Reliance MF signs distribution pact with IOB

Reliance Mutual Fund, a part of Reliance Capital, on Thursday said it has entered into a distribution tie-up with Indian Overseas Bank (IOB).

As per the agreement, IOB will sell Reliance MF products through its 2,689 branches.

“This agreement would help us expand our customer base, especially in tier II and III cities, leveraging on the wide network of the bank,” Reliance Capital Asset Management chief executive Sundeep Sikka said.

Referring to the distribution tie—up, IOB Chairman & Managing Director M Narendra said, “This would enable the bank to operate as a financial super market and help in strengthening the relationship of the existing and potential customer base, providing an opportunity to cross—sell.”

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Reliance Capital gets RBI nod for mutual fund business stake sale

The Reserve Bank of India has approved Anil Ambani-led Reliance Group's Rs 1,450 crore stake sale in its mutual fund business unit to Japan's Nippon Life.

The diversified conglomerate's financial services arm Reliance Capital is selling 26 per cent stake in RCAM (Reliance Capital Asset Management Company) to Nippon Life for Rs 1,450 crore - making it the largest ever Foreign Direct Investment (FDI) in the Indian mutual fund space.

Sources said that RBI has cleared the deal, bringing it a step closer towards its completion. The transaction has already been cleared by the Competition Commission of India (CCI) and might be completed soon after achieving a couple of more remaining regulatory approvals, they added.

"We have no objection to your company transferring 26 per cent of the issued and paid-up equity shares in RCAM to Nippon Life," RBI communicated to the company in a letter dated June 7, 2012.

The Nippon Life transaction values RCAM, the country's most profitable fund house, at about Rs 5,600 crore.

The final agreements for this deal was signed in late March this year.

Reliance Capital has already completed another deal with Nippon Life, wherein the Japanese financial services giant has acquired 26 per cent stake in Reliance Life Insurance for Rs 3,100 crore, valuing the life insurance venture at about Rs 11,500 crore.

For the last fiscal ended March 31, 2012, RCAM posted a net profit of Rs 276 crore, retaining its position as the country's most profitable fund house for the second year.

The company's profit after tax grew by over five per cent from Rs 261 crore in the previous fiscal 2011-12. Its profit before tax also grew by five per cent to Rs 308 crore in the fiscal ended March 31, 2012.

Reliance Capital AMC (Asset Management Company) had overtaken HDFC AMC as the country's most profitable fund house during the previous fiscal 2010-11 and has managed to retain its leadership position.

Reliance Capital Asset Management managed Rs 1,40,853 crore ($27.5 billion) as on March 31, 2012, across mutual funds, pension funds, managed accounts and hedge funds.

Reliance Mutual Fund figures among the top two mutual funds in India, in terms of AUM, with market share of nearly 12 per cent and its average AUM stood at Rs 78,112 crore for the period ended March 31, 2012.



Source: EconomicTimes

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Mutual funds hike exposure to Reliance Industries; lower valuations attractive

NEW DELHI: Shares of Mukesh Ambani-led Reliance Industries may have traded weak on the bourses in the recent months, but mutual funds have enhanced their exposure to the stock, attracted by its lower valuation.

More than 200 mutual fund schemes purchased fresh RIL ( Reliance Industries Ltd) shares, worth an estimated Rs 1,500 crore at current value, during the last quarter.

In contrast, about 100 schemes sold RIL shares from their portfolio during the quarter ended September 30. These shares are worth about Rs 350 crore at the current market price.

The MF schemes having purchased fresh RIL shares during the quarter also included those from Anil Ambani-led group's Reliance MF, the country's biggest fund house.

Interestingly, the RIL stock fell sharply by about 11 per cent during the July-September 2011 quarter.

In the past one year, RIL stock has dipped by over 20 per cent and hit a 52-week low of Rs 713.55 on August 26, 2011 and is currently trading near Rs 884 level.

