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Monday, June 7, 2010

IDBI Mutual to focus on rural and semi-urban areas

IDBI Mutual, the asset management arm of public sector bank IDBI, is looking to increase its customer base by 5 per cent by focusing on rural and semi-urban areas, a top company official said.

"We aim to have an investor base across the length and breadth of India. We think our success is based on how far we will be able to spread, especially in semi urban and rural areas, apart from tier-2, tier-3 cities," IDBI Asset Management Ltd (IDBI Mutual) Managing Director and CEO Krishnamurthy Vijayan told PTI here.

"The number of people who are not part of this industry is mind boggling. If I get 5 per cent of the people who are not part of the industry, I think it is more critical than 5 per cent market share," Vijayan said.

The company has introduced Index funds to bring beginners in to its fold, he said.

He said Index funds are the simplest thing to understand as they track the broad movement of the market so when markets go up, money goes up.

Also Index gives investors the best diversification. It's a superior product for the first-time investor," he said, adding, "It is a shift from short-term profit making to long-term wealth creation."

Another advantage of Index funds is that the returns are independent of any change in the management, he said.

"The fund managers may change. But it will not affect the fund as Index is always Index. It is an element of total transparency, ample liquidity and genuinely low-cost," Vijayan said.

On returns, he said that "…on an average, the money should be doubled in 5-6 years. A return of 17-20 per cent is always good."

The recently closed NFO of IDBI Mutual got tremendous response from smaller cities, he said.

IDBI has 700 branches and over 1,100 trained staff to sell mutual funds, he said.

The company is awaiting Sebi approval for its next fund, Junior Nifty Index fund, which may be announced in a couple of months, he said.

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Economic Event Calendar

GMT+5:30 Event Vol. Actual Consensus Previous
Wednesday, Jun 25
19:30 New Home Sales Change (MoM) 2 -13.7% 9.6% Revised from 10.9%
19:30 New Home Sales (MoM) 1 0.623M 0.690M 0.722M Revised from 0.743M
19:30 Fed's Chair Powell testifies 3
20:00 EIA Crude Oil Stocks Change 1 -5.836M -0.600M -11.473M
22:30 5-Year Note Auction 1 3.879% 4.071%
Thursday, Jun 26
14:00 BoE's Breeden speech 2
15:15 BoE's Greene speech 2
16:30 BoE's Governor Bailey speech 3
18:00 Chicago Fed National Activity Index 1 -0.25
18:00 Initial Jobless Claims 2 245K 245K
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