Sebi chairman M. Damodaran (centre) with U. K. Sinha (right), managing director of UTI Asset Management Company, in Mumbai on Wednesday. (PTI)

Mumbai, June 20: Sebi chairman M. Damodaran is worried about huge investments being made by corporate houses in liquid schemes of mutual funds, which should ideally attract more retail investors.

According to data released by the Association of Mutual Funds in India (Amfi), the asset base of the mutual fund industry has grown by Rs 57,474 crore in May, highest in the last 12 months.

Of this, liquid or money market funds alone have witnessed the highest-ever net inflows of Rs 36,588 crore against Rs 24,353 crore during the same period a year ago. Of the total assets under management (AUM) of Rs 4 trillion, nearly 28 per cent, or Rs 1,15,956 crore, was invested in liquid funds alone.

Many funds operating in a competitive market have been relying on liquid schemes to boost their AUM. However, liquid funds by nature are very volatile as investors can enter and exit at any time.

Dhirendra Kumar of Value Research Online said 90 per cent of the investment in liquid funds came from corporate houses. But retail investors should be investing more. “Educating the investor on liquid funds is important,’’ he told The Telegraph.

Amfi self regulation

Damodaran said Amfi would become the first self regulatory organisation (SRO) in the finance industry. The association had resisted earlier attempts to make it an SRO, but with a revised proposal it would get more autonomy now.

A.P. Kurian, chairman of Amfi, said: “We are open to becoming an SRO. We are working on a suitable model. We are looking at Amfi’s abilities and organisational structure to discharge the responsibilities effectively. We cannot say how long it will take us to become an SRO.”

Damodaran said Sebi would convene a meeting of mutual fund trustees to remind them of their responsibilities and added that regulations for trustees may be revised. “This is an industry which operates on trust and if trustees don’t measure up, something is amiss,” he said.

By early July, the corpus fund for a national investor education programme will be in place, he said.

Feeder funds

Feeder funds may well be the next big thing for Indian investors looking at opportunities abroad, Kurian said today.

“Several top funds are working on launching feeder funds schemes. They are in discussions with Sebi,” he said.

Mutual funds will now be able to invest in existing MFs’ international funds as the RBI’s latest circular has paved the way for launching feeder funds which will raise money in India and invest in existing mutual funds abroad.