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SBI MF completes 25 years of operations in the Indian
mutual fund industry today. Despite private sector AMCs’ aggressive entry, SBI
MF is in the coveted top 10 AMC space.
 Your fund house completes 25 years of
operations. Take us through the changes your fund house has undergone.
SBI
MF was launched in June 1987. It was a completely different era. We came out
with the first scheme- SBI Magnum Regular Income Schemeon 1st
January 1988. In 1991 we launched Magnum Multiplier which is called Magnum
Equity Fund now. It’s a fond memory for us because this scheme has been in
existence for so many years. It has been a consistent performer.When we started,
it was an era of assured return schemes. That was stopped subsequently.
During
1990s, a lot market linked funds were launched. We had launched Tax Gain and
Magnum Multiplier, Magnum Tax Gain, Global and Balanced Fund at that time. In
1999, we launched the hugely popular SBI Contra Fund. Our Magnum Tax Gain almost became synonymous with a PPF.
It has a very large number of investors.
Now,
the industry has realized that you can’t have NFOs just for the sake of NFOs. The
spate of NFOs has died down. The industry saw its golden period from 2004 to
2007. We also saw our golden period around the same time when we won The ‘CNBC
CRISIL Mutual Fund of the Year Award’ in 2007.
I
think managing change has become an important aspect of functioning of any fund
house. We managed change very well. The regulatory oversight is going to make
the industry even stronger. Now, many fund houses have shifted to a more
process driven, risk focused and template managed fund management process
rather than depending on a star fund manager. So, the personality of the fund
manager is slightly at the background. We are much more globally aligned now.
Public sector mutual funds started
operations much before private sector mutual funds. Today private sector MFs
command a major share of the Industry AUM. SBI MF is one of the few public sectors
AMC which continues among the
top. What has worked in your favour?
SBI
as the largest bank of India has the ability to manage change efficiently. Belonging to the same family, we share
the same DNA. Managing change has been the hallmark of SBI MF. When the
transition from assured return to market linked product set in many fund houses
found it very difficult. We are the only entity which started as SBI Mutual
Fund in 1987 and continue to remain SBI MF till today. Others have come and
gone or have entered in a new avatar.
What is your AUM share outside the top
10 cities? What plans do you have to increase the share of tier II and III
cities?
Our
AUM share beyond the top 10 cities is much better than the industry. We believe
in reaching out to the smallest investor. We have launched a pan India investor
education campaign where nine mutual fund ‘pathshalas’
are criss-crossing the country in tier II and tier III towns. We are covering a
large geography.
Even without your parent bank, you have
one of the widest networks of IFAs in the country. How do you keep them
motivated in these challenging circumstances?
We
hold regular training programs for distributors. We help them in various
processes. IFAs in smaller towns are facing a lot of problems and whenever I
meet them, I tell them to invest more in relationships and investor interest than in mere transactions. I
agree that it’s easier said than done because it has its own costs. But the
entire industry is facing this dilemma.
Your AUM increased from Rs. 41672 crore
in FY11 to Rs 42,042 crore in 2012. In which category did you see the inflows?
It
was largely in liquid, FMPs and gold funds. Our SBI Dynamic Bond Fund has been
a runaway success. It has given good returns.
Various models have been suggested to
SEBI to compensate distributors. Which model do you think would be apt?
I
had suggested SEBI to start a multiple share class structure in India which is
prevalent the world over. If you have multiple share class then each share
class can have different total expense ratio (TER). We have also suggested
fungibility under the TER.
Some fund houses have filed offer
documents for launching infrastructure debt funds. Would you also be looking at
this space?
We
have completed most of the work and are going to approach SEBI soon.
What are your views on the recent
alternate investment funds (AIF)guidelines by SEBI?
The
recent announcement by SEBI about Alternate Investment Funds (AIF) is very
exciting because we can do many more things which we were constrained to do.
Through this, we can launch a real estate fund, SME fund or a venture capital
fund. Through the new route we can target high net worth individuals or do a
private placement. It thinks it’s a very good step by SEBI. Now we have to do
everything under the MF space and whatever we do in the MF space is open for
all kinds of investors.
What is your message to investors?
One
big mistake which retail investors are making is stopping SIPs. We are advising
investors to stay invested for the long-term. But the problem is that equities
have not posted returns even for four years. Investors ask if four years is not
long-term then what is long-term. Another way to look at this is that the worst
is either over or very close to being over. We are a big economy with high domestic
demand. Instead of coming in when the next bottom, it’s a good idea to stay invested
in a disciplined manner.
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