A.
Balasubramanian, CEO of Birla Sun Life Mutual Fund talks about the 20-year-long
journey of the fund house and the way forward.
You have been with BSLAMC since inception.
Tell us about your early days at BSLAMC. How have you seen the AMC evolve?
Initial days were interesting. We were among a few private sector fund houses with an established brand.
The challenge was to set up an infrastructure in the form of dealing rooms, deployment of funds, providing efficient transaction facility and so on. However, our key focus was to build a strong distribution channel. We reached out to distributors across the country to strengthen our network.
Apart from this, we empowered our fund management team with market insights and reports. That time, access to such information was difficult.
What do you see as your strengths?
I keep myself cool and focus on deliverables. I believe in the strength of team work. Hence, I always try to act as a bridge between my team members. I try to keep the atmosphere friendly in order to provide a healthy work environment.
Over these 20 years, what were the biggest challenges faced by your fund house?
Being an established brand, our key challenge was to meet the expectations of investors as well as distributors. Since inception, we have focused on maintaining this credibility.
In terms of business, I have witnessed many ups and down like technology bubble, 2008 crisis, volatility in market and redemption pressure. These challenges were not unique to our fund house, they had affected the industry as a whole.
Above all these, our key challenge was to check people movement. Our star fund manager and a few key officials left the organization in 2002. The fund house gave me a responsibility to ensure smooth transition. I can say that I along with my ex-boss were able to overcome this challenge. The vacuum which was created was filled nicely and we bounced back to action.
Some observers feel that over the years, Birla has not focused sharply on equity funds? What do you have to say about it?
That’s a wrong perception. From the beginning, Birla Sun Life Mutual Fund has a very strong focus on building both equity and debt assets.
I would like to point out that when entire mutual fund industry was launching NFOs during 2004-2006, we kept ourselves away and not participated in the NFO bubble due to our ideological difference. Frankly speaking, we lost out on an opportunity to participate in that growth story. We could have collected close to Rs.4000 crore in equity funds during that period.
Secondly, in 2009-11, post the economic crisis, we promoted debt funds in a big way. We came out with FMPs as we wanted investors to take strong position in debt funds. Subsequently, in October 2013, we had sensed a great opportunity in equities market and started promoting equity. We came out with our banking and financial fund.
We will continue to promote the asset class which is best for investors.
You are currently the fourth largest fund house by assets. What are your aspirations? Share with us some plans on how you plan to meet those aspirations.
Aspiration is to remain role model in the mutual fund industry. We have always delivered consistency in our performance and will continue to maintain it
Our key focus is to build retail assets by expanding distribution network across the country. We have empowered our distribution force with knowledge and technology. Secondly, we are planning to improve our services by providing data transfer facility to distributors through smart phone. In fact, we have launched the pilot project. We believe digital medium would be a big game changer for the industry.
Also, we have started many projects under our investor awareness program (IAP) such as reaching out people through ground level activities, spreading awareness about mutual funds through youtube and social media etc.
You were the first to pioneer initiatives such as life cover for IFAs. What are the new initiatives being planned for IFAs?
We have taken our engagement with IFAs to the next level. Some key initiatives are expert Friday, Tuesday talk, advisory council, NIPUN, partner central and IFA newsletter. All these initiatives aim to provide knowledge, outlook on contemporary issues, feedback, training, business development etc.
In our new initiative for IFAs on data transfer facility called ‘click in’, distributors will be able to send us an execution request of up to Rs.2 lakh even without realizing actual amount and physical application form. To avail this service, distributors need to download the ‘click in’ app from android store. They have to send us a picture of application form though the app. Our team will execute transaction on the same business day if such requests are received by 3 pm. IFAs can also send us request on non-business day like Saturday and Sunday. The NAV of next business day would be allocated in such cases. The electronic application will work as a point of transaction. Distributors need to submit the physical application afterwards.
While the industry has grown in terms of assets under management, it has not been able to attract more distributors in the MF fold. Do you think the slow addition of distributors will affect the pace of industry's growth?
Though the phenomenon is true, I believe the number of financial advisors will grow manifold. Industry will have 2 lakh IFAs in the next three years.
The reason for this strong conviction is increasing awareness especially among youth about mutual funds through investor awareness programs. In fact, we have reached out to some colleges through such campaigns and witnessed overwhelming response from students. These new set of advisers will surely come to industry soon.
Another point is increasing popularity of mutual funds among investors. It will help distributors grow their business and attract new talent in the industry.
Also, mutual funds provide power of compounding not only to investors but also to distributors. Here, commission is directly proportional to equity market level. There is a great scope of income appreciation in this profession as it can grow up to double, triple or even manifold each year.
The industry has not seen the entry of any new player in the recent past. Has it become difficult to build a MF business from scratch in India? Do you see more consolidation happening in the MF industry?
No, the consolidation is a function of business. It has happened on multiple occasions. Also, I believe there is a space for everybody in this business; however, it depends on seriousness.
You recently acquired ING's schemes. Are you looking for more such opportunities for inorganic growth?
Definitely, we are open to it for inorganic growth.
