5 Minutes Read

Mutual funds to stop fresh inflows in overseas ETFs from April 1: Here’s why

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Summary

With the halting of inflows into schemes investing in overseas ETFs, investors may be temporarily unable to add an international element to their portfolios.

The Securities and Exchange Board of India (Sebi) has directed asset managers to halt inflows into schemes investing in overseas exchange-traded funds (ETFs) effective April 1. Experts believe that Sebi’s move come on the back of overall industry surpassing the $1 billion (approximately ₹8,311 crore as of March 21, 2024) limit.

Consequently, the Association of Mutual Funds in India (AMFI) issued a letter to fund houses instructing them to cease accepting subscriptions to funds investing in overseas ETFs from April 1, 2024.

However, subscriptions to funds investing in overseas securities other than international ETFs can continue until further communication from the regulator.

Overseas ETFs are investment funds traded on stock exchanges that primarily hold assets such as stocks, bonds, commodities, or a combination thereof, but are based in foreign markets.

The latest move echoes a similar restriction imposed in late 2022 when global financial markets experienced significant corrections, prompting Indian fund houses to invest in foreign stocks within a capped limit of $7 billion for the industry.

However, the recent surge in international markets, particularly in the United States, has seen US-focused funds delivering decent returns. Notably, the Mirae Asset NYSE FANG+ETF FoF emerged as the top performer in the international category, yielding 79% returns in 2023, according to Value Research report.

With the halting of inflows into schemes investing in overseas ETFs, investors may be temporarily unable to add an international element to their portfolios.

This move could significantly alter investment strategies, particularly for those seeking exposure to foreign markets, diversification, and potentially higher returns.

ALSO READ | Fresh SIPs in India’s largest small-cap scheme restricted to ₹50,000 a day

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

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today's market

index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95

Currency

Company Price Chng %Chng
Dollar-Rupee 73.3500 0.0000 0.00
Euro-Rupee 89.0980 0.0100 0.01
Pound-Rupee 103.6360 -0.0750 -0.07
Rupee-100 Yen 0.6734 -0.0003 -0.05
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Fresh SIPs in India’s largest small-cap scheme restricted to ₹50,000 a day

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Summary

Nippon India Mutual Fund cited the need for the adjustment due to the recent rally observed in the small-cap market segment and the heightened involvement of investors making investments.

Nippon India Mutual Fund has reduced the maximum investment limits for its small-cap fund through fresh Systematic Investment Plans (SIPs) and Systematic Transfer Plans (STPs) to ₹50,000 per day per Permanent Account Number (PAN). The new restriction is effective from Friday (March 22).

Notably, Nippon India Small Cap Fund is India’s largest smallcap scheme.

This decision closely follows the release of the results from the first round of mutual fund stress tests.

The fund house cited the need for this adjustment due to the recent significant rally observed in the small-cap market segment and the heightened involvement of investors making investments.

Background and previous restrictions

The fund house had previously halted lump sum investments in the small-cap fund in July 2023.

Additionally, fresh registrations via SIP or STP were capped at ₹5 lakh a day per PAN.

Purpose of new subscription limits

The newly proposed limit on unit subscriptions aims to enable a gradual deployment of the fund’s corpus, aligning it with the typical nature of small-cap investing, as highlighted by the fund house.

Impact on existing investors

These restrictions will not affect existing SIPs, STPs, or other special products registered before the effective date, nor will they impact unitholders under the dividend reinvestment option.

Changes to exit load structure

In tandem with these adjustments, Nippon India Mutual Fund has also announced modifications to the exit load structure for its Nippon India Small Cap Fund, effective from March 22, 2024.

The alteration involves shifting from the previous exit load policy of “1% for redemption within 30 days” to a revised structure of “1% for redemption within 1 year.”

Insights from stress test results

According to the stress-test report provided by Nippon India Mutual Fund, the fund anticipates a liquidation timeline of up to 27 days to divest 50% of the small-cap fund’s holdings, with a shorter duration of 13 days for offloading 25% of assets.

Given the fund’s portfolio, which encompasses more than 200 stocks, these stress test results hold significant implications.

