Posts tagged All News
Venkys announces issuing of bonus equity shares (14-09-2015)
JP Morgan AMC to seek approval of unit holders to segregate illiquid assets from schemes (14-09-2015)
JP Morgan Asset Management Company (AMC) on Monday announced that, they will seek the approval of unit holders of JP Morgan India Treasury Fund and JP Morgan India Short Term Income Fund to segregate the illiquid assets from the schemes. According to the market players this is the move in the right direction and will give an option to investors to redeem their ‘liquid assets’.
Both the schemes have an exposure to a Secured Redeemable Non-Convertible Debenture issued by AMTEK Auto Limited, which is currently illiquid in the market owing to credit concerns of the issuer. On August 27, 2015, the credit rating of AMTEK’s previously rated other non-convertible debentures was downgraded from “BWR A+” to “BWR C” by Brickwork Ratings. Immediately thereafter, the reference price of the bond held by the two JPMorgan schemes was reduced to 75% by the valuation agencies CRISIL and ICRA. This change in price was reflected in each scheme’s NAV on August 28 and subsequently the two schemes received an unexpectedly high level of redemption requests.
The fund house on 28th August had capped the redemptions at one percent of the total outstanding units on both the schemes. In the release issued by JP Morgan AMC it stated that, “If effected, this can allow for the gating to be lifted, providing unitholders of the schemes with as much liquidity as possible.”
The press note also stated that, fund house also said that, unitholders are being given a notice of seven clear business days to vote (by post or drop off at various CAMS locations across India) on the proposed segregation of the illiquid asset and the decision will be made by a simple majority.
As a result of proposed segregation, the NAV of the existing units in the schemes would drop by the
value representing the illiquid segregated asset and all unitholders on the Record Date will receive
proportionate units to reflect their interest in the value of the segregated asset. “This mean that there will be two NAV of the schemes, one will be of the liquid assets and other of illiquid assets of Amtek auto. Investors will be free to redeem their units in the liquid portfolio,” said a senior official from the from the mutual fund industry.
Meanwhile J.P. Morgan will continue to take all steps in pursuing satisfaction of AMTEK’s obligation under this bond and/or any other means of receiving cash value for these investments in the best interest of the unitholders and to the extent rights under the bonds and applicable law allow, concluded the press note.
JP Morgan AMC to seek approval of unit holders to segregate illiquid assets from schemes (14-09-2015)
JP Morgan Asset Management Company (AMC) on Monday announced that, they will seek the approval of unit holders of JP Morgan India Treasury Fund and JP Morgan India Short Term Income Fund to segregate the illiquid assets from the schemes. According to the market players this is the move in the right direction and will give an option to investors to redeem their ‘liquid assets’.
Both the schemes have an exposure to a Secured Redeemable Non-Convertible Debenture issued by AMTEK Auto Limited, which is currently illiquid in the market owing to credit concerns of the issuer. On August 27, 2015, the credit rating of AMTEK’s previously rated other non-convertible debentures was downgraded from “BWR A+” to “BWR C” by Brickwork Ratings. Immediately thereafter, the reference price of the bond held by the two JPMorgan schemes was reduced to 75% by the valuation agencies CRISIL and ICRA. This change in price was reflected in each scheme’s NAV on August 28 and subsequently the two schemes received an unexpectedly high level of redemption requests.
The fund house on 28th August had capped the redemptions at one percent of the total outstanding units on both the schemes. In the release issued by JP Morgan AMC it stated that, “If effected, this can allow for the gating to be lifted, providing unitholders of the schemes with as much liquidity as possible.”
The press note also stated that, fund house also said that, unitholders are being given a notice of seven clear business days to vote (by post or drop off at various CAMS locations across India) on the proposed segregation of the illiquid asset and the decision will be made by a simple majority.
As a result of proposed segregation, the NAV of the existing units in the schemes would drop by the
value representing the illiquid segregated asset and all unitholders on the Record Date will receive
proportionate units to reflect their interest in the value of the segregated asset. “This mean that there will be two NAV of the schemes, one will be of the liquid assets and other of illiquid assets of Amtek auto. Investors will be free to redeem their units in the liquid portfolio,” said a senior official from the from the mutual fund industry.
Meanwhile J.P. Morgan will continue to take all steps in pursuing satisfaction of AMTEK’s obligation under this bond and/or any other means of receiving cash value for these investments in the best interest of the unitholders and to the extent rights under the bonds and applicable law allow, concluded the press note.
Sebi wants fund houses to furnish corporate bond investment details (14-09-2015)
Securities and Exchange Board of India (Sebi) on Monday has asked all the fund houses to furnish the details of their investments into corporate bonds which has been downgraded by the rating agencies. This activity from the capital market regulator, comes in the wake after there has been downgrades by rating agencies and their impact on debt funds.
