What has changed with the mutual fund re-categorisation? Does it help investors?
The market regulator felt that the various names for funds used by different AMCs was making it difficult for investors to make a clear comparison between two funds. So, sometime in October 2017, SEBI came out with a circular which sought that all mutual funds must be ‘true-to-label’ with uniform characteristics within the same category. According to this rule, AMCs can only have one mutual fund offering under each category. As a result, schemes are being renamed, re-categorized or merged and terminated.
From now on, investors will be able to select funds from five categories: equity, debt, hybrid, solution-oriented and others. This is a very good move for investors as no more will they face the challenge of choosing a fund. Moreover, the clearly defined investment objective being uniform, they will be able to select funds to suit their specific needs.
So, does the new categorisation push for solution-based selling?
We are very happy with the new categorisation because it does away with any ambiguity on the traits of funds as it is all very transparent and uniform. Such a scenario also fosters financial goal-based selection of funds. For distributors too, this move will help in creating solutions for investors based on the availability of funds. I think this augurs well for investors and also the industry.
How are investors benefiting from Bandhan SWP?
This is a very unique and emotional solution that we offer to investors by which they can create an income stream for their immediate relatives. So, one could provide for their parents by transferring money to them from their investments. Bandhan SWP (Systematic Withdrawal Plan) offers monthly cash flow from an individual’s mutual fund investments to their immediate family member. This is a very tax-efficient option for both the investor and the beneficiary receiving the money. Under the present tax laws, any fund transfer to immediate family members is considered as a gift and does not attract any taxation.
How are you tapping specific investor segments?
We are looking to tap into every investor who has surplus disposable income. With the trend of money flow shifting from physical assets to financial assets, mutual funds are most often the first-choice investment vehicle for investors. Through our various networks we are reaching out to different investor segments like doctors, lawyers etc with financial solutions that meet their financial needs. This process is an on-going effort and I am pleased in the manner in which we are adding new investors into our fold.
One all-time advice you will give to equity mutual fund investors?
I would tell them to know that volatility is part and parcel of equity investment and they should be prepared for it. Moreover, whether they are investing through SIPs or lump-sum, they should have a long-term view of investing with at least 4-5 years’ time frame.