Fund houses to reach out to inactive MF distributors

Reliance MF, LIC Nomura and UTI among fund houses who are looking to touch base with older, inactive investors

Mutual fund houses are on a mission to bring inactive distributors back into the mutual fund fold. Along with bringing in new distributors, fund houses are also trying to persuade the older distributors, the ones who had left the industry a few years back to take a re-look at the MF industry.

“It is our endeavour to bring back the older distributors as we think that this is the right time for investors to look at the mutual fund industry. Our view is that this is a short-term hiccup that the industry is going through. So, once the investment pace picks up we will need some of the older hands as well,” said Sundeep Sikka, chief executive officer of Reliance Mutual Fund.

Fund houses like Reliance Mutual Fund, LIC Nomura and UTI are among some of the fund houses who are looking to touch base with the older, inactive investors.

As of today, there are about 16,000 active distributors in the MF industry, while the total number of AMFI-registered distributors stands at close to 40,000. It is this set of inactive distributors that the industry plans to target.

Industry officials said that it is easier to get the older players back as they have a better understanding of the industry.

While they admit the incentives for selling mutual funds is much lower as compared to other products, recent regulatory changes in distributor commission have been encouraging, said fund house officials.

“These are distributors who are willing to sell mutual funds but are unhappy with the incentives involved. We are trying to convince them to get back into MF distribution through the new  incentive structures such as the additional 30 bps for sales beyond the top-15 cities,” said the chief operating officer of an Indian mutual fund house.

However, some fund house officials accept that it is not an easy task to convince distributors, especially those who have seen the industry during its hey-days.

“For a distributor who has seen such phenomenal commissions as those seen prior to the August 2009 entry-load ban, getting back into MF distribution could be a disappointing proposition,” said an industry official.

However, fund house officials said that the various investor education and distributor out-reach programmes being conducted by the industry has led to a slow but steady change in investor as well as distributor mind-sets.