A senior official from the leading fund house on condition of anonymity said, “We have to inform the regulator on how many downgrades have taken place of the corporate bonds which are present in our portfolios. We had to submit all the details within a day to the regulator.” This is the third time in the recent days when regulator is asking about all the details for the debt funds.
In the last few days there has been growing concerns on downgrades by rating agencies and their overall impact on the performance of the debt schemes. In the last week of August, CARE Rating had suspended the rating of Amtek Auto as company did not furnish the information required by the rating agency for monitoring of the ratings. Later net asset value (NAV) of JP Morgan India Treasury Fund and JP Morgan India Short Term Income Fund went down. There was a sudden rush from investors to redeem their units, but fund house capped the redemptions at one percent of the total outstanding units.
According to the Value Research as on 31st August, JP Morgan India Treasury Fund and JP Morgan India Short Term Income Fund holds 5.87% and 10.78% respectively into the debt papers of Amtek Auto with a coupon of 10.25%.
Later Sebi has sought information from mutual fund houses on their exposure into Jindal Steel and Power (JSPL) after ICRA downgraded the ratings on the non-convertible debentures (NCD), commercial paper, term loans, fund-based and non-fund based limits of JSPL.
As on August 31st, mutual fund industry has exposure of over Rs 4,500 crore into the papers of JSPL. Several schemes from Franklin Templeton MF, LIC Nomura MF and JM Financial MF among others holds the papers of JSPL. However spokesperson from the Franklin Templeton India said, “At Franklin Templeton, we attempt to optimise the trade-off between safety, liquidity and returns within the investment objective and positioning of the individual product. Our approach to investing in fixed income goes beyond just macroeconomic parameters and is driven by a focus on stringent and well-defined processes, robust risk management and an active approach to identifying investment opportunities.”
Market participants feel that, regulator is being pro-active and this move will benefit the retail investors going forward.
New iPhone sales to beat last year’s record: Apple (14-09-2015)
Price situation under control: Arun Jaitley (14-09-2015)
Bose panel report has mutual funds sounding bullish (14-09-2015)
Following the Sumit Bose committee report recommending to allow mutual fund houses to manage both Ulip funds as well as retirement funds, the industry is bullish to manage more funds.
The committee has also recommended that there can be various regulators for the same product keeping in view the different functions of the product, for instance it wants Sebi to regulate the investments made by Ulip funds, while IRDA to regulate the insurance part of the same fund.
The Sumit Bose committee report also wants MFs to manage the investment part of a Ulip launched life insurers.
Currently, Ulips are regulated by the insurance regulator Irdai, while MFs are controlled by the markets regulator Sebi.
These issues may come up for discussions during the forthcoming meeting of AMFI which is slated for September 16 here, according to the industry.
Franklin Templeton Investments that manages funds worth Rs 74,312 crore as of end June, said it favours the Sumit Bose panel recommendations that seeks to allow fund houses to manage insurance and pension assets.
“Our view is that fund houses should be allowed to manage insurance and pension assets as is the case the world over. The respective regulators can set the rules for various market participants to follow,” Franklin Templeton Investments India managing director Vivek Kudva told PTI.
“There is no harm in having separate regulators for asset managers, insurers and pension funds. However, everyone’s focus should be on increasing penetration and financial inclusion whilst ensuring adequate oversight and a fair deal to investors,” he said.
He further said, “Some of these topics may come up for discussion during the forthcoming meeting of Amfi on September 16.”
Sundaram Mutual, which currently manages about Rs 24,000 crore funds, is also in favour of fund houses managing Ulip funds.
“Insurers are still doing fund management job what MF houses should ideally be doing,” Sundaram Mutual chief executive Sunil Subramaniam said.
SBI MF, which is set to cross the Rs 1 trillion-mark of funds anytime from now from Rs 90,000 crore, also favours having separate regulators for the same product.
“The panel has voiced for having one regulator for one particular function, not for a product. Ulip has a life insurance component so it should be regulated by the Irda. It also has an investment part, which must be regulated by Sebi,” SBI Mutual Fund managing director and chief executive Dinesh Khara said.
As per data collated by the Life Insurance Council, total investments made by life insurers in 2014-15 was at Rs 22 trillion and out of that Rs 3.62 trillion was invested from Ulips alone.
Similarly, life insurers were managing pension funds at Rs 2,000 crore as of end March 2015.
Besides, total AUM of retirement fund currently managed by seven pension fund firms and being regulated by the PFRDA in retail alone currently stands at Rs 700 crore.