The Hindu Business Line : Sudden surge in MF transactions

THERE has been a sudden surge in transactions recorded by registrars & transfer agents of asset management companies, prompted partly by recent changes in sentiments affecting investment patterns. Switches and redemption requests are in full swing as investors revise their strategies for the coming days.

The outcome of the elections and its probable impact on the capital market has induced some sections to follow what are essentially short-term tactics. These sections are moving out of the schemes in which they had remained invested, a trend that has given rise to this multitude of transactions. A good part of the movements has been in favour of temporary options such as liquid funds and short-term funds. Money has also moved out of equity schemes.

Registrars currently have their hands full, with so many investors shifting their savings in order to de-risk their portfolios to the best extent possible, MF sources say. Their efforts are being actively encouraged by distributors. The situation, they add, may well put to test the capabilities (for handling large volumes of transactions) that registrars have built in recent times.

It is pointed out that leading players such as CAMS (Computer Age Management Systems) and Karvy have in place their own monitoring systems. CAMS and Karvy together serve the majority of asset management companies.

Numbers pertaining to sales, redemption, investor categories, asset sizes and the like are easily available for comparison.

Even city-wise break-up of net sales is worked out regularly. Extensive data on individual distributors can also be found.

A top distribution firm told Business Line that the changing transaction scenario has been reflected in a number of major indicators. These include variations in the total number of folios, additions of new folios and retail contributions.

The latest trend, in fact, implies extra work for registrars, who are required to handle the regular flow of mandates.

Added to this is the work arising courtesy new products which are introduced by fund houses from time to time. There have been a number of initial offerings lately; apart from the better-known launches (by the likes of Reliance, DSP Merrill Lynch, Kotak Mahindra etc), there has been the usual stream of fixed maturity plans as well.