Listen to this article
What would be the key message you would like to give to your distribution partners for 2024?
2023 has turned out to be positive one for global equities with most equity markets delivering reasonable gains. The developments of the year 2023 reflect a dynamic and eventful economic landscape for the economy as well as mutual fund industry. The AUM of the Indian mutual fund industry rose above Rs. 50 trillion (Rs 50 lakh crore) in December according to data AMFI. The opportunity canvas is even bigger for the future.
At present, we have close to 4 crore unique MF investors, 7.85 crore tax filers, 11.59 crore demat accounts, 138 crore Aadhar card holders. Currently the total no of MFDs in India is around 1.49 lakh. This translates to huge opportunity per MFD in India for the next decade.
In fact, every MFD can reach out to potential 9300 investors with Aadhaar cards to cater to. This shows that MFs have still not penetrated much in India as compared to their global peers.
Partners can help investors in following 3 ways:
1. An apt asset allocation for their investors thereby introducing them to various asset classes and provide diversification
2. Providing products to investors based on their risk profile to provide a better risk adjusted return experience
3. Most importantly, focusing on positive investor experience through all the steps of the investment journey.
ITI Mutual Fund has crossed AUM of Rs.6000 crore. What are the three things that have contributed to this growth in assets?
It's impressive to see the rapid growth and achievements of ITI Mutual Fund within such a short span. Crossing Rs. 6000 crore in AUM in less than five years is a significant milestone and the support from our partners reflects the trust and confidence in the fund house.
The strategic focus on governance, people, processes and infrastructure is crucial for creating a seamless long-term investing experience for investors. It's notable that ITI Mutual Fund has diversified its product offerings to 17 solutions for investors. This demonstrates a commitment to providing a comprehensive range of investment options to meet the diverse needs of investors.
Three things that have contributed to this growth in assets are:
1. The investment team with a strong pedigree has ushered in confidence among our partners and investors. The team's collective market experience of over 100 years, along with the presence of CIO Rajesh Bhatia, Head Fixed Income - Vikrant Mehta, Senior Fund Manager, Dhimant Shah, Fund Managers (Rohan Korde, Nilay Dalal and Vishal Jajoo ) assisted by research analysts and dealers, reflects a robust foundation for investment decision-making. For a size of Rs. 6000 crore of assets, we have a 13-member investment team to manage equity and fixed income product offerings.
2. The investment process, based on principles such as emphasis on stock picking, avoiding extreme sector divergence and a risk management framework, indicates a disciplined and prudent approach to managing investments. The conscious decision not to make cash calls further showcases the fund's commitment to active portfolio management.
3. The emphasis on scaling through sales support on the ground and partners, including key MFDs, is a strategic move to expand the fund's reach and accessibility. The prompt service provided by the sales team contributes to maintaining strong relationships with partners and ensuring effective distribution for expansion.
Overall, the combination of a skilled investment team, a sound investment philosophy, and strategic partnerships with MFDs has propelled ITI Mutual Fund's success. We are very excited to see how the fund house continues to evolve and innovate in the dynamic landscape of the mutual fund industry.
According to you, what would be key pillars of strength for ITI MF ?
The key pillars of strength for ITI MF would be as follows:
1. Continuous improvement through technology: We strongly believe in offering technology enabled solutions to our investors and partners. At present, ITI MF offers investment solutions through its Android & iOS mobile app, online OTM registration, distributor-initiated transactions, continuous update through WhatsApp channel to partners.
2. Product basket based on feedback from partners/investors: We currently have 17 products that cover most of the categories across the MF space. We cover major categories which have sizeable AUM across Industry. We are glad to introduce unique features in our SIP/STP namely, SIP Top Up, Multiple SIP etc to provide interesting product propositions for our partners and shall continue to innovate further.
3. Positive investment experience : We have endeavoured to deliver consistent risk adjusted returns and have been able to outperform benchmark by reasonable alpha over last 1 year & 18 months. 6 schemes of ITI MF completed 4 years track record in 2023 and 3 completed 3 years track record. Investor’s experience has started aligning to what we believe. We have been able to come across as seasoned investment team which is highly accomplished.
4. Distributor network: We have successfully built and maintained strong relationship with a network of 23,412 distributors, which has resulted in high influx on assets through regular plans. We have presence across India with 29 branches and 51 locations to cater to our partners and their investors.
How do you plan to go about increasing engagement with your partners ?
2024 is an exciting year for us as we step into 5-year NAV track record with our schemes. We look forward to engaging with partners, investors on our first 5-year track record. We look forward to engage with MFDs in how we can have a meaningful association to provide a good investment experience.
ITI MF derives reasonable part of AUM from Tier 2 Cities. What’s working for ITI MF there?
The key factors that has helped us drive AUM from Tier 2 cities would be:
1. Local presence and reach: Establishing a strong local presence and distribution network in B30 cities which has enabled ITI MF to reach a wider investor base. Having a physical presence, such as offices or representatives has helped us to enhance trust and provide ground support to partners in B30 cities.
2. Tailored marketing initiatives: We provide customized marketing collaterals for our partners in regional languages and have a co-branded portal for their perusal. This has helped to provide marketing support to our partners in tier 2 Cities.
3. Technology adoption: Leveraging technology for online transactions, customer support and information dissemination have enabled ITI MF to become more accessible to partners in smaller cities where we do not have presence.
The fund is yet to launch any passives. Considering the growing prevalence of passives, what are the plans in this space ?
During the last few years, passive fund AUM has increased significantly. The primary reasons for increase in passive AUM are increased awareness, lower cost, simplicity and ability to mirror market returns.
At present, our focus is on active fund management. Nevertheless, passive funds are now shaping up to be an important part of investor’s asset allocation and we may look to launch passive products in future once retail interest is strong.
Each product category has its own merits and so do passives, hence, our endeavour will be to offer complete bouquet of products to our investors in future.
