Amfi applies for creation of SRO

Written by fe Bureau | Updated: Jun 27 2013, 06:06am hrs
Mutual fund industry body Amfi said on Wednesday that it had filed an application with capital market regulator Sebi to set up a self-regulatory organisation (SRO). Sebi has indicated that the cut off date for accepting applications for SRO would be July 31.

Amfi also announced that it has tied up with Crisil to launch a group of MF performance indices across five categories, including equity funds, equity-linked savings schemes (ELSS), debt funds, money market funds and hybrid funds. The indices hope to increase awareness about the performance of mutual funds among investors and bring in greater transparency within the industry.

Speaking on the sidelines of the CII Mutual Fund Summit, Amfi chief executive HN Sinor said that fund houses had so far spent about R32 crore for investor education programmes. Im seeing a lot more fund officials personally making trips to the smaller towns, which is quite positive, said Sinor. Since Sebis directive in September 2012, AMCs are required to set aside 2 basis points of their daily net assets every year within the maximum limit of total expense ratio for investor education.

Sinor expressed confidence that the additional incentive of 30 basis points for going beyond the top 15 cities would help in shoring up the revenues of MF houses. Last year, 18 fund houses made profits; I expect this number to go up this year (FY13), said Sinor.

He also said the recent initiative to introduce Employee Unique Identification Number (EUIN) for distributors would go a long way in stemming the churn of MF assets. According to Sinor, 30,000 EUINs had been issued at present. Churning had been a major cause for concern for the MF industry despite the ban on entry load in August 2009.

Product labelling, an initiative that is set to get implemented from July 1 this year, would help investors, Sinor said. Sinor was also hopeful that the online MF Utility platform, which is touted to result in considerable cost savings for the MF industry,would be up and running soon.

Meanwhile, consultancy firm PwC and the Confederation of Indian Industry have laid down a roadmap for the Indian MF industry, recommending that there is need to focus on widening the industrys distribution network, creating simple products and improving its existing technology mix.