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Over the years, mutual funds have become a strong counter force for the Foreign Institutional Investors..!
Over the years, mutual funds have become a
strong counter force for the Foreign Institutional Investors..!
by Mr. A. BALASUBRAMANIAN, Aditya
Birla Sun Life AMC Ltd
The Indian Financial
Services industry is a proxy to the Indian economy and one of its important
pillars to provide lifeline to a large growing need for funds.
In the past 10 years, it has grown by leaps
and bounds. The entire financing needs of the country have moved from financial
institutions to banks, banks to NBFCs and mutual funds.
Currently, there are
10,292 NBFCs registered with RBI and 43 fund houses with SEBI. With more
players entering this industry, availability of funds too has increased
substantially. Thus, the industry has become bigger and bigger with each
passing year.
Over the years, not
only has the industry grown but has also attracted higher supervision from
respective regulators. As a result, financial savings incrementally moved to
these intermediaries, widening the base of their overall size. It also helped
bringing down cost of borrowing to the growing needs of consumers.
During the period of
2013-14, interest rates were as high as 8%, however, RBI began to cut interest
rates post currency market stability. Mutual Funds played a key role in
bringing down the interest rates to borrowers through investment in both money
market instruments and bonds.
In effect, transmission
of interest rate reduction by RBI was broadly driven by mutual funds lending to
corporate borrowers in the form of CPs and Bonds.
In a similar manner,
the industry has played a key role in equity market stability as well.
In fact, over the
years, mutual funds have become a strong counter force for the Foreign
Institutional Investors (FII). While the FIIs continue to pull out money, the
Indian MFs were pre-dominantly the largest net buyer for most part of 2017-18
and 2018-2019.
NBFCs have also
contributed largely in increasing the ‘penetration and reach’ to every nook and
corner of the country by providing loans for various needs. A large part of the
credit offtake should be attributed to NBFC’s penetration in the country.
With the continuous
progress and evolving maturity of the industry, we have come to an inflection
point. This inflection point is posing lot of questions on the role of NBFCs
and mutual funds. Obviously, when the industry becomes bigger, complexity
arises along with the size of industry and its growing related concerns.
If I consider the
period of 1998, there was a huge rise in the number of NBFC players.
In the course of time,
while some firms went through their own tough time, some continued to remain
strong.
However, some of the
players chose to move away from this business not because there were any
default, but their risk appetite was less to carry on with the business. A
similar event happened in the mutual fund industry during 2008 global credit
crisis.
After 2008, while some
chose to be in the business and some decided to move out, the industry went
through a consolidation phase for a brief period, but revived on the back of
strong fundamentals and growing transparency.
In this saga of events,
opportunity, changes and volatility have remained constant in the entire space
of financial services Industry.
While all this is true,
human sentiments and behavior also keep fluctuating based on many global and
local factors. In these scenarios, a question arises in everyone’s mind is
whether one should panic and jump off the ship or should one stay on course to
be part of the market.
In my 28 years stint in
this industry, I must say, given the fact that the Industry is getting matured
and is well regulated, it is prudent to stay committed to one’s investments and
have confidence in the larger system.
While some unexpected events may put a
question on the fundamentals of investing and risk monitoring of the MF
industry in general, it is also equally true that phases like now create higher
noise levels, thus creating panic among investing public including money
managers.
However, events arise
out of nowhere and have a brief level of noise where we see the risk in
hindsight. But it is for sure, these unexpected events, as it has happened in
the past, will also get addressed along the way meticulously. While the concern
is obvious and different people may have different points of view, given the
way things have shaped up in the past, the noise level may stay for only three
to six months.
Therefore, the current
market noise will slowly get ebbed out, as we see progress in the resolution
process collectively undertaken by borrowers, lenders, regulators and legal
system.
It is therefore
important to stay away from the noises and focus on building business/portfolio
along with managing risk to be a winner in the long run.
The Author is chief
executive officer, Aditya Birla Sun Life AMC Ltd.
India: GST on under-construction homes slashed to 5%...!
India: GST on under-construction
homes slashed to 5%...!
