The fund house that has mainly relied on its banking channel is focusing on 150 IFAs empanelled with it. Going forward, it plans to further strengthen its link with IFAs as well as with other Banks and National Distributors. Rajan Krishnan, Managing Director, Baroda Pioneer Mutual Fund and one of the most experienced mutual fund professionals talks to Cafemutual about his plans for the fund house and the current state of the fund industry
Your strength has been on the debt side. What are your plans on the product side?
Our joint venture came into existence in 2008 when the markets were in a state of mess. The scenario became worse as we moved into 2009. It became difficult for most of the fund houses to raise large amounts in equity funds in those market conditions. It’s not that our interest lies solely in debt funds but we are waiting for more favourable market conditions.
Another reason for not launching more sophisticated products is because we are so focussed on our banking channel. Our average bank customer, at this point, is not so interested in sophisticated products. He is happy with lower risk, decent return products.
We are now gearing up to launch more products though.
Are you looking to launch gold funds or ETFs?
Currently there is lot of euphoria around gold. We are planning to launch a gold fund of funds.
How do you see the SIP market growing?
I remember talking about SIPs since 1994 but it has gained unprecedented popularity only over the last one year. While that is mainly due to current uncertain markets, the results have been due to the concerted efforts of the industry in promoting SIPs. SIP is a very apt form of investing for new investors.
Currently, our focus is on SIPs. In the last three months, we have generated more than 10,000 SIPs. That’s the rate we would like to build on. We are looking forward to generating more than one lakh SIPs a year. Our emphasis is on perpetual SIPs.
Which channels of distribution would you take to reach your target?
We have been focusing on our bank channel for distribution as we have access to more than 3000 branches all over India. The challenge is to increase penetration among branches.
We have also started engaging with IFAs. Currently, the focus is on 150 of the IFAs empanelled with us. We plan to tie-up with more IFAs.
Our banking channel contributes nearly 85 per cent to our retail sales. But now we have charted a fresh sales strategy and will be focusing on increasing engagement with IFAs too.
Many AMCs feel that IFAs would be the future of distribution for mutual fund. What is your take since your company operates on bank focused distribution channel?
Why future? They were always the distribution channel that the mutual fund industry banked on. This business has been originally built by IFAs. The banks entered the business in the late 90’s only. Going ahead, I feel that both the channels will co-exist as each channel has its own strengths.
You recorded a 71% growth in your average assets this quarter. What has contributed to this growth?
Fixed income and short term debt funds contributed to this growth.
FMPs are currently the flavor of the season. Will we continue to see a rush of FMPs in the market?
FMPs are popular because of the high interest rates. With the latest RBI move the FMP flavour could be prolonged while there could be some good opportunities in long term FMPs
How do you plan to grow this fiscal?
On the retail side, we want to expand our reach and marketshare in both the IFA and national distributor channels. We are also trying to broaden our reach in non- public sector banks and corporates. These are the two major things that we are focusing on besides increasing penetration in our banking network.