The mutual fund industry is still not ready for innovative products such as commodity, gold exchange traded, and real estate funds and is yet to sort out various operational issues, U K Sinha, chairman and managing director of UTI Mutual Fund, said today. |
In June, the Securities and Exchange Board of India had allowed fund houses to float real estate funds as close-ended schemes, which can invest in real estate properties, shares/bonds of real estate companies, and mortgage-backed securities. |
However, the market regulator had said these schemes need to declare net asset values on a daily basis. |
Fund managers had voiced their concerns on daily valuation, taking into consideration the illiquid nature of real estate as an asset class compared with other asset classes. |
Funds were also concerned over issues such as meeting redemption pressures and custodian aspects. |
In case of gold exchange traded funds, fund houses still need to sort out custodian aspects and way of storing the physical gold. |
Speaking at the Mutual Fund Convention 2006, Sinha stressed on creating greater investor awareness so as to popularise these innovative schemes. |
Also, Sinha emphasised on retirement plans and schemes that will address the needs of children.Sinha also said there is a need for more innovative schemes such as inflation-linked funds and target maturity funds. |
Target maturity funds are enhanced version of capital protection funds, which implement proper asset allocation strategies to address various needs of investors including education, retirement, etc. |
He further said that financial planning is a major area to be addressed. |
The country's largest fund house manages assets worth Rs 41,600 crore. |