Levy on affordable houses cut to 1% from 8%; definition
of affordable housing changed
In a boost to the housing sector, the Goods and Services
(GST) Council on Feb. 24, 2019 decided to recommend lower GST levy on
under-construction homes, including in the affordable segment. The new rates
will come into effect on April 1, 2019.
Under the new structure, normal under-construction
houses will attract GST at 5% against the present effective rate of 12%.
Similarly, the levy on affordable homes will be 1% against 8%, now. Both these
levies will be without Input Tax Credit.
Also, completed flats but without the completion
certificate will come under the GST regime.
“Transition rules need to be drafted carefully. The Law
Committee will do that before March 10, 2019 so that it can be approved by the
next meeting of the GST Council, which will be through video conferencing,”
Finance Minister Mr. Arun Jaitley, who is also the GST Council Chairman, told
reporters.
He expressed hope that the lower levy will give a boost
to ‘housing for all’.
The GST Council also decided to re-define a affordable
home. By the new definition, it will be a house / flat of carpet area up to 90
square meter in non-metropolitan cities / towns, and 60 square meter in
metropolitan cities having value up to Rs. 45 lakh (for both).
Metropolitan cities include Bengaluru, Chennai,
Delhi-NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurugram and
Faridabad), Hyderabad, Kolkata and Mumbai (whole of Mumbai Metropolitan
Region). Both the conditions need to be fulfilled for the affordable home tag.
Mr. Arun Jaitley said that to prevent a slip back to the
cash system, developers would be encouraged to maximise input purchases from
GST-registered dealers.
“It could be 80% or more,” he said, adding that the
final number would be proposed by a sub-panel of the Council.
Mr. Shishir Baijal, CMD, Knight Frank India, said the
GST rate-cut, coupled with incentives proposed in the Budget and the repo rate
reduction by the RBI, completes the sops for the residential real-estate
market. “...the government has taken all steps to create demand and boost
sales,” he said.
However, Mr. Pratik Jain, Partner, PwC India, said that
developers would need to raise the base price to recover the loss of input
credit.
Also, “it was mentioned that the new rates are likely to
come with a condition that majority of purchases would need to be from
GST-registered vendors. Therefore, monitoring the compliant vendor ecosystem
would be critical for industry,” he said.
Mr. K. MOHIDEEN MALIK, Financial Planner, Pollachi
Mr. K. MOHIDEEN MALIK, Financial Planner,
Nest Financial Planners
8 / 31 Kamarajar Road,
Mahalingapuram ( Post) ,
Pollachi – 642 002
Near Coimbatore
Tamilnadu
 |
| Mr. K. MOHIDEEN MALIK, Financial Planner, |
Mobile: +91 98430 57864
PHONE No : 04259 233 864
E-Mail id : malik57864@yahoo.co.in, nestfp@rediffmail.com
All you want to know about alternative asset class – P2P lending
All you want
to know about alternative asset class – P2P lending
By Mr. Rajat Gandhi, Faircent
Following the global
financial crisis, certain market forces at play led the way for a direct
lending asset class for investors. Banks, through savings accounts or fixed
deposits, provide interest rates of around 6-8%. In contrast, peer-to-peer
(P2P) lending in India currently gives a net return of 18% to 22% to lenders.
This is chiefly achieved
by connecting lenders directly with borrowers, something which drastically
reduces the operational costs.
What P2P lending offers
investors
* P2P lending in India
currently gives a net return of 18-22%
* Borrowers repay
principal & interest every month so there is a steady cash flow
* Investors can pursue
legal recourse against the borrower in case of defaults
* By diversifying your
investment across different borrowers, you will begin to mirror the overall
default rate of the platform
If you are an investor
looking to diversify your portfolio, here are three main reasons why you must
consider investing in peer-to-peer (P2P) lending.
1. Exciting returns..!
P2P lending is consistently delivering net
return upwards of 18% per annum. It takes about 18 months and an investment of
up to Rs. 10 lakh across a diversified portfolio to stabilise at 18-22%.
Add to this the fact
that since borrowers repay every month (principal and interest), there is a
steady cash flow coming in every month. Reinvesting this monthly inflow means
an opportunity to earn even greater returns.
