In an annual review on fund families, we spoke to mutual fund honchos to get their views on some of the pressing issues facing the industry. This is what Deepak Kumar Chatterjee, the MD and CEO of SBI Asset Management Company had to say:
What factors would increase the appetite for investing in mutual funds beyond the top 15 cities?
Firstly, I would like to say that it is not as if there is great penetration in the top 15 cities. Even in the urban cities, most of the money comes through institutions and retail participation is minimal. Money has been moving to real estate, gold and bank fixed deposits (FDs). This so whether it's beyond 15 cities or in top 15 cities. We have to take the idea of 'mutual fund' across to each and everyone and this exercise will take very long time. We have to make investors realize that by not investing in mutual funds they are 'lose an opportunity' of creating wealth over a long time horizon. We come across many investors who have lost money in 'Ponzi' schemes just because a massive return was assured. They believed that. It is unfortunate that investors don't look to mutual funds which constitute one of the most transparent and well regulated class of financial products. Investors should have discipline in investments and wealth creation. It's high time that investors realize that there are no short cuts to earning 'better returns', one should be committed and have patience. Inculcation of some good habits like, investing for long term and through systematic investment plans (SIPs) will bring in lot of investors in mutual funds. I think it will take many years for mutual funds to become a popular investment vehicle for the long term investor. Infact I have said it many times, that, education about mutual fund should become part of school curriculum.
Have the direct plans seen greater retail participation?
I would say that direct subscription has gone up substantially, but if you knock out institutional and corporate money the number will be much lower. We are witnessing HNIs coming through the direct route, but retail participation is weak. In a way, I find it acceptable because retail investors need lot of hand holding which can be done only by intermediaries. Strictly speaking mutual fund business follows Business to Business (B to B) model and not Business to Consumer (B to C) model. Ours is a push product. We are manufacturer of a product and distributors are link between us and investors.
What investor education initiatives have your AMC taken?
Recently we started an advertising campaign with our mascot 'Fund Guru' in nine different languages. Over the period of time it has started becoming popular and investors are taking notice of it. The idea behind this campaign is to make this 'Fund Guru' very familiar guy who can be trusted with sound advice. Earlier the 'Fund Guru' was only a mascot; now we have brought life into it. We are also doing lot of distribution trainings and investors meets on regular basis. Recently we have tied up with XLRI to train financial advisers. Apart from that we have entered and tripartite agreement with State Bank of India (SBI), National Institute of Securities Market (NIMS), as part of which Learning Centers of SBI have been recognized by NSIM for providing training and taking online exams of NSIM certificates and it is going on very successfully. Investor meets have been organized to educate investor across the country. In the year 2012-13 we have held over 1500 meets and in the current year till Aug 2013, we have held over 250 meets in tier II and Tier III towns.
What's the road ahead for your AMC?
It is high time we stop calling it the 'mutual fund' industry. By calling it a 'mutual fund' industry we limit ourselves to the restricted space of mutual funds. Instead it should be called, 'asset management industry' as it is called worldwide. I am confident that many activities will start taking shape in alternative investments funds (AIF) category and that could be the future for the asset management companies. There will be tremendous opportunity in AIF segment like PIPE fund, infrastructure fund and social venture fund and we want to tap this segment. Mutual Fund assets will also grow, as sentiments improve. We are opening 50 branches in B-15 cities in the coming months to attract more retail investors. We are a very stable fund house and are satisfied the way processes have been built up and we plan to continue with the same spirit.
Brief us about your personal investment philosophy?
Until a few years ago I used to invest in stocks directly, but since joining SBI MF I invest only through mutual funds, in deference to our employee dealing policy. When I used to invest in stocks, I concede that I had a somewhat higher risk appetite and inherently believed in India's equity story. I still have faith in the India story. My investments are skewed more towards equity and less towards debt and I would say that on the long term basis I have always been a gainer. There was a period when my portfolio was looking horrible, say in 2008 when markets tanked and my portfolio was down by 50 percent or more. So instead of panicking I kept on buying selectively, and it proved to be excellent for me. However, I do not recommend a similar risk appetite to be blindly followed by all other investors. Each investor has to go by his risk appetite, time horizon and needs based on age, income bracket etc.
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