After more than two decades in the MF industry, I can finally say that it is hence proven that – ‘Awareness is the key to success for every right business'. While mutual funds, as an investment avenue, have been an option for investors since 1965, today with the help of more awareness in the right direction we are able to explain benefits of mutual funds to more and more investors.
The market and commodities regulator, SEBI, has been taking efforts by striking all the right cords with its stress on investor education. The AMFI's 'Mutual Fund Sahi Hai' campaign is one of the most popular advertising campaigns.
Of the total financial savings and assets in the country, the share of MFs has increased in the last three years to 14% in March this year from 10% in 2016. Despite rising crude oil prices & rupee depreciation and stock market volatility retail investors have continued to remain buoyant with their SIP investments. The industry has seen large-scale adoption of SIPs, especially through retail investors. As per the reports, the number of SIP accounts has more than doubled in the last two years.
The year 2018 also saw SEBI getting more stringent on transparency. The TER has come down and even slabs of AUM have also been changing. I think it will benefit investors as costs will come down and returns will increase. All this steps will also lead to more transparency in the industry.
The MF industry was expecting some changes in the TER as in the past many occasion regulators had stressed enough on bringing the cost of mutual funds down. However, adopting the full trail model of commission in all schemes without payment of any upfront commission or up-fronting of any trail commission was creating a level playing field within the industry.
The distribution fraternity has to re-evolve themselves from transaction executioners to an advisor. Besides embracing technology, to be close to the customers, revenues of the distribution fraternity has shrunk and over a period of time serious players will get emerged.
As we mark the beginning of the new calendar year of 2019, investors’ hearts & mind are filled with concerns about the mutual fund industry getting concentrated within the top few, the impact of the general elections & rising uncertainty in the macro outlook.
In my view, investors could use the volatility to their benefit by doing an SIP and use patience as the key to investment success, focus on their long-term goals and stay invested, while it makes sense for the regulator to encourage more mutual fund players to offer their products & reducing the net-worth criteria.
Moreover, mutual funds today are also more so a solution for investors financial goals. Our products need to be solution driven and focus on the needs of the investors to further cater the niche. The fundamental requirement of an investor, if understood, can be a huge take off point for the asset managing companies. Investors especially in India are in search of right investment option that will help them reach their financial goals.The writer is MD & CEO of Quantum Mutual Fund