Ashu Suyash, Country Head, Fidelity feels it's still early to comment on inflows in new fund offers (NFOs). In recent times the biggest issue facing the mutual fund (MF) industry has been lack of fresh inflows, she said.
She believes there has been lukewarm response to the entire distribution issue. Suyash informed that net inflows in equity funds have been negative for the entire MF industry.
According to her, interest in mutual funds would not return in a hurry but there has been no widescale redemption in mutual funds.
Here is a verbatim transcript of an exclusive interview with Ashu Suyash on CNBC-TV18. Also watch the accompanying video.
Q: Is it still looking like a lukewarm investor response because of what has happen with the mutual fund regulation side for these new fund offers (NFO) which are opening up including yours?
A: We are seeing good customer feedback but its still early days. In NFOs one of the things is money really comes in only in the last one-two days. I would like to see the positive feedback translate into money and that we will know only in a few days time. What I hear in the various seminars that we have been doing over the last three weeks is people like the idea, they have stayed away from markets. But at the same time they are kind of thinking a bit and definitely from a distribution cover point of view its been a little lukewarm. There are not that many investors that have been reached out to. So we will see in the next couple of days how much of the feedback translates into money.
Q: How much of it is a distribution issue which has plagued this industry for the last three-four months? How much of it is a reluctance to get in at these kinds of levels after the smart rally which has happened this year already?
A: I think itís a combination of both. If you look at investor sentiment, it is nervous but its bit better I must say than perhaps two-three months ago because at two-three months ago they felt that the markets had run-up quite a bit. In the current rangebound environment they seem a lot more positive, I do not get that many questions regarding "Are levels good enough to invest?". I think at the moment itís more about are that many people being reached out to. If you look at what has happened on account of entry loads becoming zero and the fact that a lot of distributors are not able to levy charge on their customers. The sort of incentive and there is business in the near-term has not seemed high and thatís definitely impacted penetration. So itís a bit of both thatís really playing out and thatís one reason.
If you look at the last four months, net flows into equity mutual funds have actually been negative for the entire industry but if you look at it from a customer perspective, mutual funds are now the cheapest way to grow wealth using markets both equity and debt. You havenít ever had it that much better and any change that works for customers longer-term augur well for everybody. So I do see interest coming back, it just could take a bit of time.
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