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MF investor awareness programme gaining momentum

Sneha Padiyath Mumbai | Updated on April 19, 2011 Published on April 19, 2011

In 2010-11, 26 AMCs have conducted 5,817 investor awareness programmes covering 280 cities and 3,40,383 participants, flashes the ticker on the Association of Mutual Funds in India (AMFI) Web site.

But how good is 3.4-lakh participants in a country with over 40 crore households which save nothing in mutual funds? Very, say some analysts.

Consider this a first step, and it is a very impressive number, say fund analysts, distributors and fund house officials alike. But having said that, they say, there is still a long way to go.

The mutual fund industry consists of about 40 functional fund houses managing assets worth about Rs 6 lakh crore (as on March 2011).

Reaching out

Fiscal year 2011 saw the industry's trade body — AMFI — turning its attention towards the retail investors through an investor awareness programme. “We have always been trying to reach out to the investors. But now, our effort is to expand beyond the urban areas and convert people in the smaller cities and towns into mutual fund investors,” said Mr V. Ramesh, Deputy CEO, AMFI.

For this purpose, an Investor Awareness Committee was set up by AMFI, which devised a presentation to be used by the AMCs for their respective investor awareness initiatives. Fund houses, on their part, have conducted between 100 and 200 sessions last year.

The number of sessions depends on the size and reach of the fund house. While Mirae Asset Management conducts about five classes a month, Reliance Mutual Fund conducts around 200 a month. As on March 2011, Mirae has assets under management (AUM) worth Rs 379 crore, and Reliance has AUM of Rs 1.01 lakh crore.

Advt Promo

Apart from this, AMFI will also come out with a series of educational advertisements aimed at the investors. These will be released to the public after the IPL tournament, said Mr Ramesh.

However, some fund analysts and advisors are less than convinced about these attempts by the AMCs and AMFI. According to them, conducting educational programmes is beyond the purview of the fund houses and AMFI. They said that education falls under the ambit of the regulator, who is in a better position to reach out to the investors. The capital market regulator, SEBI, is already conducting its own investor education programme.

“Investor awareness programmes being conducted by fund houses may be viewed as an attempt by them to promote their own products, making investors suspicious and vary of them,” said Mr K. Joseph Thomas, Head Investment Advisory and Financial Planning, Aditya Birla Money.

Ideal conductors

Also, they say it leads to wastage of resources by fund houses as the target audience is the same. “There is no point in them replicating the efforts. Ideally, investor awareness programme should be conducted by financial advisories and wealth management companies. They could do the job without appearing biased. They are, after all, the final point of contact in the distribution system,” he added.

As for the advertising campaign, analysts see it as a feeble attempt. “A 20-second spot has virtually no impact. Mutual funds are something more serious and need longer to be understood. These are three-, five-, 10-year products,” said Mr Dhirendra Kumar, CEO, Value Research.

Mutual fund houses, however, chose to disagree. They claimed that the investor education is as much a responsibility of the fund houses as it is of the regulator. “Yes, it is my business and fiduciary responsibility to manage money. But it is also my responsibility to make my investors aware as lack of knowledge is one of the biggest issues in the industry today,” said Mr Arindam Ghosh, Head-Retail Sales, JP Morgan Asset Management.

Fund house officials also added that the investor awareness programmes have a neutral approach. “The aim is to simply educate the investors via seminars, e-classrooms and other e-learning methods. We talk about the importance of financial planning in these sessions. These may or may not translate into sales as the approach is neutral,” said Mr Arindam Ghosh, CEO, Mirae Asset.

Faced by constant pressure on their assets under management, fund houses will continue their efforts well into FY-12. With over 30 crore untapped investors, as one fund house official put it, they haven't even begun scratching the surface yet.

Published on April 19, 2011
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