Page 19 - BANKING FINANCE FEBRUARY 2016 ONLINE
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MUTUAL FUND
SEBI wants to wait for Reliance MF ups stake to 8% in Indian Hotels
MFs to cut distributor Reliance Mutual Fund has hiked stake a small 2.12 per cent stake is also held
in Tata-run Indian Hotels to nearly 8 in the company as a financial invest-
commissions per cent, making the hospitality sector ment by Reliance Mutual Fund, which
another key area with significant in- is part of younger Ambani sibling Anil-
SEBI wants to delay and wait for the vestments by the two Ambani groups. led Reliance Group.
mutual fund
industry to re- Elder Ambani sibling As per the latest available
duce distribu- Mukesh-led Reliance Indus- shareholding pattern of In-
tor commis- tries group is already a ma- dian Hotels on the BSE
sions further, jor investor in EIH Ltd, the website, Reliance MF held
U. K. Sinha, main listed entity from 5.42 per cent stake in the
Chairman, SEBI, said at a confer- Oberoi group that runs a chain of luxury company through two sepa-
ence. hotels. rate funds as on September 30, 2015.
The total stake of the fund house has
"SEBI does not want to get into the While RIL group firm Reliance Indus- now reached near 8 per cent which is
issue of agent commissions now. We trial Investments And Holdings Ltd a financial investment made by a mu-
would rather like the mutual fund in- owns a 18.53 per cent stake in EIH Ltd, tual fund, sources added.
dustry to take the initiative to reduce
costs for investors," Sinha said. How- Ambit Alpha Fund's AUM touches Rs 850 crore lately
ever, he said that if the fund industry
does not move towards gradually re- Ambit Alpha, an alternate investment hedge funds, Ambit Alpha Fund re-
ducing costs for investors, SEBI won't fund had said that it has touched a turned 15.41 per cent over the last
hesitate to take action. milestone of Rs 850 crore of
assets under management year, beating 83 per cent of
The Sumit Bose Committee had re- (AUM). global peers," a company
cently published a report recom- release said.
mending that upfront fees for MF Ambit Alpha Fund which was
distributors should be completely launched in June 2013 by Moreover, despite high vola-
phased out in order to reduce costs Ambit Investment Advisors, has given tility both globally and locally,
paid by the final investor, shorten the significant returns over the last year. returns generated by Ambit
period of trail commissions paid to Alpha have had a volatility of 2.03 per
distributors and curb mis-selling. "With almost 861 long short equity cent as compared to the NIFTY index
volatility of around 13 per cent.
SEBI has formed a team headed by
Nandan Nilekani to show how best MFs may disclose individual agent commission in
to use technology to sell mutual account statements
funds. This way, investors can buy
funds with the same ease as they buy After capping agent commission, mutual fund industry body and front-line regu-
phones online. lator AMFI may now ask the fund houses to disclose the individual distributor
Sinha in a conference spoke about commission in the account statements sent to investors.
the development in the securities The AMFI (Association of Mutual Funds in India) plans to
market and the need for capital take up the issue of "disclosing distributors commission in
market players to create an atmo- Statement of Accounts" in its board meeting.
sphere that investors can have faith
in. "Every scam in the capital mar- The move is aimed at making distribution commissions
kets takes us back by 10 years and it more transparent as part of efforts to help the investors
takes another 10 years to get inves- become better-informed about the total amount being paid by their Asset
tors to trust the capital markets Management Company (AMC) as distributor commission from their investments
again." in MFs.
Other key issues likely to be discussed in the board meeting is the recent Sebi
letter on dividend stripping to the fund houses and the regulator's directive to
mutual funds to provide transaction data about distributors and agents to Sebi.
BANKING FINANCE | FEBRUARY | 2016 | 19
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