JOIN USAs an ever-growing number of consumers flock to eCommerce websites for their shopping needs, market regulator Sebi is considering allowing sale of mutual funds through these platforms to deepen this market.
The mutual fund industry has been growing considerably over the last few years and currently has assets under management of over Rs 13 lakh crore, but it has been felt that a huge growth opportunity remains untapped especially among the retail investors.
To make it easier for investors to buy mutual funds in a cost-effective manner, Sebi is now looking into suggestions to allow sale of these schemes on eCommerce platforms, sources said.
Sebi Chairman U K Sinha, who himself was heading leading fund house UTI Mutual Fund before becoming chief of the capital markets watchdog in 2011, recently met representatives from eCommerce and other technology platforms.
The meeting was also attended by Nandan Nilekani, former UIDAI chairman and a co-founders of IT giant Infosys, along with representatives from Flipkart, PolicyBazaar, BankBazaar, Scripbox, FundsIndia, Perfios and Eko, among others, as also by some fund houses and senior Sebi officials.
Sebi is of the view that a greater use of Internet as a distribution channel can help increase the penetration of mutual funds, especially among the young investors, and also reduce the cost of buying mutual fund schemes.
Currently, investors can buy mutual funds directly or through distributors or agents. Investing directly is cheaper than going through intermediaries as customer is not required to pay fee to the distributors. While, fund houses also allow sale of their products online through their own websites.
A number of fund houses are already focusing on ‘direct plan’ mode to sell their schemes, a move that may maximise the returns for the investors as against regular plans involving distributors.
Since no fees need to be paid to distributors, expense ratio gets lower in direct plans, which eventually leads to higher returns for the investors.
Besides, Sebi discussed measures for simplifying the on-boarding process of retail investors. It noted several ideas to remove in-person verifications (IPVs), speeding up the KYC processes via KRAs’ (KYC Registration Agencies).
Mutual Benefits
Sebi mulls MFs to join eCommerce bandwagon
Move meant to deepen market for MFs
For now, MFs can be bought via distributors