Financial Daily from THE HINDU group of publications
Monday, Nov 22, 2004
`Distributors are more focused in their approach'
Kolkata , Nov. 21
NEVER has the business of distribution of mutual funds assumed a more complex dimension in India as now, says Mr A.P. Kurian, Chairman, Association of Mutual Funds in India. He should know, having closely tracked the many trends that have taken root in the asset management industry from time to time.
"To be a mere distributor of funds and other financial products is passť. It is now time for people who offer complete wealth management programmes", Mr Kurian tells Business Line. He also dwells on the developments affecting some of AMFI's recent initiatives.
As for distribution of MFs, what is your latest experience?
We have seen some remarkable shifts, most of which have related to changing habits of saving, investing and spending of the consuming population. Distributors are turning more focused in their approach. They are not satisfied with pushing products alone.
In other words, wealth management solutions are taking shape and getting accepted by clients. In fact, this is the time to encourage the trend. The concept of certification of distributors is important in this context. We have to ensure that the business of intermediation becomes more professional. Let me add that India has multiple systems when it comes to various classes of intermediaries.
For those who sell insurance, there is a body of norms framed by IRDA. For those who sell funds, AMFI has a set of rules. Perhaps there is a need for integration of the disparate regulations.
The asset management industry itself is witnessing some negative trends. How do you view this?
I must say equity funds have been faring fairly well, thanks to a rising market. However, debt funds tell a different story, given the outflow that has been seen in substantial quantity.
It bothers us because the returns from the debt market have discouraged many sections of the investment community. Incidentally, we are also concerned about the fact that enough household savings are not being invested in funds. The small participants, those who can put in Rs 10,000 or so, are not yet coming into equity funds in adequate numbers, despite the mind-set changes that have taken place in recent times.
The industry is trying to raise awareness... in fact, each fund house is trying to do this in its own way. It is an expensive affair, the outcome of which will be evident only after a long time.
Can you update us on your proposals on real estate and commodity funds?
As for the first, the plan is pending for a long time and there is no major development. Real estate funds are an important component of the investment scenario in certain markets overseas, including US. But India presents a different case, given the property laws that we have in this country.
On the other hand, some news with regard to commodity funds can be expected. This will be a new thing for Indian investors, and I gather that there will be a good number of takers even in the initial days. Incidentally, we are also moving ahead on capital guaranteed schemes.
The committee assigned to study the case for protecting capital has sent a report, which has been circulated. We will soon formulate a more detailed view on the subject.
AMFI is aware that a few models are available abroad. We need to go through each of these carefully.
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