MUTUAL FUNDS INDUSTRY SHOULD FOCUS ON INVESTORS’ INTEREST

 By: BHARAT RATNA

• Mutual funds should give more importance to investor’s interest to sustain the growth of mutual fund industry.

Mr C B Bhave, Chairman, SEBI

• Investor’s education and cost effectiveness are the major issues and challenges before Mutual Funds industry.

• Advisory Committee to be set up to discuss and debate on issues and policies and investors protection.

The stock market, which has lost over 26 per cent so far this year on global slowdown and inflationary pressures, is propelling fund houses in the country to look for greener pastures in the overseas market.

Mutual Funds had seen CAGR at 47% next only to Russia at 97% and China at 67% during the period of 2003-08. Some of estimates say that in the next 2-3 years, Mutual fund industry would grow at 35-40%.

Mutual Fund needs to become a conscious choice of the large untapped investor community through investors education undertaking through the model of PPP to make Mutual Fund Investment to the households in the tier II and III cities. However, along the growth come responsibilities as expectation of investors are ever rising. Mutual funds insight should be on developing institutional market like pension/insurance funds and sustaining growth in a maturing market.

U K Sinha, Chairman, CII Mutual Fund Summit 2008, Chairman, CII National Committee on Mutual Funds and Chairman & Managing Director, UTI Asset Management Company Pvt. Ltd., said that government should consider softening or removal of inter-regulatory arbitrage and pension sector reforms. He also pointed out that focus should be on investor education by spreading financial literacy.

Mr C B Bhave, SEBI chairman at the 4th Mutual Fund Summit organised by the Confederation of Indian Industry (CII) in Mumbai on 18 June 2008 said that Mutual Funds should focus the needs of investors.

Further He recommended that the mutual fund industry take up an investor survey to garner what they feel about mutual funds, competitive products and gaps in the industry to raise the level of services.

Mr. Bhave also said that SEBI initiatives towards investor protection and awareness and SEBI should re-look at Mutual Fund Regulations and mandatory board of trustees for mutual funds is being looked at. He also informed that an advisory committee for mutual fund is being set up which would discuss and debate on issues and policies of mutual fund industry.

Mr. Banmali Agrawala, Chairman, CII Western Region and Executive Director - Strategy & Business Development, The Tata Power Company Ltd. Said that the Mutual Fund industry coming of age, time has come to focus on educating investors as more responsibility and should focus on educating investors and accountability. He further emphasized on the increasing role of research and analysis of companies in mutual fund industry.