by admin | May 25, 2021 | Commodities, Commodities News, Commodity Market, Investing, Mutual Fund
New Delhi : The Securities and Exchange Board of India (SEBI) on Friday allowed mutual funds (MFs) and portfolio managers to invest in commodity derivatives to strengthen the market offerings and attract more players.
“The Board deliberated and approved the proposal contained in the memorandum to enable the participation by mutual funds and portfolio managers in exchange traded commodity derivatives in India subject to certain safeguards,” SEBI said after its board meeting here.
“Further, Category III alternative investment funds, which are already permitted to participate in commodity derivatives, have now been permitted to deal with goods received in delivery against physical settlement of such contracts, if any,” the regulator added.
Currently, the commodity markets are dominated by retail level traders and a few corporate hedgers and speculators. The entry of mutual funds and portfolio managers will attract more hedgers to the market and lead to its overall development.
Market players said the SEBI move could offer structured and attractive products to deepen the commodity derivatives market. It would also lead to more participation from the funds.
Institutional participants like mutual funds and portfolio managers will add long-term liquidity to the markets, said the member of a commodity exchange.
The participants in the commodity derivatives market comprise retail and wholesale commodity traders and a few corporate clients and punters across asset classes.
The SEBI also allowed Category III alternative investment funds to trade. Foreign companies with exposure to Indian commodities not having presence in India were also allowed to trade recently.
—IANS
by admin | May 25, 2021 | Business, Commodity Market, Investing, Mutual Fund
Mumbai : Capital markets regulator SEBI on Monday granted relaxation to non-residents from furnishing PAN card details to transfer equity shares to their immediate relatives subject to conditions.
According to the SEBI, many non-residents such as Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs), Persons of Indian Origin (PIOs) and foreign nationals have been facing difficulties in transferring shares held by them since many of them do not have PAN card.
“In order to address the difficulties faced by such investors, it has been decided to grant relaxation to non-residents (such as NRIs, PIOs, OCIs and foreign nationals) from the requirement to furnish PAN and permit them to transfer equity shares held by them in listed entities to their immediate relatives…,” the SEBI said in a circular.
Accordingly, the relaxation shall only be available for transfers executed after January 1, 2016.
“The relaxation shall only be available to non-commercial transactions, i.e. transfer by way of gift among immediate relatives,” the circular said.
“The non-resident shall provide copy of an alternate valid document to ascertain identity as well as the non-resident status.”
—IANS
by admin | May 25, 2021 | Investing, Mutual Fund, Venture Capital
By Rahul Agarwal,
A perfect mutual fund portfolio is one that is commensurate with ones appetite for risk and is capable of meeting ones financial goals.
An investor in the equity markets, especially through the mutual fund route, has to acknowledge that volatility is part and parcel of the markets. The focus should, therefore, be on learning how to navigate volatile markets so that one does not get off-tracked from his/her investment thesis during periods of heightened volatility — as is happening now.
The first step towards creating a mutual fund portfolio is the identification of one’s tolerance for risk as this drives the decision-making process pertaining to asset allocation and the quantum of allocation in each asset class. Once one has accurately identified individual risk tolerance, the next step is to identify financial goals; ideally, these should be clearly categorised into short-term, medium-term and long-term objectives.
The smartest way to create a goal-based portfolio is to allocate a separate portfolio for each financial goal or club similar goals based on risk profile and duration and create a common portfolio. One can club retirement and child’s higher education in one portfolio and buying a car or a future foreign trip in another portfolio.
Asset allocation strategies are dependent on the time-horizon of the financial goal. To realise short-term goals one need’s predictable cash flows and therefore, a higher component of debt instruments is necessary.
For medium-term goals the portfolio should have a healthy mix of both equity and debt and for longer-term goals the portfolio should have a higher component of equity to be able to beat inflation.
After one has zeroed in on the asset allocation for all the goals, the next step is to pick the right kind of mutual fund category that is capable of meeting a particular financial goal.
Once the required mutual fund categories have been identified, the next step is to choose the right schemes within a particular category. The selection criterion should hinge on the investment objective and consistency of returns that a mutual fund has been able to deliver.
Efforts should be made to pick funds with larger assets under management and reputed brand names with a better track record of delivery. Total expense ratio is another important criterion: A fund with lower expense ratio is always better than funds with a higher expense ratio, other things being the same.
