Stocks

MFs want new SEBI chief to allow for vendor incentives

Sneha Padiyath Mumbai | Updated on November 10, 2017 Published on January 30, 2011

Mr U.K. Sinha





News reports that Mr U.K. Sinha would be succeeding Mr C.B. Bhave as SEBI Chairman has been welcomed by the mutual fund industry. Having an industry man at the helm of affairs at SEBI will certainly bring about some amount of relief to the mutual fund industry, said players.

“He is one of the best choices we have as his understanding of the industry is superior, having been the head of one of the biggest fund houses in the country,” said Mr Waqar Naqvi, CEO, Taurus Mutual Fund. “He is well-equipped and would be able to strike the right balance between investors, distributors and asset management companies.”

Mr Sinha, who is CEO of UTI Asset Management Company, was in September appointed as Chairman of the Association of Mutual Funds in India.

Fund house officials voiced concerns of plunging assets under management (AUMs). Banning the entry load has severely hampered AUMs, said a fund house official. Overruling the ban is obviously not an option, but what fund houses are hoping for is some sort of incentives for distributors to sell the product.

The ban on entry load had meant that the distributors cannot earn commissions on the sale of mutual fund products. While this has helped save investors money (as much as Rs 1,200 crore, according to the SEBI Chairman, Mr Bhave), industry insiders said the AMC and distributors have been left in the lurch. Redemptions, falling AUMs and drop in folios have become the order of the day for the mutual fund industry in the post-entry-load-ban days.

“Unfortunately our industry is a ‘push' industry and therefore regulation cannot be one-sided,” said a fund house official who did not wish to be named.

Published on January 30, 2011
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