A lot is achieved; longer road lies ahead: AMFI@25

On August 22, 1995, the markets, which were just maturing at that point in time, saw the birth of an organisation, which over the years, has grown in stature and clout -- Association of Mutual Funds in India (AMFI).

It is an industry standards organisation in India in the mutual funds sector. The organisation aims and yearns to develop the mutual funds market in India, by improving ethical and professional standards.

As the industry body completes its 25 years, DH spoke to various people associated with it and some of the big-ticket investors as well, who have been critical about some of the mutual fund industry.

From just about Rs 66,000 crore assets under management in 1995 the mutual fund industry has grown 41 times in the past 25 years to over Rs 27 lakh crore -- a healthy compounded annual growth of 16% for all of the quarter-century.

NS Venkatesh, Chief Executive Officer, AMFI says that the high point of AMFI history has been the success of the ‘Mutual Fund Sahi Hai’ campaign, along with the growth in the AUM size.

Started in March 2017, the ‘Mutual Funds Sahi Hai’ investor education and awareness initiative has reached out to people across states and languages through TV, Digital, Print, and other media. Many have educated themselves about Mutual Funds through this website -- which, till now, has 39.2 million page views and has hosted 1.98 investment goals being calculated.

The website offers simple content around Mutual Funds in the form of articles and videos which prospective investors find easy to understand. The website also offers tools and calculators that help you plan for your life goals, with ease. Based on your inputs, the calculator tells you how much you need to invest to get closer to your goals.

The campaign might be a success for the industry as a whole -- the total assets under management have grown by 54.6% in the period. But the devil lies in the details: the AUM of debt schemes (which still make almost half of the industry AUM) has grown by 17.6% at a time when corporate bond exposure has grown by 38.2% and the equity scheme AUM has grown 35.7%.

So, the growth wasn’t led by debt or equity schemes but by Exchange Traded Funds (ETFs), which technically not your traditional mutual funds -- to such an extent that many ETF insiders claim that MFs and ETFs should be treated as two different categories.

ETFs merely replicate the performance of an index, they do not need active management, and they do not have a minimum holding period, and the investors are free to sell the investment as and when they like. Also, unlike MFs, ETFs need not be managed by experienced fund managers. And these ETFs have grown by an astounding 321.1% after the “mutual fund Sahi Hai Campaign”.

“Mutual Fund Sahi Hai campaign has struck a chord with masses. To that extent AMFI has played a stellar role. We have also done wonderfully on the investor awareness,” Venkatesh said.

But the investors who have suffered, have their grievances against the AMFI, even as the latter is more transparent and more organised than other industry bodies in the financial sector. While AMFI claims to have taken action whenever there is mis-selling of the schemes to the investors, yet, it’s surprising that the organisation doesn’t have any data, whatsoever, on the actions taken and complaints received.

In one of such defaults that happened recently, an MF product, across the industry, was mis-sold to the investors by the distributors -- who are not regulated by SEBI. These distributors are to be registered with AMFI. However, it seems, till now, AMFI hasn’t taken any action against the erring distributors, as Venkatesh told DH: “There was no complaint in that case... We don’t take suo moto cognisance of default.”

But to give it due credit, over the years, the AMFI has made financial information relating to various funds more and more reader-friendly and more and more comprehensible.

“We are more transparent than banking, insurance and pension industry. We have never asked the government for bailouts,” AMFI Chairman Nilesh Shah told DH. As he said, in his conversation, a lot has been achieved by AMFI till now, but a longer road lies ahead.