Based on one’s financial goals he/she would need to invest in both equity and debt mutual funds and would also have to pick several mutual fund schemes. However, it should be remembered that finalising the portfolio with too many funds is a bad idea as beyond a certain limit — for example, a maximum six to eight schemes; there is no benefit of over-diversifying. Over-diversification leads to lower returns and monitoring and re-balancing becomes tedious for an investor.
Finally, building a perfect portfolio is always based on suitable asset allocation that is derived from one’s risk appetite and investment horizon. The perfect way of investment over the long term is continuous asset allocation focused on goal-based portfolio creation. Each goal should be precise, defined in quantitative terms and duration.
(Rahul Agarwal is Director, Wealth Discovery/EZ Wealth advisory. The views expessed are personal. He can be reached at rahul@wealthdiscovery.in )
—IANS
by admin | May 25, 2021 | Banking, Business, Corporate, Finance, Investing, Mutual Fund, News, Pensions & Sipps
Chennai, (IANS) : The merger of Max Life Insurance Company Ltd with HDFC Standard Life Insurance Company Ltd has hit the regulatory block with the insurance regulator expressing reservations on the proposed scheme, Max Financial Services said on Saturday.
In a regulatory filing in BSE, Max Financial Services Ltd said the Insurance Regulatory and Development Authority of India (IRDAI) has expressed reservations to accept the scheme of amalgamation in its current form.
The application for merger of Max Life Insurance and HDFC Standard Life was filed with IRDAI for in-principle approval on September 21.
Max Financial Services said it believes that the scheme of arrangement as submitted to IRDAI is in compliance with all applicable laws and proposes to represent and clarify the matter to the sectoral regulator.
Earlier it was announced that the insurance business of two companies will be merged through a composite scheme of arrangement involving three entities.
First Max Life will be merged into Max Financial Services. The shareholders of Max Life will get one share of Max Financial Services for approximately five shares of Max Life.
“For the demerger of the life insurance undertaking from Max Financial Services into HDFC Life, shareholders of Max Financial Services (post the amalgamation with Max Life), will get 2.33 shares of HDFC Life for each share of Max Financial Services,” HDFC Standard Life said in a statement earlier.
According to HDFC Standard Life, the merged life insurance company will pay a non-compete fee to the promoter group of Max Financial Services.
As per the agreement, promoters of Max Financial Services will not compete in the same business space for years since the payment of an upfront non-compete fee of Rs 501 crore, to be paid on completion of the proposed merger transaction.
“This will be followed by three equal annual installments totaling Rs 349 crore,” HDFC Standard Life said.
HDFC Standard Life has also entered into a Trademark License Agreement to use the Max brand as part of life products that will transition from Max Life, for seven years post completion of the proposed transaction.
HDFC Ltd and Standard Life (Mauritius Holdings) 2006 Ltd will be the promoters of HDFC Standard Life the merged entity, post completion of the proposed transaction.
Upon obtaining all approvals, when the scheme becomes effective, the following steps will occur in that order:
– Max Life will merge into Max Financial Services
– Demerger of the life insurance undertaking from Max Financial Services into HDFC Standard Life (ie, the merged insurance entity)
– Merger of Max Financial Services (holding the residual business) into Max India.
by admin | May 25, 2021 | Investing, Mutual Fund
By Venkatachari Jagannathan
Chennai:(IANS) India’s insurance regulator has not come across any concern relating to Sahara Life Insurance Company Ltd even though SEBI has cancelled the licence of Sahara Mutual Fund on the ground its promoters are not ‘fit and proper’ to run the mutual fund business.
“We have not come across any concern relating to Sahara Life. It is a small company in the life insurance sector. The company’s expenses are within limit,” T.S.Vijayan, chairman, Insurance Regulatory and Development Authority of India (IRDAI), told IANS on the phone on Thursday.
When it was pointed out that Securities and Exchange Board of India (SEBI) action against Sahara Mutual Fund was on the grounds that the promoters are not ‘fit and proper’ Vijayan said: “We have not come across any issue about Sahara Life.”
