The Association of Mutual Funds in India (AMFI), an industry body, made a strange request to the Securities and Exchange Board of India, the market regulator, last week. They wanted SEBI to cut the amount they manage and spend on investor education. They believe the association’s investor education fund has more money than can be meaningfully spent.
For every Rs 100 managed by mutual funds, they are supposed to set aside 2 paise for investor education. SEBI rules mandate that one paisa of that will go to AMFI for investor education, and mutual fund companies will use the other paisa for their own investor awareness programmes or campaigns.
Considering the overall size of the mutual fund industry of Rs 82,00,000 crore, it comes to Rs 800 crore annually for that one paisa. The media reported earlier this year that AMFI spent 90% of the money on generating millions of impressions on Meta and Google, or placing logos on cricket jerseys to create brand awareness.
There is a significant jump in new account registrations, with total folios surging to 27.9 crore. However, the number of unique investors is around 6 crore. That is less than 4% of India’s population, the weakest among major nations.
‘Although awareness is increasing in urban areas, rural regions and smaller towns continue to lack knowledge about mutual funds,’ a CRISIL Intelligence report published in the draft offer document of ICICI Prudential Mutual Fund said. Residents in these areas often have a limited understanding of the benefits and potential of mutual funds, leading to hesitation, it added.
Why it matters to you
If you are new to your job or have just started investing, you need to be aware of how asset allocation works for your investments. You need to be told about what happens if you do not let your money grow or how expense ratios of mutual funds affect compounding of your wealth.
To do that, someone needs to talk to you regularly. You need that someone to speak to you in a language you understand. It is hard to find efforts that could have been made in mobile digital vans that could move around semi-urban and rural areas with local representatives who can communicate with people. Another approach could have involved self-help groups that could drive behavioural change. Just like the consumer sector, AMFI could have used the existing network or created its own.
AMFI’s investor education on-ground outreach was largely delegated to individual AMCs, which probably resulted in ‘tick-the-box’ seminars in hotel conference rooms rather than genuine grassroots penetration.
Another area of active involvement for AMFI could have been training students and the younger generation with interactive tools. Despite hundreds of crores at its disposal, AMFI can create zero-ad portfolio simulators, interactive and gamified risk calculators, or multilingual AI assistance tools for messaging platforms.
The website of such a rich body is the least friendly to someone who does not belong to the finance industry.
Time to reform and not retreat
The push to reduce the investor education fund is a classic case of misdiagnosing the disease. The quality of spending shows a lack of imagination, and it appears there is no focus on outcome tracking. AMFI requires Sebi or the industry to define outcome goals collectively. The allocation of the money has to be balanced between ad spending on sponsorships and verifiable rural education, school curriculum integration and teacher training programmes.
India’s financialisation story is just beginning. Household savings are transitioning from fixed deposits and gold into market-linked instruments. At this crucial juncture, scaling back investor education would be a mistake.
Instead of slashing the budget, AMFI must reform how it spends—moving away from high-priced ad agencies and toward real, measurable, and protective investor literacy.