2. Stable asset class..!
For an average investor, P2P lending is a good
asset class of consumer credit.
P2P lending is like
investing in debt; the capital risk is lower, and there exist ways to mitigate
it. In case a borrower defaults, investors can pursue legal recourse against
the borrower. Such a provision is not possible if you invest in stocks and
bonds.
By diversifying your
investment across different borrowers, you will begin to mirror the overall
default rate of the platform, gaining stability and consistency within your
portfolio and enjoying the returns just like a bank does.
3. Participate in
India’s financial growth and inclusion..!
The money you invest helps bring positive
changes in people’s lives. People are able to come out of credit card /debt
trap, a father is able to get his daughter married, a son is able to make his
mother healthier, businessmen are less stressed.
P2P lending companies
are giving you the opportunity to invest in and help out a fellow Indian under
pressure due to lack of access to easy and cheaper credit.
A smart investor invests
across various investment opportunities like equity and stocks, mutual funds,
SIPs, or deposits with banks such as saving, recurring, or / fixed deposits.
Alternative investments include real estate, gold, art, and P2P lending and
tend to give higher returns.
To beat inflationary
trends, experts recommend that 20% of total investments should ideally be in
alternative investments.
About the author..
The writer Rajat Gandhi, is founder
& CEO, Faircent
IFA - Independent Financial Advisor - Mr Anandkumar P - Tindivanam
IFA - Independent Financial Advisor
Mr Anandkumar P
paakumar@yahoo.com
9443325643
12 A/18, Otraivaadai Street,
Avarapakkam,
Tindivanam
Mr Anandkumar P
paakumar@yahoo.com
9443325643
12 A/18, Otraivaadai Street,
Avarapakkam,
Tindivanam
UTI MF – Equity Yatra - What Fund Managers do?
UTI MF – Equity Yatra is an initiative from one of the
largest fund house of the country, covering over 51 cities pan India, about 15
equity experts are reaching out to more than 10,000 financial intermediaries in
less than two weeks.
UTI MF – Equity Yatra is a platform to bring forth the
concepts of “What Fund Managers do?” and also explain their approach to wealth
creation, there by bringing about transparency about their investment processes.
This yatra is also an effort of the fund house to increase its engagement with
financial intermediaries and taking their relationship to a step higher. Some
of the key concepts that were discussed are as follows:
Investment Philosophy:
UTI’s Investment Philosophy in a nutshell encompasses two
approaches (a) on identifying companies that can self-sustain their growth and
have the ability to invest at higher rates of returns typically called growth
companies and (b) on identifying companies that experiences an improving
trajectory and are bought at attractive valuations, typically addressed as
value companies.
Research Process:
UTI having a qualified team of research analysts has laid a
well-defined frame work in the process of identifying the companies. The two key
that drive the framework are the concepts of Operating Cash Flow (OCF) & Return
on Capital Employed (RoCE)/ Return of Equity (RoE). As highlighted based on
these two concepts, the companies in the universe are categorized into 3 tiers
on both the drivers. The various investment arguments and hypothesis are built
on the above categorization of the companies.
Portfolio Construction:
At UTI, it is the Fund Manager who drives the process of
portfolio construction under the guiding principles of the fund mandate,
security & sector weights, market capitalization limits, monitoring of
allocation to companies in the tiers and their individual investment approach.
Style Discipline:
Having a style discipline is as important as picking a right
stock for a portfolio. Every fund manager has set a distinct investment strategy
and the essence of ensuring style discipline is the monitoring of the
parameters such as P/E, P/B, RoE, Weighted Average Market Cap etc., during all
phases of the market, and same can be attributed to the fund’s distinct
characteristics as explained though their flagship equity funds – packaged as “UTI
Power of Three”.
a) UTI Mastershare Unit Scheme, an open ended equity scheme
predominantly invests in large cap companies having competitive advantage in
their respective fields. It follows an investment style of Growth at Reasonable
Price (GARP) for stock picking.
