Lack of good talent hits MF industry, says report

Reports says growth rates of AMCs have come down from peak levels seen in early 2000s

Lack of good talent for training and hiring mutual fund agents is one of the biggest concerns among fund houses, says a report released by the Securities and Exchange Board of India (Sebi).

The report, part of the Development Research Group Study, under the title "Penetration of Mutual Funds in India : Opportunities and Challenges",  is co-authored by Prof Rajesh Chakrabarti, Sarat Malik, Sudhakar Khairnar and Aadhaar Verma.

According to the report, growth rates of AMCs have come down from the peak levels seen in early 2000s and this is on the back of lack of healthy participation from a large part of the country. The AUM are unevenly distributed across the country while presence of MFs is heavily skewed in favour of 60 districts, out of which a lion’s share originates from Mumbai.

The study argues that lack of penetration may be due to low demand of MF from the public outside the top 15 cities (T-15). This may be due to low level of financial literacy, cultural attitudes towards savings and investments. Further, low supply of Mutual Funds outside the major cities may be on account of perceived lack of demand from general retail investors or due to lack of available manpower.

The distribution costs as a function of AUM generated in the top districts are far higher than in the lower districts, the report suggests. Further, it points out that demographic and social development factors such as adult literacy, bank penetration (savings accounts) do not show strong co-relation with mutual fund presence.

Currently, there are 44 players in India's mutual fund industry which together manages sum of a little over Rs 9 lakh crore.