Sunil Subramaniam, Director - Sales and Global Operations, Sundaram Mutual Fund talks to Cafemutual about the AMC’s expansion plans and more.
As a Director Sales and Global Operations, what are your key priorities?
My key priority is to grow our assets under management particularly in equity funds, debt funds and PMS. I am also looking forward to increasing our presence in global market through our offices in Singapore and Dubai.
What initiatives have you taken to expand your presence globally?
In order to attract NRI clients, we have opened an office in Dubai. Through this office, our distributors will reach out to clients. We have close to 40 distributors in Dubai including a few international and domestic banks.
Recently, we have got an approval from Monetary Authority of Singapore (MAS) for setting up a branch in Singapore and we looking forward to starting our operations as soon as possible. We have chosen this destination as it provides a robust regulatory environment along with ethical business practices and is in close proximity to India. Through this office, we will provide services to investors across the world.
What is your growth strategy in international markets?
Currently, only NRIs can invest directly in India. Foreign investors have to either get FII license or come through a registered FII entity to invest in India. Procuring a FII license is a cumbersome process for mid and small sized institutions. Since we have already taken FII license, we will provide an opportunity to investors including HNIs and mid and small sized institutions to invest in India through us.
Also, these investors will get NAV in terms of dollar which will provide them flexibility to invest and redeem in dollar, freeing them from the hassles of currency conversion. We are simplifying the investment process for international investors.
Internationally, we will market our products through banks and other large distributors.
Industry has been witnessing redemptions ever since the market crossed the psychological level of 21000. What steps have you taken to shield your funds from redemptions?
First of all redemption is not a bad thing as many investors who had invested 2-3 years back are exiting by booking profits. Basically, these people are happy customers. Secondly, we have observed that many investors who had invested during 2008-09 period are redeeming their investments to get back their principal. We are of the view that all these investors will come back once the economic sentiment improves.
However, we believe that Indian market will revive in the coming years. World economy has started reviving and Indian markets will follow the trend. Currently, the Indian market has shown some signs of revival and Indian economy seems to be bottoming out. We are optimistic that the key indices will touch new high in the coming years. That is why we are educating people not to exit at this juncture.
Currently the PE ratio of benchmark index is in multiples of 14 to 17 whereas it was at 27 when the market touched 21K in 2008. Only a few stocks have performed in the current rally. We try to educate investors that 21K mark is a mere number as the earnings of corporate India has grown well for the past five years.
How has been the response to Sundaram Micro Cap Series I? Are you planning for Series II?
We have got a good response from investors for our close ended Sundaram Micro Cap Series I. In fact, we have collected Rs. 57 crore and got 5000 investors. At a time when investors are redeeming from equity funds, we are happy to get inflows in our new fund. I would like to thank our distributors for the same.
We have launched Series II and recently and we will launch Series III and IV too very soon. This Micro Cap Fund focuses on MNCs as these companies have great export potential, strong management, leadership in technology and global consolidation.
Which new products are you planning to launch? Also, are you planning to launch RGESS?
Currently, we are working on two global funds –ETF and an overseas fund of fund. Yes, we are launching RGESS in February/March.
How do you plan to increase your presence in B-15 cities?
We already have a good presence in B-15 cities. We have over 50 branches across the country. Also, through our parent company (Sundaram Finance) which has a strong presence in 500 cities, we are able to reach out to retail investors in smaller cities and towns. Besides, we have adopted nine districts in Tamil Nadu which is way higher than the SEBI mandated District Adoption Program (DAP). Currently, we are organizing various investor awareness programs in these districts. And through these programs we are trying to increase mutual fund penetration in Tamil Nadu. In fact, we are getting some clients from these areas who are first time investors. In future, we will open branch offices in these small cities.
How are you trying to enroll new cadre of distributors?
We are planning but not yet taken any initiative in this regard. We want to go step by step to increase our reach. Our primary goal is to increase mutual fund literacy first. Secondly, we are carrying out District Adoption Program (DAP) in order to increase mutual fund penetration in these areas. Finally we will empanel new cadre of distributors to market our products in these areas.
How many distributors are working with Sundaram MF? How do you plan to enhance your reach?
We have close to 20,000 distributors out of which 3000 are active. Essentially, we reach out to AMFI empanelled distributors and send our marketing literature to them. Our sales people try to get these distributors to empanel with us.
What is your retail share in the debt funds category? How are you planning to expand the retail reach of your debt funds?
Our retail share in debt funds is 3%. We have seen massive growth in this segment over the last six months. Our plan is to further increase this share through FMPs since it is the only product in the mutual fund industry which can be directly compared to bank FDs. To ensure retail participation, we are training our distribution force in marketing debt funds.
