Ashu Suyash, Managing Director and Country Head India, Fidelity Worldwide Investments believes that the Indian mutual funds business offers tremendous growth opportunities and shares her plans to grow the Indian business in an exclusive interview with Pallabika Ganguly
Let us start on a personal note. If we were to draw up a list of the top 100 executives in India in mutual funds, the percentage will not be more than 5%. As India’s no. 1 woman in the mutual fund business, what do you have to say about this absence of women at the top?
Generally, capital markets have fewer women and this is reflected in mutual fund industry. But the trend is certainly changing. I see a number of women in investments and research apart from other areas. Since it is a young industry, we will see more diversity as we move further.
Since the time that you started Fidelity business in India, how has the Indian mutual funds landscape changed?
Over the last decade, the industry has grown at an average rate of 30%-35%. We are getting into an area were the growth might not be 35% but it should be 25%. Considering the global scenario, 20%-25% is a good growth rate.
What are the positives you see for the Indian mutual funds business?
One of the interesting factors in terms of distribution is that we have an open architecture model while there are some markets that follow a closed architecture kind of a model.
Open architecture model is always better for a customer because it provides him more choice and he can select a fund that suits him.
Second, the under penetration is an advantage because it offers tremendous opportunities unlike a fully penetrated market. We are a young nation and have many decades before we start facing the problems of an ageing population. In such an atmosphere, the products are more outcome-oriented than capital gains oriented.
Third, we are an innovative industry and we constantly come up with unique products that are relevant.
What are the constraints or impediments to growth of the Indian mutual funds business?
There are two key constraints. First, the inability to access long term pool of assets in pension plans and schemes. Any pension plan is like a systematic investment plan so I don’t see any reason for being out of it.
Second is the constraint of creating sub advised business which allows you to work with other participants such as insurance companies.
I feel both these can give enough scale to the industry. As scale increases, we will move towards overall development of the industry. It not only ends up being beneficial for the mutual fund industry but the overall capital markets also.
How do you view Fidelity’s progress in India?
In the next three years, we are focussed on four major programs. One, we are under owned in fixed income. We made a very good beginning with short term income fund which we launched in December last year. So we will try to offer more products under this category and we will expand our presence and scale in fixed income.
Second, is to get incremental space in equity space. There is a certain segment in the market which is looking to invest offshore and we will try to bring some of these products to India. In the domestic space, we do have some product gaps as we have only being there for six years. Those are the gaps we would like to fill.
The third plan is to stay more focussed on customers and distributors. On the customer side, we keep looking at different channels to allow customers to reach us directly. For distributors, we have taken a number of good initiatives. We not only look at knowledge based training programs but also focus on soft skill development. We also conduct sessions on technology which allow our distributors to adopt recent advances in technology.
We are also constantly helping IFAs to mould themselves with the change in regulations. We are able to share with them the experience of other markets where these changes have already taken place.
Fourth and the most important agenda is to stay focussed on investor awareness program. Even today, awareness about mutual fund is very low. It remains a very important area of focus for us and needs manpower and lots of investment.
How do you plan to expand your distribution channel?
We have a diversified and balanced approach to distribution. We work with all channels - IFAs, NDs and banks. We are also appointing lot more IFAs. This channel has picked up and is doing extremely well. We do not have over dependence on any one player within the distribution channel.
We have a very good sense of the distributors - how they function, their models and we align accordingly.
Your views on the concept paper on regulation of distributors.
It is a step in the right direction. I would say that there is a need for distributor regulation rather than just regulating investment advice. At the same time, we have been through a phase of many changes. Therefore the need of the hour is implementation in a phased manner.
Also, I feel the qualifications mentioned in the paper such as CA and MBA are not relevant and should be modified. The regulation also says that if you are an investment advisor you are going to be licensed and covered. According to my view, the regulator should look at licensing all distributors and they can keep the threshold high for investment advisors.
