From the Chairman s Desk

Transcription

1 For private circuation ony A Newsetter of The Association of Mutua Funds in India Apri, 1999 Vo : I. Issue : III From the Chairman s Desk The Mutua Fund Industry has entered into a new phase characterised by aunch of new innovative products, new investors joining the funds and many funds recording encouraging performance. The efforts undertaken in the ast few years- evoution of an appropriate and industry friendy reguatory framework, upgrading standards, discosures, transparency and diigent and skifu investment management have a started producing resuts. Professiona journaism and reguar dissemination of NAV data and other information on mutua funds have generated growing interest among investors and now, with the encouraging budget proposas, which wi give an added impetus, the mutua fund industry is poised for a robust growth. AMFI is indeed thankfu to SEBI, the Government and Reserve Bank for the recognition and encouraging support the industry is getting from them and AMFI stands committed to deveop the industry on heathy ines. Let the new fisca bring in new records and new cheers for the industry. Yours, A. P. Kurian

2 SEBI UPDATE- A GROWING PARTNERSHIP AMFI Board Members had a meeting with SEBI team headed by Shri Ashok Kacker, Executive Director on February 2, 1999 and AMFI presented the industry s views on the foowing subjects: Committee on Advertising Norms The draft of the report has been sent to a members for their comments and suggestions. Committee on Certification of Agents of Mutua Funds 1) Associate of AMC/Mutua Fund investing in Mutua Fund Schemes 2) AMC not to charge fees on its own investments in the fund. 3) Stock wise imits for investments Seing of mutua funds, a sophisticated financia product is a serious and responsibe business and that is why in many countries such as USA, there is the system of certification of agents and there are reguations and rues governing the agents and brokers. 4) Accounting issues. 5) Nomination faciity for unithoders of mutua funds. 6) Registration of shares by companies in the name of mutua fund or its scheme. 7) Abridged Offer Document: Scope for further condensation. 8) Review of Voting Poicy and Procedure. On other subjects ike genera approva for aunch of pension/retirement pans, AMFI members had discussions with SEBI officias. COMMITTEE UPDATE- A JOINT EFFORT Committee on Non-Performing Assets. The draft report has been circuated to a members and after taking into consideration the feedback from the members the report wi be finaised. We aso need to evove a proper system of certification of agents and brokers. In order to study a the reevant aspects connected with the subject, a Committee with Shri R. G. Sharma of LIC Mutua Fund as Chairman has been appointed. Shri S. K. Mitra of Bira Mutua Fund and Shri K. N. Vaidyanathan of Morgan Staney Mutua Fund and Shri Girija Pande of ANZ Grindays Bank are the members. VALUATION OF SECURITIES UPDATE The poicy for vauation of non-traded debt securities formuated by the AMFI Vauation Committee has been circuated to a members aong with the software package. It wi be run on a parae basis with the existing system from Apri 1999 and after a fund wise review and harmonising any discrepancies, a uniform vauation methodoogy wi be adopted by a members of AMFI from October,1999.

3 INTIATIVE UPDATE The Advanced Training programme initiated in November,1998 in Mumbai was conducted in the cities of Chennai, Hyderbad, Bangaore, Cacutta and Dehi in the months of February-March In these centres the programme was organised in association with distribution companies viz. Bira Finance distributors and Tata Finance on a cost sharing basis for the benefit of the sub-brokers and agents of these companies. So far AMFI has trained 833 agents through 15 programmes. The second phase of the training programme has just started. Based on the feed back received, we have compressed the programme for haf a day and the fee has been kept at Rs.50/- per participant. It is hoped that a mutua funds as we as distribution companies wi make use of this programme and over a period of time, there wi be a good number of trained agents in the country. ADMISSION OF MEMBERS We wecome ING Investment Management India (Pvt) Ltd, our youngest member of the famiy of AMFI. With ING we have 35 members now. AMFI WEBSITE AMFI Website was visited by during November,1998 to February,1999. Of these 37% were from India, 35% from US and the rest from other countries. AMFI WELCOMES THE BUDGET PROPOSALS AND MAKES ITS REPRESENTATIONS AMFI is happy and thankfu to the Government that some of its recommendations have been accepted by the Government. The tax proposas woud certainy give a boost to the mutua fund industry. AMFI had a consutation with a its members on the impications of the Budget proposas. On the appicabiity of the reduced rate of capita gains tax, AMFI has represented to the Government to make it appicabe to units of a mutua fund schemes whether isted or not. MONEY MARKET MUTUAL FUNDS (MMFS) ALLOWED CHEQUE FACILITY AMFI conveys its appreciation and thanks to the Reserve Bank of India for aowing money market mutua funds to offer cheque writing faciity to investors through a tie-up with a bank. This is a deveopment in the right direction and wi further encourage growth of Money Market Funds. NEWS UPDATE The Dave Committee on Coective Investment Scheme has submitted its report to SEBI. Shri A. P. Kurian Chairman was a member of this committee. The Chairman aso attended other committee meetings such as Market Making Committee, Committee on Par Vaue and the Working Group on De Mat. SEBI has nominated the Chairman to the recenty formed Accounting Standards Committee. The Indira Gandhi Nationa Open University (IGNU) has constituted an expert group to design the curricuum for a post graduate course on Capita Market which wi have a separate section on Mutua Funds. Chairman attended a meeting of this Expert Group. A diaogue has been initiated with IGNU for undertaking an educationa programme on Mutua Funds. In the Nationa Convention on Investor Protection

