The year that was 2016: CAMS perspective

2016 was a year that suffered no dearth of surprises. The year was marked by multiple instances of market unpredictability, what with Brexit, Fed rate hikes, surge in oil prices and strategic political events passing on in their stride. In the domestic premises, demonetization and GST did their parts to influence the proceedings of the Indian market.

MF

Robust investment activity in MF in India

Mutual funds investors in India, however, surprised observers with a significant upsurge in participation, even as the rest of the world was reeling from the effect of the many events ringing with political and economic significance.

Industry data confirms that inflow of investments as high as 580 billion had been recorded in the period between January and November 2016. This information has rendered 2016 as the third consecutive year that has registered positive growth in terms of mutual funds in India.

One aspect of investment discipline, as observed among investors in India during this period, was adherence to a long-term investment strategy and a well-planned asset allocation practice that could be deployed even during times of tumult in the market.

Systematic Investment Plan or SIP, where the investor builds a portfolio through specific sums invested at regular intervals that may be monthly, quarterly or annually, was one investment avenue a vast majority of Indian investors had taken to in 2016.

The year saw a remarkable increase in retail investor participation through SIPs. Implementation of presence-less and paperless eKYC procedure was another factor that catalyzed robust investment activity in the mutual fund sector.

Mutual Fund SIP

The CAMS perspective

An integral part of the Indian Finance sector and a trusted service partner to 8 out of the top 10 AMCs in India, CAMS had retained its position as the market leader with a substantial market share of 62%.

The following inferences are based on data provided by CAMS Data Bureau Services – covering 92% of Mutual Fund Industry –

It is encouraging to note that investments from smaller towns had significantly increased in 2016. Nearly 2.19 million new SIP registrations made in the last year have been traced to the B15 regions in the country; T15 regions accounted for 2.65 million new SIPs. It is notable that the average ticket size had also increased during the said period.

Why investors prefer SIP

In general, SIP requires a fixed amount to be invested periodically. Clearly, this is a convenience to investors who are beginners and those who prefer to invest in small pockets.

Alternatively, step-up SIPs, as hosted by most of the CAMS-serviced funds, allows for ‘stepping up’ the amount to be invested, at set intervals.

Now, investing in SIPs has become a lot more easier for first-time investors, thanks to the state-of-the-art digital investment services hosted by camsonline.com and myCAMS. Investors can now set up new SIPs, view SIP status(es) and cancel SIPs in a matter of few minutes. The icing on the cake here is that no physical request is required for registrations done via myCAMS. For more information on investing through myCAMS, click here .

About CAMS:

CAMS Logo High Resolution

Computer Age Management Services (CAMS) is India’s premier Mutual Fund Transfer Agency serving over 62% of assets of the industry across 16 Mutual Funds. Leveraging superior technology, CAMS brings several innovative services to Mutual Fund investors and distributors. CAMS is also a service partner to leading Insurance Companies, Banks, NBFCs and Alternate Investment Funds. To know more visit www.camsonline.com

 

 

 

 

 

Can You Borrow Against Your MF Units?

Borrow Against Your MF Units?

In times of financial crisis, why stop your Systematic investment plan (SIP) or redeem your MFs, when you can take a loan against your MF units? As mentioned in the previous article, borrowing against Your MF Units is possible. Watch this video from CAMS and read the concept explained by ET to know more on Lien Marking:

1. From where can you get a loan against your mutual fund units?

You can take a loan from a financier which could be a bank or a non-banking finance company (NBFC) by pledging your mutual fund units. You can pay back the loan at the interest rate agreed with the financier. During the tenure when the units are under lien, you cannot redeem or switch the units.

