The SEBI official expressed concern over the rapidly falling number of investors and suggested that the fee model for MF investments has to be revised to attract investors
Mumbai: Speaking at the Motilal Oswal ETF Conclave, 2011, K N Vaidyanathan, Executive Director, SEBI, highlighted that the Indian mutual fund industry needs to create value and work on the fee structure to get in new investors. He said that in the present scenario, when the exchange fees, regulator fees, brokerages, depository charges and settlement charges have come down over a period of time, the mutual fund industry continues to charge fee of 2 per cent to the investors.
Citing the example of the telecom and consumer durables sectors’ which has grown in terms of volume due to a decline in prices, Vaidyanathan feels that a similar price reduction will enable the players in tapping the huge demand opportunity in India. However, all of it has to benefit investors, at the end of the day, or else it would bear no meaning , believes Vaidyanathan.
He also highlighted that every fund manager creates a portfolio which is actively and dynamically managed. However, a majority of funds have consistently underperformed and the cost is still being borne by investors.
Stressing on the difference in growing industry size and increasing number of investors, Vaidyanathan said that “In the last 15 years, the MF industry has grown fat by having plethora of mutual fund products suiting the flavor of the season, but the number of investors has not grown. In the past three years the industry has seen more outflows then inflows”.
