They say, “There are some things that money can’t buy.” This is true indeed. PersonalFN had covered a story on January 20, 2016 What Money Won’t Buy You? Investors’ Trust For Sure. The story had highlighted the apathy mutual fund houses have towards investor education. Mutual fund houses were underutilizing the funds that had been mandatorily budgeted for investor education programmes and were also directing them towards other purposes.

Taking a serious note of it, the Securities and Exchange Board of India (SEBI) directed mutual funds to transfer 50% of the sum earmarked for being spent on awareness programmes to the Association of Mutual Funds of India (AMFI). In another story How Serious Are Mutual Fund Houses About Investor Education? Dated March 11, 2016, discussed why mutual funds have been failing to spread their reach and gain more popularity.

Here comes May and PersonalFN is forced to write another article on the same subject—investor education.

Here’s why
As per the SEBI directives, mutual fund houses are supposed to transfer 0.01% of their Assets Under Management (AUM) to Association of Mutual Funds in India (AMFI) from April 01, 2016. Commenting on this AMFI Chief said, “Fund houses have already started contributing 50% of the two basis points corpus meant for the Integrated Action Plan (IAP) to Amfi from 1 April. We are likely to form a committee to decide how to utilise the fund during the board meeting slated for the later month.”

What is shocking and discouraging is this—the AMFI is yet to form a committee deciding how the funds for investor education should be utilised. The t AMFI chief expressed the inability of the funds’ association in handling large funds.

As revealed by the AMFI data for April 2016, 43 mutual fund houses have been collectively managing over Rs 14 lakh crore. In other words, they would contribute about Rs 140 crore to a dedicated fund which AMFI will use for promoting financial literacy and investor education programme. What’s more, as reported by Mint on dated May 08, 2016; mutual funds are undecided about whether to transfer funds on a monthly basis or quarterly basis.

This gets PersonalFN thinking as to what made the SEBI assign the responsibility of spending funds meant for investor education to AMFI (before testing its readiness and ability to handle huge sums).

There’s every reason to be concerned about the future of this drive, unless AMFI comes up with a concrete long-term plan and most importantly, feels confident about its abilities.

A message for mutual funds: Money won’t get you more AUM; trust will. Moreover, money won’t win you trust.

It is high time mutual fund houses think beyond higher commissions and New Fund Offers (NFOs) to spread their reach.

PersonalFN has been educating investors with small steps, small initiatives that make a big difference. Money Simplified is one of them, so is the PersonalFN authored guides on various Personal Finance topics.

How would you like AMFI to go about promoting financial literacy and investor education? Please share your views here.
 

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