b) UTI Equity Fund, an open ended equity scheme investing across large
cap, mid cap, small cap stocks. The Fund is built around the three pillars of Quality, Growth & Valuation. “Quality”
signifies the ability of a business to
sustain high RoCE / RoE over a long period of time. “Growth” signifies long term secular growth for the
business. “Valuation” is determined by consistency
in cash flow generation. The Fund would follow growth strategy with bottom-up approach
for stock picking, is agnostic to the
market capitalization spectrum and
c) UTI Value Opportunities Fund, a multi cap scheme
investing across the market capitalization spectrum following the “Value” style
of investment. The fund would follow the “barbell approach” for its stock picking, buy what the market
underestimates - Growth or Cyclicality. Sector
Selection & Market
Capitalisation are flexible
based on valuations.
UTI Mutual Fund launches ‘ UTI MF Equity Yatra’ Target 10000 IFAs across India
UTI Mutual Fund launches ‘ UTI MF Equity Yatra’
Targets 51 cities and more than 10000 IFAs across the country
UTI Mutual Fund has launched a
Unique initiative – “UTI MF Equity Yatra” which aims to reach out to over 10000 Financial Intermediaries in 51 cities across the country. UTI will be
targeting Tier II and Tier III cities in the States of Punjab,
Rajasthan, Madhya Pradesh, Gujarat,
Maharashtra, Goa, Karnataka, Kerala, Uttarakhand, Uttar Pradesh,Bihar, West
Bengal, Jharkhand, Odisha, Andhra Pradesh,Tamil Nadu
and North East. These intermediaries have access to around 1 crore investors in
the country.
During the ten days of UTI MF Equity Yatra
starting February 20, 15 Equity Experts
from UTI will tour the country addressing the financial intermediaries on UTI’s
investment philosophy, research process, portfolio construction, market outlook
and trends in the mutual fund industry and seeking to reinforce their belief in
the role of equity class in creation of long term wealth for their investors.
UTI MF Equity Yatra is a platform to bring
forth the concepts of ‘What the Fund Managers do?’ and also to explain their
approach to wealth creation, thereby bringing about transparency about their
investment processes. This ‘Equity Yatra’ is an effort of the fund house to
increase its engagement with the financial intermediaries and through them to
reach out to investors who need right guidance at the time of market
volatility.
On the occasion Mr. Lalit Nambiar, Fund Manager, UTI AMC said, “A clearly documented and articulated
investment process is key to consistency in managing investors money over a
long period of time. This is even more relevant today as we see investors
commit to long term investments through the SIP route. During the Yatra we will
highlight our proprietary process and emphasize the behavioural gaps that could
impact investor experience.”
“With 150 Financial
Centres, over 50,000 Independent Financial Advisors (IFAs), 302 Business
Development Associates and over 1 crore investor accounts, UTI is committed to
work in the best interest of the investing class during all market cycles.” he
added
About
UTI Mutual Fund
UTI Mutual Fund is a
SEBI registered mutual fund whose Sponsors are State Bank of India, Punjab National Bank, Bank of Baroda
and Life Insurance Corporation of India.
UTI Mutual Fund is
one of the largest mutual funds in India with investor accounts of over 1 crore
under its 188 domestic schemes / plans as on January 31, 2019.
Registered Office: UTI Tower, ‘Gn’
Block, Bandra - Kurla Complex, Bandra (E), Mumbai - 400 051. Phone :
022-66786666. For more information please contact the nearest UTI Financial
Centre or your AMFI/NISM certified UTI Mutual Fund independent Financial
Advisor (IFA) for a copy of Statement of Additional Information, Scheme
Information Document and Key Information Memorandum cum Application Form. Mutual Fund Investments are subject to
market risks, read all scheme related documents carefully
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SAFER INTERNET DAY February 05
SAFER INTERNET DAY
February 05
MICROSOFT RELEASES DIGITAL CIVILITY
INDEX ON SAFER INTERNET DAY
·
People
around the world report increased civility online, including in India
·
India ranks 7th among 22
countries surveyed
·
Millennials
(ages 18-34) had the highest lifetime exposure to online risks
As
part of its commitment towards online safety, Microsoft has released the 3rd Digital Civility Index on
Safer Internet Day (Feb 05). The index shows that people across the world
are experiencing increased levels of online civility, including in India. India
was at No. 7 among 22 countries surveyed worldwide. The India index was
59% (vs the global index of 66%), reflecting a gain of 2 points y-o-y,
indicating a better level of online civility in the country. A lower index
indicates lower risk exposure and a higher perceived level of online civility
among the population.
