A few fund houses have made some key changes in their offerings like reduction of minimum lump-sum amount and revision of exit load structure to bring in first time retail investors and investors from B-15 cities on board.
The Union Budget 2014 has made mutual fund industry rethink their business strategy. Since FMPs have lost their sheen with the proposed hike in long term capital gain tax and change in withholding period from 12 months to 36 months, some AMCs have started focusing on retail investors either by reducing minimum investment amount or revising exit load structure.
Three fund houses – DSP BlackRock MF, BNP Paribas MF and Motilal Oswal MF have made some key changes to bring in first time retail investors and investors from B-15 cities on board.
While, DSP BlackRock Mutual Fund has reduced the minimum application amount of all the open ended schemes to Rs.1000 with effect from July 01, BNP Paribas Mutual Fund has reduced the minimum tenure of SIP from 10 months to 6 months from August 01. The minimum monthly SIP amount remains Rs.500. Also, BNP Paribas MF has increased SIP dates to 6.
Similarly, in a bold move, Motilal Oswal Mutual Fund has made all its scheme no load a few months back. Aashish Somaiyaa, Managing Director and Chief Executive Officer, Motilal Oswal MF said that such facilities give comfort to investors in terms of ease in transaction. The fund house has collected over Rs. 600 crore in a year, he added.
Hemant Rustagi of Wiseinvest Advisors believes that such moves can attract first time investors to mutual funds. Also, low ticket size can bring in retail investors from B-15 cities on board.
Nisreen Mamaji of Moneyworks Financial Advisers is of the view that low ticket size help retail investors to experiment with risky assets. “Many retail investors who are into bank FDs can make a good start in equity mutual fund by putting a smaller amount. Also, the low ticket size investment facility helps financial advisors to convince retail clients to diversify their investment by putting a small corpus in mutual funds. I believe such facilities will enable retail investors to taste mutual funds as an asset class for long term wealth creation.”
Meanwhile, majority of fund houses have extended the maturity of their FMPs (roll over) having maturities over a year to three years or more to avail tax benefits to their investors. Also, a few fund houses like Axis Mutual Fund and Reliance MF has either reduced their exit load structure or tenure in some of their top performing schemes like Axis Mid Cap Fund, Axis Focussed 25 and Reliance Index Fund.
The Union Budget has definitely dented the inflows from corporate houses and HNIs in debt mutual funds. However, a silver lining is the rising number of retail folios which is considered to be a source of sticky long term money for industry.
