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Ananta Barua, Whole-Time Member, SEBI shared a timeless message for fund managers and investors at the recently held FICCI‘s 19th Annual Capital Markets Conference 2022.
Referring to fund managers as trustees, he said, “Fund managers act on behalf of investors by managing their assets. They should not gamble away or speculate on the assets which is the trust they have been given. They should act responsibly.”
Talking about managing funds in a competitive environment, Ananta said that while fund managers have to give decent returns, they also compete with other mutual funds. When in competition, they want to deliver higher returns. But higher returns have higher risks and fund managers should be mindful to manage both the aspects – risks and returns efficiently.
He added that investors should know where mutual funds invest. The level of transparency is very high and the whole portfolio is available on the mutual fund website. Also, being marked to market, they can redeem units at any time. Ananta said, “We have seen during covid when everything was shut and people were running for money. Many middle investors who invested in mutual funds could redeem money. It has helped the whole channelization of savings in mutual funds.”
Also, mutual funds have one of the lowest expense ratios when compared with other products. He elaborated with the example of ULIP. Suppose someone invests Rs. 1 lakh in ULIP, around 15% goes towards expenses and 85% will be invested. However, in the case of mutual funds, the whole amount is invested so the return will be more.
