The Hindu Business Line : Pure commodity funds may not be so easy to introduce

The securities regulator last week flagged off norms for what could easily lead to very interesting products for Indian investors - real estate mutual funds. Mr A.P. Kurian, Chairman of Association of Mutual Funds in India (AMFI), wonders which fund house - there are now about 30 players - would be the first to capitalise on the new norm.

Excerpts:

What could trigger the arrival of the first realty funds in India?

We do see a few positive factors, ones that would ultimately attract at least some of our members to come up with these options. Consider the expanding real estate market, something that even the average Indian consumer is keenly aware of these days. And I am not referring to mega shopping malls and sprawling housing complexes alone.

The point is the common man would like to gain from the emerging scenario too. Real estate funds would provide him with the right vehicle for investments in this segment... these would allow him access to a booming market.

REITS, or real estate investment trusts, have in the past made their presence felt in a number of other countries as well. This argument too would go in their favour.

When are the detailed guidelines expected?

These are yet to come, and I cannot comment exactly when they would arrive. What is noteworthy, however, is the fact that SEBI has seen merit in the concept. The close-end structure of the real estate funds, we think, would be good for investors.

This, and the few other provisions that the regulator has touched upon, would provide the desired bedrock.

At such an early stage we are not too sure as to which player would be first off the mark. Let us wait and see who takes the lead.

There are fewer doubts about gold ETFs today than before...

True. Players like Benchmark MF and UTI MF have already expressed their desire to bring out gold ETF products.

Their offer documents have also been filed. These clearly demonstrate that the critical issues debated in the past have been now addressed. The next few months would see some development on this front.

Let me tell you, however, that pure commodity funds may not be so easy to introduce. There are far more complex matters to be sorted out when it comes to commodity products. In fact, we may have to wait for the next round of reforms for these funds to materialise.

Are any new fund houses coming to India?

A few names, some of them quite well-known, have been doing the rounds for some time... these include JP Morgan and AIG. Lotus, the new entity, is also here and is widely expected to start soon. We keep hearing about a few others, but there is nothing very specific to share with you at this juncture.

You recently took steps against a distributor in eastern India. Is this becoming a bigger issue than what is anticipated?

Not really. The distributor concerned was known to have misled some people and LIC Mutual Fund, one of our members, had specifically complained against them. There was an FIR too.

AMFI has de-activated this distributor and its registration number is not functional at the moment. There was proof and we had no problem in doing what we did.

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