labels: confederation of indian industry, investment - general, mutual funds
Guidelines for real estate MFs, capital protection schemes soon: SEBI chiefnews
15 June 2006

Mumbai: Addressing the CII Mutual Fund Summit 2006, 'Indian mutual fund industry: generation next', M Damodaran, chairman, Securities and Exchange Board of India (SEBI), announced that the guidelines for launching real estate mutual funds in India would be promulgated next week.

Damodaran also said that capital protection schemes would be launched by next month and that the scope for launching Indian mutual fund schemes aimed at overseas investors was under active consideration as follow-on to the finance minister's announcement in his Budget speech.

Damodaran also complimented the mutual fund industry on its growth performance over the past year. According to him, the industry's growth has been beyond figures and mutual funds have done excellent work in reaching out to new segments and adopting a better fee structure. "I believe mutual funds today are far more significant than they were a year ago. It is time to press down the accelerator," he said.

Damodaran called for a greater role on part of mutual fund trustees, especially in new fund offerings (NFOs). He said that mutual funds should not only publicise new offerings but also their existing schemes. Before launching any new fund offerings, trustees should first verify that an existing, older offering does not already cover the scope of the new NFO.

Stressing on the need for more realization by mutual funds, Damodaran pointed out that while incidences of mis-selling have substantially reduced, they have not been eliminated entirely either. He also asked mutual funds to ensure that they alert investors about aspects like ups and downs in the stock markets. "There is reasonable money to be made in this asset class if you take informed decisions," he stated.

In his welcome remarks, Mr. Farhad Forbes, Chairman, CII Western Region, highlighted the huge untapped potential market that could be exploited by mutual funds and said that there was immense scope for proactive measures from SEBI and AMFI. According to him, the increased focus on equity means that a downside in the equity markets could also impact mutual funds substantially. The low level of investor knowledge coupled with the dependence on tax sops could also affect returns, he said.

S V Prasad, CEO, Birla Sun Life Asset Management Company Ltd., pointed out that even today; debt and cash funds constitute 60 per cent of the mutual fund industry. "People should understand that mutual funds are long-term solutions provider across various asset classes. The Indian mutual fund industry has taken big strides and is as good as any in the world. It has done extremely well by all yardsticks," he said. Prasad is also chairman, CII Mutual Fund Summit 2006, and chairman, CII national committee on mutual funds.

A P Kurian, Chairman, Association of Mutual Funds in India, highlighted the fact that the Indian mutual fund industry grew by 65 per cent on a year-on-year basis during 2005-06 compared to a rate of just 9 per cent in 2004-05. Distribution should be looked at in a more holistic manner, considering the possibility of having a monitoring mechanism or revising business practices, he said.

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Guidelines for real estate MFs, capital protection schemes soon: SEBI chief