Kotak Mutual Fund has been one of the fastest growing fund houses over the last two years. What has contributed to this growth?
In the last two years, the mutual fund industry has seen healthy growth. While the industry AUM grew 50% year-on-year, our growth has been 120% largely due to low base and spectacular performance of our funds. Over the years, acceptability of our products has increased among IFAs. Our schemes have made it to list of recommendations of many banks and NDs.
Also, Nilesh Shah joining as the CEO has changed the perception of the fund house among distributors. In addition, we have made a small acquisition of Pinebridge MF. We believe this has created a perception among distributors that we are serious about this business.
Our concentrated effort as an organisation in ensuring that we engage with distributors regularly and more aggressively has also paid off. Every month we do a conference call with our distributors to brief them about the markets and share our outlook. Currently, over 1,000 distributors log in to our conference call.
As on December 2017, 7% of your AUM was from B15 cities. How are you planning to expand your business in these locations?
We are currently present in about 82 locations. I think we should go deeper in our existing centres. It does not make sense to open new branch offices since we see huge potential in existing locations. Over the last three years, our focus has been on how we can penetrate deeper within the distribution community through our existing centres.
Three years ago, the B15 market share of Kotak Mutual Fund was much less than what it is now. I think the effort has to be on engaging more deeply with IFAs, banks, NDs and incrementally improve the market share in these places.
We have seen an encouraging trend in UP, Rajasthan, Gujarat and some parts in the east. However, in many other states such as Jharkhand, Bihar and some pockets of south India, the efforts have to be much more aggressive. In Assam, we are planning to add a dedicated investor relations staff since we have seen healthy inflows from Guwahati.
What distributor engagement programmes have you planned for FY18-19?
Our first priority is to keep in touch with our distribution partners through conferences, conference calls and group meetings.
This year, markets are likely to be volatile. Hence, the engagement has to be more than what we did last year. This year the key message would be how to handhold new investors so that they do not panic when they see volatility.
We will also continue to do our own event to present our outlook on markets and investments. We will invite external experts to give insights on different topics that will add value to advisors.
How has the response of your digital initiative for IFAs Go-Digital been? How it is different from the existing platforms of other fund houses?
Over the last three years, robo advisors and online distributors have emerged in a big way. As a result, there is a strong urge among distributors to migrate to these platforms. Now, many distributors have started using the NSE and BSE platform to transact.
As an AMC, we should encourage IFAs to leverage digital technology to grow business. Hence, we launched Go-Digital last year to empower distributors to build their own website/mobile app and execute transaction across fund houses.
Barring a few, many platforms do not provide open architecture infrastructure. We feel that distributors need a platform where advisors can execute transactions across all mutual fund houses.
So far, IFAs have created over 750 websites across the country with 3 lakh users as their clients.
What changes have you made to this platform to make it more attractive for IFAs?
We have a dedicated team of relationship managers to help IFAs use the platform. We are planning to incorporate a financial planning segment on the product. We are also exploring if we can help IFAs do biometric and IPV of their prospective clients to bring them to mutual funds fold within minutes.
Many IFAs are not comfortable sharing client data on such a platform. How are you going about promoting your platform among these IFAs?
Using Go-Digital is like approaching an IT company to build a website. We are just helping IFAs with subsidised rates. We have clarified in the FAQ that we are not privy to their data.
We understand that Kotak MF has filed for Category-III AIF. What is the rationale for this move?
Wealth managers prefer recommending their wealthy clients to invest across asset classes. And many HNIs prefer investing in AIFs.
As a manufacturer, we need to see that we have the whole suite of products. We have applied for the approval and expect it in the next three months.