This week in MFs: IDFC may exit AMC biz; fund houses renaming schemes

Mutual funds are busy changing their schemes names to comply with the Securities Exchange Board of India’s directive on rationalisation and categorisation of schemes. This has made mutual funds drop their fancy names and fall in line.

Most fund houses have started responding by changing their names and investment strategy of schemes, wherever applicable. For example, DSP Blackrock Focus 25 Fund has now been renamed DSP Blackrock Focus Fund. Analysts used to treat it as a large-cap fund so far. However, going forward it will be placed in the Focused Fund category.

The idea is to simplify the process of understanding mutual fund offerings and choosing schemes for investments by investors.

To ensure that all schemes launched by mutual funds are distinct in terms of asset allocation and investment strategy, Sebi had proposed categorisation and rationalisation of mutual fund schemes

Under this, fund houses are allowed to offer 10 types of equity funds, 16 categories of bond funds and six categories of hybrid funds. They are also allowed to launch index funds, fund of funds and solution oriented schemes.

IDFC may exit AMC business
Among the other major developments this week, media reports stated that IDFC has begun discussions with IndusInd Bank and Citic CLSA, among others, to merge or sell its AMC – that manages about Rs 71,000 crore -as part of its shareholder value-unlocking move. However, the AMC told Moneycontrol, “This is purely speculative and as a policy we do not comment on market speculation.”

A fourth of the AMC’s assets under management (AUM) is equity, while the rest is debt. If the deal goes through, it will improve IDFC’s capital position. The deal will fetch IDFC about Rs 4,000 crore, which works out to around 6% of IDFC Asset Management’s AUM.

What makes IDFC AMC an attractive buy?
According to Association of Mutual Funds in India (AMFI), in the December quarter, IDFC MF was the 11th largest AMC in the 42-firm strong mutual fund industry.

In October-December 2014, its assets stood at Rs 48,000 crore, from there its AUM has grown almost 48%.

If compared to the top three players in the industry in the last 3 years, ICICI Prudential Mutual Fund more than doubled (grew 114%), while HDFC Mutual Fund and Reliance Mutual Fund registered 92% and 93% growth, respectively.

Industry experts say IDFC AMC will be a good buy for a mutual fund player who is interested in expanding its scheme portfolio.

Some of the other stories reported this week were:

Why MF houses are appointing two fund managers to manage large schemes?
In the last three months, as many as five mutual fund houses have appointed co-fund managers for managing their large or flagship funds. A slew of funds are star performers in their respective category.

Recently, DSP BlackRock Mutual Fund appointed Resham Jain as co-fund manager of DSP BlackRock Small and Midcap Fund and DSP BlackRock Micro Cap Fund. Vinit Sambre was solely managing DSP BlackRock Small and Midcap Fund since July 2012 while Vinit Sambre and Jay Kothari jointly manage DSP BlackRock Micro Cap Fund.

NSE may levy transaction charges for mutual fund platform
The National Stock Exchange is likely to follow in the footsteps of BSE, and levy a transaction fee for using its mutual fund platform: NSE NMFII.

ICICI Prudential Mutual Fund launches Bharat Consumption Fund
ICICI Prudential Mutual Fund launched ICICI Prudential Bharat Consumption Fund- Series 1, an around three-and-a-year close-ended equity scheme on March 21. Subscription to the scheme will remain open until April 5.

The scheme aims to provide capital appreciation by investing in well-diversified portfolio of stocks that could benefit from growth in consumption and related activities.moneycontrol


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