Ashu Suyash, Managing Director & Country Head, Fidelity Mutual Fund says that the FMPs may not sustain the growth rate once DTC kicks in
Now that the regulator has allowed AMCs to use exit load corpus for marketing and distribution expenses, will we see any increase in payouts to distributors?
It’s only a clarification from the regulator. The payouts should be reasonable. We will look at aligning the payouts based on the products. One needs to be competitive. Each channel tends to sell a particular product type and the payout structure needs to reflect this. It’s important to get long term investors rather than just putting the money across and buying assets.
Is the industry in talks with regulator to relax NFO and unit allotment timeline?
The industry is in talks with the regulator. The reason is that the current NFO norms become a constraint in reaching far off places. It’s more of a practical issue. We hope that the regulator understands that.
The FM has opened up the gates for equity mutual funds for foreign investors. Are you well positioned to make use of this opportunity?
We are very well positioned. We understand the offshore investors very well due to our large presence in 23 countries. The announcement is made but the details are yet to come.
ELSS products have not been able to attract sizeable assets this time. How will you reposition ELSS schemes once DTC kicks in?
The DTC is still a year ahead and the jury is still out whether it will come. I do hope that ELSS tax benefit is retained. The case for tax benefits to remain is very strong because if you are talking about bringing long term money and reducing volatility than this is the ideal product. If the tax benefits are removed it will dissuade retail investors.
FMPs have raked in a lot of moolah. Will the growth continue next fiscal?
The DTC has proposed to change the long term capital gains tax structure in FMPs. So the aware investors may not come. It is difficult to say whether the growth will be similar to what has been in the past because of this big change. You will still see a nominal growth. As a category it will still remain.
The IRDA is examining a proposal to allow insurance firms to invest in ETFs. Will see any increase in assets under management and volumes due to this?
It is difficult to see any significant increase in assets. That will not be the sole driver. At the end of the day the sole driver is the end customer. It’s ultimately the investors who have to accept the product. There is also a cap on the exposure. So, we will have to wait for the guidelines.
Any particular focus on equity or debt products in the next fiscal?
We want to grow on both product sides and not one favoring the other. We have a good line up of products. Three years ago we did not have that many products. Today we pretty much cover the entire spectrum.
