Vijai Mantri, Chief Executive Officer, Pramerica Mutual Fund talks to Cafemutual about Pramerica’s journey so far and its growth plans.
How was the last year for Pramerica?
Last year was fairly decent for us. We grew along with the industry. In the second half of 2013 we saw rupee depreciating and there was tightness in the money markets. All were waiting for elections and thus the entire investment decision making came to a standstill. Only liquid funds were getting inflows and we were no exception to this trend. Towards the end of the year, we launched our midcap fund, which was a very timely launch.
What are your focus areas?
Our focus is on creating innovative products and solutions which meet the needs of investing community and help them achieve their goals. To that end we have developed innovative solutions like Power Goals (PE based equity investing focused on goal achievement), Power SIP (SIP that changes the amount invested in equities depending on market valuations), Anywhere Transact (facility through which investors can transact over phone call/SMS), among others.
How do you plan to grow your business? Are you targeting a certain niche?
To us the investor is of paramount importance, be it retail investors, HNIs or institutions. Each investor category has a unique set of financial needs. We strive to provide products and solutions that meet investor needs and help them achieve their goals.
What are you doing in the area of investor education?
There are two facets to investor education and awareness. One is targeted towards the investor community and to that end we do a lot of investment conferences through which we explain the concepts of mutual funds.
The other important stakeholder is the distribution community. We believe that while the onus of investor education is on fund houses, it is best served through distributors. It takes multiple meetings to fully familiarize people with mutual funds and it is our firm belief that distributors are best suited to do this as they are the ones that interact with investors regularly and hand-hold them through the investing process. Our effort has been to educate distributors and through them educate investors. So we are also focusing on skill enhancements for distributors.
How big is your PMS business? How do you plan to grow it?
We launched our PMS in July 2013 and we’ll be completing one year soon. This product is very different from the other products available in the market. At the time of our PMS launch, investors were very disappointed with PMS products as a whole and the negativity around PMS was immense as people had lost their wealth.
We have developed this PMS based on the proposition that ‘equity investing is about protecting and growing your capital.’
Investors also need to understand the difference between ‘permanent loss of capital and temporary loss of capital.’
• Permanent loss of capital happens when you invest in unsound businesses
• Temporary loss of capital is caused by market volatility.
We look at what is the best time to own these companies. Typically, this is when they are ignored by the market because they are experiencing temporary difficulties and their immediate term performance is doubtful. So, when we created the portfolio FMCG and IT were very popular. We didn’t invest in any FMCG or IT stocks. We invested in companies which were out of favour like capital goods and industrials.
As time passed, the market started recognizing that these stocks offered compelling value. As a result, our strategy, viz, Pramerica Deep Value Strategy delivered over 68% return as compared to around 30% returns generated by Nifty.
You don’t have many equity funds in your product basket…
We have a few basic equity products. However, it is not just products that help an investor meet their needs and goals. Hence, we have launched innovative features and solutions like Power Goals and Power SIP that operate with these products as the base and help investors meet their diverse needs. We also have lined up other products across the equity spectrum; however we will launch them only when we see a need and opportune time.
Are you planning to bring some of your sponsor’s funds in India? (Offshore and FOF)
Most of the offshore funds are launched after the markets have run up. We will launch at an appropriate time.
Some large distributors only sell funds which have Rs. 10,000 crore or above AUM. How do you plan to reach this critical AUM mark?
Your fund performance matters and not the AUM. Our focus has been on delivering superior risk adjusted returns. Once you do that market will automatically accept you. More than 40% of our sales comes from IFAs. National distributors contribute around 25%-30%. Some banks and national distributors do sell our products. We are not looking at 10% market share immediately. We will grow incrementally. If we have good performance I don’t think we’ll have any hurdles to grow.
How are you trying to expand your distribution network in B-15 cities?
Our B-15 presence is quite good compared to some of the established players. 11% of our AUM is in B-15 cities. We are continuously working with our distribution partners to enhance our reach further.
How are you leveraging online technology to grow?
It is good to have multiple points of convenience for investors. We have features like ‘online investment’ for investing through our website and ‘Anywhere Transact’ through which our investors can transact over a phone call or SMS. This saves the investors the hassle of filling forms and sending them to our office every time they want to invest. However, it takes time for any channel to become popular. It took ten years of hard effort by the industry to make SIPs popular. Even online shopping has picked up only recently.
How are you engaging with distributors?
Enhancing distributor skills is a focus area for us. We had launched a ‘Diploma in Wealth Management’ for distributors. We conduct regular distributor trainings where we have covered topics like - how to create brand for oneself, understanding star ratings, soft skills etc. We even did our global CIO meet in India last year. We keep engaging with our partners on a continuous basis to educate them about the latest developments in the market.
