AMFI is likely to request SEBI to reconsider its decision directing fund houses not to spend IAP corpus on distributors to create awareness about mutual funds among their clients, said three MF CEOs requesting anonymity.
The CEO of a large fund house told Cafemutual that many AMCs do not have the bandwidth to carry out IAPs on their own. “MF distributors deal with investors on a day-to-day basis. They can conduct IAPs and ensure that maximum number of participants attend their programmes. For us, MF distributors are the touch point to connect with investors.”
Another CEO of a mid-size fund house said that the move would affect the objective of IAPs to reach out to investors at large. “Distributors have the logistics to hold IAPs effectively. They have domain knowledge and access to investors. However, if we are stopped from conducting IAPs through them, it would be difficult for us to execute investor awareness programmes.”
He further said that organising IAPs through IFAs have yielded good results. “It is cost effective and the success of an event can be gauged easily,” he said.
Earlier in April, SEBI pointed out instances where AMCs have used IAP corpus to create awareness among distributors’ clients through the distributor websites or magazines. SEBI said, “It has been observed that AMCs are conducting IAPs on distributor’s platforms viz. web banner; distributors are sending e-mailers to investors, publishing education advertisement in monthly magazine of distributors, etc.”
The market regulator has clarified that such IAPs create awareness only among clients of distributors or RIAs instead of direct plan investors and new investors. SEBI said, “The cost incurred on IAP initiatives through distributors or investment advisors shall not be charged to IAP corpus i.e. 1 bps earmarked by the AMC.”
