Personal Finance: Service With A Smile

Hot competition and a volatile stockmarket are forcing mutual funds to offer investor-friendly options-from phone-in facilities to Net-based services.

Last June, when he boarded an Air India flight from New York after a three-month secondment in the US, Ramanand Sampat, a project manager at a Mumbai-based software development company, was in high spirits. The US sojourn had been enjoyable, but he was a bit homesick too, and looking forward to getting back home. On the flight, he eagerly picked up a copy of The Economic Times and turned to the stockmarket pages.

That was it. One look at the Net Asset Values (NAVs) of the mutual funds he had invested his money in was enough to change Sampat's mood. While he was away, the Indian stockmarket meltdown had eroded Sampat's investments and the NAVs of the mutual fund units that he held had plummeted. Had Sampat been back home in India, he could have taken corrective measures-like opting for redemption of his units when the markets started moving southward.

Mutually Comforting
The scheme	How it helps
Instacheque	Facility Helps in instant redemption of a part of the investment
Direct Credit	Redeemed amount is directly credited to the account, saving three days
Holiday NAV	NAV is calculated even on holidays and price is closest to NAV even a day after the holiday
Phone-In Facility	Allows investors to enquire, redeem, purchase, and switch over the telephone
Net-Based Services	Armed with a PIN number, investors will be able to do everything on the Net
Systematic Investments	Allows systematic investment, redemption, and transfer of a pre-determined amount
E-mail & Automated Fax	Investors get daily NAVs posted at their e-mail addresses

But investors like Sampat need fret no more. Spurred by intense competition, mutual funds are now offering conveniences and services that allow investors to do things they could earlier only dream of. Like redeeming their investments over the Net. Or switching from one scheme to another over the phone.

Service is the new buzzword in an industry where volatile stockmarkets and a proliferation of funds have made it difficult to attract and retain subscribers. Says Suraj Mishra, 37, Vice-President (Marketing and Customer Service), Prudential-icici: ''When you are investing in the same markets and in similar instruments, you cannot always be the best in terms of performance (return). But when it comes to customer service, it's the best way to differentiate yourself.'' Agrees Anil Saigal, 33, Vice-President (Service), Dundee Mutual Funds: ''Investors are not going to stick to you only for the return. Ultimately, it's the service that is going to make all the difference.''

It could. Last month, Prudential-ICICI kicked off its Instacheque facility, which lets investors redeem their investments in debt-funds over the counter at any of the fund's customer service centres across five cities. Instead of the three to four days that it takes normally, redemptions are done instantly, with Instacheque. Says Mishra: ''Our aim is to make investments in mutual funds as liquid as deposits in banks.''

Other funds like Kotak Mahindra, JM Capital, Templeton, and Prudential-ICICI directly credit redemption amounts to investors' bank accounts.Direct credit bypasses the Reserve Bank of India's (RBI) cheque-clearing system and credits the redemption money into an investor's bank account.

Kotak and Templeton also offer accruing interest on holidays. Normally, NAV for all funds are calculated based on the net asset value of its holdings on only the days when the debt market is open. So if an investor goes for redemption on a Monday, his NAV-based redemption price will be based on the last working day, which is Friday.

Zurich India and Birla Mutual have introduced schemes where investors can hand over post-dated cheques with instructions to invest in a specified scheme on a particular day. Such services are particularly popular with salaried employees who may want to invest small amounts in equity funds regularly over a long period.

Templeton, which is one of the more customer-oriented funds, also offers investors systematic withdrawal and transfer facilities. The first allows an investor to regularly redeem investments worth a fixed amount over a period of time and the second allows him to invest gains (through redemption) from one fund into another.

Quite a few funds, notably Prudential-ICICI and Kothari Pioneer, have introduced phone-investing, where investors armed with their own personal identification number can access their accounts and carry out transactions like redemptions, purchases, and switches.

And, of course, there's the Net. Funds like JM Mutual, Templeton, Sun F&C, Zurich India, Kothari Pioneer, and Prudential-ICICI have already created web-sites that provide the latest details of their funds. NAV data, experts' commentaries, and replies to investor queries are despatched by e-mail. That's just for starters. Some of these funds are already working on enabling their web-sites to handle redemptions, switching, and purchases.

Of course, the main issue involved is that of security. To help with transactions, these funds are joining hands with private banks who can act as their payment gateways. Says B. Swaminathan, 38, Director and Chief Marketing Officer, Templeton India: ''The Net is a great customer-service tool for the mutual fund industry. The faster we develop this space, the better it is for all of us.''

There's more good news for investors. The National Stock Exchange (NSE) may soon allow mutual fund units to be retailed through its own network of 300-plus centres across the country. If that happens, it will expand the reach and trade of mutual funds exponentially because currently private sector mutual funds are restricted to just 25-30 centres. Clearly, for mutual fund investors, things are getting better.