‘Non-interest of investors hit MFs’

Assets under management in the country grew 47 percent in 2009-10,while aggregate funds mobilized grew 87 percent for the year. However,participation of retail investors remained low at 26.6 percent,the report released on the sidelines of an industry summit said.

Funds should expand into smaller cities and increase investor awareness over the next few years to fuel growth,it said.

Indian funds rely heavily on the corporate sector,which accounts for about 51 percent of total investment.

PwC also said assets under management in the country was on track to grow 15 percent to 25 percent between 2010 and 2015,though profitability may decline due to higher costs and lower revenue.

MFs must adapt to changing investor demographics

The Indian mutual fund industry’s growth in the next couple of years will hinge on companies’ ability to adjust and cater to the changing demographic profile of investors,a PWC report said.

“The performance of the MF industry has been strong,with the average assets under management (AUM) growing at 47 per cent to Rs 6,13,979 crore,” PriceWaterhouseCoopers (PWC) said in a report released at a CII event on the mutual funds industry here today.

“However,the next few years will be influenced by the journey undertaken so far and changing demographic profile of the investors,” it said.

PWC said that if the industry needs to sustain growth levels,it has to come out with more innovative and diverse products catering to the ever-changing requirement of customers.

“Diversified products will keep the present momentum going for the industry in a more competitive and efficient manner,besides competing with bank deposits and government securities. Hence,MFs have to mature and keep on offering comprehensive life-cycle financial planning and not just the products,” the report said.

It also added that there should be a regulatory body for MF distributors that would inform the investors about the efficacy of the product for a particular risk profile.

The Association of Mutual Funds in India (AMFI) has been demanding a self-regulatory organisation for the MF industry for a long time.

Market regulator Sebi is planning to put in place an online compliance certification examination,which is expected to take off by the end of this month.

Sebi is also likely to come out with a new set of guidelines to check mis-selling of MF products.

The report further stated that real estate mutual funds could be the next big thing for the industry,provided the regulators bring in more clarity on the tax and regulatory aspects.

The PWC report also stated that despite the industry posting a robust growth,it continues to deal with challenges of low retail participation and penetration levels.