Fund houses have started roping in ‘new cadre of distributors’ but they find that they don’t have enough category of schemes to offer them to sell. SEBI has restricted the type of schemes which the new cadre of distributors can sell to diversified schemes, index funds and FMPs.
In the current market situation, some fund houses are not keen on pushing their equity schemes. In the debt funds category, some fund houses say that liquid funds and money market should also be included. “I think MIPs, money market or accrual fixed income and tax saving funds should be allowed,” said a sales head of a private sector fund house.
“SEBI should expand the suite for products which the new cadre of distributors can sell. It’s riskier to sell equity schemes in the current market. Fixed maturity plans are open for a brief period and it becomes a challenge to communicate and market the products in such a short span of time. Moreover, the markets where FMPs will be sold need to have efficient banking infrastructure for transactions to happen,” said the sales head of a public sector fund house.
“SEBI’s circular states that the scheme’s returns should be equal to or better than the benchmark during each of the last three years which is not possible in case of index funds and FMPs. Moreover, FMPs are NFOs and thus do not come with a track record. There should be some exemption in the interpretation of the circular,” said a product head of a large fund house.
Some fund houses have already made recommendation to AMFI to broad base the product category for the new cadre of distributors. “We have taken up the matter with AMFI and have suggested that cash funds should be also be allowed to be sold through the new cadre of distributors,” said a marketing head of a public sector fund house.
However, some feel that the existing suite of products allowed by SEBI is sufficient for the time being. “These products are enough to begin with. Duration based funds have mark-to-market risks,” said Deepak Chatterjee, MD & CEO, SBI Mutual Fund.
Most of these new distributors
are insurance agents who sell ULIPs so how can they be less competent than
mutual fund agents? They should be allowed to sell balanced and hybrid funds
also,” said Nilesh Sathe, Director & CEO, LIC Nomura Mutual Fund.
In order to attract more distributors, AMFI has waived off the ARN registration fee for these new cadre of distributors till 30th June, 2013.
