Facts and Figures

Dear All,

These are some facts and figures


Average 3 Yrs Equity Mutual Fund Returns    :    6.7 %

Appx. 40 % of the Funds underperformed the average.

Average 3 Yrs E L S S Mutual Fund Returns    :    6.8 %

Appx. 60 % of the Funds underperformed the average.

Average 3 Yrs Closed Ended Equity Mutual Fund Returns    :    4.1 %

Appx. 60 % of the Funds underperformed the average.


Bank Interest prevailing 3 yrs back was 10 % to 13 %.



Average 1 Yr Bond  Mutual Fund Returns    :    4.8 %

Appx. 45 % of the Funds underperformed the average.

Average 1 Yr Gilt Mutual Fund Returns    :    2.5 %

Appx. 65 % of the Funds underperformed the average.

Average 1 Yr Floating Rate Mutual Fund Returns    :    4.3 %

Appx. 65 % of the Funds underperformed the average.

Bank Interest prevailing 1 yr back was 5.5 % to 6 %.


Please note :

This data is noted as on 31.05.2010 From Value Research

It is being widely debated, as to why people are shying away from
mutual funds, and are in fact withdrawing their investments. The above
date clearly shows why fundamentally the bank has been the better
option. Normally, market investments carry higher risk due to markets,
and so normally investors look to invest in them to get better returns
for the risk that they take. However we note that investors have not
been compensated sufficiently for the risk that they have taken.

So, the notion that investors are shying away from investing in the
mutual funds, due to distributors taking the back seat, as their wings
have been virtually chopped off since Aug 2009, is totally incorrect.

Just 3 yrs back many investors were queing up to AMC offices, applying
online, calling up the distributors, hurrying, borrowing to invest in
I P Os. Now, nobody is doing that. People were voluntarily queing up
to apply for IPOs. Most IFAs were not selling IPOs.

Why? The reason is obvious. Lack of returns. The market may be @
18000, but where are the returns? If these be the returns when the
market is @ 18000, imagine the returns, if the markets were still
languishing.

Also imagine the returns, if you take into consideration entry loads,
or the upfronts that they are expected to pay us. What returns will be
left in their hands, that too in the peak of the market? A point to
ponder?

Moreover, a majority of the funds have given sub par returns. This
gives a bleaker picture than most would imagine.

In such a scenario, how do we expect investors to invest in mutual funds?

I think that we have to put our minds together, and shift the focus to
the Fund Houses, to up their ante and find ways and means of improving
their performances, vis-à-vis the average, so that the investors do
not get a raw deal, in markets as volatile as they are.

I invite suggestions, on my observations, and suggestions on the road
going forward in the light of my observations.

Harish
Time Financials


Note: Please register your comments down here so every one can read

Templeton Issue

Dear Colleagues,

I have received a letter from Franklin Templeton seeking to make amendments to the agreement with them for distribution services. While most of the clauses seem routine and as per SEBI diktat, clause 2 reads as follows.

" Notwithstanding anything contrary contained elsewhere in the agreement/declaration/undertaking (if any), the distributor hereby agrees that investors shall have unfettered and unrestricted access to transact and /or communicate in relation to any matter with Franklin Templeton Mutual fund / FTAMIL. The distributor agrees to inform customers about the same and provide such information as may be required by FTAMIL in connection thereof."

The letter also requests distributors to sign the letter as a token of acceptance and return within 30 days but goes on to say ......."Notwithstanding the foregoing requirement, the contents of this letter shall be binding between us from the expiry of 30 days from the date of this letter.

The letter dated 24th June, 2010 was delivered to me on 13th July, 2010.

I would appreciate your views on this matter and would like to know if you too have received such a letter.

--
Best regards,

Allan Govias
Horizon Financial Services
New No.27, 2nd Floor
5th Street, Padmanabhanagar
Adyar,
Chennai 600 020
Tel: +91 44 2491 4862
+91 44 2446 1808
Mobile 0 98410 94840

Reply by Mr. Srinivasan of Money Kare

Dear All,

THIS IS A VERY IMPORTANT ISSUE PLEASE DO GO THROUGH AND RESPOND:

In continuation to below mentioned email of Mr. Allan we have contacted the local branch of Templeton on this issue, they say it is a clause specifically intended for MNC banks like Citi and HSBC which have online client accounts. The said accounts are operated by the client through the banks online platforms. The client can buy and sell the units of various mutual funds at one instant. There will not be any interaction between the client and concerned mutual funds the Bank will be the only face of contact for the client. Sebi has now it seems (have to be verified) made it mandatory for all the mutual funds to allow all the mutual fund investors to approach the concerned mutual fund directly if he wants to buy or sell its units. Till now the concerned MNC bank was the only face for the client thus making it difficult for the client to buy or sell even if he has closed the bank account.

