Expressing his concerns over lack of awareness of direct plans especially among existing mutual fund investors, SEBI Chief UK Sinha has reportedly asked fund houses to promote direct plans in a big way. He was addressing the fund officials at the annual general board meeting of AMFI held yesterday in Mumbai, said three CEOs who attended this meeting.
Sinha has reportedly questioned fund houses about what stops them from promoting direct plans. He asked fund officials to disclose NAV of direct plans in all their communications with investors.
Meanwhile, one of the CEOs quoted above told Cafemutual that the SEBI Chief has expressed his discontent over the recent SEBI circular on commission disclosure in which SEBI has excluded the requirement disclosing TER of direct plans in the half-yearly consolidated account statement (CAS) if an investor has invested in a regular plan.
Earlier in June, SEBI had communicated that the market regulator is not happy with the way fund houses are promoting direct plans. One of the CEOs who had received such communications through AMFI said, “SEBI wants us to promote direct plans in investor awareness programs (IAPs) across the country. The market regulator has also suggested us to go digital to promote direct plans. However, how we can create awareness of direct plans through digital media is still not clear,” he added.
This is the second time that SEBI has expressed concerns over lack of awareness of direct plans.
Launched in 2012, direct plans are gaining momentum especially among corporates and HNIs. Most of these clients have invested in debt funds. However, the silver lining is that business of many distributors has grown at the same time. This clearly shows that investors need handholding of an adviser to invest in mutual funds.
At a recent held Cafemutual Confluence event, Kartik Jhaveri of Transcend Consultancy urged advisers that they need not worry about direct plans. He says that small ticket investors may go direct to save a little money. However, people who are serious about their money will continue to seek expert advice.