But, RIL figures prominently on the portfolios of various MF schemes, by virtue of being the country's most valued firm and its high weightage on key market indices including Sensex.

MFs collect money from various investors, including the retail participants, for their different schemes and then invests the same in stocks, bonds and other securities.

One fund house generally runs a number of schemes for different market segments.

RIL is the second most-held stock after ICICI Bank by all the fund houses together. It figures on the portfolios of more than 300 MF schemes and all the funds together held RIL shares worth about Rs 6,800 crore at the end of September.

An analysis of quarterly portfolio disclosures of various funds shows that as many as 210 schemes together bought more than 1.7 crore fresh shares of RIL during the last quarter.

On the other hand, about 41 lakh RIL shares were sold by a total of 97 MF schemes during the quarter.

Only two schemes, belonging to Franklin Templton MF, had no change in their RIL holding during the quarter.

Those having sold RIL shares included only one Reliance MF scheme, while about a dozen schemes of the fund house purchased fresh RIL shares during the quarter.

Besides, the shares were also bought by various schemes of ICICI Pru, UTI, HDFC, Birla Sunlife and Franklin Templeton.

Interestingly, Reliance MF had lowered its exposure to RIL in the last fiscal.

On its part, RIL continued to avoid Reliance MF for its investment needs during the fiscal ended March 31, 2011, even as it parked money in a host of schemes from other funds.

A host of other funds had cut their RIL exposure during the last fiscal and the stock lost its position as the top- held stock for overall mutual fund space to ICICI Bank.

Source: EconomicTimes

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Reliance mutual fund pips HDFC MF to become most profitable fund house

NEW DELHI: Reliance mutual fund has overtaken HDFC mutual fund to become the country's most profitable fund house, as per their profit figures for the latest financial year.

For the financial year 2011, profit after tax of Reliance MF stood at Rs 261 crore, while that of HDFC MF was Rs 242 crore.

On year-on-year basis, Reliance Asset Management company's PAT rose by as much as 34 per cent in the Fiscal 2011, whereas HDFC MF's profit increased by 16.34 per cent, according to the Association of Mutual Funds in India's data.

While UTI MF's figures were not available for the latest fiscal, Franklin Templeton is currently ranked the third most profitable with a PAT of Rs 97 crore (for fiscal year ended September 2010).

Most of fund houses follow April-March financial year. Others in the top ten include Birla Sun Life AMC with a PAT of Rs 85 crore, followed by SBI AMC (Rs 79 crore), ICICI Prudential AMC (RS 72 crore), DSP AMC (47 crore), Tata AMC (17 crore) and Kotak AMC (Rs 11 crore).

Meanwhile, on September 27, speaking at the Annual General Meeting of Reliance Capital, Anil Ambani had said that the talks for a stake sale in its asset management business to Nippon were also in advanced stages.

The company also plans to take its asset management businesses to other emerging markets and would look at further expansion of its wealth management and private equity businesses, Ambani had said.

Source: Economic Times

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HDFC MF overtakes Reliance MF to become largest fund house

NEW DELHI: HDFC Mutual Fund with an average asset base of Rs 91,827.11 crore has overtaken Reliance MF to become the country's largest asset management company.

This is the first time since 2009 that the average assets under management (AUM) of Reliance MF fell below the Rs 1 lakh crore.

At the end of September, the AUM of Reliance MF declined by Rs 10,598.72 crore or 10 per cent to Rs 90,660.60 crore.

HDFC MFs asset base too witnessed a decline of Rs 205.79 crore or 0.2 per cent to Rs 91,827.11 crore at the end of September.

Reliance Capital Asset Management CEO Sundeep Sikka had earlier said that the company was focusing on increasing its retail customers base, rather than on bringing AUM through institutional investors.

As at the end of September the average assets managed by the mutual fund industry, consisting of 41 active players, stood at Rs 7.12 lakh crore.

The MF industry witnessed decline in their average AUM by Rs 31,255.34 crore or 4.2 per cent, as per the data available with industry body Association of Mutual Fund Industry (AMFI).

