‘A Mutual Fund Is The Best Option For Investors’

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: Retail investor interest in mutual funds is crucial for the growth of the mutual fund industry. This is because pooling the small investors’ money into a big sum for investment is what this industry is all about. SUN F&C CEO Nikhil Khatau shares his views with Manisha Deka of The Financial Express about the issues concerning the retail investors with regard to mutual fund investing:

How have the Budget 2002 announcements affected retail investor interest in mutual funds?
I think the Budget impact on retail investors would be marginal. It would impact high net worth individuals more than the retail investors. That’s because retail investors should be looking at mutual fund (MF) investments as long term investments. If they are typically investors with an investment horizon of more than one year, then the effect should be marginal as they would be subjected to capital gains tax @ 10 per cent.

Are there any alternative avenues of investment that investors may find more interesting in the current scenario?
Mutual fund is the best option for investors. The MF industry is easy to understand. MFs constitute one of the most liquid and transparent investments and are also tax efficient. This is in comparison to investing directly into equities, bank deposits or corporate debentures.

Is the retail investor’s interest important for the MF industry?
Absolutely. Over a period of time, the MF industry growth would depend on retail participation. So fund houses should become retail focused. Currently, the players in value terms are mostly high net worth individuals and corporates. Retail investors are also present but considering the size of the Indian population, there is tremendous untapped potential.

Are retail investors showing interest in the equity-oriented schemes of MFs?
If you look at it, up to March 2000, investors were quite keen on the equity market. Then things changed and they started moving towards debt. We are starting to see retail investors coming back to the equity schemes. The reason for this is that the markets are looking cheap, Sensex is looking cheap compared to what it was earlier, there are diversified equity funds across the board which are seeing some amount of money flowing in.