It’s worth noting that the disclosure of stress test outcomes by various fund houses follows directives from the Association of Mutual Funds in India (AMFI), emphasising industry-wide compliance with regulatory standards.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

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index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95

Currency

Company Price Chng %Chng
Dollar-Rupee 73.3500 0.0000 0.00
Euro-Rupee 89.0980 0.0100 0.01
Pound-Rupee 103.6360 -0.0750 -0.07
Rupee-100 Yen 0.6734 -0.0003 -0.05
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Aditya Birla Sun Life Mutual Fund stress test results

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Summary

The AMFI has mandated its members to regularly disclose stress test results every 15 days, in compliance with a recent directive from the Securities and Exchange Board of India (SEBI).

Aditya Birla Sun Life Mutual Fund unveiled the outcomes of its stress tests on Thursday (March 14), aligning with a directive from the Association of Mutual Funds in India (AMFI).

The AMFI has mandated its members to regularly disclose stress test results every 15 days, in compliance with a recent directive from the Securities and Exchange Board of India (SEBI).

Aditya Birla Sun Life Midcap Fund and Aditya Birla Sun Life Small Cap Fund have 10,363 crore worth of assets under management (AUM). These are the most important things to know:

1. Top 10 investors hold 4.14% of the midcap scheme and 2.52% of the smallcap scheme.

2. If needed, Aditya Birla Sun Life Mutual Fund will take 4 days to sell 50% of its midcap portfolio and 10 days to sell half of its smallcap portfolio. This shows how liquid are the stocks that the funds have invested in.

3. Both the funds have a beta (volatility) of 0.87 and 0.84. The beta of less than one implies the portfolio is less sensitive to market volatility.

4. Both funds have a lesser annual standard deviation compared to the benchmark. Standard deviation measures how widely the returns from a stock in the portfolio from one time period to another. The higher the standard deviation, the less predictable the returns are.

5. The portfolio turnover rate for the midcap fund is 0.23 and the same is 0.42 for the smallcap fund.

These stress tests aim to assess how quickly fund managers can liquidate their portfolios in the event of investors seeking redemptions amid challenging market conditions.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

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index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95

Currency

Company Price Chng %Chng
Dollar-Rupee 73.3500 0.0000 0.00
Euro-Rupee 89.0980 0.0100 0.01
Pound-Rupee 103.6360 -0.0750 -0.07
Rupee-100 Yen 0.6734 -0.0003 -0.05
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SIP inflows cross ₹19,000 crore for the first time in February

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

 Listen to the Article (6 Minutes)

Summary

Financial experts attribute this surge in SIP inflows to several factors, including increased awareness about long-term wealth creation, the ease of investing through SIPs, and the market’s overall positive sentiment.

Systematic Investment Plan (SIP) inflows have reached an all-time high in February 2024, surpassing the ₹19,000 crore mark for the first time. The latest data reveals that SIP inflows stood at ₹19,187 crore, marking a notable increase from the previous month’s figure of ₹18,838 crore.

The number of new SIP registrations stood at 49.79 lakh.

According to the Association of Mutual Funds in India (AMFI), the SIP assets under management (AUM) for February 2024 stood at ₹10.52 lakh crore.

The number of SIP accounts also reached 8.20 crore, up from 7.91 crore in January 2024.

Financial experts attribute this surge in SIP inflows to several factors, including increased awareness about long-term wealth creation, the ease of investing through SIPs, and the market’s overall positive sentiment.

Venkat Chalasani, Chief Executive, AMFI said, “As we delve into the February 2024 data, we observe that there is a surge in SIP accounts, totalling 8.20 crore with 49.79 lakh new SIP registrations. This underscores investors’ unwavering commitment to disciplined wealth accumulation.”

ALSO READ | Equity MFs see 36th month of inflows in February, new fund offers garner ₹9,388 crore

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

 Daily Newsletter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

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today's market

index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95

Currency

Company Price Chng %Chng
Dollar-Rupee 73.3500 0.0000 0.00
Euro-Rupee 89.0980 0.0100 0.01
Pound-Rupee 103.6360 -0.0750 -0.07
Rupee-100 Yen 0.6734 -0.0003 -0.05
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Equity MFs see 36th month of inflows in February, new fund offers garner ₹9,388 crore

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

 Listen to the Article (6 Minutes)

Summary

Equity New Fund Offers (NFOs) played a significant role in driving the positive momentum, attracting a total of ₹9,388 crore. Notably, the SBI Energy NFO stood out as a major contributor, raking in ₹6,700 crore alone.

