Sixth Pay Commission - MFs eye big opportunity in govt pay hike

MUMBAI: With the clearance of Sixth Pay Commission, mutual fund houses are now eyeing for a bigger pie of extra money that will come in the hands of 5 million government employees.

The government of India is shelling out Rs 178 billion on account of higher salaries for its 5 million employees. Be it the oldest fund house or the newer ones, AMCs find it a good opportunity to bag investments with an array of suitable products for those target audience.

Said UK Sinha, chairman and managing director, UTI Asset Management Company, "A considerable chunk of the surplus money in the hands of the government employees will be invested in fixed deposits, shares, and mutual funds. But most of them are likely to choose investing through mutual funds as the option offers a safe and easier method of investing."

Banking on its 94 branches covering all state capitals, UTI Mutual Fund is planning to cater to the employees from three focal points - individual risk taking ability, investment horizon need and the age status of investors.

Besides equity, balanced, fixed maturity plans and debt schemes, UTI AMC has schemes like UTI ULIP which offers benefits of investment plus insurance cover upto Rs 15 lakh at a very small cost. Likewise, UTI Retirement Benefit Pension Fund, UTI Children Career Plan and UTI Mahila Unit Scheme are the schemes aimed at people from different age groups.

"Every government employee can find suitable schemes for him/her and their family from our kitty of products," commented UTI's Sinha, who believes, government employees have traditionally shown affinity to UTI Mutual Fund being the oldest mutual fund in India.

SBI Mutual Fund is also busy designing promotional campaigns in government offices wherever they find a substantial number of employees (500-1000), be it at any central government office or railways or post offices. The fund house plans to make presentations for government employees to increase awareness of mutual funds.

"We will mostly use systematic investment plan as a tool to attract government employees. It is the safest bet for them, who are quite scared of taking greater risk in a volatile market," said Achal Gupta, managing director, SBIMF; who is in favour of aggressive marketing strategies for it.


Source: http://economictimes.indiatimes.com