Ravi Samalad speaks to fund house officials and distributors and finds that they are working on a strategy.
With the Supreme Court ordering two of Sahara group companies to refund a sum of Rs 17,400 crore to its investors, mutual fund officials are hoping that this would be a good opportunity to channelize the refunded money into mutual funds.
SEBI’s recent push to mutual funds to go beyond the top 15 cities could also be another reason for MFs to tap this money.
“It’s definitely an opportunity for mutual funds in the context of SEBI’s guidelines to go beyond top 15 cities,” says a sales head of a bank sponsored AMC.
However, they see an equally daunting task in complying with KYC norms and convincing these investors about the virtues of mutual funds. “It’s a tough task to tap this money. We’ll have to verify the source of money and comply with KYC norms,” says a sales head of a mid-sized AMC.
“It’s an opportunity if you look at the size of the money but it’s not going to be easy for anybody,” says a marketing head of a large fund house.
Due to low financial literacy and a preference to invest in fixed deposit type schemes, fund officials are not sure of the right product match for these investors.
“These investors invest mostly in fixed deposits. They may not understand the risks associated with mutual funds. Even if you sell FMPs there you can’t indicate returns. It is a challenge in tapping this opportunity. The challenge is finding the right scheme to offer them and communicating with them about mutual funds. If you talk to 100 people there may be four will turn up and that’s how the momentum will start picking up. We can’t sell equity funds to them,” says another sales head from a mid-sized fund house.
National distributors too are eyeing to attract these investors into mutual funds. “Yes, there’s an opportunity because some of the money could go into investor’s bank accounts,” says a top official from a national distribution firm.