Now coming to this clause: With regard to distributors like us IFA's, ND's etc. the client at any point of time can directly approach the concerned mutual fund and do any kind of transaction. In such a scenario WHY SHOULD WE ALSO SIGN THIS CLAUSE. I think we have to ask this question to the concerned officials.

That apart the Distribution Agreement signed by an IFA and that of a Bank are totally different. So Templeton can't ask us to sign a generic amendment agreement.

We request all the IFA's to send a mail to the concerned Relationship Manger or officials related to the registration and get the clarification. Till such time we request all to withhold the document. As it is we are giving the entire data to the mutual funds why should we further sign a amendment document and further complicate the relationship. Even if you have signed it please call back the document and keep it with you till we get a clarification.

Secondly, the deadline of 30 days offered by Templeton is ridiculous we don't know what will be the legal implication of the same. The letter dated 24th June 2010 and the same was received by us only on 13/07/2010. The letter states:

" We request you to affix your signature and/or seal in the place provided below and return one copy of this letter within 30 days from the date of this letter. Notwithstanding the foregoing requirement, the contents of this letter shall be binding between us from the expiry of 30 days from the date of this letter".

We think they cant impose on us such things.

Those who are aware of the legal complication of both these clauses kindly respond immediately.

Regards

Srinivasan S

MONEY KARE
Mobile No. 9841016902

Revision of Exit Load

FRANKLIN TEMPLETON MF REVISES EXIT LOAD STRUCTURE UNDER ITS SCHEMES (ON JUN 30 , 2010)

Franklin Templeton Mutual Fund has planned to revise the exit load structure under its schemes, Templeton India Ultra short Bond Fund and Templeton Floating Rate Income Fund - Long Term Plan. As per the revision, Templeton India Ultra-short Bond Fund will not charge any exit load and Templeton Floating Rate Income Fund - Long Term Plan will charge an exit load of 0.25 per cent if the investments are redeemed within 30 days from the date of allotment. The revision is effect from 30th June, 2010. Both the schemes are managed by Mr. Sachin Padwal-Desai & Mr. Pallab Roy and benchmarked against CRISIL Liquid Fund Index. HDFC MUTUAL FUND REVISES EXIT LOAD STRUCTURE UNDER HDFC SHORT TERM PLAN (ON JUN 29 , 2010) HDFC Mutual Fund has planned to revise the exit load structure under its scheme HDFC Short Term Plan. As per the revision, scheme will charge an exit load of 0.50 per cent if the investments are redeemed within 6 months from the date of allotment. The revision will be effective from 01st July, 2010. Currently the scheme charges 0.50 per cent of exit load if the investments are redeemed within 3 months from the date of allotment. HDFC Short Term Plan is an open ended income scheme with the investment objective to generate regular income through investment in debt securities and money market instruments. The scheme is managed by Mr. Anil Bamboli and Mr. Anand Laddha and benchmarked against CRISIL Short-Term Bond Fund Index. ICICI PRUDENTIAL MUTUAL FUND REVISES EXIT LOAD STRUCTURE UNDER ITS GILT FUND (ON JUN 29 , 2010) ICICI Prudential Mutual Fund has planned to revise the exit load structure under its scheme ICICI Prudential Gilt Fund – Investment Plan – PF Option. As per the revision, scheme will charge an exit load of 1 per cent if the investments are redeemed within 1 year from the date of allotment. The revision will be effective from 29th June, 2010. Currently the scheme does not charge any exit load. ICICI Prudential Gilt Fund – Investment Plan – PF Option is an open ended gilt fund with the investment objective to generate income through investments in Gilts of various maturities. The scheme is managed by Mr. Kuldeepsinh Jagtap and benchmarked against I-Sec Li-BEX. UTI MUTUAL FUND REVISES EXIT LOAD STRUCTURE UNDER UTI DYNAMIC BOND FUND (ON JUN 28 , 2010) UTI Mutual Fund has revised the exit load structure under its scheme UTI Dynamic Bond Fund. As per the revision, scheme will charge an exit load of 0.50 per cent if the investments are redeemed within 30 days from the date of allotment. The revision has been effective from 25th June, 2010. UTI Dynamic Bond Fund, is an open ended income scheme, with investment objective to generate optimal returns with adequate liquidity through active management of the portfolio, by investing in debt and money market instruments. The scheme is managed by Mr. Puneet Pal and benchmarked against CRISIL Composite Bond Fund Index.