Birla Mutual to launch the GenNext Fund
Kolkata: The Birla Mutual Fund has worked out a scheme for investing in companies that are likely to benefit from rising consumption patterns, and has named it as the Birla India GenNext Fund.

Under normal circumstances, about 90 per cent of the assets will be invested in equity and equity-related instruments carrying medium to high risk profiles. While the minimum investment is 80 per cent, this can be scaled up to 100 per cent if the situation so warrants.

According to the offer document filed with SEBI, the country's economy has seen "a paradigm change" in consumption habits in the past decade. The pattern is fuelled by two factors - the opening up of the economy and its integration with global markets.

Some of the sectors that are expected to benefit from this growing propensity to spend are automobiles, hospitality, travel and tourism, retail chains and consumer durables. Financial services too have not been left out of its list of areas in which the fund would try to invest. The fund, to be managed by Mr Nishid Shah, will have the Nifty as its benchmark index.

The MF has referred to the rising income levels in India and the new consumption patterns. It has also mentioned the following facts:

• India's per capita income has jumped by 78 per cent at Rs 25,723 per year in 2003-04 from a level of Rs 14,463 per year in 1996-97. If the per capita income of urban areas is considered alone, the number would be higher.
  
• Even though India largely has a developing status, the proportion of services in the overall GDP of the country has grown to almost 50 per cent. This has recorded a growth of eight to nine per cent in the last few years.
  
• With 56 per cent of the population being less than 25 years, it can be safely assumed that the companies that cater to this segment would stand to benefit in the times ahead.
  
  "The rising levels of consumption are also being led by a growing breed of young educated mass of people working in areas like call centres, service desks, IT companies, financial services etc. The young generation has consumption habits that are markedly different from the existing middle class population," the offer document points out.

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UTI: Corporate India to return decent numbers
New Delhi: The UTI Mutual Fund is hopeful that corporate India would return "fairly decent numbers" in the earnings season beginning from Monday, though it expects the stock market to exhibit "volatility" in the near term.

"We expect corporate earnings to grow by 15 to 18 per cent. The market valuation is not expensive. It is fairly priced. I am not saying its cheap," A.K. Sridhar, Chief Investment Officer, UTI MF, said here at a press conference to announce the launch of "UTI-Dividend Yield Fund" scheme.

The initial offer period for the open-ended equity oriented scheme is from April 11 to May 3. The UTI Mutual Fund CIO said that the UTI Dividend Yield fund was suitable for investors with at least a 1-year time horizon for their investments.

Sridhar also said that he doesn't see any hardening of interest rates in the near term in the economy. He had a similar viewpoint on deposit rates. At the same time, he held that the proposed changes in income tax provisions augur well for mutual funds.

"The changes proposed include removal of Section 80L. The proposed taxation changes would dramatically change the saving habits of Indians, especially those in the middle income group," he said.
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