Equity mutual funds in India have maintained their upward trajectory, marking the 36th consecutive month of inflows, as per data released by the Association of Mutual Funds in India (AMFI). The latest figures for February 2024 reveal a surge in inflows to ₹26,703.06 crore, up from ₹21,749 crore in January 2024.

Breaking down the numbers, Small cap funds emerged as the frontrunners, witnessing a net inflow of ₹2,922.4 crore. The mid cap funds secured a net inflow of ₹1,808.2 crore, and large cap funds followed closely with a net inflow of ₹921.1 crore.

Equity Linked Savings Scheme (ELSS) inflows stood at ₹339 crore versus ₹532 crore in January 2024, AMFI data showed.

Hybrid schemes attracted a net inflow of ₹18,105.08 crore.

Although slightly lower than January’s figures of ₹20,637 crore, the continued appeal of hybrid schemes highlights investors’ ongoing interest in balanced investment options that provide exposure to both equity and debt.

Liquid funds, known for their stability and liquidity, saw a robust net inflow of ₹83,642.33 crore in February, a significant increase from January’s figure of ₹49,468 crore.

Exchange-Traded Funds (ETFs) also experienced a notable uptick, attracting a net inflow of ₹6,461.67 crore in February, up from ₹571 crore in January.

However, amidst the positive trends, Credit Risk funds faced an outflow of ₹366 crore in February, slightly higher than the outflow of ₹303 crore in January.

Equity New Fund Offers (NFOs) played a significant role in driving the positive momentum, attracting a total of ₹9,388 crore. Notably, the SBI Energy NFO stood out as a major contributor, raking in ₹6,700 crore alone.

The strong response to equity NFOs indicates a sustained appetite for new investment opportunities among market participants.

The total assets under management (AUM) for the mutual fund industry climbed to ₹54.5 lakh crore.

Commenting on the numbers, Anand Vardarajan, Business Head – Banking, Institutional Clients, Alternate Products and Product Strategy, Tata Asset Management said, “Equity inflows continue to soar largely led by some NFOs. Notably thematic/sectoral have seen massive interest. Small and midcap flows have been buoyant. Most categories have seen positive flows in equity. Multi asset also saw a combination NFOs also led by NFO flows. The category has seen investor interest as markets scale new highs and we are seeing flows getting channelised in balanced advantage funds and multi asset with a view to diversify/derisk.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

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today's market

index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95

Currency

Company Price Chng %Chng
Dollar-Rupee 73.3500 0.0000 0.00
Euro-Rupee 89.0980 0.0100 0.01
Pound-Rupee 103.6360 -0.0750 -0.07
Rupee-100 Yen 0.6734 -0.0003 -0.05
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Mutual fund distributors may earn trail commission on transferred assets: What it means for investors?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

 Listen to the Article (6 Minutes)

Summary

AMCs may now allow trail commission to distributors on transfers initiated by investors, with the payment being based on the lower of the commission rate of the transferor and the transferee distributor.

The Association of Mutual Funds in India (AMFI) has reportedly announced a change in its policy regarding trail commissions for mutual fund distributors. This move is expected to have implications for both distributors and investors in the mutual fund market.

Previously, when investors switched from one distributor to another, no trail commission was paid for the transferred assets.

However, AMFI’s latest notice to members reveals that mutual fund distributors will now be eligible to receive trail commission from asset management companies (AMCs) on such transferred assets, after a cooling-off period of six months.

Understanding trail commission

Trail commission is a form of compensation paid to mutual fund distributors for the ongoing assistance, advice, and services they provide to investors.

It is typically a percentage of the assets under management (AUM) and serves as an incentive for distributors to offer continued support and guidance to clients over the long term.

Here’s a breakdown of the key points outlined in the notice:

Payment structure

AMCs may now allow trail commission to distributors on transfers initiated by investors, with the payment being based on the lower commission rate of the transferor and the transferee distributor.

Exclusions

Apart from trail commission, no other payments of any nature, including incentives, will be made on account of the change in distributor.

This implies that any additional incentives or commissions related to the distributor switch will not be permitted.

Review of the existing rule

The decision to revise this rule comes after receiving requests from mutual fund distributors to reconsider the previous guideline, which was introduced a decade ago to address specific market practices.

