AMFI’s Investor Awareness’ Committee, created at the behest of SEBI, may end up blowing up a lot of money for no reason
Even as investors are turning their backs on mutual funds (MFs), regulators and the industry have suddenly woken up to ‘protect’ and ‘educate’ them. The preferred solution? Spending crores of rupees in advertisements. Sometime ago, the Association of Mutual Funds in India (AMFI) formed two committees named ‘Investor Awareness’ and ‘Investor Connect’, under a directive from the Securities and Exchange Board of India (SEBI). These committees are now in action.
The Investor Connect Committee has commissioned a survey on what investors think and how they behave, while the Investor Awareness Committee is planning to, well, spread awareness about mutual funds. According to a chief executive (CEO) of an asset management company (AMC), AMFI has around Rs9 crore in its kitty, of which Rs3 crore to Rs4 crore will be spent by these two committees. However, one of the committee members denied that such a campaign was being planned.
Apart from insisting that these committees be set up, SEBI also suggested the names of the committee members. According to sources, the Investor Awareness Committee is planning to make a proposal to spend Rs40 crore on investor-awareness advertising. Apparently, the Committee is hoping to seek SEBI’s support to tap the Investor Education and Protection Fund (IEPF) for a sum of Rs40 crore; receiving approval from IEPF requires clout.
It is not clear whose brainchild such a massive ad campaign is. AMFI believes that an advertising blitzkrieg will increase investor awareness, but there is no study to substantiate a correlation between ad campaigns and investor awareness. Ad campaigns will only fill the pockets of large media houses. Maybe that would ensure a pro-industry and pro-regulator stance from the media.
The members of the Investor Awareness Committee include Sundeep Sikka, CEO of Reliance Mutual Fund; Kailash Kulkarni of Kotak MF; Srinivasan Jain, marketing head of SBI MF; and Sanjay Kaley of Fidelity Mutual Fund. This Committee has prepared a white paper on the state of the mutual fund industry and what needs to be done to make it grow. India’s investor population has plummeted from 20 million in the 1990s to eight million now (according to the Swarup Committee report of 2009), despite a booming economy and a bull market.
One of the reasons for the slow growth of the industry and the dwindling investor base, according to Investor Awareness Committee, is that investors are unaware of the benefits of equity and mutual fund products. So, it has decided that the way to make them aware is by unleashing advertisements.
Following SEBI’s ban on entry load in August 2009, MF distributors found it unprofitable to sell MFs. Subsequently, SEBI directed AMCs to implement trail commission, whereby commission is paid to the new distributor if a customer decides to change his broker/distributor. This has only led to a game of poaching assets under management (AUM) among the AMCs and fund distributors.
Industry sources indicate that the Investor Connect Committee has commissioned the Indian Market Research Bureau (IMRB) to do a study on investor behaviour. The Committee and the research agency are trying to study something which is already known.
It remains to be seen whether such workshops and seminars on investor awareness bring about tangible benefits or whether investors need it at all.
Our email queries sent to Sundeep Sikka, AP Kurien of AMFI and Srinivasan Jain remained unanswered.
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Vijay Panhalkar
9 years agoSub : Termination of distribution of arrangement in Reliance Mutual Fund.
You have not given any clarification/reason about any misconduct activities in doing business with you.I therfore request you to pls. clarify the reson in details for termination of my distribution arrangement. I have very short period of my empanelment I have given 80-90 lac. I also have more business in my hand for our company. Request you to revert with the reason for termination as I am very keen to continue the relationship with your company.
thanx.
Rajat Jolly
9 years agoNo more hawkers in the street? Pl read the complete article at http://indianmutualfundsonline.com/View/19/No_more_hawkers_in_the_street?.html
Rajat Jolly
9 years agoWho is worried? Why investors are missing from market, because there is game. Go through complete article, it is slightly old but enough relevant. To conclude, we investors need to locate our hawkers/ Bicholia/ Dabbawalla, because their earning has been barred by someone in the name of the improvement. A Trust created by these service providers for over a long period has been shattered in just one stroke. We need to realize the value of our Dabbawalla, when we will miss our lunch. Or we will have to take a sandwich/Burger/Pizza supplied by some nearby MNC Food chain. A rather strange scenario has been created
Shibaji Dash
9 years agoComposition of the Awareness Committee- the gardener keeping goats to tend the garden! The already performing CEOs of the small stock exchanges deserve priority in being members of the Committee. Oh, sorry- huge adspends? Now I understand.Client Account!
sunil c mone
In Reply to Shibaji Dash 9 years agoplease provide me your current residential address urgently to communicate with you. my mobile number is 9821237025.
R Balakrishnan
9 years agoAnything that AMFI spends on, will be a first. Apart from spending on executive salaries and 'meetings', no public spend is visible. Let them blow up some money like IRDA is doing. In any case, AMFI under new management will be SEBI's extension.
Maybe they want to make sure that the SRO does not get to keep any of the bank balances.
somasundaramgurunathan
9 years agoFrom the beginning the AMFI is not conducting any investore meeting and any pouchereissued to the investor.It is better to educate the investor through the qualified ARN agent or giving any training to the qualified agent by way of giving CD or trainer.It is very usuful to the investor as well as the ARN holder
Anil
9 years agoBan on entry load and paying to corporate houses. Great idea. If advertisements could sell mutual funds, it can be sold through pan wallas and why exams for distributors, the investors already understand the products. But the panwallas won't sell if for free anyway.
Alas! Who will talk with the investor, A qualified distributor off course.
Arvind Thakur
9 years agoInvestor And Distributor ki mehnat ka paisa aise hi bekar main udao.
B V Vijaya
9 years agoAfter attending such Four awareness campaigns addressed by Mr. A P Kurian, I am of the opinion that the results are of no encouragement. Instead there are lot of administrative / procedural reforms to be attended like different of procedures are followed by each AMC for death claims, different norms for change of Bank A/c, change of address, duplication of names ( Multiple AMC's are having BLUE CHIP Fund), rationalisation of nomenclature of funds like Small & Mid cap / Multi cap funds which confuse investors, reduce expenses by avoiding duplication of work at registrars etc. & there by increase the returns to the investors
roopsingh
9 years agoIt looks every one from AMC is trying to sideline IFA"A and have belief that they can make investors come to AMC office and make purchases directly-this all gimmick statrted by SEBI is in close door consultations with AMC marketing people-but they are not ready to accept that there ahs to be some one to ""SELL"" the product-he can be either IFA Or a salaried executive of AMC.but these guys forget that a salaried employee is a jumping jack from one AMC to other or to a BANK-he cant keep touch with clients as tightly as a IFA,so whats the harm if IFA"s were doing it.and the worst part is that NO AMC" guy would ever pitch a scheme suitable to cleint-but he would try to complete his TARGET.will he be able to give ''fair'' service to clients as sole motto of SEBI-for which all this gimmick has been created for so called 'investor protection''but in reality it is not serving anyone.