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Aug 17, 2012, 05.10 PM IST
Vivek Kudva of Franklin Templeton Investments hails this as a positive move and believes this will help the asset management companies, distribution companies as well as the investors.
The Securities and Exchange Board of India (SEBI) announced a slew of reforms to benefit the mutual fund industry along with the approval for eIPOs. Vivek Kudva of Franklin Templeton Investments hails this as a positive move and believes this will help the asset management companies, distribution companies as well as the investors.
Kudva is also hopeful of further reforms and is of the view that this will make the industry much more efficient. He also looks at the changes in exit load positively, adding that it is eventually going to benefit the end investors who remain invested in the funds.
Here is the edited transcript of the interview on CNBC-TV18.
Q: Is this addressing the structural issues, do you think we will see additional inflows, particularly from retail and will it make fund raising easier, have the structural issues been addressed?
A: I think changes announced by SEBI are all very positive and I definitely think it will help all the three constituents, the asset management companies, the distribution companies as well as the end investors. This I would say is the first phase in a series of reforms.
I think they are additional reforms and changes that are required. I am hopeful that along with the ministry, SEBI will usher on those changes over the next several months.
Q: We just had this conversation sometime back with regards to what you all were expecting from the SEBI to come out with on the mutual fund industry. One of the things you spoke about was fundability and the tweaking of the overall expense ratio. Give us a sense in terms of what exactly would the fundability norms mean with regards to overall expense ratio and how is it going to help the mutual fund industry going forward?
A: The fundability basically means that previously you had an expense ratio cap and within that management fees were also capped. Now, what happens is that the expense ratio is increased a little bit but, more importantly within the expense ratio, there is no cap on the management fee.
Those asset management companies that are efficient within the same expense ratio can get more management fees through that efficiency. I think this will spur the entire industry to become more efficient.
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