AMFI has called a general body meeting in which it has invited all MF CEOs on May 30. Among other things, AMFI will seek suggestions from fund houses on how to utilize its IAP corpus in this meeting, confirmed three senior executives.
AMFI has appointed a committee which is tasked with formulating a strategy on IAP. AMFI’s committee on Financial Literacy met SEBI yesterday to seek the regulator’s suggestions on how it can invest IAP corpus to create awareness about mutual funds. “Since the corpus is big we need all AMCs views on this initiative. SEBI has also shared some ideas which will be discussed with AMC CEOs,” said the senior executive from a public sector fund house who attended this meeting.
Fund officials say that while there are no formal suggestions received from SEBI on utilizing IAP corpus yet, they say that it should be on fair practices. “SEBI will be hands-on. It will closely monitor the activities and see the progress. The focus of IAP should be on promoting the industry,” said a fund official who is a member of AMFI’s Financial Literacy committee.
Following SEBI’s diktat, the mutual fund industry has started contributing one basis point of AUM to AMFI from April. AMCs are supposed to give 50% of their IAP fund in the first week of every month to AMFI.
Also, AMCs have already shared 50% of the unspent IAP corpus accrued till March 2016 to AMFI, said two industry officials. Based on AUM of Rs. 12.32 lakh crore as on March 2016, AMFI will have Rs. 123 crore to invest in creating awareness about mutual funds this year. This means the industry body will get Rs. 10 crore every month from the industry.
Some industry officials feel that the IAP corpus can be used to strengthen the distribution network because ultimately investors need advisors to handhold them. “A lot of AMCs are already running TV commercials and doing outdoor advertising. However, only education will not empower investors. You need distributors to handhold investors. We need to be able to measure the efficacy of the efforts by seeing how many new investors are we able to add,” said the marketing head of a public sector fund house.
A section of the industry feels that AMFI should not use celebrities to promote mutual funds. “I’m not in favor of endorsing mutual funds through celebrities. Instead, AMFI should talk about how mutual funds can help people achieve their life goals. It should be for common good. Also, we need to simplify the content of IAP messages by avoiding jargon,” suggests the CEO of a public sector fund house.
Share your ideas on how AMFI should utilize IAP corpus.
