Mutual Fund investment will be inflation buster

Redemption pressures as well as entry load ban by SEBI has seen mutual fund industry sail through these hard times, but industry believes going ahead investment in mutual fund could be one big inflation buster.

“With inflation being high, the choice of beating inflation can now not be bank deposits. Investments will ultimately flow into the equity market and that would be a pull for the industry,” Jaideep Bhattacharya, UTI Mutual Fund Chief Marketing Officer told The Pioneer.

He added that with credit offtake increasing, banks are not parking much money with the mutual funds and so, we do not see much of bank money coming into mutual fund.

But in India, with only 8 per cent of savings is parked in mutual fund, there is a lot of money that needs to be harnessed. And adding salt to the injury was the ban on entry load by sebi, further demoralizing agents from selling mutual funds.

Bhattacharya said: “We have been conducting investor awareness programmes and also training our distribution channels to cope up with it, though the industry has devised their own structure.”

He further added that agents are being trained on how to move away from the transaction model to an advisory model.

UTI mutual fund in 2009-10 added a record Rs 31,463 crore asset under management and recorded 8.6 per cent growth in market share. In equity, the company recorded Rs 656 crore of net sales.

Bhattacharya said it has been an eventful year for UTI mutual fund. “We have crossed the one crore investor mark and this has been due to our continued focus on training, investor programmes and technological upgradation,” he said.

Going forward, Bhattacharya said that more and more people will allocate larger amount of money into equity.

“Systematic Investment Plan (SIP) is going to be the flavour of the year,” he said.

SIP is an instrument offered by mutual fund in which specific amount has to be invested for a continuous period at regular intervals. It is more like a recurring deposit in banks.

On asked if the company is launching any new fund, he said: “We have a large number of funds that are doing well. Going forward, we would be promoting the existent funds.”

He added that if and when we are faced with an investor need and there is a product gap, we will come out with a new fund offer.

Source: http://dailypioneer.com/254658/Mutual-Fund-investment-will-be-inflation-buster.html