Market regulator Sebi today asked mutual funds to focus on retail customers and stop chasing corporate clients who were known to scoop money out of funds at short notice and deploy it somewhere else.Sebi chairman C.B. Bhave today told fund managers and other bigwigs in the industry that they should look for more investor participation, particularly from individuals since they imparted stability to a mutual fund.
Last year, when the chips were down, corporate clients pushed the redemption buttons and put a huge strain on fund houses.
Unlike corporate investors, individuals do not pull out their money, and prefer to ride out the storm. Often, they are deterred by the charges on early redemptions.
“There was no queue of investors to withdraw from equity-oriented schemes when the markets tumbled from their highs,” he said.
“If the mutual fund industry wants diversity, the importance of non-corporate investors should be realised. It is in the interest of the industry to have increased investor participation,” Bhave told delegates at a mutual fund summit organised by the Confederation of Indian Industry here today.
Bhave was, however, quick to add that fund houses should not ignore corporate clients entirely. “I’m not saying that corporate houses should be driven away,” he said. According to Sebi data, corporates/institutions still are the largest investors in mutual funds.
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