The Hindu Business Line : UTI Mutual Fund should take up investor education

THIS looks like a year of reckoning for UTI Mutual Fund, the country's largest investment management outfit. It did some stocktaking last week and allowed the market to take a look at what it is likely to offer in 2004.

Big things had been happening at the fund house for some time and more are being promised by the management. There is, however, a feeling that UTI MF is capable of doing much more. Indeed, one believes that it should leverage its No. 1 position to create new benchmarks for the rest of the asset management industry.

The market would expect the industry leader (as well as the other top players) to come up with fresh ideas insofar as investor education is concerned.

Can all funds come together to create a common pool of resources, one that would be directed towards educational programmes? The industry association, AMFI, may perhaps work out a suitable proposal. The idea is to collect talent and, importantly, money, for educating investors, especially the small ones.

What is needed most at this juncture is a unified effort to fight the industry's worst enemy - ignorance about mutual funds. That large tracts of the market are still poorly informed is quite clear.

Funds are, for instance, a fairly unknown element for rural investors, although some players have been claiming that they have penetrated semi-urban areas. And people still keep vast amounts of money in low interest-bearing savings accounts with banks.

Ignorance also assumes other, and sometimes dangerous, forms. These permit big, wholesale investors to blatantly disregard the small ones and take undue advantage of their size.

A section of the industry - a very large section - helps perpetuate the situation. Or so suggest sources who are aware of some of the practices that have become fairly common.

The market regulator has a lot to do on this count as well. To be fair to SEBI, some measures (to which AMFI has agreed) have been taken already.

Certain other issues would have to be addressed now. The authorities need to understand that large segments of the investor community are looking up to them for direction and support. And January 2004 could be the best time to renew the regulator's commitment to these segments.

On another front, the next few months could see arrival of new schemes. Some of them would be essentially debt products with a sizeable equity content.

Prudential ICICI MF and Tata MF have already sent their offer documents to the SEBI. It may be mentioned that Principal MF has recently set off a trend by coming out with a monthly income plan (MIP) with a relatively high equity allocation.

MIPs have made quite a splash this year and more innovations may be expected from them in 2004. The MIPs launched by the likes of HDFC MF and Reliance MF would also come up for on-going sales.

Going back to UTI MF, it has already declared a slew of measures. Investors would particularly wish to see the half-a-dozen sector funds that have been promised: Banking, PSU, auto, basic industries, large-cap and mid-cap.

The MF has pointed out that it proposes to "pre-disclose" the stocks in which investments would be made. That, one feels, would strike a different note.

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