Axis MF is looking at doubling its
asset base by tapping the retail segment. Rajiv Anand, MD & CEO of Axis
Mutual Fund shares his plans to help the fund house reach break-even this
fiscal. A few excerpts…
Axis MF has reached
15thposition in terms of AUM in just 3 years. What has worked in
There are three factors that make a fund house successful—fund
performance, distribution and operations. In our case, Axis Bank brings us a
brand in distribution and our team is skilled in collecting investments and delivering
optimal operational performance. The distribution community now recognises us as an innovative fund house. We are already among the
top 10 in the hybrid fund category. Axis Triple Advantage Fund, Axis Income
Saver and Axis Capital Protection Fund have all been very popular schemes in the
hybrid category. We have three funds in the equity space and our focus is to
build a strong track record. Our fund performance has been strong over the past
year. We have an excellent portfolio of fixed income funds as well. We will
continue to grow on the foundation that we have built so far. I am sure the distributor
community will recognise our work and increase
allocation to our funds.
Another reason—we are present in 71 centres; Axis is one of the few AMCs which are able to penetrate
the smaller towns.
What is the roadmap
for Axis MF in 2012-13?
We have built our team, infrastructure, and improved performance
over the first two years of our operations. From here on, we are keen to expand
our distribution network and enroll more IFAs. We are working on a few product
ideas as well.
When do you plan to
Our aim was to break even in three years when we had set
up the business plan. We are planning to break even in 2012-13. Our estimates
suggest that we are well on track to achieve this.
Have you set any AUM
targets for reaching this break-even point?
Profitability can be achieved through a sizeable AUM and
tight control on costs. We have been able to do a bit of both. Our focus is on
building full-fee assets which are typically retail. We continue to focus on
our institutional business as well, which is also a profitable segment. So it’s
an amalgamation of both. We have been able to control our costs as well—which
is very critical. Considering these three factors, we think we are on our way
to achieve break even.
You had filed an
offer document for Axis Life Plan. Have you received SEBI approval for the
same? Will it be difficult to sell such a fund in India when most distributors
prefer to sell plain vanilla products?
SEBI has come back to us with some queries. We have
addressed these questions and hope to get approval soon.
We are witnessing a trend globally—investors are
allocating more funds to ‘outcome-oriented’ schemes.Today investors are not
necessarily looking for relative performance. They are also looking for
absolute performance. This fund will try to manage volatility over the short
term and beat inflation over the long term. We believe that ‘outcome-oriented’
funds will form a part of many investors’ portfolios.
Some media reports have
said that Schroder (a global AMC that manages $291 billion in assets) was
acquiring a stake in Axis MF. Can you tell us the status of the deal?
We do seek out opportunities to work with a partner and
that’s an evolving process.
So far, Axis Bank has
been the biggest distributor of your funds. Are you looking at expanding your
distribution network? How many IFAs work with Axis MF?
Today, approximately 60% of our retail assets come from
Axis Bank. We believe that Axis Bank’s share will come down in the future as other
distributors increase allocation to our funds. We work with IFAs across the
country. As we complete three years of performance, we believe that more
distributors will have faith in Axis MF and its products.
What kind of
activities is Axis MF carrying out to engage IFAs/distributors?
We have various activities for the IFA community, which
touch upon areas like skill development, growing business, etc. At the end of
the day you have to provide suitable products for investors.
How many SIPs does
Axis Bank bring in on a monthly basis?
Our SIP book is in the vicinity of around 1,20,000, and
we want to double that number in the current year.
What are your views
on upfront commission?
There needs to be alignment of interest of all three
stakeholders—investors, distributors and AMCs. My view is that full trail
aligns the interest of all three stakeholders. The investor’s money is not
churned due to upfront commission. Distributors will be able to benefit from
the upside in NAV in a trail model. The AMC will be able to operate with less
churn. We could evolve a strategy where upfront will be allowed up to Rs 2 lakh
or Rs 5 lakh. We can also work on allowing monthly trail for distributors so
that their cash flows are taken care of. There can be some hiccups in the short
run—but it’s beneficial for all in the long run.
Axis MF added Rs 217
crore this quarter when most AMCs faced redemption. In which funds did you
We are seeing money coming into our full-fee assets like
equity and hybrid funds. We also had some inflows into our debt funds as well. Axis
MF has been able to expand its institutional business this year.
You changed the name
of your ‘Axis Tax Saver Fund’ to ‘Axis Long Term Equity Fund’. Has this
This was done to expand the potential investor base.
Apart from investors who want to save tax, we wanted to position this fund for
other investors who might otherwise invest in a diversified fund and are ready
to hold their investments for three years. One can already see the benefits of
this if you look at the fund’s performance. We had collected Rs 1 crore during
the NFO and now the scheme has grown to around Rs 162 crore.
How much are you
managing in PMS?
We manage around Rs 800 crore. We advise some provident funds. We have
found some niche targets within this segment—fixed income is one of them.