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MFs should widen customer base, bring down abstention rate: G Mahalingam

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Mumbai: Alpha generation is going to be an obsession in the mutual fund industry.

However, this cannot be the sole factor driving the whole industry, said G Mahalingam, whole-time member, Sebi.

He emphasized that the industry should focus on widening the customer base and include more retail investors.

Speaking at CII Mutual Fund Summit in Mumbai, he added that the search for yield is going to intensify going forward.

He also urged mutual fund houses to vote at all companies’ resolutions.

“Mutual funds’ abstention rate stands at 12 per cent at present and this should come down,” he added. While sharing his thoughts on passive investing, Mahalingam said that the strategy is yet to get a boost from the industry.

He also added that Sebi’s recent decision to open up an exchange platform will lead to more participation.

His views came after the market regulator on Thursday said that it has allowed investors to directly access stock exchange infrastructure to purchase and redeem mutual fund units. Mahalingam is sure that the mutual fund industry will grow in the coming years.

“The unique customers we have garnered are still a small number.

There is a need to look beyond big cities.

The regulators do come up with stipulations such as B15—but they are only nudges.

We need to increase direct participation.” NS Venkatesh, Chief Executive, Amfi echoed Mahalingam’s thoughts and said that there is enough scope for the growth of the mutual fund industry.

However, he added that shift from active investment to passive is one the biggest challenges for the industry. Venkatesh also added that the compression of fees for asset management companies is another challenge for the industry.

“We need to look at new types of investors.

There is a need to tap more women investors,” he added. The Amfi chief also said that the SIP inflows have counterbalanced the outflows of foreign institutional investors.

“There are enough domestic resources that can be tapped,” he added.




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