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.
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.
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
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.