Mutual fund industry must simplify their products: Sebi's Executive

Markets regulator Securities and Exchange Board of India (Sebi) will soon come out with measures to further strengthen investors’ confidence in mutual fund sector, SEBI’s executive director, Ananta Barua has said.

“Recently we have been discussing with industry and investor associations on how to increase more transparency so that industry becomes much more robust and we will come out with many more things which will further strengthen the structures where investors will have more confidence,” said Barua during the 14th Mutual Fund Summit organized by industry body Assocham.

“As a regulator, things by which we want to increase accountability of AMCs (asset management companies) and also enhance the confidence of retail investors is through transparency and disclosures,” said Barua.

“As far as penetration is concerned we are also seeing how this product can reach every nook and corner of India,” he added.

On the issue of sale of mutual funds on e-commerce platforms, Barua said “We want a system where even though we may allow e-commerce, there will be same requirements which we are debating should be applicable because if they sale a product then there are executive who is an employee, he needs to be certified and he should sell those products that are suitable and all three routes - distributor route, only distribution route and all through advisor route are being debated.”

He also said that mutual fund industry must come out with simple products that can be sold to people across India and they should be able to know the consequences i.e. what are the risks and rewards for investing in mutual funds.

Barua further said that during the course of past few years mutual fund portfolio has been comparable to other investors which helps in deepening the market.

He also said that to increase investor participation in mutual fund sector the SEBI had allowed cash transactions, this route has not been utilised to its full extent. Besides, online tractions mainly constitute about 16 per cent and this route too has not been fully utilised.