The Securities and Exchange Board of India chairman C B Bhave on Wednesday brushed aside the criticism that the ban on the entry loads in 2009 has impacted inflows into the mutual fund industry. The regulator stated that the existing equity schemes has witnessed a steady inflow in 2010 despite it being a tough year for the MF industry. ?The numbers tells us a slightly different story. The subscription figures for the existing equity schemes in 2010 (calendar year) is actually more than that of 2008-09,? he said.
While speaking at the launch of India’s first satellite delivered programme for certified financial planner certification by TeamLease IIJT, the Sebi chief further advised the industry to emulate business models implemented by some fund houses that has managed to attract inflows despite the industry facing overall redemption.
?People like to combine ban with inflows in the fund industry. This is just to confuse as the ban on entry load has nothing to do with exits,? said Bhave while pointing towards the inflow of Rs 60,000 crore into the existing equity schemes.
?Even during the market peak of 2007, the industry has witnessed an inflow of just Rs 70,000 crore. So 2010 can be considered better with an average inflow of Rs 5,000 crore into the existing equity schemes every month,? he said while asking fund houses to analyse the performance of distributors who have generated inflows post the entry load ban. ?Analyse which distributors have succeeded and draw lessons from that. One has to adopt a successful business model,? he said.
While acknowledging that the subscription into the new schemes has declined, the Sebi chief criticised mutual funds for launching similar schemes under the guise of new fund offers (NFOs). ?Fund houses are launching new schemes that are a replica of old schemes. Distributors sell NFOs due to higher commission,? he said.
Meanwhile, Bhave said Sebi is re-looking into the idea of setting up SME exchanges, an idea first floated June last year, even though no bourse has formally approached it. In fact, a week earlier, BSE?s CEO said the bourse would announce the launch of its SME exchange in a fortnight. Even NSE and MCX-SX are keen to launch SME exchanges though they have not formally applied for a licence with Sebi. The proposed SME bourses will allow small firms to get listed at a lower cost and raise smaller amount of money from the primary markets as the existing exchanges are too costly for them.