Page 17 - Banking Finance June 2021

MUTUAL FUND

SEBI fines top officials of AUM linked to SIP reaches Chemicals producers make up at least
14% of the portfolio for three funds
Franklin Templeton a new record that have delivered the biggest returns
Sebi has decided to fine the CEO, CIO, The assets under management (AUM) this year among those with at least
debt fund managers and other top of funds linked to the systematic $500 million in total assets, according
officials of Franklin Templeton AMC in investment plans (SIP) reached a record to Bloomberg-compiled data. Those
the case of shutting down of six debt of Rs 4.7 lakh crore at the end of May bets have paid off thanks to rising
mutual fund schemes in 2020. Sebi has 2021 following a consistent inflow and global appetite for specialty chemicals
decided to put a monetary fine of Rs 3 capital appreciation amid a sustained in industries such as automobiles and
crore on CEO Sanjay Sapre and CIO- stock market rally. The SIP equity funds cosmetics amid a recovery from the
Santosh Kamath. have delivered 26-56% returns over the pandemic.
Other debt fund managers of past year thereby resulting in an India is emerging as a hub for specialty
Templeton- Kunal Agarwal, Sumit expansion of 1.7 times in their chemicals, helped by favorable policy
Gupta, Pallab Roy, Sachin Padwal Desai aggregate AUM during the period.
measures that include decisions such
and Umesh Sharma will be liable to The SIP linked schemes contributed as imposing anti-dumping duty on
pay a fine of Rs 1.50 crore each. In
14.1% to the AUM of the mutual fund some imports and a proposal for
addition to the above, SEBI also fined industry in May compared with the
the trustee company a sum of Rs 3 production-linked incentives. Producers
long-term average of 10.2%. They have also benefited from a 'China-plus-
crore and SaurabhGangrade, Chief attracted a cumulative inflow of Rs
Compliance Officer, Franklin 96,995 crore over the past 12 months. one' strategy that has made companies
Templeton, a sum of Rs 50 lakh. around the world diversify their supply
A consistent inflow into the SIP chains from the Asian superpower
Sebi in the order said that the forensic
schemes has played a crucial role in amid geopolitical concerns.
audit report found that Franklin
offsetting the volatility in the flow from "We continue to be very optimistic on
Templeton violated several regulations
in the management of the six shut debt foreign portfolio investors (FPIs). The the long-term prospects of the
SIP book received a monthly inflow of chemical industry in India," as it
schemes. "There were similarities in
investment strategy though the more than Rs 8,000 crore in five out becomes an important player in the
of the past six months. According to global supply chain, said Samir Rachh,
investment objectives were differing in
industry experts, nearly 90% of this
the six wound up schemes. who helps manage the nearly $2 billion
went to the equity funds. It means Nippon India Small Cap Fund, the best
This was observed by way of common
cumulative inflow from SIP driven funds performer with a 42% return year-to-
fund managers, high exposures in "AA
into equities would be around Rs date.
and below" corporate bonds in all the
38,000 crore in the past six months,
six schemes even though investment which is nearly 91% of the FPI inflow The biggest holding in Rachh's fund is
objectives as per the SIDs of these in the same duration. Deepak Nitrite Ltd., a maker of phenol
schemes are different. Further, as per and acetone used in numerous
the portfolio holding data, most of the applications including mouthwash and
securities are rated AA or below at the Chemical stocks help these nail-polish remover. He initiated that
time of investment. mutual funds give 40% position in 2017 and increased it in
In addition, there was concentration of return to investors this 2019.
similar securities across schemes under Shares of the firm based in Gujarat
audit where investments were made year have risen 88% so far this year, taking
over 70% of the issue of such debt Mutual fund companies are betting their surge over the last five years to
securities and most of the investments heavily on companies that make the nearly 2,000%. Its revenue has more
which were made in schemes were chemical substances used in items than tripled in the period to 43.6 billion
common at time of investment," said ranging from lip balms to crop- rupees ($595 million) for the fiscal year
Sebi in the order. boosting fertilizers. ended March. T

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