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Focus on efficiency

Right tax incentives for long-term investors can help create demand for greater investor participation, says Suresh Soni of Deutsche Mutual Fund

What factors would increase the appetite for investing in mutual funds beyond the top-15 cities?
Two things come to mind: first, creating greater awareness about mutual funds and second, creating some fiscal/tax incentives to encourage investors to save and invest for longer-term. On increasing awareness, publications like yours are doing a great job and with the recent regulatory push, AMCs are now increasingly working towards creating greater awareness about mutual funds.
We however have to admit that MFs still remain a push product. Right tax incentives can help pave the way for greater investor participation. Creating a tax incentive for long-term investors can help create a “pull” for investors.

Have the direct plans seen greater retail participation?
Direct plans were introduced by the industry only from January 1 this year. It is still early days. In the initial phase we have seen some part of corporate money, especially in fixed income and liquid funds, moving to direct plans. Retail participation in direct plans, though increasing, has been relatively limited. Most investors continue to buy through distributors.
We believe introduction of advisory regulations paves the way for a new business model where the advisor offers the choice of a direct plan to clients, while making revenue by charging an advisory fee to investors.

What investor education initiatives has your AMC taken?
As part of Deutsche Mutual Fund's investor education initiatives, we regularly conduct investor camps in various cities. We have also developed various application/tools on our website to educate investors/visitors on financial markets. There are also various presentations and FAQs explaining the working and benefits of mutual funds which are available on our website.
Apart from this, we have also been advertising the merits of MF investments across various media. Recently, we have launched our international initiative the Global Financial Institute (www.dgfi.com ) in India, whereby academics from various international universities come out with White papers on financial topic/issues. Deutsche MF will also participate in investor awareness initiative and programs spearheaded by AMFI.

What's the road ahead for your AMC?
As we complete 10 years of our business, it is satisfying to have won the trust of a large number of investors and distributors. We want to stay focused on delivering superior investment performance to our investors. We have strengthened our equity fund management team during the year.
We are taking initiatives to enhance customer and distributor engagement. We believe staying focused on investment results and customer engagement will lead to a sustainable growth in the business overtime.

Brief us about your personal investment philosophy?
Having worked in the financial services industry for over two decades, I have seen different market cycles and have understood the need for maintaining a balance in the portfolio. In early years of my career I was primarily invested in equities, however, over the years I have diversified my investments to include fixed income and real estate as well. Most of the market-linked exposure is using MFs given the flexibility and tax benefit.
I believe equities are for long term financial goals, income funds help smoothen cash flows and generate present income; real estate is for stay or long term capital appreciation. However it is important to understand the objectives for which one is investing and the instruments which can help achieve the same. Everyone has to understand one's own risk-tolerance as well as time-horizon in order to determine the appropriate asset allocation.

Suresh Soni is the MD and CEO of Deutsche Mutual Fund.