Sebi Chief Flags Microcap Risks, Stresses Investor Awareness At Amfi’s 30th Foundation Day

The Association of Mutual Funds in India (AMFI) celebrated its 30th Foundation Day on August 22. Sebi chief Tuhin Kanta Pandey also spoke at the event and talked about the growth of the mutual fund industry. Pandey also spoke about the risks that the mutual fund industry should address and the new initiatives introduced by the Amfi.

Here’s a look at some of the key highlights of the new initiatives announced by Amfi on August 23:

Sebi’s MicroCap Warning

Pandey highlighted the need for mutual funds to invest beyond blue-chip stocks. However, Pandey added that when mutual funds invest in micro-cap stocks and debt papers, they should do so with caution by maintaining proper documentation. Typically, microcaps are prone to liquidity constraints and undergo a relatively high degree of price and volume volatility compared to stocks with larger market capitalisations and wider investor base.

"While there is a need to diversify beyond the blue-chips, mutual funds as a retail product should exercise caution while investing in micro-cap or debt papers in bespoke deals. Maintaining proper documentation for such investment decisions ensures transparency and sound due diligence," Pandey said at the event.

Revamped Amfi Website

On the occasion of its 30th Foundation Day, Amfi also announced the launch of its revamped website. Amfi claims the new website has intuitive navigation and multi-device compatibility. The new website seeks to provide 5.5 crore investors with comprehensive data and insights. Additionally, the ‘Mutual Funds Sahi Hai’ website has also been revamped to provide investors with access to resources to make informed investment decisions.

Amfi’s Retirement Initiatives

Amfi also released a white paper on retirement. Through the paper, the Amfi recognised that a major part of the workforce remains outside formal retirement savings. Amfi’s paper also calls for coordinated action for regulators, policymakers, industry participants, and investors to encourage early and consistent long-term savings for retirement.

Postmen To MF Distributors

The industry body also signed an MoU with the Department of Posts. As a part of the MoU, the Amfi will train one lakh postmen across India to distribute mutual funds.

Investor Awareness Programs

Amfi also announced the launch of several campaigns focused on investor awareness, such as ‘Nivesh Ka Sahi Kadam’, which seeks to provide content in 13+ regional languages, distributed through TV, digital channels, and 30 on-ground investor camps across the country. Other campaigns include ‘Bharat Nivesh Rail Yatra’, an initiative to bring investor education on board Vande Bharat trains.

Amfi has also announced partnerships with several educational institutions, such as IIM Bodh Gaya (Bihar), IIM Shillong (Meghalaya), IIM Visakhapatnam (Andhra Pradesh), and XIM University Bhubaneswar (Odisha), to bolster investor education.

Pandey also spoke about the way ahead for the mutual fund industry and emphasised the need to expand the industry to new geographies and first-time investors.

“Over the years, mutual funds have democratised access to markets, turning disciplined savings into a powerful engine of wealth creation. The journey ahead is about expanding this reach even further, especially to new geographies and first-time investors, while continuing to uphold the highest standards of transparency and investor protection. Our true measure of success will not be assets under management alone, but the trust under management, which remains the soul of this industry.” Pandey said.