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2022 is ending soon. Can you give us a sneak peek into your 2022?
2022 finally saw a return to normalcy after two years of disruption. We had a good 2022 with our midcap fund being the top performer in its category. On the AIF side, we raised more than Rs. 2000 crore of commitment this year and remain the leader in the category of CAT III AIFs.
We also launched an ethical strategy PMS for the communities and people who wish to invest into markets via only the ethical route as per their sentimental, religious or conscious beliefs.
Despite a challenging macro environment, we believe we have done a good job in terms of performance and inflows. We also saw one of the industry veterans i.e. Prateek Agrawal join as Executive Director which should further boost confidence of our clients and partners. Overall, the year laid a good foundation for us to capitalise in 2023 and beyond.
What trends do you think that the MF industry should watch for in 2023?
The uptrend in SIP flows is expected to continue gradually. Industry will see more launches of unique passive funds and increased traction of debt funds. I believe that AMFI’s campaign to encourage people to participate in the Industry as distributors would gain speed and will prove to be a catalyst for the industry just like its SIP campaign. Already in November, we saw about 5000 people joining as distributors compared to about 11,000 people between Apr-Sept. This trend of wider retail participation and deeper distribution strength would be a force multiplier over time.
What are the two key lessons that the year has taught you?
I would not call it lessons but rather learnings. First is power of persistence and resilience. No matter the difficulty of situation at hand, if you keep at it with persistence and remain resilient, you find your way through. Second was reaffirmation that we are living in a country which is in its golden decade in modern history and it is time to think big and make the best of it both personally and professionally.
What are your aspirations for the coming year?
Professionally, would like see Motilal Oswal AMC grow to newer heights with more distribution penetration and client engagement. Personally, I wish to get back to fitness regime and maintain a healthy work-life balance.
What are the new things that you would like to implement in your professional and/or personal life?
I have believed that evolution is a continuous process and have been learning and improving as I go along. I intend to start running again for fitness. This good habit had discontinued due to Covid and I could not pick it up again later.
What is that one thing that you feel could have been done differently last year?
I definitely could have resumed my fitness regime last year itself. Better late than never.
What trends do you think MFDs/RIAs should watch for in 2023?
Given the rising interest of retail investors in markets in general and mutual funds in particular, we expect good opportunity for MFDs/RIAs. However, I believe that one shouldn’t be short sighted and rather focus on the golden decade which lies ahead of all of us. Hence, rather than giving broad trends for 2023, I would like to highlight the great opportunities for MFD/RIAs this decade.
We recently did a study to identify the opportunities for MFDs/RIAs. Top 1 lakh individual MFDs/RIAs constitute 40% of the mutual fund equity AUM managing around Rs.5.90 lakh crore. If we do a simple math with generic assumptions of 12% compounding of the AUM along with the incremental AUM to be added upto 2030, we believe this AUM can increase 6 folds to Rs 37 lakh crore. This means on an average top 1 lakh MFDs/RIAs will be handling Rs.37 crore each in 2030 v/s 6 crore as of today. This creates a 6x opportunity for MFDs and RIAs.
Also, we all know about the 80-20 rule that states that roughly 80% of outcomes come from 20% of causes. Similarly, 20% MFDs/RIAs handle 80% of the AUM (Rs.24 lakh crore on average v/s Rs.1.5 lakh crore for bottom 80%). Now if the MFDs/RIAs can move from bottom 80% as of today to top 20% in 2030, this can lead to a 100x increase in their AUM and revenue potential. So, if you see, there is a huge runway for growth for MFDs and RIAs.
Some key success mantras for achieving this include continuous learning, quality advice, prompt service and innovation. Finally, the most important is to Keep investor’s interest in mind, always.
