 "Street signs: MFs worried about IL&FS, AMCs hit by new changes, and more")
MFs worried about IL&FS
With IL&FS group companies continuing to default on payments, fund managers are worried about the state of the debt market. So much so that Aditya Birla Sun Life Mutual Fund (MF) CEO A Balasubramanian took to Twitter on Friday evening seeking help from the government. “This move of IL&FS is putting the well ring-fenced structure under bigger risk; potentially putting infrastructure asset refinancing at a bigger risk; your intervention is necessary,” tweeted Balasubramanian. IL&FS and its group companies have not been able to service their debt for a few months.
Curbing fund managers' discretion
Sebi may look to further tighten norms on how mutual funds value certain debt securities. Fund managers have a discretion of using an amortised price which is within 0.1 per cent of the available reference price for securities that are not traded. This discretion may be reduced to 0.05 per cent, according to a person familiar with the matter. Other norms in the works reportedly include a decrease in the maturity cut-off for which securities are marked-to-market from 60 days to 30.
AMCs hit by regulatory changes
The two listed asset management companies (AMCs) have not had it easy of late. In the past month, Reliance Nippon AMC has shed 9.7 per cent, while HDFC MF is down 6.7 per cent. The duo have slipped about 52 per cent and 23 per cent from their respective peaks. The fall is a result of regulatory changes such as the ban on upfront commissions, re-categorisation of schemes and the reduction in total expense ratio (TER). On the other hand, the duo will benefit from financialisation of savings as incremental flows gravitate towards AMCs.
With IL&FS group companies continuing to default on payments, fund managers are worried about the state of the debt market. So much so that Aditya Birla Sun Life Mutual Fund (MF) CEO A Balasubramanian took to Twitter on Friday evening seeking help from the government. “This move of IL&FS is putting the well ring-fenced structure under bigger risk; potentially putting infrastructure asset refinancing at a bigger risk; your intervention is necessary,” tweeted Balasubramanian. IL&FS and its group companies have not been able to service their debt for a few months.
Joydeep Ghosh
Curbing fund managers' discretion
Sebi may look to further tighten norms on how mutual funds value certain debt securities. Fund managers have a discretion of using an amortised price which is within 0.1 per cent of the available reference price for securities that are not traded. This discretion may be reduced to 0.05 per cent, according to a person familiar with the matter. Other norms in the works reportedly include a decrease in the maturity cut-off for which securities are marked-to-market from 60 days to 30.
Sachin P Mampatta
AMCs hit by regulatory changes
The two listed asset management companies (AMCs) have not had it easy of late. In the past month, Reliance Nippon AMC has shed 9.7 per cent, while HDFC MF is down 6.7 per cent. The duo have slipped about 52 per cent and 23 per cent from their respective peaks. The fall is a result of regulatory changes such as the ban on upfront commissions, re-categorisation of schemes and the reduction in total expense ratio (TER). On the other hand, the duo will benefit from financialisation of savings as incremental flows gravitate towards AMCs.
Ashley Coutinho
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