The AMFI believes that the circumstances prompting the original rule may no longer be prevalent and that the transferee distributor provides the same level of support and service to investors on transferred assets.

Implementation

The payment to the new distributor will be based on the lower commission rate applicable on the date of the distributor code change, ensuring a fair and standardised approach to commission payments.

Investor impact

For investors, this change could potentially lead to more flexibility in choosing distributors, experts say.

The policy change is expected to foster healthy competition among distributors, as they vie to attract and retain investors by offering superior services.

This competition can lead to improved customer service too, better investment advice, and more comprehensive support for investors.

Investors switching distributors may now benefit from continued support and services without incurring additional costs.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

 Daily Newsletter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Previous Article

Oil Fluctuates as Traders Assess China’s Vow, Unrest in Libya

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today's market

index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95

Currency

Company Price Chng %Chng
Dollar-Rupee 73.3500 0.0000 0.00
Euro-Rupee 89.0980 0.0100 0.01
Pound-Rupee 103.6360 -0.0750 -0.07
Rupee-100 Yen 0.6734 -0.0003 -0.05
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These mutual funds may be hit the most by AMFI’s advisory on mid, small-cap funds

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

 Listen to the Article (6 Minutes)

Summary

It is essential to emphasise that these identified funds are not categorised as poor quality or underperformers. The AMFI advisory specifically addresses mid-cap and small-cap equity schemes, stressing the need for comprehensive disclosures regarding risk parameters on the official websites of Asset Management Companies (AMCs).

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

 Daily Newsletter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Previous Article

Oil Fluctuates as Traders Assess China’s Vow, Unrest in Libya

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today's market

index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95

Currency

Company Price Chng %Chng
Dollar-Rupee 73.3500 0.0000 0.00
Euro-Rupee 89.0980 0.0100 0.01
Pound-Rupee 103.6360 -0.0750 -0.07
Rupee-100 Yen 0.6734 -0.0003 -0.05
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Mutual fund regulator turns cautious on small and mid-cap schemes — here’s why

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

 Listen to the Article (6 Minutes)

Summary

Small and mid-sized funds have seen high inflows, causing concern among authorities about how they would hold up in the event of a sharp market selloff.

Taking cognisance of a significant influx of funds into small and mid-cap segments, the Association of Mutual Funds in India (AMFI) has issued an advisory to mutual funds, said DP Singh, Deputy Managing Director (MD) at SBI Mutual Fund on Wednesday, February 28.

AMFI’s cautious approach reflects the industry’s efforts to navigate the challenges posed by the heightened interest in these specific fund categories.

DP Singh emphasised these discussions revolve around protecting investors’ interests, even though the Securities Exchange Board of India (SEBI) hasn’t given any directive. 

“I am not saying this is a diktat from SEBI because ultimately all of us want that the investors’ interest should be protected,” he told CNBC-TV18.

His comments follow the regulator’s move to demand increased information disclosure from asset managers regarding risks associated with small and mid-cap funds.

Investment committees have been urged to disclose information on how they plan to accommodate large redemptions, the potential impact on portfolio value, and the liquidity held to meet outflows, according to a Reuters report.

The move aims to caution against the rapid inflow of funds, outpacing available stocks with limited viable investment opportunities.

Singh added that asset management companies (AMCs) stopped accepting lump sum inflows into small-cap funds since 2017, opting for Systematic Investment Plans (SIPs) up to ₹25,000.

He noted, “Money that is flowing in is outpacing the stocks. Also, good businesses at the right valuation are limited. So, this is just to give a caution note to everybody that this is something that needs to be done.”

Singh advised that each fund house should evaluate its risk position, and the advisory suggests funds might need to implement curbs based on their risk parameters.

He stressed that SBI Mutual Fund is managing its inflows and outflows effectively, but others may need to consider implementing restrictions based on their circumstances.

He explained, “For somebody else who’s getting much more money coming in looking at the past returns, they will definitely have to think about it on how to put some curbs in their fund house.”

AMFI, in collaboration with SEBI, is reportedly proposing a standardised format for risk disclosure, expected to begin from April.

Funds, as per public documents, usually maintain 1% to 5% of their assets as cash. However, there is no minimum regulatory requirement.

The proposed disclosure format aims to provide investors with vital information about the liquidity position of funds.

