S&P BSE Sensex*	Re/US $	Gold Rs/10g	Crude ($/barrel)	FD Rates (1-Yr)
20,882.89 | 354.3 1.73%	61.22 |0.1 0.23%	30,970.00 | 755.0 2.50%	110.34 | 1.4 1.29%	8.00% - 9.00%

Is your retirement money in EPF really safe?

As a salaried individual you may contributing your hard earned money into the Employee Provident Fund (EPF) account and making some provision for your golden years. You see, provident fund (PF) corpus that you build over your entire working life is a significant contributor to your retirement wealth. But here's something which has impaired the safety of this salary-friendly investment instrument.

Scamsters have been puncturing EPF accounts with fake claims. It is noteworthy that nearly 2.5 crore, or 30%, of all PF accounts have a negative balance, some of which may be due to fraudsters who faked withdrawal claims to siphon-off money by opening bank accounts using forged identity documents. Apparently, it said that fraudulent withdrawals have been orchestrated in accounts that have not had fresh inflows since years (i.e. dormant accounts). The amount had been settled in all these cases through National Electronics Fund Transfer (NEFT) in the bank accounts opened with forged identity.

You see, the aforesaid findings were discovered during Employees' Provident Fund Organisation's (EPFO's) recent drive to clean up its books and bring all members' accounts up to date. Now getting into a damage control mode, the EPFO has issued directives to its field offices to fix responsibility for these lapses, correct the spectre of negative balances and ensure that no fake claims get through the system.

PersonalFN is of the view that, insiders seem to be colluded with scamsters in orchestrating such a fraud and Know Your Client (KYC) norms seem to have been flouted. Therefore the false claims have managed to escape all checks and balances in the system.

Given the aforesaid, it is recommended that the employees check the status of their EPF accounts (whether they are active or dormant) and also consolidate all the old accounts with the present one (to check whether are reflecting the correct details), in case if you have switched jobs in the recent past but have not withdrawn or transferred your balance to the present PF account.

How guidelines for social media in capital markets can protect you.

The glamour quotient added by the financial industry over the last decade or so has enthused many to write financial blogs, and the social media too is playing an active role. If you are looking out for an opinion on investing, well, you'll find a host of them. And this is especially more so, in case of investing in equities or stocks.

But what about investors - has it helped them to create wealth, or are they losing their hard earned money? Well through experience we can say that in most cases, since the opinion is unsolicited and there being lack of accountability and responsibility; investors who relied upon have caused damaged to their wealth.

Nevertheless now to crack the whip, the Securities and Exchange Board of India (SEBI) is looking to frame guidelines to check the possible misuse of social media in capital markets so as to protect investor interest. The move is also a part of SEBI's effort to curb manipulative practices in the capital markets through the use of social media. You see, very often the social media is misused by floating incorrect and / or deluded information feeds which in turn leads to price rigging.

It is noteworthy that the International Organisation of Securities Commissions (IOSCO), the global grouping of capital market regulators that includes SEBI, recently resolved to focus on the social media, as that could serve as a tool for gathering market intelligence and identifying trends.

PersonalFN is of the view that, guidelines from SEBI on use of social media in the world of finance, capital markets and corporate affairs; would add vigil thereby guiding companies and other users of social media to use the medium more responsibly, which in turn would bring in accountability as well. If the guidelines are drafted well, it may possibly also reduce the incidences of price rigging via the usage of social media.
 

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Mutual fund houses gain...but what about investors?

It would be rare to find any investor making excellent profits these days due to topsy-turvy experienced in equities. Equity markets have been absolutely flat over last 3 years and equity oriented mutual funds have been witnessing continuous redemption pressure. It is often said that mutual fund industry is passing through a rough patch. We have seen mutual fund houses exiting business for lack of profits. But you would be astonished to know that profitability of asset management companies has gone up substantially over last 3 years. In fact, collectively a profit of mutual fund houses is expected to record a 3-year high in Financial Year (FY) 2012-13. You may have found it startling and may be keen to know what led them earn such huge profits when you are burning your fingers.

