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The mutual fund industry grows by ‘word of mouth’ and as the industry now has a 25-year history of wealth creation, it is only a matter of time before mutual funds enter Bharat from India, say top MF honchos in the business. Regular meeting of BFSI on Thursday.
“Today, 27 percent of equity AUM is outside the top 30 cities. More than 45 percent of MF portfolios are also from these small towns and villages. We still have a long way to go, but with technology on our side, it is very possible,” said HDFC MF CEO Navneet Munot.
Edelweiss MF CEO Radhika Gupta cited the success of the ‘Mutual Fund Sahi Hai’ campaign to create increasing awareness on MFs. “We have become a part of pop culture, I have come across this slogan on various TV shows, many investors have come after covid and we need to make them stay. First experience is a differentiating experience,” she said. .
MF executives believe that the debt offering of mutual funds has a lot of potential, but one area where the industry has not done enough to promote their fixed income products.
Nimesh Shah, CEO, ICICI Prudential MF said, “Indians prefer fixed assets and the offerings of debt MFs are superior to any other fixed income instruments. We need to educate people about the potential of debt MFs.”
“We should have ‘Fixed Income Bihi Sahi Hai’ on the lines of MF Sahi Hai. Equity is good for wealth generation but there is a need for regular income generation and debt funds have potential there,” said Balasubramanian, CEO. Aditya Birla Sun Life Mutual Fund.
DP Singh, deputy manager and general manager, SBI MFs, said there is a need to emphasize tax efficiency of debt MFs. “Debt MF is not just about returns, it’s also about tax efficiency. As an industry, we haven’t deployed debt funds properly for retail investors. There’s a lack of awareness on debt,” he said.
With the vast growth potential, the industry feels that finding the right talent will be a challenge going forward given the competition from wealth management verticals such as Portfolio Management Services (PMS) and Alternative Investment Funds (AIF). In the recent past, some star fund managers like Prashant Jain, Madhusudan Khela and Anthony Heredia have left the MF industry for other verticals.
“Times have changed. The alpha generation is getting stronger as efficiency in the market is increasing,” said Nilesh Shah, CEO, Kotak MF.
Nimesh Shah of ICICI Prudential MF said the way forward is to retain a large pool of analysts. “We have never hired an outside fund manager. Fund managers change and we always have talent to fill in.”
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