The passage of much-awaited amendments to the Forward Contracts (Regulations) Act (FCRA) by the union cabinet on Thursday, has made stakeholders of financial markets including mutual fund players hopeful about entry in the commodities market, which was a restricted field for them to enter till now. In an interview with Rutam Vora, chief executive officer of Edelweiss Mutual Fund, Vikaas Sachdeva, expressed hope that amendments to FCRA would deepen the financial market and bring more convenience to small investors. Edited excerpts:
Will the access to commodities market help mutual fund industry to come out of dull phase it is facing now?
We are positive about this development. As gold has helped in increasing overall size of the mutual fund industry post the introduction of ETFs, similarly, implementation of FCRA amendments will bring product innovation, which will hopefully attract more investors in mutual fund space.
After facing a redemption pressure in past six months, do you believe recent policy reforms will help resume fund inflows in the mutual funds again in the remaining part of the fiscal?
It seems uncertain to comment for the next six months in the current conditions. If the recent equity market rally sustains for another one month, there will be some redemption pressure. But things may normalise once the market stablises at a certain level. There is still fear among retail investors and the sentiment is dull, same as was seen four years back.
What is your view about the long term growth prospects for the mutual fund industry considering the the reforms that are being made?
On a three-year horizon, the industry should be able to achieve at least double digit growth. With the recent reform measures, we can expect India's GDP growth rising in the next three years. And mutual fund industry's growth would be at least 200 basis points over and above what the country's GDP growth would be. The mutual fund industry witnessed negative growth in the past year, and outflows have been quite high. So, nothing worst is left to happen, things can only get better from now.