The Year That was 2010

Controversey over the regulatory aspects of ULIP that kept both investors and distributors alike in anxiety hold during 2010, but it will be more known for the revamping of MF regulations 1996 in a major way.



SEBI made the "bold" risk clause in print media and then shortened it for convenience of audio/video telecast advertisemaents.


The valuation of debt portfolio walled into two classess with one of them having term less than 91 days and the other with that of more than 91 days. The asset portfolio with debt having more than 91 days will have to be valued at market prices or against the benchmark's yield in a proportionate manner, if the securities are not traded.

The next historic move was introduction of ASBA for NFOs. Simultaneously the NFO period was reduced to 15 days for CES and OES while sparing the ELSSs. The unit premium collected on sale of units henceforth needs to be accounted as Unit Capital and the discounts debited to distributable reserves.

The disclosure needs mandated Commission or Brokerage paid to sponsors, Associates, employees and their relatives be declared in specified format every 6 months. It also needed the MFs to articulate its generic policy regarding Corporate Governance in investee companies and make itemised disclosure on their actions. The proforma for declaring the investor complaints every year in the annual reports was made mandatory including uploading it on the website of the fund. Elaborate disclosure is needed about the use of derivatives in the portfolio; importance is for hedging and made it compulsory not to write options contract.

In line with the removal of entry load, the additional management fees of 1% for no load funds became an unsolicited section which found its logical end

Fund of Funds unitholders got relief when SEBI ensured that any revenue accruing to the scheme should be accounted into scheme accounte and not have revenue sharing arrangements even when they invest in ther own schemes. SEBi allowed the FOFs the option to select one of the two methods of total expense structure earlier given by it.

The consolidation/merger of schemes shall not be further treated as change in fundamental attributes.


The AMFI certification henceforth will be NISM certification for distributors.


PAN, KYC norms are madatory from new year for any amout of investment in MF. SEBI made it legally bound to have the PAN, KYCand PoA(wherever applicable) data with AMC/RTA and not just with distributors. The Stock Broker channel was given freedom to use the digital higway for transacting the MF deals in the same manner as that for stocks.


The transfer of units was upheld as a normal activity than a rare one.


The interval schemes were made to be listed compulsorily.


The trustees need to value the portfolio of Gold ETFs half yearly based on the auditors report commenting on the asset allocation and also affirm whether the statutiry auditirs have done the physical verification of stock.

SEBI made it very clear that the assets of scheme shall be made free from all incumberances.

The new funds that came were Pramerica and Motilal Oswal. The Most 50 launched by Motolal Oswal was the beginning of a new kind of index funds. On the marketing side, there was a tendency to go to basics from ING Vysya, Religare, Axis and Taurus and also add apinch of gold into the MIPs of Fixed Income portfolios. Another notable feature was the launch of sectoral ETFs.

IDBI cameback with an index fund. Shinsie gave the baton to Daiwa where as the Fortis bowed its way to BNP Paribus, DBS Chola to L&T during the year under review.

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1. 2009: A bird's eye view on MF industry