RBI raises rates to tackle price pressures

Just ahead of its monetary policy 2010-11 on April 20,the Reserve Bank of India has raised the key interest rates to rein in inflation.

Just ahead of its monetary policy 2010-11 on April 20,the Reserve Bank of India (RBI) has raised the key interest rates to rein in inflation. The central bank raised the repo rate,the rate at which it lends to banks,to 5 per cent from 4.75 per cent and reverse repo rate,the rate which it absorbs funds from the system,to 3.50 per cent from 3.25 per cent with immediate effect. Given the lags in monetary policy,it is better to respond in a timely manner,even if it is outside the scheduled policy reviews,than take stronger measures at a later stage when inflationary expectations have accentuated, the RBI said.

SEBI announces reduction in new fund offer period

Securities Exchange Board of India (SEBI) has announced reduction in period of a new fund offer (NFO) launched by a mutual fund company. The capital market regulator has reduced the NFO period to 15 days from 30-45 days earlier to ensure that the investors’ money is not blocked for longer period. However,this change is not applicable to equity-linked saving schemes (ELSS). To make the NFO process more efficient,SEBI has also decided to introduce an additional mode of payment through Application Supported by Blocked Amount (ASBA) for NFO investors of mutual fund schemes. This scheme was earlier enjoyed by investors subscribing to public issue of equity capital of companies. The changes are applicable to all NFOs launched on or after July 1,2010.

Dividends out of realised gains: Market regulator

The Securities and Exchange Board of India (Sebi) has asked mutual funds to distribute dividends out of realised gains only,and not out of unit premium reserve. Earlier,fund houses paid dividends out of the unit premium reserve. In effect,they were rewarding investors by paying them out of their purchase price itself. Now Sebi has stipulated that mutual funds must pay dividends out of realised gains (money made by the funds from the sale of the shares held by it). The move is aimed at increasing transparency among mutual funds that were using dividend declarations as a sales ploy to attract new customers.

Baroda Pioneer Mutual Fund revises exit load

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Baroda Pioneer Mutual Fund has revised the exit load structure under Baroda Pioneer PSU Bond Fund. The scheme will now charge an exit load of 0.50 per cent if units are redeemed within 30 days from the date of allotment as opposed to 0.50 per cent charged earlier if units were redeemed within 90 days from the date of allotment. The change is effective from March 19,2010. Baroda Pioneer PSU Bond Fund is an open-ended debt income scheme with investment objective to generate stable returns with lower risk by investing in fixed income instruments of public sector undertakings – banks,financial institutions and companies. The scheme is managed by Alok Kumar Sahoo and Hetal Shah and is benchmarked against Crisil Composite Bond Fund Index.

IDFC Mutual Fund unveils capital protection NFO

IDFC Mutual Fund has launched its first capital protection fund IDFC Capital Protection Oriented Fund Series-1. It is a close-ended fund that will invest up to 16 per cent in equity and equity related instruments and 100 per cent in debt securities and money market instruments. This is the 12th capital protection fund in the entire mutual fund industry and is benchmarked against CRISIL MIP Blended Index. The fund allows a minimum application amount of Rs 5,000 and will be managed by Ashwin Patni. The NFO was launched on February 24,2010 and is open for subscription until 24th of this month.

JP Morgan launches short-term Income Fund

JP Morgan fund house has launched JP Morgan India Short Term Income Fund,an open-ended income fund. The fund has the leeway of investing up to 100 per cent in cash,cash equivalents and other fixed income securities with maturity not more than a year while it may also invest up to 35 per cent in fixed income securities with maturity of more than a year.

The fund performance will be benchmarked against the CRISIL Short-Term Bond Fund Index and will be managed by Nandkumar Surti and Namdev Chougule. The fund is open for subscription from March 18 and close on March 23,2010.

Quantum Mutual Fund files Gold FOF offer

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Quantum Mutual Fund has filed an offer document with market regulator Sebi to launch Quantum Gold Savings Fund. It is an open ended fund of fund (FOF) that would invest up to 100 per cent in units of Quantum Gold Fund Exchange Traded Fund and up to 10 per cent in money market instruments,short term corporate debt securities and units of debt and liquid schemes of mutual funds. As of now,there are no gold FoFs. However,three other asset management companies Benchmark,Reliance and UTI have filed offer documents with the market regulator.