15 09, 2015

JP Morgan AMC Isolates Amtek Bonds Into A Side Pocket, Will Allow Redemptions of the Rest

By |September 15th, 2015|Categories: AmtekAuto, MutualFunds|0 Comments

JP Morgan, which has been in the news because if refuses to let people exit short term funds (currently has a gate of 1% per day), has now offered a redemption proposal to “segregate” its funds.  The Proposal is complex but basically it’s like this:

  • If you own 5000 units of the fund today
  • You will continue to own 5000 units of the fund tomorrow
  • But you will get additional units of a new “segregated” fund containing the Amtek Auto bond (illiquid asset)
  • The NAV Of the current fund will fall since you are effectively splitting assets
  • […]

11 09, 2015

Premium: Action Plan: What To Do With the Jitters In Corporate Debt Owning Mutual Funds

By |September 11th, 2015|Categories: Debt, MutualFunds, Premium|0 Comments

CapM Premium Header

Today we’re going to look at debt mutual funds, and how they will be impacted when there are concerns that the debt they own has a potential of not being repaid.

Unless you’ve been living under a rock, you’ve heard of the crisis at Amtek Auto, and then that caused a crisis at JP Morgan AMC. Amtek Auto’s shares are near multiyear lows and when they were downgraded (12 notches! to essentially junk) everyone realized there’s a good chance the company may not be able to pay back the debt.

The Mark-To-Market Problem


28 08, 2015

JP Morgan AMC Takes A Big Hit on Two Short Term Debt Funds – The Sword of Potential Default in Amtek Auto?

By |August 28th, 2015|Categories: Debt, MutualFunds|13 Comments

Remember Amtek Auto? That company that fell big time on the exchanges and the official excuse was that it was taken out of the F&O category?

Well, that’s not that only thing that seems to have been hit. JP Morgan AMC’s short term debt funds have seen a large dip in their NAV yesterday. From Invest Mutual:

JP Morgan Short Term Income Fund  -3.38% – This is a short debt fund with Avg Maturity of 3.59 yrs and a Modified Duration of 2.01

JP Morgan India Treasury Fund  -1.73% – This is an ultra short term fund with Avg […]

10 03, 2015

Long Term Returns for Going “Direct” Can Give You Many Lakhs More

By |March 10th, 2015|Categories: Direct Plan, HDFC Mutual Fund, MutualFunds, Regular Plan|39 Comments

Last week, we wrote about how investing in Direct Plans vs Regular Plans could give an investor up to 0.7% extra returns annually. The differential is because of commissions that the distribtors get versus none in the Direct route. 

Take the HDFC Equity Mutual Fund, for instance. The Fund was started on January 01, 1995 with a starting NAV was Rs. 10. The Direct Plan was introduced in January 2013.

This is how the NAVs of both the Plans of the Fund have grown since Jan 01, 2013:

NAVs - Reg vs Direct[…]

5 03, 2015

Mutual Funds: Direct Plans Beat “Regular” Plans By 0.7% Per Year!

By |March 5th, 2015|Categories: Direct Plan, MutualFunds, Regular Plan|26 Comments

Mutual Funds have been in vogue as an investment class ever since their introduction in the 1960s with UTI introducing the first Mutual Fund in India. It has undergone a sea of changes and upgrades since those days, with public sector banks and other NBFCs throwing their hat in the ring as the years went by. The first private sector funds were set up in 1993, and this coincided with greater awareness among the general public about investing in Mutual Funds.

Currently, there are more than 40 AMCs in India that offer 1000+ MF schemes. Mutual Funds are currently offered in […]

9 02, 2015

Bonus Stripping and the Impact of Arb Fund Unwinding on the Market

By |February 9th, 2015|Categories: Arb Funds, Budget2015, Budgets, Charts, JM Fund, MutualFunds|25 Comments

You gotta hand it to Manoj Nagpal (@nagpalmanoj). (He’s a great guy with excellent insights on mutual funds!) In a conversation on the impact of converting arbitrage funds to debt funds, potentially in the budget, he spoke of the strange happenings at JM Mutual Fund’s Arbitrage scheme.

The Massive JM Fund Inflow

JM Arb Fund was one of the big recipients of investor money, which according to Manoj came in even before the budget (which was on July 10 or so). This money amounted to Rs. 5,500 cr. (approx). The entire idea was to do bonus stripping. That is: […]

6 02, 2015

Tax Arbitrage Using Arb-Funds To Be Removed?

By |February 6th, 2015|Categories: Arb Funds, Budget2015, Capital Gains Tax, MutualFunds|9 Comments

Value research says it’s likely that in the budget, Arbitrage funds will be considered debt funds for the sake of tax.

