Avoid 'short-termism', focus on long-term investor value: Sebi's Amarjeet Singh to fund houses

Amarjeet Singh, Whole Time Member, SEBI

Mutual funds should not focus on short-term approach and should instead look at creating long-term investor value, said Amarjeet Singh, Whole Time Member, Securities and Exchange Board of India (SEBI).

While speaking at the Moneycontrol Mutual Fund Summit here in Mumbai, the senior SEBI official highlighted the fact that the number of investors in the mutual fund industry is increasing, and it is very important for the industry to maintain trust and ethics and focus on the long-term objectives.

While highlighting the growth of the Indian mutual fund industry, Singh emphasized on industry milestones including the fact that the mutual fund industry grew exponentially in last 11 years with the cumulative assets under management (AUM) growing from Rs 8.25 lakh crore in 2014 to Rs 72 lakh crore now.

He further said that the share of B-30 in total AUM of MFs has gone up from 9% to 18.4% in a decade while the share of retail investors in AUM rose from 23% to 28%.

The number of distributors grew from around 70,000 to over two lakh in a decade while the number of schemes rose from 810 to 1760 in a decade, he said.

More importantly, Singh said that while there is a strong growth on various parameters, one needs to focus on offering enough investment opportunities.

"While we are growing at a phenomenal speed, what we need to be watchful about is if you have enough investment opportunities... we are one of the unique markets where regulator works very closely with the mutual fund industry," said Singh.

He said this is an important issue as a large share of household savings is moving from deposits to pension, insurance and MFs.

One vision we had was how to create equity investment culture in India, he added referring to his early days at SEBI.

On a different note, Singh said that effective gate keeping, and checks are important and so is the role of auditors, board, board committees and trustees is important.

He added that it is important for Asset Management Companies (AMC) to build trust and long-term investor value. "Apply the family test. Ask yourself whether you would be doing and saying exactly the same thing if your family member was the investor," he said, addressing the distributors and sales executives of AMCs.