Mutual funds should take over pension funds, says UTI chief

MUMBAI, July 20: Mutual funds occupy a very important segment of the capital markets and the next major step for the buoyancy in the capi...

MUMBAI, July 20: Mutual funds occupy a very important segment of the capital markets and the next major step for the buoyancy in the capital market would come from making the pension and provident funds available to the mutual funds for management on a tax comparable basis, said the acting chairman of UTI, P J Nayak.

The mutual fund industry will take its own course of time to evolve and develop in India, as it had done in the US, said JM Financial Services chairman Nimesh Kampani, at the fourth annual seminar of the mutual fund industry. According to Kampani, the US mutual fund industry witnessed a flat rate of growth from 1924 to 1980 when it grew to manage 180 billion while it grew at a substantial rate from 1980 onwards to manage 4 trillion in assets as of now.

He said that as such the Indian mutual fund industry has also grown substantially from 1990 but it still has a long way to go. quot;The industry players need to build a track record of good performance and this will take time. Constantcommunication with investors, liquidity, market information, innovative products and their effective communication to investors holds the key to its growth,quot; said Kampani.

quot;The SEBI regulation which states that the portfolio manager charge an agreed fee for rendering portfolio management services without guaranteeing or assuring performance is absurd. Here in India there is no accountability of fund managers like in the west. This is the only country in the world which prohibits performance based competition among fund managers,quot; said Oxus Fund Management director Surjit S Bhalla.

According to him, the fallacy that 60 per cent of the mutual funds have beaten the index is absolutely false. According to his data, over the last one year the Sensex has given a negative return of 28.6 per cent while all funds put together including UTI have given a negative return of 9.3 per cent. Even the much touted FII funds have given a negative return of 0.9 per cent over one year .

quot;As regards the extent ofmobilisation by the mutual fund industry it is a myth that it making any inroads into attracting further investments,quot; said Bhalla.