Business Daily from THE HINDU group of publications
Tuesday, Jul 11, 2006
Business Daily from THE HINDU group of publications Tuesday, Jul 11, 2006 |
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Mutual Funds Markets - Mutual Funds Nilanjan Dey
Kolkata , July 10 Numbers are set to rule the world of mutual fund distribution in more ways than one. Not only are the assets under advice by intermediaries expected to rise exponentially, but the number of distributors is also set to soar in tandem. The tally of distributors registered with AMFI, the association formed by mutual funds, is hovering near the 45,000-mark and 50,000 is being seen as a target that may be easy to achieve in the not-too-distant future. While even 50,000 will be far too small a figure when compared to the agency strength commanded by public sector insurer LIC, the asset management industry feels it will start attracting more followers than before. The trend, says Mr A.P. Kurian, Chairman, has prompted the funds' organisation to be more hopeful about the headcount. "The situation is in a way a reflection of the increased acceptance of mutual funds among investors. The pie is widening and the number of distributors to service this industry will also rise," he contends. AMFI is underscoring a few raw statistics to uphold its case. Mutual funds, it says, have seen about 2.8 crore accounts - of which roughly 1.8 crore accounts are in the context of equity funds. The last few years, thanks to a burgeoning stock market, have seen the arrival of equity fund investors in a big way. The total AUM (assets of all fund houses taken together at the end of June) has grown to cross Rs 2.65 lakh crore. At the end of March 2006, over 41,000 distributors were registered with AMFI, a tally that has now gone up even more. "Changing investment habits is turning the market's attention to quality distribution," Mr Kurian notes while referring to what he says is "greater awareness" evident among investors. The view may be seen in the context of a very tricky subject - the demand raised by some sections to lift the ban on rebating. The latter, it is pointed out, is thriving, albeit secretly because of SEBI's stand on the matter. However, others have argued that it is quality of service that needs encouragement, not volume of sales.
New players in marketing
Fund houses are reporting an influx of a new set of distributors. Some of the newcomers have been quite alien to the asset management sector, drawing strength from promoters who have had little to do with funds till recently. A case in point is an outfit backed by a well-known automobile dealer, albeit one that has been investing fairly regularly in funds. The entity in question has now actively started looking for clients, it is learnt. There are other instances. The number of self-employed entrepreneurs in the intermediation business is also on the rise. They include relatively younger people, some of whom are hoping to come up as certified financial planners as well. The CFP community, Mr Kurian indicates, is already growing in the country, thanks to increased activism by the Financial Planning Standards Board of India.
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