Fund houses have welcomed the move by Reliance Mutual Fund to disclose its promoter group holdings in the fund house
“It’s a good move and we don’t mind taking this step forward,” says D P Singh, Executive Director & Chief Marketing Officer, Domestic Business, SBI Mutual Fund.
Debasish Mallick, Managing Director & Chief Executive Officer, IDBI Mutual Fund told Cafemutual that his fund house too is planning to disclose its promoter group holdings in a bid to instill confidence among investors.
There
are more than 15 fund houses whose sponsors have business interests in
different sectors.
In January, Financial Intermediaries Association of India (FIAI) had submitted a white paper to AMFI and SEBI in which it had recommend that all AMCs should disclose promoters holdings.
Industry experts are of the view that such disclosure should be made in an elaborative manner. A scheme wise disclosure will create transparency and boost confidence of investors in mutual funds, they say.
Dhirendra Kumar, Chief Executive Officer, Value Research believes that such disclosure improves transparency. He said, “It was a good move but it should be more elaborative. The disclosure should be made scheme wise so that investors can get a better idea. For instance, if a promoter company has invested Rs. 10 crore in Rs. 100 crore AUM scheme, it would give a better picture to investors. Such disclosure can be beneficial for investors while making investments in equity funds.”
Nikhil Kothari of Etica Wealth Management seconds the view. He says that such disclosure can build confidence among investors. “It simply gives the message that even promoter’s money is at stake.”
In a press release, Reliance Mutual Fund has stated that the investment of group companies stood at Rs 3,274 crore or 3.2% of total AAUM of Rs 1.02 lakh crore as on December 31, 2013.
Sundeep Sikka, Chief Executive Officer, Reliance Mutual Fund said, “Disclosing the details of total investment by Group companies in the AAUM will help the investor get a better view of the fund house and enable greater transparency. We hope the other players in the industry will also make this voluntary disclosure in the larger interest of the investors.”
The disclosure came after Reliance crossed Rs. 1 lakh crore average asset under management in December quarter. HDFC has already crossed Rs. 1 lakh crore AAUM while ICICI Prudential is also believed to have crossed Rs. 1 lakh crore AAUM.
A CEO of a bank funded AMC is of the view that Reliance has disclosed its promoter group investments to showcase their marketing strength. He said, “Since Reliance crossed Rs. 1 lakh crore AAUM, it wanted to show that it had not achieved this merely due to group company’s investments.”
