SEBI enhances the responsibility of mutual funds - What is expected from the MF?
One of the crucial and difficult issues raised by the circular on Sebi strengthens the responsibility of mutual fund trustees by requiring that the Mutual Fund (Trustee and AMC) Committee oversees the implementation of safe and good market practices with regard to investments, amongst other things.
The answer is adopting a Sound and Healthy System to Monitor Investments for Outperforming its Counterparts
Introduction:
In the fast-paced and ever-evolving world of investment, staying ahead of the competition and making AMC trustworthy to its investor is crucial for investment success. One way to gain an edge is through the adoption of a sound and healthy system to monitor investments. This article explores the significance of such a system and how it can help Fund House outperform its counterparts.
The Importance of Monitoring Investments: Timely Data & Monitoring
Effective investment monitoring is essential for several reasons. Firstly, it provides Fund House with real-time insights into the performance of the portfolios, allowing them to make informed decisions and take appropriate actions. To achieve the best investment portfolio, monitoring only helps identify potential risks and opportunities, enabling proactive adjustments to investment strategies. Moreover, it ensures compliance with regulatory requirements and promotes transparency and accountability.
Characteristics of a Sound and Healthy Monitoring System: Automation near-real-time
Fund House needs a robust monitoring system with specific characteristics to outperform their counterparts. Firstly, it should offer comprehensive coverage, tracking a wide range of asset classes, markets, and investment instruments. This breadth of coverage allows for a holistic view of the investment landscape. Most importantly, the system should provide accurate and timely data, leveraging advanced technologies and reliable data sources. Real-time or near-real-time information is vital for making agile investment decisions.
Automation and Market Knowledge
Automation with hand-to-hand expertise plays a pivotal role in modern investment monitoring systems. These technologies enable the processing and analysis of vast amounts of data in a fraction of the time it would take for humans. Such a system can identify patterns, correlations, and anomalies that might go unnoticed by human analysts, providing valuable insights for investment decision-making. Automation also reduces manual errors and increases operational efficiency.
Risk Management and Compliance: Provide Early warning.
A sound investment monitoring system should include robust risk management and compliance capabilities. It should have mechanisms to assess risk exposure across portfolios and provide early warning indicators for potential threats. By promptly identifying risks, investors can take appropriate actions to mitigate them. Furthermore, the system should ensure compliance with regulatory frameworks, helping investors avoid penalties and reputational damage.
Performance Measurement and Reporting: Offer customizable reports and dashboards present.
Monitoring investments involves assessing performance against predefined benchmarks and objectives. A healthy monitoring system should provide accurate performance measurement tools, allowing House to evaluate the success of their strategies. It should offer customizable reports and dashboards to present key performance indicators and metrics in a clear and concise manner. Timely reporting helps Fund House assess the effectiveness of its investment decisions and make necessary adjustments.
Continuous Improvement and Adaptation:
Investment monitoring systems must evolve continuously to keep pace with changing market dynamics and investor requirements. This involves incorporating integrating new data sources, and leveraging emerging technologies. Regular system enhancements ensure that Fund House have access to the most relevant and valuable information, giving them a competitive edge.
Conclusion.
SEBI understand today's competitive investment landscape is much different from the past, adopting a sound and healthy system to monitor investments is not only crucial for outperforming counterparts but also for survival. Such a system empowers investors with real-time insights, automation, Automation-driven insights, risk management capabilities, performance measurement tools, and the ability to adapt to changing market conditions. The Fund House/Manager can make more informed decisions, mitigate risks, and achieve superior investment performance by embracing these practices.
Logu Dhamodaran
Personal view.
