As the range of mutual fund offerings gets more and more complex with dozens of new fund offerings being launched every month, the need for basic and relevant information increases manifold. However, not everyone sees it that way.
Some are of the view that if the mutual fund investor wants information (even if it's as basic as information on benchmark indices), he better be willing to pay for it, because there is no such thing as a free lunch.
If you ask us, we believe that the mutual fund investor gets enough grief from the fund houses in terms of information (or the lack of it), than to worry about being deprived of basic information from other sources.
If the mutual fund investor is going to live in a vacuum for the information that he needs for basic analysis, how can we expect mutual funds to become the preferred means of investment for the retail investor? And it is the retail investor who is the biggest loser when the flow of basic information is strangled; high net-worth individuals (HNIs) and institutions have their own sources of information and are not at anyone's mercy for such inputs.
You may wonder what kind of basic information we are referring to over here. Shocking as it may sound, it is information on benchmark indices.
As things stand today, if a mutual fund investor wishes to compare the performance of a balanced fund or an MIP (monthly income plan) with the relevant benchmark index, he cannot do it. The same holds true for all debt fund categories like debt funds (long-term and short-term), liquid funds, and government securities/gilt funds.
Of course, information on the equity benchmark indices (BSE Sensex and S&P CNX Nifty, to name the most popular ones) is present in public domain. It is information on the benchmark indices of the other categories (balanced funds, MIPs and debt funds) that is hard to come by at present.
If you segregate mutual funds in three broad categories - equity funds, debt funds and hybrid funds (like MIPs and balanced funds), you will notice that information on benchmark indices of two out of the three mutual fund categories is not available in the public domain!
In effect 2/3rd of mutual fund schemes (category-wise) cannot be analysed by the investor even at a basic level to assess whether the mutual fund scheme under review has outperformed its benchmark index over different periods of time!
Information on these benchmark indices was available in the public domain, but has become `paid' for some time now. Even the AMFI (Association of Mutual Funds of India) website, which used to display this information when it was free, draws a blank!
So if an investor wants to do some very basic, back of the envelope calculation like comparing the performance of the relevant mutual fund with the benchmark index, it's not possible.
Of course, this comparison is done regularly (usually monthly) by mutual funds and communicated to the investor (through newsletters/mailers/fact sheets), but for an objective view, the investor may like to do his own analysis and this is something that must be encouraged, not deterred.
What the mutual fund industry needs to do to improve basic information flow instead of restricting it:
This is an ideal situation for Sebi (Securities and Exchange Board of India) and AMFI (Association of Mutual Funds in India) to step in and clean the mess. Fund houses must not have to benchmark their mutual funds against indices that are not a part of public domain. If such indices are not available then they must be developed, but the mutual fund industry must not be held hostage for information as basic as the benchmark index performance.
It's not surprising to note that while all of us are aware of what comprises the BSE Sensex for example, we have virtually no idea of what constitutes any debt fund index that is currently available. From an investor's perspective this is not good as he not having an idea of what he is benchmarking his mutual fund against.
If the benchmark indices have to be `paid only', someone in the mutual fund industry (like AMFI, which is funded by fund houses) should undertake the responsibility of subscribing to the service so that the same can be made available in the public domain for investors.
To investors, we recommend that they write in to Sebi and AMFI with their displeasure on being deprived of basic information necessary for making an informed investment decision. Investor grievances can be posted to Sebi at the following address:
Securities and Exchange Board of India
Mutual Funds Department
Mittal Court 'B' wing, First Floor,
224, Nariman Point,
Mumbai 400 021
Phone: (022) 2285 0451-56, (022) 2288 0962-70