stood at Rs 1,17,313.78 crore.
ICICI Prudential, the third largest fund house, saw its assets rise by Rs 4,638.30 crore to Rs 77,966.86 crore. While, UTI MF's assets grew by Rs 6,674 crore to Rs 73,925.90 crore at the end of August.
"In absence of credit growth, banks are right now sitting on surplus cash. With the increase in bank deposits banks are parking money in MFs which helped in increasing the industry AUM," Gupta added.
Fund houses which saw an increase in their average AUM in August include Canara Robeco MF, Deutsche MF, IDFC MF, Religare MF and LIC MF.
However, the AUM of DSP BlackRock Mutual Fund dropped by Rs 120.85 crore, HSBC Mutual Fund dipped by Rs 478.76 crore and Benchmark Mutual Fund fell by Rs 6.42 crore.
Other fund houses which saw a decline in their AUMs include ING Mutual Fund, JPMorgan Mutual Fund, SBI Mutual Fund and Shinsei Mutual Fund.
However, analysts cautioned that there could be a decline in the assets of the fund houses during this month as banks would withdraw cash at the end of September quarter.
"There could be a slight decline in AUMs this month as advance tax payments by corporate houses and big ticket Oil India public offer could take out some money from the industry," he added.
The BSE benchmark index Sensex remained flat over August and had settled at 15,666.64 points at the end of trade on August 31.

Source: http://www.business-standard.com/india/news/mf-industry%5Cs-assets-cross-rs-7-lakh-cr-mark/72458/on

Your investment cost just got lower

In times when spiralling food prices seem to be pinching the wallet on a daily basis, fierce competition among financial institutions and strict regulatory actions are ensuring that your investment costs have started falling. Here are four such examples:

Entry load ban for mutual funds: From August 1, the Securities and Exchange Board of India (Sebi) has banned the entry load of 2.25 per cent on equity funds and 1 per cent (maximum allowed) on debt funds.
This amount was earlier deducted from your investment and given to the distributor of mutual fund schemes by fund houses. That is, if you invested Rs 100 in an equity fund, Rs 97.75 would be invested and the rest Rs 2.25 would be given to the distributor.
From August 1, the distributor has to negotiate the commission with the investor itself and be paid through a separate cheque. Also, these distributors have to declare the commission paid by fund houses for similar schemes.
“Distributors will now have to justify their fee by recommending good schemes to customers. Why else will someone pay?” said Gaurav Mashruwala, a certified financial planner.
Also, the market regulator has asked fund houses to charge the same exit load to both retail and high networth individuals.
Ulip costs capped at 3 per cent: Though, financial planners will say that insurance should be separated from investment, most buyers of unit-linked insurance plans (Ulips) can be accused of looking at hefty returns.
As a result, sellers/ agents of Ulips have often been accused of charging astronomical sums in initial years - much more than that for mutual fund products. However, the Insurance Regulatory and Development Authority (Irda) has recently capped the difference between gross and net yield at 3 per cent for a 10-year policy and 2.25 per cent for a 15-year policy.
“But this is only valid for customers who stay in for the entire term of the policy. If you decide to surrender before the policy matures, the charges will still be marginally higher,” said G V Nageswara Rao, managing director and chief executive officer, IDBI Fortis Life Insurance.
Medical insurers cannot deny renewability: This should come as a relief to senior citizens as they are more prone to illness. Earlier, insurers would either deny renewing a mediclaim policy to a person who had made a claim or would hike the premium substantially.
Irda recently said that from June 1, insurance companies would not deny extending medical insurance and also have to explain the hike to a person. “There was a fear that the existing sickness may lead to more claims and, in turn, more losses,” said S Narayanan, managing director and chief executive officer, Iffco-Tokio General Insurance. Also, the maximum entry age of an individual for medical cover has been raised to 65 from the earlier 50-55.
Reduced loan rates: Call it competition or the lack of credit offtake, but banks have been forced to cut home and auto loan rates aggressively.
State Bank of India (SBI) has been slashing rates in a hurry. It has already cut rates thrice since January. In the recent cut, borrowers of Rs 5-50 lakh will get the loan at 8 per cent for the first year and 8.50 per cent for the next two years. These loans come without any administrative cost and free insurance for personal accident.
Following this, other lenders too have cut rates. HDFC Bank slashed rates by 50 basis points to 9 per cent for Rs 30-50 lakh.
The current United Progressive Alliance (UPA) government has also pitched in and given a subsidy of 1 per cent for loans up to Rs 10 lakh (price of house up to Rs 20 lakh).
For auto loans, Canara Bank is charging 8.50 per cent in the first year, 9.50 per cent for the next 24 months and 10 per cent for the 36-60 month period. Following the aggression shown by public sector banks, ICICI Bank cut its auto loan by 50-75 basis points and the rate ranges between 12 and 14 per cent now, depending upon the car.

Source: http://www.business-standard.com/india/storypage.php?autono=368874