Profitability of mutual funds...
Except for two fund houses rest all have declared their profit numbers for FY13 which stands at about Rs 764 crore. It is estimated that when the remaining two fund houses announce their results, the number may rise to Rs 860 crore.
 

Long term debt funds- flavour of the season...

(Source: ACE MF, PersonalFN Research)

You see, investors interest in long term debt funds and some favourable regulatory changes have helped fund houses register a huge growth in profits.

Typically fund houses charge an expense ratio of 1.70% on long term debt funds including long term gilt funds. During FY13, Asset under Management (AUM) of mutual funds in the category of long term debt funds went up several times.

To read more about this news and the view of PersonalFN over it, please click here.

Would REITs make investing in real estate easy for you?

Demand in the real estate sector has been sagging due to economic slowdown. Since many people are deferring their property purchases; inventory level in major property markets is rising. It is often found that due to higher ticket size, many find it difficult to buy properties. On the other hand, real estate developers have been knocked down by higher cost of borrowing due to which many projects have gotten stalled. To increase the investor-base and open up another financing avenue for real estate developers, SEBI has been considering allowing Real Estate Investment Trusts (REITs) in India. The initial draft was launched in 2008 but was subsequently withdrawn too due to non-transparent valuation norms, dissimilar stamp duty structure across different states and the lack of uniformity in land and property pricing. Recently SEBI has revived the plan by issuing draft regulations for launching REITs in the country.

What are REITs?
REITs are trusts which are patterned like mutual funds. They pool capital from investors and deploy in real estate. REITs will be established under Indian Trust Act, 1882 and will have parties such as a sponsor, manager and valuer. Both, investors as well as property developers are expected to benefit from the launch of REITs.

What are the positives?

For the real estate sector:
 

• It could help the real estate sector to raise stable funds
• Will encourage developers to think long-term
• Will infuse transparency to the real sector (and would be well-regulated now if the Real Estate Regulation Bill is passed in the monsoon session of the parliament)
• Instil professionalism in property management
   

For the investors:
 

• Can make investing in real estate accessible to those who may not have the resources or may not want to directly buy a property
• Offers an alternative investment avenue
   

For the economy:
 

• Attract overseas investment
• Could help in development of capital markets
• Could help bringing in stable long-term flows which are needed to finance country's Current Account Deficit (CAD)

To read more about this news and the view of PersonalFN over it, please click here.

The capital market regulator - SEBI, seems to be on major overhaul of its role, function and organisational structure under 'Project Shikhar'. The regulator has roped in global consulting firm, Oliver Wyman for this purpose, who have also recommend a setting up of a stronger workforce and putting in place greater IT (Information Technology) resources.

Further, SEBI has asked the consultant to re-define the vision, mission and value statements with the help of top officials of the regulatory authority.

Among others, the consultant has also recommended the capital market regulator to impart a greater focus on mobilising household savings into capital market assets, strengthen its supervisory functions and its oversight of listed companies.

The other goals identified in this project are:

• Building a balanced and diversified investor base in the country;
• Developing viable alternatives to bank credit;
• Enhancing ability to prevent and respond to crises;
• Empowerment of investors; and
• Ensuring full trust and confidence of investors in the securities market
   

PersonalFN is of view that execution of 'Project Shikhar' through acceptance of recommendation from the aforesaid consultant would bring SEBI in a more vibrant avatar and that would instil confidence of investors.

Price Rigging: An illegal action performed by a group of conspiring businesses that occurs when the firms agree to artificially inflate prices in an attempt to recognize higher profits at the expense of the consumer. Price rigging can be found in any industry and is regulated by the antitrust division of the United States Department of Justice.
 

Quote : "Money won't create success, the freedom to make it will" - Nelson Mandela