One of the fastest growing AMCs, Axis Mutual Fund is ranked currently at the 16th position in the 44-player industry on the back of its consistent performance and strong distribution network. Chandresh Nigam, the newly appointed Managing Director & Chief Executive Officer, discusses his challenges and future plans.
You have recently taken over as the MD & CEO. So, what is your stated mandate?
To begin with, the mandate is to ensure that the next growth phase is achieved without many hiccups. Since the company’s inception, we have built a strong investment, sales and operations team. Because of some outstanding investment performances, we have built a strong foundation for the future. We want to build it further to reach a leadership position in this industry.
Do you still look after the fund management related issues at the organization?
Yes! I am still involved with the fund management though not directly responsible for the day to day fund management anymore. As a CEO of the company, the scope of responsibilities has increased. Now, I am involved with company strategy and shoulder key responsibilities.
What are your key challenges?
Talking about the broader issues, the first challenge is to stay relevant to the investors and convince them to invest for the long term. As far as the products are concerned, we have done a reasonably good job. For instance, our Axis Triple Advantage Fund has been awarded as the ‘Best Retail Product’ by Asset Magazine (Hong Kong). Investors trust us today and hence, we are in a position to take long term asset allocation call.
See, if the product is good then customer service becomes easier and you tend to get a higher wallet share of investors. So, the important aspect is to convince the investors for a long-term position.
Since we are a comparatively new fund house, we have to reach out to distributors in order to attract much more attention for our products.
Another challenge we face is the penetration of mutual funds, which is roughly 4% currently. Out of this 4%, nearly 80% have invested in only one mutual fund product. They have not made any fresh investment. So, our job is to introduce the investor class to products that appeal to them.
Finally, we need to align the interests of various stakeholders including investors, AMCs and advisors. This is crucial for the industry to function efficiently.
Have you adopted any practices from Schroders? If yes, how has it helped you?
Through our partnership with Schroders, we are looking forward to provide Indian investors with an avenue to participate in global markets. Going forward, we would utilize our domestic fund management expertise to advice Schroders on India-specific products.
What strategies have helped you to sustain the performance of Axis Long Term Equity Fund?
On the equity side, our strategy has always been to invest in sustainable businesses. Since it is an ELSS, the money stays for a minimum period of three years. If we find good businesses then we invest with a three year outlook without worrying about what would happen in the short term.
The focus has been on buying good quality businesses, which have a strong competitive advantage, high cash generating ability and sustainability. This strategy has a higher chance of delivering good returns at the end of three years for your investors. The core strategy across all our equity funds is to buy companies, which have the strength to compete and grow for the next 5-10 years.
How do you plan to increase your footprint in tier II and tier III cities?
We already have a good presence in B-15 cities. Now, some of SEBI’s initiatives will help us penetrate further in smaller towns & districts. I am glad to inform you that in some of our funds, about 50% of our new gross sale come from B-15 cities.
As you talked about penetrating smaller towns & district, how exactly do you plan to increase your distribution network beyond Axis Bank?
Since day one, we have been trying to forge alliance with maximum channels of distributors and it’s a gradual process that takes time. We empanel new distributors every month and are making steady progress. A lot of distributors are showing interest in working with us due to our robust equity performance. The performance has been quite strong on the debt side too. We are trying to communicate this differentiating factor among the advisors.
Your observations on the current market scenario...
I believe the markets would remain volatile till the announcement of the general elections. Once the elections are announced, markets would not focus on the current problems but on the possible changes in policy measures. This should give some boost to the market!
Given the current scenario, we don’t have great expectations on the economy and profitability in the short term. Corporate profitability will continue to grow somewhere between 8 to 10%. This would not be the ideal market triggers. However, markets have long term growth potential. To an extent, the market is also reflecting that. Despite the negative news, the market is holding up well. After the general elections, markets would start looking at FY15 and beyond. We are optimistic about the market two to three years down the line.
What roadmap you have exactly chalked out for the company for the next two years?
We have to do justice to the brand ‘Axis’. We want to increase our market share and build a profitable business, which is based on consistent performance. We aim to be among the top-10 players and increase our mindshare among distributors.
