The first AMFI Mutual Fund Summit was held in Mumbai on June 29, 2017. Here's what Anil Ambani and Ajay Tyagi has to share in their addresses to the audience.
Ajay Tyagi, chairman of the Securities and Exchange Board of India
Reaching the masses
Inflows from B15 cities have risen in the last few years. Currently, around 16% of the industry’s total Rs 19 lakh crore assets are concentrated in smaller towns.
SEBI has asked AMCs to share 50% of the 2bps IAP corpus with AMFI. The industry body has come out with a campaign called ‘mutual funds sahi hai’ to raise awareness about mutual funds. Of the 175 crore IAP corpus with AMFI as on March 2017, only Rs 28 crore has been utilized so far. The money should be effectively deployed to spread awareness in smaller towns. Advertising is not a CSR activity. It is a core strategy. The industry should measure how many new investors it has added after this campaign.
Superior fund performance
Eighty six per cent open-end equity mutual funds have outperformed their benchmarks in the last 5 years. Mutual funds have emerged as the backbone of domestic investments which are providing a cushion and stability to the markets when foreign investors exit.
Default in debt instruments
Fund managers must play safe while investing in companies to avoid stressed assets coming into mutual funds. They need to be watchful of NPAs not getting shifted from banks to mutual funds through debt funds.
Number of schemes
There is a need to consolidate schemes as the government has eased tax rules on consolidation. He urged AMFI to pursue this matter with the industry.
Corporate governance
Appreciating the participation of AMCs in corporate governance of investee companies, he said that SEBI is in the process of forming a stewardship code to be followed by financial institutions in participating in the voting process.
Registered Investment Adviser
SEBI has received mix responses on the recently published RIA consultation paper. He asked distributors to share their views to enable the regulatory body to form regulations that strengthen the industry.
KYC
On the suggestion of simplifying KYC norms, SEBI is in advance talks with the finance ministry to facilitate common KYC across financial regulators.
Reliance Group Chairman Anil Ambani had four suggestions for the new SEBI chief for the next 100 days.
- Make mutual fund investments simpler.
- Allow anyone with a legitimate bank KYC to invest in mutual funds by doing away with Mutual Fund KYC.
- Ensure better utilization of technology to improve penetration.
- Simplify advertising norms for mutual funds to help the industry communicate the value proposition to investors.
He also noted that despite the asset management industry being in its infancy in India, there has been significant growth and distributors have had a strong role in its contribution. “Distributors are the eyes, ears, arms and legs of the industry. Despite all our digital and ecommerce success, it is rare to find investors investing in mutual funds without consulting a financial adviser,” said Ambani.
