In your new role, what are your key priorities for Mirae Asset?
Since Mirae Asset has grown substantially in the past few years, my endeavor would be to try to ensure that this momentum continues. I believe it is just a change of manpower. The core competency of the fund house, which is superior fund management process supplemented with robust sales and communication process, remains unchanged.
We would like to continue with our processes and approach which include consistency in communication, working closely with partners and consistency of performance which have been yielding the right results for us. We believe sticking to these basics will help us grow our business and gain market share.
How do you plan to sustain this growth?
We believe in building good products over asset gathering. We will grow because we have good products and we will achieve sustainable growth only by improving product quality and delivering better services. For the last five years, the entire Mirae Asset team has worked hard on these two fronts. This has been our success mantra.
This is a business of simplicity and continuity. If we are consistent in our processes we would eventually grow.
How will you go about creating awareness about your brand?
In order to create brand awareness, we reach out to our advisors through ground-level activities. Our sales team believes in the traditional way of desk to desk selling. We are in constant touch with our advisors. Our sales as well as our fund management teams interact regularly with advisors. It is very important to create our brand acceptance among our advisors first.
Secondly, our performance has helped us gain widespread acceptance from distributors and investors. We have always received an overwhelming response from the media which has covered us positively due to our consistent fund performance.
Finally, we have observed that we can’t build a brand by advertising on hoardings. If you look at financial services companies worldwide, a majority of them don’t prefer outdoor promotional activities. Instead, most companies use the digital media to build their brand. Hence, we are figuring out how we can leverage the digital media to create awareness about our brand.
The industry has seen net inflows of Rs. 72,000 crore in equity funds so far? Do you think the momentum will continue?
If you do an analysis of inflows, you will find that a large portion of money has come in existing open ended equity schemes which have delivered consistent performance over a long term. I think this is a dramatic shift for the mutual fund industry. It clearly shows that advisors and investors do not want new products. Instead, they want good products. We need to wait for the next six months to see if the momentum continues. Meanwhile, we need to convince investors to stay the course.
Historically, we have seen that funds have performed well but investors are yet to reap the benefits. We measure it in terms of ‘investment returns’ versus ‘investor returns’. This experience of investors has to change. Even if inflows slow down, we have to ensure that existing investors stay invested.
How do you plan to deepen your engagement with distributors?
We are yet to reach out to a large number of T15 distributors. In the next two years, we are planning to make inroads in the B15 market through ground level activities aggressively.
Also, we will continue to strengthen our relationship with existing distributors. We meet our distributors on a regular basis and try to know their expectations related to our products and services. It is this consistent two way interaction which has led to our growth. We intend to intensify this process even further.
You have considerable experience in sales, how do you think the industry should attract more IFAs?
Our industry should have at least 50 good schemes which are consistent performers at all points of time. If our advisors have a large pool of great products, our investors would be spoilt for choice and their investment tenure would increase dramatically.
Subsequently, if demand increases, there has to be a strong supply chain to cater to investors. This has happened in e-commerce industry. We have witnessed that with the increase in online sales, a large number of players have emerged as e-commerce retailers. A similar trend was observed in growing number of mobile sellers and recharge outlets.
The strategy used by our industry to attract new investors has been through offering new products. This has to change; we need to build our existing products strong with consistent track record. The responsibility of building strong IFA’s business lies with the AMCs. We have to build strong products for our IFAs so that they are confident enough to recommend our products to their investors.
Another positive trend is that IFAs are gradually transitioning to trail model. However, most IFAs are yet to realize the revenue potential of trail income over upfront brokerage. Once they all realize the power of trail income through the growth of NAVs, the businesses would become highly remunerative. This would automatically create good businesses which would attract others to take this up as a career.
Going forward, which distribution channel do you see growing at a faster pace – IFA, ND/bank or online platforms?
IFAs will continue to be dominant players in the mutual fund industry since investors need handholding to invest in mutual funds. As far as the online space is considered, we are in a wait and watch mode. It is difficult to comment on this at this juncture.
What do you think about e-commerce distribution? Will it be a threat to brick and mortar IFAs?
I don’t think e-commerce distribution will be a threat for the brick and mortar distributors. I see e-commerce distribution space as a completely new vertical which will cater to a new set of investors. Currently, a majority of young customers prefer e-commerce websites to buy products and they are yet to invest in mutual funds.
Some distributors allege that AMCs are trying to bypass them by promoting direct plans. Your comments...
Globally, mutual fund is an advisory driven business and fund houses don’t have branch offices. We see branch offices only in India. Thus, mutual funds are actually meant to be sold through distributors.
We believe that advisors are the face of the mutual fund industry. Investors need advice and handholding. Thus, distributors will continue to play a major role in the industry.
SEBI has asked fund houses to reduce costs. What do you think about the scope of reducing costs in mutual funds?
Currently, the industry is doing business at wafer-thin margins. So I don’t think there is scope to reduce costs. Hiring a professional fund manager at 2.5% is not expensive, considering the wealth created by mutual funds in the last two decades.
What is your roadmap for Mirae Asset for the next three years?
I believe in having short term goals along with long term goals. Though Mirae has a long term goal, considering the changing business environment, it is imperative to look at short term goals first. As mentioned earlier, our immediate target is to achieve Rs. 6,500 crore AUM and be among the top 15 equity fund house. We are confident of reaching this target by next year.
Currently, we have over 1.8 lakh investors out of which over 60,000 investors invest through the SIP route. It would be our endeavor to retain this 30% of investors coming through the SIP route. This would bring stability to our AUM.
In the next three years we would strive to build on our product track record. Each of our products should follow the footsteps of our two main funds - Mirae Asset India Opportunities Fund and Mirae Asset Emerging Bluechip Fund. We want to create a basket of distinct products which are suitable for wealth creation.
We are a distribution driven fund house. Our existing distributors are our strength. At the same time, it is a continuous process to attract new advisors who would understand our fund management philosophy and help us build our business.
Any book you would like to recommend to distributors which can enhance their sales practices?
There are two books which distributors will find very useful – ‘On Becoming a Great Wholesaler’ by Nick Murray and ‘Passport to Profits’ by Mark Mobius.
Murray’s book is based on the life of a mutual fund seller in a developed market. This book gives insights on how to reach out to prospects and build relationships.
Passport to profits is a repository of Mobius’s conviction on investment and his views on various asset classes. He has demystified investment concepts in a very simple way. The book tells you about his 82 rules of wealth creation.
