'MF sector needs to widen reach'

International Advisory Board, constituted by the Securities and Exchange Board of India, has said the mutual fund industry needs to widen investor base and educate investors.

The advisory board, which was formed to aid capital market regulator Securities and Exchange Board of India (SEBI) by bringing in global experience, met for the first time in New Delhi on Friday.

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It said the mutual fund industry needs to offer life cycle products, along with the plain-vanilla products. Investors have to be educated about the sector's products, and it attractiveness.

The advisory board also suggested reducing dependence on channels of distribution by enhancing alternative channels, like the Internet.

The board advised Sebi to set up a listing and trading platform for smaller companies and suggested the option of an independent research coverage of companies for a few years after listing through a common agency.

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The IAB further advised the capital market monitor to have high regulatory standards to cope with the increasing technological advancements and to strengthen pre-trade risk management mechanism. Other measures recommended by the IAB include development of a vibrant corporate bonds market, introduction of securitised debt instruments and real estate investment trusts.

IAB, which has seven members including Sebi chairman U K Sinha, will meet twice every year.