Albert Einstein once said; You have to learn the rules of the game. And then you have to play better than anyone else. This player is following his words diligently. “Distributors will remain an important part of the mutual fund industry. We need to work out ways that will help distributors and small IFAs,” says U K Sinha, chairman, UTI Mutual Fund.
Disappointing AUM growth: One must disaggregate the mutual fund industry and the AUM into two categories; the equity, balanced and MIP funds where mostly the retail investors invest. And, liquid and debt funds where the corporates invest. The possible direction to proceed may be to create awareness about mutual funds.
Regulatory changes: We must appreciate that the mutual fund industry has been a very well regulated industry over the years. The Regulator has set caps on the expenses charged. Therefore even before the entry load ban, the mutual fund industry was a low cost investment vehicle as compared to ULIPs or other investment avenues. After the entry load ban, the onus on paying upfront commission has moved from the AMC to the investor. Therefore, the cost may not necessarily further come down as some of the distributors are still charging commissions for the transactions.
The road ahead: We have taken up the challenge of investor education in a big way and have launched 'Swatantra' which arguably is the biggest of its kind investor education campaign. In the campaign, we have three UTI knowledge caravans moving from the West, North and East covering different towns and villages and culminating into Kanyakumari in the South covering more than 400 locations in 100 days.
My investing style: I beleive in investing in mutual funds with allocation to equity and balanced funds for the long term. For the short term I invest in debt and liquid funds.
This article was originally published on October 25, 2010.
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