The combined average AUM was Rs 7,43,083.91 crore in end-June.

Besides, ICICI Prudential MF and UTI MFs assets declined 5.7 per cent and 9.4 per cent. At the end of September quarter, ICICI Prudential's AUM stood at Rs 75,217.10 crore and UTI MF's at Rs 62,579.86 crore.

The industry has seen an AUM decline of 5 per cent in December quarter and 2 per cent in March quarter. This was followed by a 6 per cent increase in the June quarter.

As many as 22 players witnessed a decline in their AUM in the September quarter.

Among the other players Birla Sun Life MF saw their average assets declining 4.8 per cent to Rs 64,217.03 crore. Also SBI MF average AUM fell 0.3 per cent to Rs 47,731.39 crore.

Source: Economic Times

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5 years on, MF SIPs hold their own

Mumbai: True, the stock markets have been battered and investor sentiments badly hit. But systematic investment plans (SIPs) of mutual funds still seem to be generating modest returns for retail investors who reposed their faith in the stock markets over the long term.

In the last five years or even over a three-year period, the Bombay Stock Exchange’s (BSE’s) benchmark index Sensex witnessed high volatility and saw the highs of 21,000 (in January 2008 and November 2010) and deep lows of 8,160 (in March 2009). But, the systematic investment style has held its own and retail individuals who continued with their monthly investments have got reasonable returns.

For example, if you had invested Rs 5,000 at the beginning of every month starting August 2006 till July 2011 in Sensex, then at a Sensex closing of 17,130 on Tuesday, your total investment of Rs 300,000 over the 5 year period would have grown to Rs 4,04,892 yielding an annualised return of around 12 per cent. Similarly, a Rs 5,000 monthly investment in Sensex over the last three years would have generated a return of around 10.25 per cent.

Against this, a lumpsum investment five years back in Sensex would have grown at a compounded annual growth rate (CAGR) of 9.8 per cent and that three years back would have grown at a CAGR of 5.3 per cent.

“Timing the market is tough and SIP takes away the human bias as investors rush to invest when the market is moving up and start pulling out when the market is down which is opposite of what they should be doing,” said Sundeep Sikka, CEO, Reliance Mutual Fund. “Every retail mutual fund investor should invest through SIPs and even the lumpsum investments should be broken down and invested in 4-5 parts.”

Having scaled the peak of 21,000 in January 2008, the markets are yet to reach the level, but SIP investors have seen good returns since it offers the advantage of rupee cost averaging when the chips are down.

During the same period, no fixed deposit generated a double digit return. Gold, however, has generated far superior returns compared with most investment products.

Gold prices have risen at a CAGR of over 28 per cent over the last three years and at a CAGR of 21 per cent over the last five years.

by: SANDEEP SINGH

Source: Financial Express

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Reliance MF launches first SIP in gold

Reliance Mutual Fund launched India's first systematic investment plan (SIP) in Reliance Gold Savings Fund, wherein premium will be made on a monthly basis.


CEO of Reliance Capital Asset Management Sundeep Sikka said it was the first SIP in gold introduced in the domestic mutual fund industry aimed at helping investors to accumulate the yellow metal in small amounts regularly.


Sikka said that in line with the growing gold investment demand, coupled with India's culture for buying gold, "We are introducing SIP in Reliance Gold Savings Fund. This is aimed at cultivating a regular savings habit among investors to accumulate gold in small amount through the SIP mode."


The fund allows small regular investments as low as Rs 100 per month and in multiples of Re one thereafter. According to Sikka, Reliance Gold Savings Fund is the only fund in the market which will enable investors to invest in gold in a paper form without the need of a Demat account as it provides the facility to invest through online medium and physical application mode.


He said that the new fund offer was a convenient way to diversify investment portfolio and reap the returns of gold from a long-term perspective.


To a query, he said the fund enables the investor to avail long-term taxation benefits from first year.




Source: Financial Express

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