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Journalism of Courage
Amid rising incidents of unregistered entities providing misleading stock recommendations to investors, HDFC Asset Management Company Chairman Deepak Parekh on Friday stated that mutual fund (MF) distributors can play an important role in driving financial literacy and ensuring investors remain invested for the long-term.
“In an era of easy online access of information or what is called the proliferation of “The WhatsApp University”, there is also a lot of misinformation and mis-selling, despite all the safeguards put in place by the regulator.
“There are many ill-informed investors who start out with mutual funds and then abandon them thinking they can invest in the markets directly with a tip here and there only to end up burning their fingers. This is where your role as distributors is critical in ensuring investors stay invested for the long-term,” Parekh, who is also the Chairman of HDFC Life, said at an event organised by Franklin Templeton.
This will also be beneficial because the trail commissions earned also increases not just with longevity of the investment, but more so with the mark-to-market appreciation on the investments.
Markets regulator Securities and Exchange Board of India (SEBI) has been cracking the whip on unregistered entities or financial influencers (finfluencers) who are providing stock specific tips or advice on various social media platforms such as YouTube, Telegram, Facebook, Instagram and X (formerly Twitter).
Last month, SEBI floated a consultation paper proposing a set of measures to restrict the association of regulated entities or intermediaries with unregistered finfluencers.
Parekh further said the Systematic Investment Plans (SIPs), as an investment tool, plays a critical role. It is important for investors to understand the importance of discipline to ride the rough waves and also avoid entering when the market is at peak.
Monthly average SIPs across the mutual fund industry have been steadily rising, he said.
Gross monthly SIP contribution reached an all-time high of Rs 15,813.54 crore in August from Rs 15,245 crore in July. The number of new SIPs registered also hit a record high of 35,91,650 in the month.