The DCI is based on a survey completed in May 2018 to
gauge the attitudes and perceptions of teens (ages 13-17) and adults (ages
18-74) in 22 countries about online behaviors and interactions. It asked
questions like, “which online risks have you and your close circle experienced,
when and how often have the risks occurred, and what consequences and actions
were taken?” — and it measured respondents’ lifetime exposure to 21
online risks across four areas: behavioral, reputational, sexual and
personal/intrusive.
The survey showed that unwanted contact continues to
be the standout risk across geographies and demographics. However, teens around
the world now more than ever are looking to their parents and other trusted
adults for help with online risks. The report reveals several insights
for India, including the following:
·
The types of risks
that stood out for India compared to the global averages included: 1) receiving
offensive or obscene content, 2) encountering fake news and 3) encountering
internet hoaxes
· Online risks had some of the strongest impacts
on millennials and teenagers in terms of risk exposure and consequences
·
Teens matched the
global average in asking for help from parents (+35 points to 45%) or another
adult (+18 points to 26%)
·
29% of perpetrators of online abuse were
family or friends
·
Respondents showed an increase in “loss
of trust in others, both on- and offline; stress, and sleep deprivation” as a
result of negative online interactions
·
Indians were most
likely to encounter fake news and internet hoaxes, with 7 points higher than
the global average
Please find the full India report
attached for more details You
can also find more details on the worldwide report: HERE.
Digital Civility
Challenge
Microsoft is also challenging
people to take the Digital Civility Challenge and pledge to adopt positive online
habits and practices throughout the year. The goal of the
challenge is to support Microsoft’s long-term commitment to fostering safe,
inclusive interactions online and to encourage people to be accountable for
their online behaviour and to serve as a role model and/or champion for others.
The digital civility actions include:
1. Live the Golden Rule by acting with empathy, compassion and
kindness in every interaction, and treat everyone you connect with online with
dignity and respect.
2. Respect differences, honor diverse perspectives and when
disagreements surface, engage thoughtfully, and avoid name-calling and personal
attacks.
3. Pause before replying to things you disagree with, and don’t
post or send anything that could hurt someone else, damage a reputation or
threaten someone’s safety.
4. Stand up for yourself and others by supporting those who are targets of online
abuse or cruelty, reporting threatening activity and preserving evidence of
inappropriate or unsafe behaviour.
The 22 countries that participated in the survey
were Argentina, Belgium,
Brazil, Canada, Chile, Colombia, France, Germany, Hungary, India, Ireland,
Italy, Malaysia, Mexico, Peru, Russia, Singapore, South Africa, Turkey, the
United Kingdom, the United States and Vietnam. Microsoft hopes policymakers, companies, and
consumers will consider the need for a safer, more respectful internet and
leverage the evidentiary base for a global push toward “digital civility.”
Founded in 1975, Microsoft (Nasdaq “MSFT” @microsoft)
is the leading platform and productivity company for the mobile-first,
cloud-first world, and its mission is to empower every person and every
organization on the planet to achieve more. Microsoft set up its India operations
in 1990. Today, Microsoft entities in India have over 9,000 employees, engaged
in sales and marketing, research and development and customer services and
support, across 11 Indian cities – Ahmedabad, Bangalore, Chennai, New Delhi,
Gurugram, Noida, Hyderabad, Kochi, Kolkata, Mumbai and Pune. Microsoft offers
its global cloud services from local datacenters to accelerate digital
transformation across Indian start-ups, businesses, and government agencies. In
2016, Microsoft opened one of its eight Cyber Security Engagement Centers in
the country, to address security needs of both public and private sectors.
For media queries, please contact:
|
Microsoft
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