You have
been a part of Deutsche AMC almost
from the beginning. How have you seen the AMC
evolve?
It has been a satisfying journey. We started this business in early 2003 and have completed ten years of operations. We made a humble beginning by collecting around Rs 300 crore across four funds in Q1/2003. Over the years, we have achieved strong investment results and have built distribution relationships to reach out to investors. We have also expanded our team and reach. We currently manage over Rs 18500 crore (AAUM for quarter of April-June 2013) for a large base of investors. So it has been a fulfilling journey.
From the very beginning our focus has been on delivering superior returns. We have built a team of experienced managers locally who are well linked up with our investment team globally. This unique combination of strong local market knowledge backed by global best practices has helped us achieve strong investment results while ensuring strict risk control.
You were appointed as CEO in addition to your role as CIO in 2008. How actively involved are you on the fund management function? What are the challenges in handling both these roles together?
I am fortunate to have a very experienced and talented investment team which allows me to stay away from active management of funds. I used to head investment function before being given the additional responsibility of running the business in July 2008. Over a period of time the demand from business side increased and I realized that I was not able to do justice to the day to day requirements of fund management. That’s when I moved out of fund management responsibilities to concentrate on my duties as CEO.
Fund management is a reasonably demanding job. You are on your toes all the time. You have to have conviction as well as humility to accept your mistakes and make corrections. Fund management is also a team effort. You need to be able to build a team, implement processes and create an environment where each individual is encouraged to deliver his best. These are equally important learnings for a CEO as well.
In a fund management role, you are always trying to outperform the market and competition. Heading the business is about building partnership and trust. It is more of an inclusive approach as opposed to fund management where you are trying to beat the market.
Your fund house recently filed an offer document for DWS Inflation Linked Bond Fund. Do you think this category will attract a lot of investors? Is there enough paper?
It’s a new avenue for investors. Inflation linked Bonds is a fairly sizable category in other markets. Since this product is yet to receive regulatory approval, I wouldn’t want to comment much on this.
Your AUM in B-15 cities is currently 1%. How do you plan to increase your presence in B-15 cities?
Indeed the share of B-15 for the entire MF industry has been very low. The industry has to work collectively. The regulator must be complimented for its efforts to create incentives for geographical expansion of funds. We are running investor conferences at various locations. We are also trying to reach out to investors through mass media. It will take time to increase our presence in B-15 cities but we are confident about increasing our footprint. Hence we are working on multiple activities to achieve this objective.
Is net worth the correct barometer of measuring an AMC’s seriousness?
It is a business of trust. It is only fair that credible players come into the industry. There can be various parameters like credentials of sponsors, management team, financial muscle, reach, etc. to gauge the seriousness of any player. Net worth could be one of them.
Your AUM growth has largely been in the debt category while your equity AUM has not grown at the same pace. Is it a conscious effort to focus on debt funds?
It is a reflection of investor appetite. Over the last four to five years a large part of the investor allocation has been towards fixed income. Investors have preferred fixed income products due to the volatility in equity markets. The trend is similar for all the asset managers. We would like to get money in equity funds as well. We are taking steps to increase our equity AUM. Our flagship equity funds such as DWS Alpha Equity Fund, DWS Investment Opportunity Fund have done well, outperforming the benchmark since their inception (based on latest quarter data). We would certainly go out and seek investor participation in our equity funds as well.
What is your roadmap for the AMC for the next two years?
We want to stay focused on delivering superior returns to our investors. We want to enhance customer and distributor engagement. We are adding more people to our equity fund management team. We believe staying focused on investment results and customer engagement will lead to a sustainable growth in the business overtime.
What is your advice to investors at this juncture?
We have seen significant macro headwinds for the market in recent times. Despite the current headwinds, I believe the situation can only improve from here. Equity investors could potentially end up making good returns over next three to five years. If you are looking at creating long term wealth then invest in equity. Equity investors will not be disappointed over a three to five year time frame. However, if you have near term commitments, then invest in debt funds. Within debt funds I would recommend to invest in short to medium term products. I wouldn’t recommend lump sum investments in equities right now. So investors should invest in a staggered manner.