2. What is the process?

As a first step you need to execute a loan agreement with your financier. The financier will write to the mutual fund registrar like CAMS or Karvy and ask them to mark a lien on a certain number of units that are being pledged. Financiers typically lend about 60-70% of the value of the pledged units. The registrar in turn will mark the lien and a letter is sent to the financier with a copy to the investor confirming the marking of a lien on the units

3. How is the lien removed?
Once the loan is repaid, the financier can ask for the removal of the lien and send a request letter to the fund. This request should state the name of the investor, fund, folio number, scheme and the number of units for which the lien should be removed. A financier can also request for a partial removal of lien in which case, lien on some of the units will be removed and these units are ‘Free’ units. This can happen when financiers receive part payments.

4. What happens if the investor defaults in making a payment to the financier?

If the borrower defaults in making payment, the financer can enforce the lien i.e. send a signed request to the mutual fund to redeem the units and send the proceeds/cheque to the financier.

5. What is the advantage of a loan against mutual fund (LAMF)?

Loan against mutual funds gives you the option of receiving immediate liquidity against the mutual fund units that you own. It is like an overdraft facility for shortterm monetary requirements, with a relatively shorter tenure than other loans. It is a beneficial monetary tool for those looking to leverage their otherwise idle mutual fund investments, and also raise capital quickly for short term financing needs. You need not sell your mutual fund units, nor is your ownership of the fund units divested after pledging them for a loan.

Source: EconomicTimes.indiatimes.com

Convenience to MF investing in your finger tips

CAMS saw 4 important reasons for developing a smart phone digital solution (i.e., “myCAMS”) that mitigates the problem of paper, reach, young and retail investors and also offers a smart self-management tool.

Mutual Fund Investments
Convenience to MF investing on your finger tips

Problem of Paper: CAMS has built electronic interfaces for Banks and Wealth Managers platforms to submit MF transactions. However, Independent Finance Advisors (IFAs) submit their investor transactions predominantly as paper forms at Registrar’s Customer Service Centers or Asset Management Companies (AMC) branches. As Transactions forms and cheques have to be time stamped before 3pm to receive same day NAV, IFAs often accept forms only till 1 p.m. or 2 p.m., so that the forms can be submitted with the Registrar by 3 p.m. Additionally, there is recurring cost of travel and time for physical submission of forms.

The exponential growth in digital transactions in financial service sector is an indication of the rapidly maturing digital habits of the population and financial transaction through myCAMS app has been steadily increasing month on month. myCAMS app has been widely appreciated by investors and is the most downloaded Mutual Fund app in the country.

Problem of Reach: Penetration of Mutual Funds in the Tier 2 and 3 remains low from beyond the Top 15 locations. The MF regulator has incentivized AMCs to expand the MF market aggressively reaching into semi urban and rural locations. IFAs are the primary distributors to secure business from beyond metros and this cadre of distributors need physical branches to submit transactions. But setting up branches to facilitate transactions receipt is prohibitive.

myCAMS as a product has a huge potential to increase investments from B-15 cities (beyond the top 15 cities). B15 cities mutual fund assets is merely 12% of total assets under management and this indeed presents a significant opportunity for distributors and asset management companies who can grow their business with the help of myCAMS.

Problem of Self Managing Investors: Another progressive step introduced by SEBI to accelerate retail investor participation is the higher NAV (Net Asset Value) for direct investments, in 2013. Direct investments are those where there is no intermediary involvement i.e. self-managed investment.  Since the launch, there has been a steady increase of inflows from both corporate and retail investors. myCAMS app is developed to be a single gateway where an investor can transact and manage his/ her Mutual Funds across CAMS serviced funds with just a single login. They can diligently maintain their investment details and track performance/returns.

CAMS has been launching several “must have” and “great to have” features in myCAMS mobile app to make investing in mutual funds a delightful experience for mutual fund investors

Problem of Younger savers/ investors: As younger investors (digital natives) seek products to create wealth, their relating to the MF as a product category will depend on the ease of access and coolness, pointing to the need of a “anytime, anywhere” solution.

myCAMS has a large number of registered users in the age group of 25-35 pointing to the potential of the app with younger savers. 

Author: Mukund SESHADRI