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Ananth Narayan G, WTM, SEBI said the industry should develop metrics to educate investors about risks involved in PMS and AIF.
He was speaking at the Cafemutual's CafeAlt Conference 2024 held today in Mumbai.
Narayan said that riskometer is a huge success but the reality is the industry can't put all equity schemes and credit schemes in one bucket of high risks.
Depending on the volatility, implied volatility of F&O markets and liquidity in the scheme based on stress test results, risk levels should be disclosed.
Whether it is PMS or AIF, the industry should spend some time to ensure the suitability and appropriateness of the product, the WTM said.
Here are other key highlights from the session:
- As of March 2024, there is Rs.11.2 lakh crore worth of commitments in AIFs
- PMS has crossed Rs. 10 lakh crore in June 2024
- In the last 5 years, Indian markets have 15% CAGR in dollar terms, more than any other global economy
- The mismatch between demand and supply has been growing, which can lead to price inflation instead of capital formation
- Over 40% mid cap, small cap stocks have gone 5X in the last 5 years
- Stress tests indicate that stress has not gone up from March 2020 to FY24
- Stress test results can be used to make better mechanism
- AIFs were misused in the past to circumvent existing regulations. So, SEBI has come up with a framework to avoid this with the help of fund managers
- SEBI is looking to grade risk levels in AIFs and looking for fair ways for valuation
- AIFs should look to form associations and help SEBI by plugging any possible loopholes in the ecosystem
