Market regulator the Securities and Exchange Board of India (Sebi) has said that the mutual fund industry can comfortably achieve the $1-trillion of assets under management (AUM) mark in the next five years, if the asset management companies (AMCs) become more customer centric.
"The industry needs to reinvent the wheel and offer simple solutions to him (the customer)," Sebi Executive Director K N Vaidyanathan said at the ICRA MF awards last evening.
To start with, MF investments should be "bank deposit-like" for a customer and as he gains confidence, it can go on to become "bank deposit plus", he said.
Taking a critical line, Vaidyanathan said it "amazes" him how one of the safest products, liquid funds, is the least sold.
"It amazes me the least risked product in the country, liquid funds, is not sold to retail investors," he said.
Currently, the total AUM of the industry stands at around Rs 6,75,377 crore. He added that AMCs should seriously invest in investor connect, a job they had been delegating to the distributors till now.
"You cannot delegate it to someone else, you have to establish that connect with investors," he said.
It is noteworthy that in the past as well, Sebi has made moves like lifting the entry load which did not go down well with distributors. Asked if there would be any revocation of the stand, Vaidyanathan said, entry load is a "closed chapter" and "there isn't an economic case out there".
In the last few years, Sebi's policy vis-a-vis the mutual funds industry has focused on ensuring greater investor focus, addressing systemic risks, tighten regulatory framework and development of the market, he said.
