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Equity Mutual Funds Recorded Worst Inflows in Three-and-a-Half Years in November

Professor of Financial Economics and Part-time Value Investor, Transfin.
Dec 10, 2019 12:43 PM 6 min read
Editorial

Equity mutual funds recorded their worst inflows in three-and-a-half years. Insurance stocks gain as Govt considers raising FDI limit in insurance companies. Gmail to allow users to attach email on emails. Medical tech startups and e-pharma companies seek greater clarity in Personal Data Protection Bill.

 

ECONOMY

Frauds and economic crimes rise as India’s economy slows.

Bad News Nobody Asked For: India’s economy is witnessing a worrying trend: that of growing instances of fraud and economic crimes.

 

As per data from the RBI and the NCRB, both bank frauds and general economic offenses are on the rise. The rate of economic offences (as reported under the Indian Penal code) rose to 111.3 crimes per million people in 2017 from 110 in 2014. Forgery, cheating and fraud accounted for 86% of all these offenses.

 

Bank frauds have seen a seven-fold increase in just five years. And the overwhelming majority of these stem from malpractices at PSBs, which account for 90% of the fraud value and 55% of the number of frauds. Livemint

 

Frauds and economic crimes rise as India’s economy slows.

 

Delayed salary payments main reason for retail loan defaults.

You Are Not A-loan: As per a report by CreditMate, delay in salaries by employers is the top reason for retail loan defaults, accounting for 36% of the same. The report looked at payment patterns of 2 lakh borrowers from fintechs and NBFCs across India. The other top reasons for defaults were business downturns (29%), medical emergencies (13%) and loss of jobs (12%).

 

Delhi, Haryana and Arunachal Pradesh accounted for the highest defaults while the poorest-performing cities were Bhopal, Chennai and Bengaluru. Mumbai was credited as the city with the best repayment history. ToI

Equity flows dip 78% in November.

Eternal Sunset of the Hapless Kind: At INR1,311cr in November, equity mutual funds recorded their worst inflows in three-and-a-half years. This number is 78% lower than the same for the previous month. And despite the drop in equity inflows, the assets under management (AUM) for the industry soared to a record high of INR27Lcr. BS

 

INSURANCE 

Why do insurance companies add premium charge for tobacco users?

Smoking Can Cost You Heavily: As per the World Health Organization (WHO), Indians account for over 12% of the world’s smokers. With the repercussions of smoking being rather well-known, life insurance companies also actively try to hedge themselves from the higher risk by increasing rates for tobacco users. 

 

Many insurers consider the higher risks associated with smoking when adding a premium charge for tobacco users.

 

Click here for a useful comparison between the premiums of a smoker vs a non-smoker by three leading insurers providing term insurance of INR1cr life cover for a 30-year-old, covering age till 70 years.

 

Applying for a health insurance? Here is a handy primer of some baffling health insurance terminologies.

Insurance stocks gain as Govt considers raising FDI limit in insurance companies.

Cheers of Joy: Share prices of insurance companies today hiked 2-8% on the back of news that the government is considering raising the limit for foreign direct investment (FDI) in insurance companies to 74%. 

 

Currently, FDI in the insurance sector is capped at 49% under automatic route, including for insurance broking, insurance companies, third party administrators, surveyors, and loss assessors. 

 

Hit Refresh: Finance Minister Nirmala Sitharaman in the July budget had announced that the government will examine suggestions from various stakeholders to further open up FDI in the insurance sector. ET Insure

 

INVESTING 

Want to switch your mutual fund distributor? Know how. 

This Isn't Working Anymore: Banks in India are one of the largest and most “trusted” financial intermediaries, but are also guilty of a major share of mis-selling cases - especially mis-selling of insurance policies in India and other such third-party products like mutual funds.

 

As per SEBI data, as of 31st March 2018, there were 107,302 mutual fund distributors in India. The vast majority of mutual fund ‘advisors’ in India are actually distributors of mutual funds, including relationship managers in banks.

 

It is worthy noting here that a mutual fund distributor is distinct from a SEBI Registered Financial Advisor (RIA) who cannot collect commissions and must instead directly charge you for financial advice. 

 

Quick Tip: In case you are unsure who your distributor is, you can identify him from the AMFI Registration Number (ARN) that will be mentioned on your mutual fund statement.

 

Now a mutual fund distributor is ideally expected to gauge a client's overall asset allocation, their financial goals, their risk appetite and accordingly explain the risks invoked in a mutual fund investing. However, if one is not happy with one's mutual fund distributor, one could simply switch by filing a form from AMC websites. One can also switch out of regular plans and move to direct plans (which have no distribution commissions) but this can attract exit load and tax. Livemint

Which is a better investment mode - SIP or Lump Sum?

Extra Crunch: There are two ways to invest in mutual funds - lump-sum or the Systematic Investment Plan (SIP) mode. Here's a beneficial list of pros and cons of both these investment modes. Read more to understand which one might suit your requirement better.

 

ONLINE PHARMA

Medical tech startups and e-pharma companies seek greater clarity in Personal Data Protection Bill.

Once in a Definition: Medical tech start-ups and e-pharma companies have raised concerns over the Personal Data Protection Bill, which is expected to be tabled during the ongoing Winter Session of Parliament. They seek a clear definition of “sensitive” health data and detailed, unambiguous guidelines for the use of data.

 

Explain Yourself: The Personal Data Protection Bill would have a framework for the use of personal and private data by public and private entities. And personal health data – which e-pharmas and related companies in the sector explicitly rely on – falls under the category of “sensitive data”, and thus can be processed only after “explicit consent” by individuals and should be subject to “fair and responsible processing”. ET Tech

 

Listen In: What’s behind the recent woes of the online pharmaceutical industry, once touted as a INR25,000cr market opportunity? Click here to listen to the latest episode of LongShorts for a deep-dive into the matter.

 

TECH

Gmail to allow users to attach email on emails.

Mail Inside A Mail...A Russian Email?: Mailing system Google will soon allow its users to send emails as attachments without having to forward or download them first.

 

Users can simply drag and drop one or more emails into the Compose window. Alternatively, they can select one or more emails from the conversation view, and using the overflow (three-dot) menu button to select "Forward as attachment". Click link to see how this can be done. 

 

As per Google, these options can be used where attaching emails makes more sense than forwarding separate emails, like wanting to forward multiple messages related to a single topic.

McAfee expresses interest in rival NortonLifeLock.

Deal to Go: Cybersecurity software firm McAfee has reportedly expressed interest in rival NortonLifeLock, joining Permira and Advent International as potential suitors for the consumer software company.

 

NortonLifeLock is the new name for Symantec Corp which closed a $10.7bn deal to sell its enterprise-security business to Broadcom in early November. NortonLifeLock, which has a market value of around $15.8bn primarily sells Norton antivirus software and LifeLock identity-theft-protection products. WSJ

FIN.

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