Assocham asks mutual funds to innovate

Industry body Assocham, today, asked the mutual fund industry to come out with differentiated products, to attract more investors into the sector.

Industry body Assocham on Sunday asked the mutual fund industry to come out with differentiated products, to attract more investors into the sector.

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SEBI and the mutual fund industry should work towards "amending mutual fund regulations and offering more diversified products with a view to optimise utility of mutual funds as well," Assocham said in a statement.

The mutual fund industry has been complaining of declining investments for more than a year and a half, after the Securities and Exchange Board of India (SEBI) barred them from charging entry load.

Assocham, however, said investors are losing interest as products offered by different MFs are not innovative and offer limited asset classes.

"There are a plethora of similar sounding schemes offered by the asset management companies resulting in a craving for lower number of schemes with similar investment strategy," Assocham said.

The average assets managed by the MF industry, consisting of 40 players as of December 31, 2010, was Rs 6,75,377 crore. The industry body said the Asset Management Companies (AMCs) should be given the flexibility to charge management fees as such, and these fees should be determined based on market forces.

It said SEBI should work to support the infrastructure required to train the distributors to meet the needs of the investors.

The industry chamber further called for moving the Indian pension funds and insurance companies closer to international levels, as it could give a much needed boost to domestic institutional investor participation.