Earlier this week, Kotak Mutual Fund announced restrictions on lumpsum investments in its small-cap funds.

The same will be effective from March 4, 2024. Fresh lumpsum investments, including additional investments or switch-ins, will be capped at ₹2 lakh per PAN (first holder or guardian) per month.

Systematic Investment Plan (SIP) and Systematic Transfer Plan (STP) registrations will continue with a monthly limit of ₹25,000 per PAN for various frequencies, the fund house said.

Kotak Mahindra Mutual Fund highlighted the multiplication of certain small-cap and mid-cap stocks, leading to momentum-driven valuation distortions.

Notably, SBI MF, Nippon India Life Asset Management, and Tata Mutual Fund have taken similar measures in the recent past.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

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today's market

index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95

Currency

Company Price Chng %Chng
Dollar-Rupee 73.3500 0.0000 0.00
Euro-Rupee 89.0980 0.0100 0.01
Pound-Rupee 103.6360 -0.0750 -0.07
Rupee-100 Yen 0.6734 -0.0003 -0.05
Quiz
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Should Elon Musk be able to buy Twitter?

 5 Minutes Read

SEBI asks small, mid-cap funds to disclose more information about risks

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

 Listen to the Article (6 Minutes)

Summary

Small and mid-sized funds have seen high inflows, causing concern among authorities about how they would hold up in the event of a sharp market selloff.

Securities Exchange Board of India (SEBI) has asked the country’s asset managers to give investors more information about the risks associated with their small and mid-cap funds, according to a fund manager and two people with knowledge of the matter.

Small and mid-sized funds have seen high inflows, causing concern among authorities about how they would hold up in the event of a sharp market selloff.

The Securities & Exchange Board of India (SEBI) has also been reviewing stress tests conducted by such funds, sources have previously said.

The funds are being asked to disclose how long it might take to accommodate large redemptions, what impact large outflows could have on the value of the portfolio and how much cash and liquid assets the fund holds to meet outflows, the people said.

”Investment committees were always aware of liquidity challenges but investors were not. Once this information is available to them, they can compare each fund,” said Harsha Upadhyaya, chief investment officer at Kotak Mutual Fund.

The Association of Mutual Funds in India (AMFI), which is working with SEBI, is proposing a standardised format for the disclosure of risks, he said, adding that the disclosures would be made on a regular basis.

SEBI and AMFI did not immediately respond to requests for comment.

Heavy inflows have sent the Nifty small cap 250 index surging 71% over the past 52 weeks and lifted the Nifty mid cap 100 index 64%. That far exceeds the benchmark Nifty’s 28% rise.

Funds are likely to begin making these disclosures from April, said one of the sources who was not authorised to speak to media and declined to be identified.

Mutual funds tend to keep between 1% and 5% of their assets as cash as a prudent measure to meet outflows, according to public documents. There is, however, no minimum regulatory requirement.

Funds need to invest at least 65% of their assets in small-cap stocks to be categorised as a small-cap fund and the remaining 35% can either be in cash or invested in large-cap stocks. The rule is similar for mid-cap funds.

”In some cases, the funds do not have enough cash. While in others, funds are fully invested in small/midcap stocks with no prudent investments in large-cap stocks,” said the second source.

In India, small-cap stocks are defined as those with market caps of less than 50 billion rupees while mid-cap stocks are those with market values of between 50 billion and 200 billion rupees.

Kotak small-cap fund, has put temporary restrictions on inflows, saying that ”momentum chasing” is ”over-shadowing the caution required”.

Last year, Tata Mutual Fund and Nippon India Mutual Fund stopped accepting lumpsum investments in their small-cap funds.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

 Daily Newsletter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Previous Article

Oil Fluctuates as Traders Assess China’s Vow, Unrest in Libya

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Shanghai residents turn to NFTs to record COVID lockdown, combat censorship

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today's market

index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95

Currency

Company Price Chng %Chng
Dollar-Rupee 73.3500 0.0000 0.00
Euro-Rupee 89.0980 0.0100 0.01
Pound-Rupee 103.6360 -0.0750 -0.07
Rupee-100 Yen 0.6734 -0.0003 -0.05
Quiz
Powered by
Are you a Crypto Head? It’s time to prove it!
10 Questions · 5 Minutes
Start Quiz Now
Win WRX (WazirX token) worth Rs. 1500.
Question 1 of 5

What coins do you think will be valuable over next 3 years?

