HOME         WEBSITE         SUBSCRIBE           E-GREETINGS   
                               

Tuesday, May 10, 2011

Aegon to exit India's mutual fund business

Dutch financial services group Aegon intends to surrender its licence to operate in India's mutual fund industry, which is going through its roughest patch following a string of regulatory restrictions. An Aegon official is said to have met capital market regulator Securities and Exchange Board of India (Sebi) recently in this regard.

An email query to Aegon on why the group plans to exit India's mutual fund industry did not elicit a response till the time of going to the press. But sources in the mutual fund industry said Aegon no longer considers the asset management business in India as a 'strategic fit' for its growth plans in the country.

This is the first instance where a mutual fund has expressed its intention to the market regulator to give up its licence, industry officials said. "It's a little surprising. Despite the hurdles faced by fund houses, India continues to be one of the hottest emerging markets," said a fund manager with a private mutual fund.

Aegon is yet to launch a mutual fund product in India since receiving the li-cence from Sebi in October 2008 to start an asset management venture with New Delhi-based Religare Enterprises . But a month later, Aegon and Religare parted ways amid speculation of a rift between the two. The two companies continue to be partners in their life insurance joint venture, Aegon Religare Life Insurance .

Mutual fund industry officials said Aegon has been hunting for a partner, espe-cially a bank, for the asset management business since the split, but did not man-age to find one. The speculation is that the inability to find a joint venture partner could have contributed to the proposal to give up the mutual fund licence.

"Being a late entrant into industry, it was important for Aegon to get a partner with a decent network because it is really expensive and tedious to start afresh without distribution support," said an analyst, requesting anonymity.

Most foreign financial groups, which are part of India's 41-member strong asset management industry, have felt the need to partner a local bank, especially after the ban on mutual funds to charge investors to pay distributors an upfront fee, known as entry load. Distributors almost stopped selling mutual fund products after the move, affect-ing inflows into mutual fund equity schemes, which fetched them maximum fees.

Some mutual fund industry officials are surprised by Aegon's plan, as they feel the group is well-placed to take advantage of the offshore advisory business. Leading asset management companies nowadays are focusing more on their "offshore advisory" business, where they give research-based advice to foreign funds that invest in India for a fee.


Blog Archive

____________________________________________________________________________________________

Disclaimer - All investments in Mutual Funds and securities are subject to market risks and uncertainty of dividend distributions and the NAV of schemes may go up or down depending upon factors and forces affecting securities markets generally. The past performance of the schemes is not necessarily indicative of the future performance and may not necessarily provide a basis for comparison with other investments. Investors are advised to go through the respective offer documents before making any investment decisions. Prospective client(s) are advised to go through all comparable products in offer before taking any investment decisions. Mutual Funds and securities investments are subject to market risks and there is no assurance or guarantee that the objectives of the fund will be achieved. Information gathered & material used in this document is believed to be from reliable sources. Decisions based on the information provided on this newsletter/document are for your own account and risk.


In the preparation of the material contained in this document, Varun Vaid has used information that is publicly available, including information developed in-house. Some of the material used in the document may have been obtained from members/persons other than the Varun Vaid and which may have been made available to Varun Vaid. Information gathered & material used in this document is believed to be from reliable sources. Varun Vaid however does not warrant the accuracy, reasonableness and/or completeness of any information. For data reference to any third party in this material no such party will assume any liability for the same. Varun Vaid does not in any way through this material solicit any offer for purchase, sale or any financial transaction/commodities/products of any financial instrument dealt in this material. All recipients of this material should before dealing and or transacting in any of the products referred to in this material make their own investigation, seek appropriate professional advice.


Varun Vaid, shall not liable for any loss, damage of any nature, including but not limited to direct, indirect, punitive, special, exemplary, consequential, as also any loss of profit in any way arising from the use of this material in any manner. The recipient alone shall be fully responsible/are liable for any decision taken on the basis of this material. All recipients of this material should before dealing and/or transacting in any of the products referred to in this material make their own investigation, seek appropriate professional advice. The investments discussed in this material may not be suitable for all investors. Any person subscribing to or investigating in any product/financial instruments should do soon the basis of and after verifying the terms attached to such product/financial instrument. Financial products and instruments are subject to market risks and yields may fluctuate depending on various factors affecting capital/debt markets. Please note that past performance of the financial products and instruments does not necessarily indicate the future prospects and performance there of. Such past performance may or may not be sustained in future. Varun Vaid, including persons involved in the preparation or issuance of this material may; (a) from time to time, have long or short positions in, and buy or sell the securities mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation in the financial instruments/products/commodities discussed here in or act as advisor or lender / borrower in respect of such securities/financial instruments/products/commodities or have other potential conflict of interest with respect to any recommendation and related information and opinions. The said person may have acted upon and/or in a manner contradictory with the information contained here. No part of this material may be duplicated in whole or in part in any form and or redistributed without the prior written consent of Varun Vaid. This material is strictly confidential to the recipient and should not be reproduced or disseminated to anyone else.


Varun Vaid also does not take any responsibility for the contents of the advertisements published. Readers are advised to verify the contents on their own before acting there upon.


Published Credits goes to following sources & all the mentioned sources as footer below the published material- Bloomberg, Valueresearch Online, Capital Market, Navindia, Franklin Templeton, Kitco, SBI AMC, LIC AMC, JM Financial AMC, HDFC AMC, The Hindu, Business Line, Personal FN, Economic Times, Reuters, Outlook Money, Business Standard, Times of India etc.