We need IFAs to grow our business: Rajiv Anand, Axis Mutual Fund

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 15^thposition in terms of AUM in just 3 years. What has worked in your favour?

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 break even?

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.

Again, will it be difficult to sell this product after approval, given the fact that so far, distributors mostly prefer to recommend plain vanilla products?

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 receive inflows?

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 improved inflows?

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?