The Hindu Business Line : Newer choices in 2007 will underscore need for better advice

Mutual funds were never better positioned to win investors' confidence, feels Mr Pankaj Razdan, MD, Prudential ICICI MF, as he talks to Business Line about the way things will shape up for the funds industry.

"A number of factors, including the end of many guaranteed-return options and the realisation that investment in funds can add value to portfolios, will make it a lot easier for us to approach investors", he notes.

Excerpts:

What sort of products can we expect from the industry in 2007?

I can't speak for all, but it is clear that funds will continue to explore the possibility of identifying gaps in their chain of products. This has happened in the past and the days ahead will be no exception either. There has been, for instance, significant product innovation on the debt side in the last few years.

On the equity front too, we have tried to see how best we can meet investors' expectations. The industry will make use of the regulator's go-ahead when it comes to newer varieties of funds. I am referring to Gold ETFs and funds that look at international markets. These will make news in the coming months.

What are Pru ICICI MF's own plans in this regard?

I am not getting into specifics here. We will do our bit when it comes to launching new funds. We have come out with a few engaging products in recent years. Again, I am not naming any particular fund.

However, investors have taken to these in a way that reflects their eagerness to test fresh concepts. It is also interesting to note that some of the older, existing products have significantly added to their following.

Ideas like `Higher NAVs make funds less attractive' still abound. How do you view this?

It is evident to us that there is a lot more awareness today than before. Yet some sections still harbour wrong ideas. Higher NAVs do not necessarily mean that the funds in question are worse than those with lower NAVs. To put it bluntly, misconceptions such as these will have to be driven away. What we need is more education. This will help a greater number of investors to appreciate the usefulness of funds.

There is talk of regulation of distributors...

Yes, we will have to see how this pans out. What we need is a set of disciplined intermediaries, ones that can service clients in the most competent manner. As the market gets expanded, thanks to newer choices, the right sort of advice becomes even more necessary for investors. The latter need to know the difference between right advice and wrong. Certified financial planners will have their role cut out in the days to come.

Finally, equities have peaked. Is it time to stay out?

It is true that the stock market has run up sharply. This will not stop us from exploring the possibility of longer-term bottom-up investing. There is a range of good stocks to pick up. Remember, there is growth in the economy, which has found reflection in all sorts of sectors. Investors will have to go by their fund managers, who will have to see how best they can make use of it.

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