Page 19 - Banking Finance October 2015
P. 19
MUTUAL FUND
MUTUAL FUND
NEWS
UTI MF assets surpasses A Fee of Just Rs.7 to Manage EPFO's Rs.1.41 cr
Rs.1 lakh cr mark One out of the five fund managers for 0.0003%, At that time, it had been
the Employees' Provident Fund allocated 35% of the corpus.
UTI Mutual Fund has obtained an as- Organisation (EPFO) debt corpus has
set base of over agreed to charge just Rs 7 for manag- While the other four fund managers
Rs.1 lakh crore ing nearly Rs.1.4 lakh crore. have higher fees, only three are likely
with about one to make money on this mandate. Reli-
crore investor ICICI Securities Primary Dealership has ance Capital AMC won't cover its costs
bid 0.0000000005% of the
accounts and is now targeting lead- assets it is managing as an- from the Rs.11 lakh it will
ership positions across various seg- nual fee. This is by far the be paid for managing
ments. Besides expanding its pres- lowest bid ever to be ac- Rs.1,22,500 crore. For the
ence to smaller cities, the fund house cepted by the retirement fund managers, the real
is also looking to bolster its offerings fund. The other four man- gain is the leverage from
in terms of premium and off-shore agers bid comparatively the huge corpuses they
market products according to Leo higher fees. will handle. "If they man-
Puri, MD of UTI AMC. age a very large corpus
In 2009, a large mutual they can showcase the
MF schemes on high de- fund house offered to AUM (Assets Under Man-
handle the EPFO corpus for free, but agement) to global inves-
mand the bid was rejected for want of a tors and boost their valuation," as per
"commercial logic". the industry source.
With rising demand from retail inves-
tors for mutual The bids were opened by the Finance, The mandate is also prestigious. This is
fund schemes, the Investment and Audit Committee of why investment bankers agree to the
draft papers by the EPFO in January this year. ICICI Se- very low fee for disinvestment
fund houses filed curities Private Dealership has been al- programmes. They normally charge
with the capital located 20% of the estimated between 1.2% and 1.5% of the amount
markets regulator Sebi for launching Rs.7,00,000 crore corpus. Even in the raised by a private company. But when
the New Fund Offers (NFOs) have previous bidding held in 2011, the com- SBI came out with a qualified institu-
gone as high as 100 since January. pany was the lowest bidder at tional placement, eight investment
The document for these 100 NFOs bankers shared a token fee of Rs.1.
have been submitted with Sebi since
the beginning of 2015.
BANKING FINANCE | OCTOBER | 2015 | 19
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