The Hindu Business Line : Reliance NFO proves MFs can reach out to masses

Thanks to some recent ultra-large collection figures, the leading players have conclusively shown that it is possible for the asset management industry to handle more.

Reliance Equity Fund made news last week by collecting nearly Rs 6,000 crore, a record of sorts as far as mobilisation figures are concerned.

Now, before you discount this news with an airy "I have read about this already!", let us share with you a couple of interesting trivia, ones that might have escaped your attention. Collectively these tell us what may be described as an inspiring tale about Indian mutual funds.

For the record, Reliance Mutual Fund saw cheques coming in from about 400 centres. The average ticket size was Rs 60,000 - not a colossal figure in urban India, but the amount does carry a lot of weight in the rural heartland. Or so we are made to think.

That the latest collection propels Reliance MF to an even bigger league in the AMC space, is not what we are discussing here. However, the fact that it has pulled off such an act certainly merits mention. Especially so, because this shows that mutual funds are actually penetrating deeper than we think.

It does not take a Nostradamus to predict that fund houses will scale even greater heights in the days ahead. The future, we are sure, will see more people saving through funds, thanks to an investment climate that is changing rapidly. Compare the current scenario with that prevailing in the old UTI days, and you will know how drastically things have altered.

Sure, there will be many more high-decibel launches and greater churning. Yet, at the same time, fixed deposits will see a decline in popularity, people will invest more in actively-managed products, distribution networks will become stronger, bolder investment themes will emerge. In short, the stakes for fund managers will go up.

Assets to swell

Records, as they say in cricket, are meant to be broken. Reliance Equity Fund will, perhaps in a not too distant future, be topped by another open-end equity NFO. It does not really matter whether HDFC does it or Prudential ICICI. The point is, the story will continue on and on...

Some forward-looking people in the asset management industry will soon start to think beyond the numbers notched up by Reliance MF. From 400 centres to, say, 1,000 will indeed be a big jump. But the sooner this is accomplished, the better it is for funds.

Despite all that has been achieved, a far bigger issue remains to be addressed: Under-investment in equity by Indians. As everyone agrees, that unbelievable two per cent equity ownership - or is it actually even lower? - is a curse that has blighted the country's investment landscape for far too long.

Thanks to some recent ultra-large collection figures, the leading players have conclusively shown that it is possible for the asset management industry to handle more.

The solution will lie in creating better delivery channels. Imagine a situation where a villager - may be, he is a prosperous farmer - walks into a rural bank and buys equity funds of his choice. Is this a big ask?

What now needs to be ensured is directing more resources towards consumer education.

Raising the level of awareness among investors should truly be the next big thing for fund houses.

In fact, the need to do so was never felt more acutely than now.

Feedback may be sent to nilanjan@thehindu.co.in

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