Page 23 - Banking Finance October 017

MUTUAL FUND

MUTUAL FUND

NEWS
NEWS
NEWS
NEWS
NEWS

Federal Reserve may hike interest rate Aditya Birla Sun Life
The Federal Reserve is likely to hike interest rates in December. That raises a AMC launches new mu-
big question in the mind of debt mutual fund investors:
when the USA is going to hike rates, will Reserve Bank tual fund scheme
of India cut rates? A rate cut is happy news for debt Aditya Birla Sun Life AMC Ltd has
mutual fund investors, especially in long-term debt launched a
mutual funds. When yield falls, bonds prices rise, push- new fund
ing up the Net Asset Value (NAV) of the schemes. That scheme
is why a pause or rate hike is not music to debt mutual fund investors. which will
Lakshmi Iyer, CIO - debt & head of products, Kotak Mutual Fund, believes shrink- invest
ing of Fed balance sheet is more important than the rate hike news. "We never mainly in
expected a rate cut in October. But I am not ruling out a rate cut completely in equity and equity-related securities.
December. A lot depends on the data," she says. The Aditya Birla Sun Life Resurgent
According to her, debt mutual fund investors need not make any changes at this India Fund - Series 5, a close-ended
juncture. "Those who are already invested should continue with their invest- equity scheme with tenure of 3.5
ments. Fence sitters can consider making investments at the current yield," she years, opened for subscription on
says. Bond yields have moved up in the money market after a series of bad news, September 20 and closes on October
notably the news on additional expenses by the government. The 10-year gov- 4, the company said in a statement.
ernment bond is currently quoting at 6.66%. The fund aims to generate capital
Small Town investors push Mutual Funds assets to Rs. appreciation by investing primarily in
equity and equity-related securities,
20 trillion mark that are likely to benefit from recov-

According to a recent report , AUM of the mutual fund industry rose 30.35 per ery in the Indian economy, it said.
cent to Rs. 19.97 trillion led by over 41 per cent surge in "We believe that a confluence of
inflows from small towns or the B15 cities. "Smaller towns multiple factors - administrative and
or B15 (beyond top 15 cities) cities accounted for 17.7 per economic reforms, new initiatives
cent of total AUM as of July, thanks to a 41.3 per cent surge and plans by the government and
to reach past Rs. 3.60 trillion in July from Rs. 2.55 trillion a favourable macro environment,
year ago helping the industry AUM to grow over 30 per cent makes equities especially attractive
to Rs. 19.97 trillion," ICRA said quoting AMFI data. According to the report, there over the next 3-5 years," said A
is a better balance of equity and non-equity assets at 5:4 in B15 locations com- Balasubramanian, CEO, Aditya Birla
pared with 1:2 in the T15 (top 15) cities. Also, the share of direct plans in B15 Sun Life AMC Ltd.
centres is 22.7 per cent against 45.2 per cent in the T15 cities.

22 | 2017 | OCTOBER | BANKING FINANCE

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