Focus on growing existing schemes, Sebi tells MFs

Move aimed at curbing misuse of money to pay higher commissions

 “We want all focus to come on existing schemes and grow them instead of launching new fund offers (by the mutual funds industry),” Executive Director K N Vaidyanathan, told Press Trust of India here. The abolition of the entry load has led to a fewer number of new fund offers and it would help the industry by way of consolidation of products. Sebi abolished entry loads from August 2009 saving huge money of retail investors that was going to the intermediaries.

Vaidyanathan said Sebi was restraining mutual funds from launching new fund offerings at random. Mutual funds were misusing the new fund offer option to pay higher commissions. Following the tightening of norms, net inflow in NFOs has come down to Rs 5,000-crore this year against Rs 25,000-30,000-crore in earlier years, he added.

Investor education

“We are not keen on mutual funds launching new NFOs. We are asking 20 more questions, before somebody launches a NFO like how is it different from the existing schemes,” Sebi executive director pointed out. There is no impact of abolition of entry load on inflows into the existing schemes which are attracting funds of Rs 5,000-5,500-crore every month, he said. Over the last 12-months, all asset management companies have invested in investor education and in technology and there have been nearly 300 investor awareness campaigns done already, he said.