On July 28, India’s securities market regulator ordered cancellation of certificate of registration of Sahara Mutual Fund as it found the fund house, Sahara Asset Management Company (AMC) and Sahara Sponsor not “fit and proper” to carry on the business.
According to a the market’s regulator’s statement, its whole-time member Prashant Saran passed the order as Sahara Mutual Fund along with Sahara AMC and Sahara Sponsor were found to be no longer “fit and proper” to carry out the business of Mutual Fund.
However insurance industry experts differ from Vijayan’s views.
The criteria whether the promoter(s) are “fit and proper” is one of the fundamental criteria while licensing an insurance company.
“SEBI cancelling the licence of a mutual fund on ‘fit and proper’ grounds should ring alarm bells in other financial regulators,” D.Varadarajan, a Supreme Court advocate and expert in insurance, company, competition law, told IANS.
According to him life insurance contract is of longer duration and is a business of promise to pay the nominee the sum assured in the event of death of the policyholder.
On the other hand mutual fund investment is generally is of short/medium term duration.
Insurance officials are of the view that solvency, management expenses are operational issues whereas ‘fit and proper’ criteria is more fundamental aspect.
A retired senior official of IRDAI too expressed similar views to IANS and added: “Insurance regulator should at least review Sahara Life Insurance’s operations.”
by admin | May 25, 2021 | Investing, Mutual Fund, Portfolio Management Service
New Delhi:(IANS) In a reformist move to attract more foreign investment and simplify the norms, India on Thursday clubbed the categories under which capital flows into domestic companies from abroad, to determine the compliance towards overseas equity cap imposed in some sectors.
In a decision taken by the union cabinet at a meeting presided over by Prime Minister Narendra Modi, foreign institutional investment, foreign portfolio investment, qualified foreign investment, non-resident Indian investments have been clubbed into a single composite category.
“The cabinet approved the introduction of composite caps for the simplification of foreign direct investment,” Finance Minister Arun Jaitley told reporters here after the decisions, adding relevant changes in the consolidated policy on foreign equity have also been given a nod.
Among the decisions, a single entity under any of these categories can invest up to 10 percent of the capital of a company, while collectively it can go up to 24 percent.
But the cabinet has allowed companies to raise the limit of such investments beyond 24 percent as long as these fall within the sectoral cap in which it operates. This apart, no changes were made in the existing limits on foreign equity in various sectors.
“The decision of merging the limits of foreign direct and portfolio investments into a composite cap is essentially a move towards giving companies more flexibility for deciding on the desired mix of foreign investment,” a senior finance ministry official said.
“It will also bring in transparency and clarity on the country’s foreign investment policy.”
For the purpose of calculating foreign direct investment, equity funds injected by various types of entities mentioned above will be clubbed, irrespective of how and in what form it has been made. But debts will not be treated as foreign equity unless they are to be converted into shares.
For foreign indirect investment, that is inflows in the form of venture capital or seed money, by entities that are otherwise not engaged in the business that the target company operates, will also be clubbed as above to determine the adherence to the sectoral cap. Here, too, debt will be exempt.
These decisions will, however, not impact on sectors where the government already permits 100 percent foreign equity, a note issued after the cabinet decision said. But they will apply in cases — like transfer of ownership from an Indian to a foreign entity — where prior government approval is mandatorily required.
While the domestic industry and foreign players have been seeking such changes, some political parties, notably the Congress and the Communists, have opposed it on the ground that portfolio investment is in nature a short-term, hot money that can leave the country at any time.
But Prime Minister Modi’s government has maintained that an overhaul such as one on Thursday was long pending.
The official statement said due to similar policies followed by the government for the past 14 months and the various initiatives such as “Make in India”, the foreign equity inflows have seen a 48 percent growth since September last year.
The country, the note said, witnessed an unprecedented growth of 717 percent, or $40.92 billion in investments, by foreign institutional investors.
Commenting on the development, Vivek Gupta, partner, BMR Advisors said: “For sectors such as banking, where currently portfolio investment was restricted up to 49 percent, the amendment seems to suggest that the said limit could now be raised up to the overall limit of 74 percent subject to government approval route for the excess.”
“One would await the department of industrial policy and planning (DIPP) rules language on certain aspects, particularly in relation to the assertion around no need for government approval for transfer of non controlling stakes,” he added.
