Debt Funds and FMPs - What Happens Now?

Posted by: Uma Shashikant on Mon, Jul 28th, 2014

After the amendment to the Finance Bill, debt funds redeemed after July 10 will be subject to new tax rules. What are the choices for investors in FMPs and debt funds?  Read more

Carnage in Liquid Funds Explained

Posted by: Amit Trivedi and Uma Shashikant on Fri, Jul 19th, 2013

The RBI's measures to halt rupee depreciation led to a steep rise in short term market rates. NAVs of liquid funds fell sharply. This was a shock as it is generally presumed that liquid funds are free from market risk. This article attempts to explain this event. Read more

Nurturing Financial Advisors - Part 3 - Don't oversimplify "Investors can and will pay for advice"

Posted by: Uma Shashikant on Sat, May 5th, 2012

The onus of recommending the right product should be on the advisor who should earn the trail commission, while the agent earns a small token commission for his limited role.  As an extension of this principle, the exit load currently charged to the investor can also be collected from the advisor.  Read more

Nurturing Financial Advisors - Part 2 - Why Variable Asset-based Fee is Needed

Posted by: Uma Shashikant on Fri, May 4th, 2012

Reputational capital in advisory business can be built only when assets under advice are evaluated by investors for performance.  This can be fostered only if advisors are able to earn a variable fee for their services. Such variable fees currently go to the distributor. Read more

MFs Focus on Retailing ST Debt Funds

Posted by: Uma Shashikant on Mon, Mar 14th, 2011

The mutual fund industry is currently aggressively offering open-ended short term debt funds to retail investors  -  a belated but welcome development.  The default choice of most investors is a short term debt product. RBI data shows that 75% to 80% of all bank deposits are held in the 1-3 year horizon. Debt funds have mostly been offered to corporate investors with retail participation somewhat restricted to fixed maturity plans (FMPs).  FMPs from 91-day to 730-day maturities are being routinely offered, but a sharply increasing short term interest rate makes a later product more attractive than the current one, leading to missed investment opportunities for investors.  What funds are doing is to reposition existing products or offer new ones to offer a short term retail debt product to investors. IDFC MF has a Super Saver fund in this space, ICICI Prudential MF and Reliance MF have Regular Saving Funds, DSP Blackrock has re-positioned its monthly income plan as the Savings Manager Fund in this space, and Templeton Income Opportunities operates in the same space.  Read more