SEBI amended MF and Portfolio Managers Regulations
The Securities and Exchange Board of India (SEBI) Board met on January 28, 2012 and took the following decisions pertaining to Mutual Funds (MFs) and Portfolio Management Services (PMS):
Amended ‘SEBI (Mutual Fund) Regulations, 1996’
The capital market regulator made changes to two aspects of the regulations:
(1) Relating to investment valuation norms: The regulator has mandated that if debt and money market securities are not traded on a particular valuation day then valuation through amortization basis will be restricted to securities having residual maturity of upto 60 days (which currently stands at 91 days), given that such valuation is reflective of the realizable / fair value of the securities.
SEBI has also said that the AMC will need to ensure fair treatment to all investors seeking to purchase or redeem units of MFs at all point of time in all schemes.
(2) Relating to advertisement code: SEBI will amend the Sixth Schedule of the regulations along with other circulars issued on Advertisement Code and will make it ‘principle based as far as possible’ so that Asset Management Companies (AMCs) can have flexibility in issuing ‘true and fair’ advertisements with ‘meaningful disclosure’. The regulator will also broaden the definition of advertisement to include all forms of communication that may influence investment decisions.
Waived some requirements pertaining to preferential allotment to insurance companies and MFs
SEBI has exempted insurance companies and mutual funds from the provisions of SEBI (Issue of Capital and Disclosure Requirements) Regulations relating to sale and lock-in of their pre-preferential shareholding in the issuer company. Till now, these regulations barred companies from issuing preferential allotment to entities who have sold any of their holdings during the 6 month period prior to relevant date; also, allottees had to lock-in their entire pre-preferential holdings for a period of 6 months from date of preferential allotment. However, it needs to be noted that the lock-in on shares allotted in preferential issue per se would remain unchanged.
Amended ‘SEBI (Portfolio Managers) Regulations, 1993’
SEBI has enhanced the minimum investment amount per client from Rs 5 lakh to Rs 25 lakh and asked entities to ensure separation of holdings in individual demat accounts in respect of unlisted securities also. These amendments would be applicable on prospective basis for new clients and for fresh investments by existing clients.
Fund manager changes
Principal Mutual Fund appointed Pankaj Jain as Senior Fund Manager of fixed income schemes. Now, he will manage or co-manage all the fixed income schemes offered by the MF.
ICICI Prudential Mutual Fund has reshuffled the fund management responsibilities of 13 equity as well as debt schemes from February 1, 2012. Yogesh Bhatt will manage ICICI Pru Balanced (debt portion: Avnish Jain), ICICI Pru FMCG, ICICI Pru Infrastructure, ICICI Pru Services Industries, ICICI Pru Target Returns Ret. and ICICI Pru Top 200. Rajat Chandak and Chaitanya Pande (equity and debt portion respectively) will manage ICICI Pru Capital Protection Oriented series, ICICI Pru Child Care – Study Plan and ICICI Pru Multiple Yield series. Sankaran Naren and Mittul Kalawadia will manage ICICI Pru Dynamic and ICICI Pru Top 100. Venkatesh Sanjeevi will manage ICICI Pru Banking & Financial Services Ret. and Punit Mehta will manage ICICI Pru Indo Asia Equity Ret. – Asia Portion.
New fund launch
IDBI Mutual Fund launched IDBI Dynamic Bond Fund, subscription to which will remain open till February 14, 2012. The investment objective of the scheme is to generate income while maintaining liquidity and asset quality through active management of a portfolio comprising of debt and money market instruments. The performance of the scheme will be benchmarked against CRISIL Composite Bond Fund Index and will be managed by Gautam Kaul.
Fundamental changes in scheme structure and name
Birla Sun Life Mutual Fund renamed Birla Sun Life Income Fund to Birla Sun Life Short-term Fund from February 1, 2012.
Principal Mutual Fund revised the definition of small cap stocks for Principal Emerging Bluechip Fund and will now identify them as bottom five stocks of CNX Midcap Index in respect of market capitalization on the last trading day of the preceding calendar quarter. Then, the average market cap for the last five trading days will be computed. Thus, the market cap of a small cap stock should be less than the average market cap computed above.
Principal Mutual Fund will rename Principal Ultra Short-term Fund as Principal Bank CD Fund from March 2, 2012. Its new investment objective will be to generate returns by primarily investing in Bank CDs. Also, the exit load will be 0.25% if units are redeemed on or before 3 months from the date of allotment. Investors who are not in agreement with this change can exit without paying any exit load between February 2 and March 2, 2012.
Principal Mutual Fund will change the fundamental attributes of Principal Near-term Moderate Plan from March 2, 2012. The scheme will be renamed to Principal Near Term Corporate Bond Plan with an investment objective ‘to generate income and capital gains through investments in a portfolio of securities issued by private and public sector companies.’ Its benchmark will be changed to CRISIL Composite Bond Fund Index from CRISIL Liquid Fund Index. The revised exit load will be 3% if units are redeemed within 12 months, 2% if redeemed after 12 months but before 24 months and 1% if redeemed after 24 months but before 30 months from the date of allotment. Investors who do not agree with these changes can exit the scheme without paying any exit load between February 2 and March 2, 2012.
Religare Mutual Fund introduced a discretionary dividend option under Religare Credit Opportunities Institutional Plan from January 30, 2012.
Religare Mutual Fund will change the minimum application amount for Religare Active Income Fund - Plan B and Religare Short Term Plan - Plan B from February 9, 2012 to Rs 25,000 per application and in multiplies of Rs 1 thereafter and additional application amount will be Rs 1,000 and in multiples of Rs 1 thereafter.
Mirae Asset Mutual Fund changed the benchmark index of Mirae Asset Cash Management Fund from February 1, 2012 from CCIL Mibor to CRISIL Liquid Fund Index.
Exit loads change and dividends declared
Birla Sun Life Mutual Fund has started charging an exit load of 0.50% under Birla Sun Life Dynamic Bond Fund from February 1, 2012, if units are redeemed or switched out within 180 days from the date of allotment.
Canara Robeco Mutual Fund has begun charging an exit load of 0.50% under Canara Robeco Short-term Fund from February 1, 2012.
Principal Mutual Fund has begun charging an exit load of 1% under Principal Retail Equity Savings and Principal Debt Savings Fund from January 30, 2012. Under Principal Retail Equity Savings, the load will be charged if units are redeemed within 1 year from the date of allotment. Earlier it used to charge an exit load of 1% if units were redeemed within 91 days. Under Principal Debt Savings Retail Fund, the aforesaid exit load be charged if units are redeemed within 1 year from the date of allotment instead of a load of 0.50% if redeemed within 91 days earlier.
IDFC Mutual Fund will charge an exit load of 0.60% under IDFC Super Saver Income Fund - Medium Term from February 6, 2012 if units are redeemed within 9 months from the date of allocation. However, investors opting for PEP / Dividend reinvestment option / SWP or switch between options within the plan will not be charged any exit load.
Tata Mutual Fund declared dividend for Tata Equity P/E Fund under its Dividend Trigger Option B-10%. The quantum of dividend will be Rs 2.25 per unit with the record date set as February 2, 2012. The fund house also declared a dividend of 15% (Rs 1.50 per unit on face value Rs 10) under Tata Tax Saving Fund. The record date for dividend has been fixed as February 8, 2012.
Franklin Templeton Mutual Fund declared dividend under the dividend option of Franklin India Taxshield. The quantum of dividend is Rs 3 per unit with the record date set as February 3, 2012.