According to the Pareto Optimality Concept in Game Theory,
if a change in something makes a Person A better-off without
making another Person B worse-off, there is scope
for enhancement. Drawing this analogy to Mutual Funds (MFs), if
a scheme/product can be modified to introduce a new product
that makes the MF's position in the market better and, at the same
time, also attracts the investors, such a situation would be beneficial
to both the sides. This is very important in the MF industry where
size defines existence.
John C Bogle, the man who started the Asset
Management Company called Vanguard, was the first to design an Index
Fund. Since then, fund managers have followed different techniques–
from using simple asset class based products to highly
complicated models for designing MF products. The Indian MF industry is
all geared to look for newer methods to roll out better products.
Post restructuring of UTI in 2003, more and more thematic funds
started to be introduced, compared to the plain vanilla schemes and
sectoral funds, which were very popular earlier. The competition in
the industry has also increased.
In 2001, a study conducted by Dr. Tapan K Panda,
Faculty Member IIM(L) and Dr. Nalini Prava Tripathy (Regional College
of Management, Bhubhaneswar) using Principal
Component Analysis, tried to identify the factors/attributes that were
considered by investors before investing in an MF. This study was historical
in perspective bringing forth the factors that appealed to the market
till then. Some of my articles published in Business Manorama during January-December, 2007 brought forth incidences of fading
themes. For example, UTI Variable Investment Scheme (launched in
2002) could not make use of equity opportunities beyond 9,900 levels
of BSE Sensex during entire 2006 Business Manorama March 12, 2007) as the scheme had defined absolute levels of the index
for portfolio revision. Petro Sector Funds first changed into power
funds and finally into energy funds, thereby embracing all forms of
energy generation, transportation and distribution and allied business.
JM Basic Fund, launched in 1997, as an oil sector fund, converted
itself into oil and energy sector fund by 2004. It was further revamped
in November 2006 as an infrastructure fund. |
