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Birth of a Leader

Franklin Templeton to acquire Pioneer ITI was the headline of the week. Besides the big fund acquisition, dividend flurry continued to beat the financial year-end deadline.

Franklin Templeton to acquire Pioneer ITI was the headline of the week. This will make Franklin Templeton the second largest mutual fund in India, next only to Unit Trust of India with a total assets of Rs. 8160 crore.

Both fund families are a good fit. Franklin Templeton is strong in bond funds, while Pioneer ITI has a strong equity fund line-up. The combined business will have a scale to enhance the investor's experience with the fund. But, that's it. Otherwise, everything remains the same for us in term of our choices, which we had anyway. The additional hassle will be keeping a closer vigil of management changes in a fund, which could be critical in an equity fund. A discomforting change should prompt you to evaluate your investment in the fund.

Besides the big fund acquisition, dividend flurry continued to beat the financial year-end deadline. Reliance Liquid Treasury Fund declared a high dividend of 20 per cent in its weekly dividend (reinvestment) plan. Tata Liquid Fund has also declared a hefty dividend of 6.5 per cent in its weekly dividend plan. Escorts Growth Fund has announced its first dividend of 9 per cent.

The week also saw some new launches. In a re-launch mode now, GIC Mutual flagged two new debt funds christened GIC Debt Fund and GIC Gilt Fund. These two offerings closely follow the successful launch of GIC Liquid with over Rs. 100 crore under management. The Debt fund will invest 75 to 100 per cent of its corpus in Debt securities while the Gilt Fund will invest about 85 to 100 percent in the same. And the balance will be invested in money market instruments. GIC Mutual has over Rs 600 crore assets under management.

Sun F&C Money Value Liquid Fund has introduced a dividend option. Both growth and dividend plans will have a common portfolio and similar scheme features including investment objective and asset allocation. IL&FS Mutual Fund has come out with a Fixed Maturity Plan (FMP) - Yearly Series. With this, IL&FS Mutual fund now has a complete range of debt products namely Liquid fund, Short term Bond, Regular bond fund, Gilt fund and FMP.

Fund Update: All fund categories plunged but Medium Term Debt funds gained marginally. The average equity fund lost 2 percent against the market loss of 2.8 percent on the Sensex. But many funds gained. The key gainers were –Chola Freedom Technology (4.98%), JM Basic (3.32%), Zurich India Capital Builder (1.94%) and UTI Petro (1.58%).

Medium-term Bond funds gained 0.07 percent. The key gainers were UTI Bond (.25%), First India Income (.20%), ING Capital Portfolio (0.19%) and LIC Bond Fund (.19%). The Long and Medium term Gilt funds slipped by .04 percent. But some funds gained. The gainers were – Escorts Gilt Fund (1.05%), Dundee Sovereign Trust (.24%), Grindlays GSF Investment Plan (.21%) and First India Gilt Fund (.20%).