SEBI Chairman UK Sinha has asked the mutual fund industry to re-look at the quality and the manner in which investor education is done.
Speaking at the CII mutual fund summit in Mumbai on Thursday, Sinha said: “I have a comment about the two basic points permitted by SEBI for investor education. SEBI expected that the money will be very well utilised and will have an impact.
“I request all CEOs and trustees to look at the quality of these programmes. In several cases I found that total number of participants is 4-10. In one case, the programme was held for their own distributors. These things should not be talked about when we meet the next time at another forum.”
Another area, we discovered was in the area of short-term deposit of funds. An investor does not go to an MF to park his money in a bank FD, said Sinha. On the changes in mutual fund regulations made by SEBI, Sinha said the intention was to make the transition smooth and not disruptive.
“They have to ensure that the rules of the game are in place and the people (investors) are being treated equally.” He urged the mutual fund industry to take up branding of mutual funds as an asset class.
“Except for an advertisement yesterday, the industry has never been doing branding. It is not clear in the minds of people where a mutual fund fits into the hierarchy of savings.” He asked the mutual fund industry to make more use of Internet and mobile phones. “I am told 50 per cent of railway reservation is done through the Internet. We have a lot to catch up. Internet trading on exchanges is about 10 per cent whereas for mutual funds, it is five.”
Sinha also pointed out to fund houses that they could raise money from pension funds, such as EPFO, like their counterpart - portfolio management service providers.
“PMS providers handle about ₹7.7 lakh crore of AUM — of which ₹6.5 lakh crore is pension money and of which ₹5.5 lakh crore is solely contributed by the EPFO. Why don’t they come to you?” he asked. Sinha said it was primarily because someone had to knock at their door and explain what they brought to the table in terms of debt schemes.
He praised the way the mutual fund industry had handled the July 2013 rupee depreciation and its fallout on debt and equity schemes.
He was also happy at the one percentage point increase in AUM from beyond top 15 cities (from 12.68 per cent to 13.68 per cent) besides the performance of equity funds on three- and five-year horizons.