 "Lukewarm response to voluntary disclose group companies' investments")
Idea of voluntary disclosure of group companies' investment in its mutual fund house has received a lukewarm response from India's mutual fund industry.
Last week, country's second largest fund house - Reliance Mutual Fund (part of the Anil Ambani group) took the initiative in this direction and voluntary disclosed its group entities' investment in its schemes.
It disclosed that ADAG companies invested Rs 3,274 crore in the schemes of Reliance MF - accounting for 3.2% of the total average asset under management (AUM).
V Ramesh, deputy chief executive at Association of Mutual Funds in India (Amfi), says, "It's a healthy practice but it's up to the individual fund houses to disclose."
According to executive vice president (EVP) of a large fund house, "It's just an addition to being transparent and brings confidence among investors. But, our sponsors, as such do not have much of the holdings." He was quick to add that amid positives, it could also prove negative in some cases.
"It's just another step in making mutual fund more transparent and shows commitment of the sponsors in the fund house. But we have no intention to hurriedly get into this. As of now, there is no such proposal," said chief executive officer of a mid-sized fund house.
Sundeep Sikka, CEO of Reliance Mutual Fund, told Business Standard, "We did what we think is in the best interest of investors." In a statement, last week, Sikka had said that with this move, investors would get a better view of the fund house and enable greater transparency. "We hope the other players in the industry will also make this voluntary disclosure in the larger interest of the investors," he had said.
His views attract significance as several of the fund houses in India are promoted by big corporate houses. For instance, top players like HDFC MF, ICICI Prudential MF, Birla Sun Life MF, SBI MF and UTI MF, among others have strong sponsors and also group companies.
Another CEO appreciated the development and said, "It shows the commitment of the sponsors but it should be left to AMC to AMC to take a call on it." According to him there is no harm in disclosing parent companies' investments, which anyway, are mostly in the liquid and debt schemes.
However, there is section of industry officials who say that at a time when the need is to push mutual funds and reach to more geographies, such disclosures after disclosures are not much needed. "Rather than focusing energy on such moves, one should work to grow the industry," said an official.
India's mutual fund industry is one of the most transparent financial industries, thanks to the various regulatory changes in recent years. At times, such high degree of transparency has not gone well for the industry and only intensified ugly competition among players.
Last week, country's second largest fund house - Reliance Mutual Fund (part of the Anil Ambani group) took the initiative in this direction and voluntary disclosed its group entities' investment in its schemes.
It disclosed that ADAG companies invested Rs 3,274 crore in the schemes of Reliance MF - accounting for 3.2% of the total average asset under management (AUM).
V Ramesh, deputy chief executive at Association of Mutual Funds in India (Amfi), says, "It's a healthy practice but it's up to the individual fund houses to disclose."
According to executive vice president (EVP) of a large fund house, "It's just an addition to being transparent and brings confidence among investors. But, our sponsors, as such do not have much of the holdings." He was quick to add that amid positives, it could also prove negative in some cases.
"It's just another step in making mutual fund more transparent and shows commitment of the sponsors in the fund house. But we have no intention to hurriedly get into this. As of now, there is no such proposal," said chief executive officer of a mid-sized fund house.
Sundeep Sikka, CEO of Reliance Mutual Fund, told Business Standard, "We did what we think is in the best interest of investors." In a statement, last week, Sikka had said that with this move, investors would get a better view of the fund house and enable greater transparency. "We hope the other players in the industry will also make this voluntary disclosure in the larger interest of the investors," he had said.
His views attract significance as several of the fund houses in India are promoted by big corporate houses. For instance, top players like HDFC MF, ICICI Prudential MF, Birla Sun Life MF, SBI MF and UTI MF, among others have strong sponsors and also group companies.
Another CEO appreciated the development and said, "It shows the commitment of the sponsors but it should be left to AMC to AMC to take a call on it." According to him there is no harm in disclosing parent companies' investments, which anyway, are mostly in the liquid and debt schemes.
However, there is section of industry officials who say that at a time when the need is to push mutual funds and reach to more geographies, such disclosures after disclosures are not much needed. "Rather than focusing energy on such moves, one should work to grow the industry," said an official.
India's mutual fund industry is one of the most transparent financial industries, thanks to the various regulatory changes in recent years. At times, such high degree of transparency has not gone well for the industry and only intensified ugly competition among players.