Answer Anonymously

Should Elon Musk be able to buy Twitter?

 5 Minutes Read

Large-cap mutual funds garner ₹1,287 crore in January on profit booking

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

 Listen to the Article (6 Minutes)

Summary

The latest inflow helped push the asset base of the large-cap equity category by 26% to ₹3 lakh crore at January-end from ₹2.38 lakh crore a year ago. According to the latest data by the Association of Mutual Funds in India (Amfi), equity mutual funds focused on large-cap received inflow to the tune of ₹1,287 crore in January. This was the highest level since July 2022, when the category saw an inflow of ₹2,052 crore.

Investors flocked to large-cap oriented mutual funds with an influx of 1,287 crore in January, making it the highest fund infusion in 19 months, as a significant run-up in small and mid-caps prompted them to book profit. This is a huge turnaround following a net outflow of 281 crore in December. Also, the quantum was 80% higher than inflows of 716 crore in January last year.

The latest inflow helped push the asset base of the large-cap equity category by 26% to 3 lakh crore at January-end from 2.38 lakh crore a year ago. According to the latest data by the Association of Mutual Funds in India (Amfi), equity mutual funds focused on large-cap received inflow to the tune of 1,287 crore in January. This was the highest level since July 2022, when the category saw an inflow of 2,052 crore.

Given the significant run-up in small and mid caps, investors are booking some profits and rebalancing into large-caps, Kaustubh Belapurkar, Director – Manager Research at Morningstar Investment Research India, said.

Akhil Chaturvedi, Chief Business Officer, Motilal Oswal AMC, said,”Large- caps demonstrated positive contributions in January, reversing the net outflows experienced in December 2023. This shift in trend is in line with valuation differentials among large v/s mid and small caps, suggesting that large caps or flexi caps oriented schemes may attract higher flows in the future”.

Before the outflow in December 2023, the category attracted 307 crore in November and 724 crore in October. Overall, equity schemes saw an inflow of 21,780 crore in January this year making it the highest monthly infusion in nearly two years. The latest flow was about 28% higher than inflows of 16,997 crore in December.

Besides, mid-cap oriented funds and small-cap focused funds continued to attract investors with inflows of 2,061 crore and 3,257 crore, respectively. Feroze Azeez, Deputy CEO, Anand Rathi Wealth Ltd, said that in FY2024, until December, the total outflow hovered around 4,949 crore from large-caps. During the same period, small-caps received inflows of 34,103 crore.

ALSO READ | SIP inflows cross ₹18,000 crore for the first time in January

For FY2024, large-caps have delivered an absolute return of 28%, whereas small-caps delivered over 60%. Given that this would have created portfolio allocations biased towards mid and small as well as huge run-up in small relative to large, allocations moving towards large-cap is justified, he added.

“With mid-caps at 15% and small-caps at over 20% premiums, investors are realising the considerable valuation gap with the large-cap segment, and accordingly making adjustments to their investments,” Gopal Kavalireddi, Vice President of Research at FYERS, said.

The growing interest in large-cap funds could be seen in the rising number of investor folios, both on a month-on-month and yearly basis. Year-on-year, folio numbers surged by over four lakh to 1.33 crore in January, while on a month-on-month basis, there was an increase of 1.45 lakh folios.

ALSO READ | Debt mutual fund inflows surge in January: Is it the right time to invest?

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

 Daily Newsletter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Previous Article

Oil Fluctuates as Traders Assess China’s Vow, Unrest in Libya

Next Article

Shanghai residents turn to NFTs to record COVID lockdown, combat censorship

LIVE TV

today's market

index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95

Currency

Company Price Chng %Chng
Dollar-Rupee 73.3500 0.0000 0.00
Euro-Rupee 89.0980 0.0100 0.01
Pound-Rupee 103.6360 -0.0750 -0.07
Rupee-100 Yen 0.6734 -0.0003 -0.05
Quiz
Powered by
Are you a Crypto Head? It’s time to prove it!
10 Questions · 5 Minutes
Start Quiz Now
Win WRX (WazirX token) worth Rs. 1500.
Question 1 of 5

What coins do you think will be valuable over next 3 years?

Answer Anonymously

Should Elon Musk be able to buy Twitter?