4 at Ahmedabad organised by Consumer Education Research Centre on 10th Apri, 1999, the session on Mutua Funds was chaired by Shri P.S. Subramanyam, Chairman, Unit Trust of India. Chairman AMFI made a brief presentation on the Performance of Mutua Funds and Reguatory Frame Work. MUTUAL FUND INDUSTRY DATA The data for third quarter October - December 1998 is presented in tabes 1, 2 and 3. Rs.1,997 crores, accounting for 40% of the saes. Existing schemes mobiised Rs.3,024 crores forming 60% of the saes. Redemptions were substantiay higher at Rs.8,984 crores as against Rs.5,124 crores ast quarter. Assets under management at the end of the quarter were Rs.65, 828. The highights are: Saes during the quarter were ower at Rs.5,021 crores as compared to Rs.6,093 crores ast quarter. 5 new schemes were aunched which coected Association of Mutua Funds in India A Wing, Daama Towers, Free Press Journa Marg, Nariman Point, Mumbai Te : (022) / Fax : (022) E-mai : amfi@bom5.vsn.net.in. Website : MUTUAL FUND DATA FOR THE QUARTER OCTOBER - DECEMBER, 1998 TABLE 1 - SALES, REDEMPTION AND NET ASSETS Rs. Crores Name of Mutua Fund No of Schemes Launched Saes for a Schemes Redemptions Under a Assets Under during the Schemes Mgmt As on Quarter From From Tota Tota for Tota For Tota for New Existing for the Year to the the year Schemes Schemes Quarter Date Quarter to Date A Unit Trust of India 2 1, ,837 9,308 6,981 11,179 54,339 B Bank Sponsered(6) ,508 C Institutions(3) ,993 D Private Sector I Indian(6) , , I Joint Ventures - Predominanty Indian (7) , ,577 2,224 I Joint Ventures - Predominanty Foreign (8) , ,986 Tota(I+II+III) ,105 2,116 5,355 1,808 4,723 4,988 Grand Tota (A+B+C+D) 5 1,997 3,024 5,021 15,189 8,984 16,858 65,828 Notes : 1. Assets under management of Unit Trust of India at book vaue and incudes net income. For others at market vaue. 2. Data is provisiona hence subject to correction. 3. Figures in brackets denote no. of funds.

5 TABLE 2 - SALES DURING THIRD QUARTER - OCTOBER - DECEMBER, 1998 : TYPE AND CATEGORY WISE ANALYSIS - ALL MUTUAL FUNDS 2.1 New Schemes Launched Rs. Crores Open End Cose End Assured Returns Tota No.of schemes Saes No.of Schemes Saes No.of schemes Saes No.of schemes Saes Income Schemes , ,997 Growth Schemes Baanced Schemes ELSS Tota , , Exisitng Schemes Open End Cose End Assured Returns Tota No.of schemes Saes No.of Schemes Saes No.of schemes Saes No.of schemes Saes Income Schemes 31 2, ,775 Growth Schemes Baanced Schemes ELSS Tota 75 3, , Tota of a Schemes Open End Cose End Assured Returns Tota No.of schemes Saes No.of Schemes Saes No.of schemes Saes No.of schemes Saes Income Schemes 34 2, , ,772 Growth Schemes Baanced Schemes ELSS Tota 78 3, , ,021 Note : Number of Schemes redeemed not avaiabe. TABLE 3 - REDEMPTIONS/REPURCHASES FOR QUARTER OCTOBER TO DECEMBER, 1998 Rs. Crores Open End Cose End Assured Returns Tota Income Schemes ,165 Growth Schemes Baanced Schemes ELSS Tota 6,814 1, ,984

6 PERFORMANCE OF MUTUAL FUNDS Based on the pubished Vaue Research Data a summary anaysis of performance of Equity Funds for the year is presented in Tabe 4. TABLE 4 - PERFORMANCE OF EQUITY FUNDS- SUMMARY ANALYSIS FOR YEAR ENDED MARCH 31,1999 Movement of BSE Sensex March 31,1999 (3739) Over March 31,1998 (3892) (-)3.9% Open end Cose end Equity Linked Savings Scheme 1) No. of Funds ) No. of Funds Outperforming BSE Sensex ) Of which No. of Funds recording growth 1-25 percent Above ) No. of Funds recording decine of ess than (-) 3.9% ) No. of Funds Underperforming BSE Sensex ) Range of Decine (-)4% to (-)23% (-)6% to (-)25% (-)6% to (-)27% Source : Based on data pubished in the Financia Express Dated Apri 10,1999 The foowing concusions emerge: above 100 percent. For the year 98-99, 21 out of 26 (80 percent) Open end Equity Funds outperformed the BSE sensex and ony 5 funds under performed the index. 15 out of 21 funds that outperformed the index gave a return varying from 26 percent to In respect of cose end funds, 25 out of 33 (76 percent) outperformed the index and ony 8 funds underperformed 44 out of 59 (about 75 percent) of the Equity Linked Saving Schemes outperformed the index and ony 15 funds underperformed. Designed by Ogivy & Mather, Financia & Business Communications and Printed by Leo Press & Communications