UTI Mutual Fund is following up with “India Invest Karo” investor awareness campaign after its earlier drive called Swatantra that reached out to 15 lakh people. These campaigns are expected to translate into investment flows into mutual funds over a longer term.
Mumbai: Only about 7 per cent of Indian households invest in mutual funds. Compare this with the US where 50 per cent of households invest in mutual funds. Mutual fund industry has still not spread its wings effectively beyond the top 10 cities. The flow of investments into mutual funds from Tier II and Tier III towns is just a trickle.
Mutual fund companies in India are getting on to a bandwagon to spread awareness among the masses particularly in smaller towns about investing in mutual funds.
Ever since SEBI abolished entry loads, AMFI has been worried about the future of the industry.
AMFI set up an investor awareness committee. The committee was headed by Sundeep Sikka, CEO of Reliance Mutual Fund. Kailash Kulkarni of Kotak Mutual Fund and two other senior officials from the industry were members of the committee.
The committee in its report suggested that fund houses conduct at least five investor education activities across cities every month. This was met with criticism from small fund houses who found it to be an unviable proposition. While it is difficult to gauge the material benefits of such camps, fund houses are optimistic that the benefits will flow in the long run.
“It is unfair to expect any direct results from these initiatives. We are converting savers into investors,” said Sundeep Sikka of Reliance MF.
“After a lot of hammering, people’s mindset will change. So education is the first step,” said the CEO of a mid-sized fund house preferring anonymity.
Industry sources say that AMFI committee had floated the idea of using funds from unclaimed dividend accounts for investor education initiatives few years back. The money was meant to be spent after three years for investor education programmes. Estimates suggest the kitty consisted of crores of rupees.
UTI Mutual Fund kicked off the largest investor awareness education drive called “Swatantra” with a caravan starting its journey from Porbandar in Gujarat on July 10, 2010. The caravan travelled through all major states covering 35,000 kms and reaching out to 15 lakh people. Industry estimates put the cost of the Swatantra campaign at around Rs 3 crore.
“The objective is to tap money in tier 2 and tier 3 cities. We have less than 1 lakh agents or advisors compared to 29 lakh advisors in insurance. The country’s total population is 120 crore,” said Jaideep Bhattacharya, Chief Marketing Officer at UTI Mutual Fund.
UTI Mutual Fund is moving on to another ambitious campaign called “India Invest Karo”.
Bhattacharya said“knowledge is a journey and not a destination. We are going to tie up with lot of regional newspapers to create awareness about mutual funds.” The India Invest Karo campaign will be carried out over six months through 14-15 newspapers.
“We need to find out how the larger part of India can benefit from the capital market,” said Bhattacharya.
Similar initiatives have been undertaken by a host of other fund houses on varying scales. Sundaram Mutual Fund conducted 30 investor meets a couple of months ago. DSP BlackRock Mutual Fund conducted some 20 to 25 campaigns in 25 different cities.
Quantum Mutual Fund started an initiative called ‘Path to Profit' which travelled across 7 cities in south India. ICICI Prudential Mutual Fund, SBI Mutual Fund and Reliance Mutual Fund are also conducting such programmes. AMCs are required to update AMFI on a regular basis on the initiatives taken by them. According to AMFI, so far 26 AMCs have conducted 3,121 programs spanning across 280 cities by October 2010. Investing in mutual funds through systematic investment plans are primarily promoted through these awareness campaigns.
“We will be able to monetise it definitely but there cannot be a timeline. There cannot be a direct link between the new SIP registrations and the campaigns that we are doing but it’s a focus area for AMCs as well as in the education programs that we are doing,” a senior official from a private fund house said.
Industry officials underscore the importance of awareness among investors as the first step towards the growth of the industry but feel the need for advice from distributors or IFAs will not diminish to choose from the myriad schemes on offer. “Education will be incomplete without implementation tips. SEBI is creating entry barriers. If we teach you swimming in a classroom without giving you any practical exposure, nobody will swim,” said the industry official.
“The role of financial advisors is crucial to convert awareness into sales. Even if investor awareness programmes are conducted, people will eventually ask which scheme to invest in. There you will definitely need advisors,” the official added.
