Nilanjan Dey

Kolkata, June 27

MONTHS after they were drawn up by the Association of Mutual Funds in India, two major reports, one on capital-guaranteed funds and the other on commodity funds, are lying with SEBI, waiting to be approved by the regulator. The situation has prompted those behind the recommendations to increasingly suggest that precious time is being lost.

The reports, which elicited a lot of interest from various quarters, are said to have prepared the ground for what are considered important for the Indian market. While neither capital-guaranteed nor commodity products are available in India at the moment, these are seen to carry some potential in terms of acceptance by local investors.

The MF industry is of the view that the passage of time (with a little action being taken) is not good for investors who may be willing to try out new categories of products. While no one is willing to talk about it openly, it is felt that there is a strong case for the regulator to speak out on the issues involved.

Five months have passed since the report on commodity funds was handed over to AMFI, notes Mr Sanjiv Shah, Executive Director of Benchmark MF, who was part of the initiative. "Commodity funds, whenever they are okayed in India, will provide investors with an interesting choice," he said, adding that the report took into account a variety of issues concerning the structuring and operating of commodity funds.

The proposed genre, it may be mentioned, is not quite similar to the latest offering from the SBI MF stable. The latter recently mooted what is being billed as SBI COMMA Fund. `COMMA' is an abbreviation for commodities in Oils, Metals, Minerals, Agriculture - that is, stocks of companies linked to these areas.

"We had actually proposed that MFs should be allowed to invest directly in commodities. The report referred to aspects like taking delivery of commodities and their warehousing," Mr Shah mentioned.

Mr Naval Bir Kumar, Managing Director, Standard Chartered MF, is not so forthcoming in discussing details that have been incorporated in the report tabled by the AMFI committee on capital-guaranteed schemes. However, he too agrees that months have passed since the matter first hit the headlines.

"The task of the committee was to prepare its report. It is now for the regulatory agency to take a view on the matter. As far as we are concerned, we did what we had set out to do," he said.

Capital-guaranteed funds, as MF circles point out, will have a steady market in India, thanks to a large number of investors carrying a relatively low appetite for risk. Such investors are said to be looking for schemes that provide safety of capital - but not solely through investment in fixed-income options like fixed deposits or bonds.

(This article was published in the Business Line print edition dated June 28, 2005)
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