Ex-SEBI Chief UK Sinha Praises Growth Of Indian MF Industry

U K Sinha, the former Chairman of SEBI (Securities and Exchange Board of India), praised the growth of the Indian MF industry over the last five years while giving a speech as the chief guest at Business Standard Fund Cafe 2018.

There is a possibility for the Indian mutual fund industry’s assets to grow five times in the following five years, said Sinha.

He feels proud of the mutual fund industry because of many reasons such as the fast growth of Systematic Investment Plans (SIPs) and equity assets, and good performances of MF.

The Indian MF industry is one of the most expensive globally and there is a possibility for bringing down the investment cost, added the former SEBI’s Chairman.

Assets are being shifted from actively managed funds to ETFs (Exchange-traded Funds) because of the high investment costs. Also, pension money went towards passive funds due to high costs.

Even the EPFO (Employees’ Provident Fund Organisation) preferred investing in index funds and not in active fund schemes when it entered the markets.

Moreover, trillions of dollars were shifting from active funds to passive funds worldwide. There is a possibility that the same trend could be followed in India.

Hence, very thoughtful effort on cost reduction is a must. Otherwise, the mutual fund industry may “face some serious bumps,” he said.

Sinha hopes that in long-term interest there will be some efforts focusing on reducing the costs of investing.

There was a serious discussion on whether or not SEBI should set a ceiling for commissions, and if the Market Regulator does it, then the rules will be fixed. Hence, it is better for the MF industry to reduce the investment cost on its own, said the SEBI’s former Chairman.

Although the whole financial sector is performing well, the success of the Indian MF industry is getting attraction not only across sectors in India but also in other countries, concluded Sinha, according to Business Standard.

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