Cut costs, Amfi urges AMCs

Recommends 30 bps reduction in 3 tranches, starting next month; board meeting on Sept 16 to discuss these

Following the Sumit Bose committee recommendations, the Association of Mutual Funds in India (Amfi) has asked entities in the sector to voluntarily opt for some of these.

In an e-mail sent on Friday evening to directors of all asset management companies (AMCs), from H N Sinor, chief executive, Amfi has said as the assets under management (AUM) ranking published on their websites, information memorandum, etc, are presently a combine of all products, it gives a misleading picture.

“For retail products, the AUM rankings should be shown only for retail AUM. I am wondering whether we can move away from the present system of AMC-wise overall AUM disclosed on our website to only AMC-wise retail AUM. We, however, need to debate about the composition of retail AUM,” wrote Sinor.

Also, a proposal to slash the expense ratio by 10 basis points from October 1, followed by another 10 bps reduction effective April 1, 2016, and a further 10 bps effective October 1, 2016.

Sinor also urged the sector to voluntarily bring down the expense ratio in centres outside the top 15 cities, termed B-15 in sector parlance. And, to change the system of AUM disclosure from October 1. The issue is expected to be discussed in the next board meeting of Amfi, scheduled for September 16.

However, some feel these moves are only likely to make things more complicated. There are many which are pushing the products through upfront commissions and by paying a little extra in B-15.

“Implementing the guidelines of the committee will reduce the number of distributors further, due to the low fees. Also, there has been too much of chopping and changing of guidelines in this over the years. This kind of micro management makes things very difficult for everyone, as they have to continuously keep tinkering with their business models,” said the chief executive of a fund house.