The Hindu Business Line : Fixing aberrations need of the hour

FOR those who are bored with the usual, and often monotonous, sales spiel delivered by fund managers, a couple of proposals worked out by Mr A.K. Sridhar will come as a breath of fresh air. The Chief Investment Officer of UTI Mutual Fund has, without mincing words, presented a strong case for amending some of the aberrations that have come into being in the world of asset management.

The first of the two suggestions relates to the demand for special treatment made by certain quarters. These are investors who are adamant about portfolio disclosures - more frequently than what is normally done. In some cases, there is emphasis on one-to-one meetings with fund managers, a privilege that ordinary investors do not have.

The other proposal, perhaps more avant-garde than the first, refers to a practice followed by all fund houses. This pertains to the allotment of units at the prevailing NAV on the day a cheque is received. The date of realisation of the payment instrument is not taken into account.

Interestingly, the UTI MF CIO does not take sides. He leaves the first idea for discussion as to whether any special treatment is acceptable to the majority of the investing populace.

As for the second, he agrees that the current practice of allotting units (which at any rate appears to be quite investor-friendly) could after "deeper analysis" present a different picture. It is difficult to come to a conclusion, but it is "definitely worth some discussion", is all that he mentions.

Just in case you wish to read his actual statements, please look up UTI MF's latest factsheet (September-October).

What makes it all so significant is the fact that the statements have come from such a senior functionary. Mind you, UTI MF also happens to be the largest player in the industry, handling a fairly large pool of assets spread over a wide range of funds. But isn't Mr Sridhar charting a rather perilous course? Will he not disturb too many safe havens?

All those questions are for you, dear investor, to answer. For the time being, let it be simply said that the spirit of his statements needs to be endorsed wholeheartedly. And, not without reason. After all, not all investors get the opportunity to meet fund managers directly. Many of them have to remain satisfied with month-end portfolio disclosures or even reports carried by the media. Simply compare the position of the small players with what is enjoyed by large investors, and you will get a clearer picture.

The point is, aberrations that have been spawned over the years by these practices have grown in strength; they have far too many backers today and practically no one is willing to discuss these in public.

Many fund houses, in their efforts to step up their businesses, seem to prop them up. Even some of the larger players, which could have rightly assumed a more positive role, are keen to encourage them. Their opponents are mostly silent either because they are too casual in their approach or because they lack solidarity.

One tends to believe that the absence of unity is the reason.

Feedback may be sent to nilanjan@thehindu.co.in

More Stories on : Mutual Funds | Mutual Confidence

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Funds World India to showcase opportunities for global players

Fixing aberrations need of the hour

Households turn conservative — Equity investments stagnate in 2003-04

Changes in BSE indices take effect from today

Banking counters shine

Sensex may see further decline

Those who talk know that those who know don't talk

`Correction may be in order at this stage'