Sundeep Sikka, CEO, Reliance Mutual Fund feels that the industry should focus on enhancing the capabilities of existing IFAs to bring in more investors into the fold.
2011 has been eventful for AMCs as well as distributors. What were the major challenges facing the industry?
Major challenges this year continue to be low penetration and awareness of mutual funds among the retail investors. The current market environment has resulted in an overall decline in AUM as far as equity is concerned. However, investors continue to believe in gold and fixed income and we are seeing steady inflows there.
The industry has registered a rise in SIPs this year. Today, we have close to 80 lakh SIPs in the industry. Will the thrust continue to remain on SIPs going ahead?
Absolutely! Retail investors have matured. They have been through different cycles and have experienced the value and benefits of investing in SIP. Hence we don’t see retail investors panicking too much this time around.
The principle of SIP is very simple – regular constant investment over the long term without timing the market.
We (RMF) have over 20 lakh SIPs and will continue to promote SIP for the retail investor. In fact, to make investment in SIPs more attractive, we have launched Reliance SIP Insure which now covers a wider range of RMF schemes. This feature provides free cover for an investor’s SIP investments which covers his balance unpaid SIPs uptoRs.10 Lakh.
Many AMCs launched gold funds in 2011. The inflows in Gold ETFs have also been positive. Will gold continue to glitter in 2012 as well?
Gold has a special attraction for Indians and no matter what the gold price; people will continue to invest in gold as it is a key part of religious and festive occasions. Early on, people invested in physical gold as they did not have many options. Now, with the advent of Gold ETF and Gold Savings Funds, people are beginning to accept the benefits of investing in paper gold. Also, the Gold Savings Fund has made investment in gold very easy without the need to have a demat account. Also the facility to accumulate gold by investing via SIP has proved to be a winner.
How are AMCs helping distributors make the transition from being agents to financial advisors?
We have launched a solution called Flexible Asset Selection Tool (FAST) basedon the core principles of financial planning – goal planning, diversification across all asset classes and tax planning.
In partnership with NISM, the Reliance Personal Financial Advisor Programme has also been started. It has been specially designed to help advisors build on their competencies required to become a Certified Personal Financial Advisor. It will also enable them to provide holistic financial advisory services to their clients. The course conducted over the next 4-5 months will include 12 classroom sessions covering financial planning, investment planning, insurance planning, retirement planning and tax & estate planning.
How do we bring in more IFAs into the industry?
I think the issue is not with the number of IFAs in the industry. Rather, the focus should be on increasing the awareness and knowledge levels of the existing IFAs, supporting them to build on their business and bringing more investors into the fold.
How has been the response to your ATM facility?
The Reliance ATM card has been received very well. We are focused on increasing awareness about the benefits of this unique product, which will be a game changer in the industry.
What initiatives are in the pipeline from Reliance?
Currently, we are focusing on simple and innovative solutions for the retail segment such as Reliance ATM card, Reliance SIP Insure, Gold Savings Funds and the Invest Easy Platform.
What is your wish list for the MF industry in the year 2012?
If it was anything, I would wish for every household to have a mutual fund.
Any New Year resolution?
To be more focused on retail investor and investor education than ever before.