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Usha Thorat, Chairperson, SEBI’s Mutual Fund Advisory Committee (MFAC) feels that the industry should introduce additional incentive for bringing retail investors to the mutual fund industry.
Usha was speaking at the first Moneycontrol Mutual Fund Summit held yesterday in Mumbai.
Usha said that mutual fund accounts for just 10% of the household savings, which is very low. She said while AMFI has been spreading financial awareness through mutual fund sahi hai campaign, there is a need to introduce incentivization to mobilize investment from retail investors. She; however, said that such an incentivization should not be misused.
Currently, fund houses are allowed to incentivize distributors for bringing retail investors from B30 cities. If this goes through, distributors will be incentivized for bring retail investors irrespective of their geographical location.
Here are other key highlights from her speech:
- While ETFs and index funds are good for retail investors, they come with shortcomings like impact cost and secondary market liquidity
- There has to be segregation between roles and responsibilities of sponsors, trustees and AMCs. This will ensure accountability of any wrongdoing
- Fund houses should not play with wordings of the regulations. They should keep in mind that every regulation is made keeping in mind the interests of investors in mind
- Mutual funds have become very big in terms of exercising voting rights. They should exercise voting rights with accountability
