Securities and Exchange Board of India (SEBI) Chairman CB Bhave, on Wednesday advised mutual funds (MFs) to target more individual investors and not run after corporate investors.
This piece of advice comes as the mutual fund industry still finds itself in its infancy after nearly 20 years of existence and still searching for the stable, long-term retail investor.
Bhave was speaking at the Mutual Fund Summit 2009 organised by Confederation of Indian Industry.
“I am not saying that fund houses should drive away corporates,” Bhave said adding the industry needed stability.
The assets under management with the mutual fund industry were Rs 4,93,300 crore at the end of March 2009, against Rs over Rs 9,00,000 crore with the insurance industry.
He said corporate investors tend to move in and out in bulk, hitting stability.
“The dip during the downturn was seen more in debt schemes as compared to equity schemes. This is because assets in equity schemes came largely from individual investors,” said Bhave. He also touched upon the need for debt markets to become more liquid and generate the kind of confidence that equity market has.
Of the total MF assets, 44 per cent of the investments come from individual investors - 22 per cent high net worth individuals (HNIs) and 21 per cent retail investors. On the equity side, the industry boasts of a 86 per cent flow from individual investors - 23 per cent from HNIs and 63 per cent from retail investors.
A CII-KPMG report on “Indian Mutual Fund Industry - The Future in a Dynamic Environment” released at the summit said low customer awareness, low financial literacy and limited retail penetration are among the challenges faced by mutual funds.