After the last budget (July 2014) you had to hold “debt” mutual funds for three years before they were considered long term. Equity funds, however, were tax-free after a year. A special species of such funds, called “Arbitrage funds” came into demand.

India loves the concept of fixed income, but hates the concept of tax. While you could get returns of 9% in debt funds, the post tax return fell to under 7% for the richest. Arbitrage funds would provide, […]

26 12, 2014

Closed Ended Mutual Funds: Why You Shouldn’t Bother

By |December 26th, 2014|Categories: ClosedEnded, MutualFunds|6 Comments

Many fund houses have come up with “closed ended funds” which have been the rage with distributors lately, largely (almost entirely) because of the much higher commission structure. Should you buy into the madness?

If it’s the rage with distributors because of commissions, the answer should be a BIG NO.

Let’s see why. Firstly, what the heck are closed ended funds?

Here’s a video we did a long time back:

(Ignore the points about capital gains after one year, now it’s three years for debt funds. )

The concept is:

9 12, 2014

Equity Mutual Fund Inflows Till November At Highest In Over 8 Years

By |December 9th, 2014|Categories: AUM, Equity MFs, MutualFunds|2 Comments

This year seems to have really kicked off for Mutual Funds. Especially Equity Mutual Funds, which have recorded a Rs. 86,816 cr. worth of inflows for the current Financial Year till November end. This includes inflows into already existing Mutual Funds, as well as new entrants.

All the data used here was taken from AMFI’s website.

In the 8 months of FY15 till the end of November, the amount of inflows into Equity Mutual Funds are at an all-time high. For the same period in previous years, the inflows pale in comparison to this year’s collection. In fact, till now, […]

15 10, 2014

Equity Mutual Funds Outperform Nifty; AUM Increases Over 60% In 15 Months

By |October 15th, 2014|Categories: MutualFunds|1 Comment

Following up on our earlier posts on Mutual Funds (Read “Why AMFI Should Not Ban Upfront Commissions” and “Mutual Funds Hike Exit Loads, Hoping This Time Investors Will Stay”), we take a closer look at the monthly performance of Mutual Funds.

The data that is used in our analysis provides a monthly look at Total Inflows, Redemptions/Repurchases Assets Under Management (AUM) and a few more metrics. The data was obtained from AMFIs database. […]

13 10, 2014

Why AMFI Should Not Ban Upfront Commissions

By |October 13th, 2014|Categories: MutualFunds|4 Comments

I am all for regulation. As in, I do not think a world without regulation, in the financial space, is worthwhile. But not all regulation is good, and the specific nature of my argument is that while I like the concept of regulation, I think we fail in the implementation.

Latest in my disagreement series is that AMFI is considering banning all upfront commissions to distributors by mutual funds. I think this is a bad step, and I think so even as I find it agreeable that we have no “entry loads” by regulation.

After our earlier post about Mutual […]

10 10, 2014

Mutual Funds Hike Exit Loads, Hoping This Time Investors Will Stay

By |October 10th, 2014|Categories: MutualFunds|12 Comments

In a strange move, Mutual Funds are increasing exit load time frames. This is usually a desperate situation by MFs to retain investors, or they are just using the current interest in equity funds to ensure that these investors stay even if the market gets volatile.


(Pic from the Business Standard Article)

Even bond funds haven’t been spared! Sure, the recent budget has made it less lucrative to exit fixed income funds within 3 years (short term capital gains tax applies) but surely, that should be incentive enough for people to stay.

While funds charged a 1% exit […]

25 07, 2014

Jaitley Removes Retrospectivity in Debt Mutual Funds, But FMPs Will Still See Tears

By |July 25th, 2014|Categories: Budget2014, MutualFunds|8 Comments

NDTV reports that the higher tax on debt mutual funds will apply only from July 10 onwards, and not “retrospectively”, from a statement given by Arun Jailtley (Finance Minister) to Parliament.

Which needs a change in the finance bill, to state that units of non-equity mutual funds that have been sold between April 1 2014 and July 10, 2014 and held for more than one year from purchase will be attract long term capital gains. This means a “proviso” needs to be added stating this intention.

However for investors in FMPs who bought for […]

18 07, 2014

Mutual Fund Commissions Go Up in FY14, But The Future Is Scary (Freemium)

By |July 18th, 2014|Categories: Macronomics, MutualFunds, Premium|Comments Off on Mutual Fund Commissions Go Up in FY14, But The Future Is Scary (Freemium)

Each year AMFI releases data on all commissions paid to agents by all mutual funds, to distributors that meet any of:

  • Manage more than 100 cr. Of assets
  • Commissions of Rs. 1 cr. In total (all MFs) or Rs. 50 lakh from a single fund house
  • Presence in 20 locations or more

What we have found after a multi-year analysis of this data is: