IRONY OF SCHEMES NAME LEADS TO MISS SELLING

If we look into the schemes that are being offered to the investor are more or less  concentrated on the same company stocks only the name change plays the trick. A common example is the INFRASTRUCTURE theme that is being MISS SELLED to the common investor. The infrastructure theme in mutual funds industry is like festivals in India. They are among the most diversified funds. The confusion has, however, been compounded by the marketing strategy employed by fund houses. Consumer goods style naming is not uncommon in mutual funds. We have a DSP Blackrock T.I.G.E.R. fund (which supposedly stands for The Infrastructure Growth and Economic Reforms), Sundaram BNP Paribas S.M.I.L.E. (Small and Medium Indian Leading Equities), ING C.U.B. (Competitive Upcoming Businesses), Morgan Stanley A.C.E (Across Capitalisations Equity), Canara Robeco F.O.R.C.E. (Financial Opportunities, Retail, Consumption & Entertainment), and ICICI Prudential Ninja (Nifty and Nifty Junior Advantage).

While a fund house is within its rights to float a new scheme to update its product bouquet, a fund house launching replicas or variants of its existing schemes should be seen with scepticism. It is probably more interested in increasing its assets than offering investors value. This is more likely to happen when an asset class is doing well, as equity currently is. Witness, for instance, the number of launches of ‘opportunity funds’.

Such schemes are essentially cosmetic makeovers. Strip away the fancy name and the advertised opportunity, and you’ll probably find a scheme that resembles an existing plain-vanilla scheme. Among the current lot of IPOs, there are a few that resemble diversified equity funds–a product every fund house has. Since it can’t justify another diversified equity fund but still wants to cash in on the equity demand, it resorts to makeovers to garner assets.

For example, Sundaram India Leadership plans to invest only in companies that are leaders in their sector, DSP ML India TIGER in companies that stand to gain from infrastructure sectors. Such statements of intent are thin and ambiguous, they give a fund manager leeway to justify any stock pick.

These are only some of the more fanciful names that have been thought up to sell funds.

In these situations the need of a FINANCIAL ADVISOR comes into play. So in these types of situations the Miss Selling happens in a bigger sense. What SEBI is doing for this.Can all the blame can be passed to the MUTUAL FUND ADVISORS.

AMC lure investors with smart fund names. The name of the fund plays the trick where as the portfolio of stocks  remain the same. So please tell me where SEBI or any other regulator have really stopped the Musical Chair game of MISS SELLING. No where is the answere .Why does the SEBI and AMFI don’t look in to this matter and improve the quality of products. When an offer document is filed with SEBI why it does not look into this process. Why such rules and regulations are not met to look beyond the objective of the fund. When the investors are fooled by the AMC by giving Luring names to their mutual fund schemes. Why the same portfolio and strategy funds are being offered to the investors.

Why SEBI cannot take any action against them.I leave this debate to question to my reader.

Only by raising the voice of MISS SELLING made by advisors will not eliminate MISS SELLING.WE need to look into the core of the matter where we can provide improved and investor demand required products.

To develop something one don’t need to break some thing already built. Additions can also be made without touching the basic.

I am not trying to make a biased statement favoring the Mutual Fund Advisors community. I am trying to depict the picture of where the law is being imposed and what is the real goal of implementing that law and whether that goal is achieved.

So where one finds that MISS SELLING have been eliminated.