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 Sandeep Dasgupta, the CEO of BOI AXA Asset Management Company had to say:
What factors would increase the appetite for investing in mutual funds beyond the top 15 cities?
Indian households prefer to park their surplus cash into Bank deposits. High interest rates, greater accessibility coupled with safety of investments makes this investment very attractive. However the investors beyond 15 cities are keen to allocate part of their assets into riskier investments like equity, provided they can expect a higher return. The risk premium expected is over 8-9 per cent. Therefore there are only two ways we can draw the investors in these cities into Equity Mutual funds; one a sustained bull run and two making them aware of disciplined investments through SIP. Our experience in BOI AXA shows that the latter option is indeed working. But this would entail investment of time and energy in training the intermediaries like Bank Managers who play a vital role in reaching out to the retail investors. We have done that and will continue to focus on training. In products like FMP too, we have witnessed good participation from affluent investors in these cities. I am very optimistic.
Have the Direct plans seen greater retail participation?
To my knowledge, the 'Direct' plans are very attractive to well informed, savvy high-net worth investors. They may reside in large cities or smaller towns. I don't think the Direct plan would have increased mass retail participation. Greater involvement of financial planners, responsible distributors and increased penetration by the AMCs would be the key factors for increasing retail participation. In BOI AXA, today we have presence in over 36 towns and cities. We are able to service the bank branches of Bank of India as well as a select group of IFAs in these cities. Our endeavor would be to intensify this initiative and gradually expand into other towns over the next 2 years.
What investor education initiatives has your AMC taken?
We at BOI AXA have focused primarily on providing well structured training to large number of Bank branches and smaller IFAs. We have appointed a very senior professional with over 18 years of sales & marketing experience in the AMC industry as Head- Training for BOI AXA Investment Managers. He has already conducted training in over 15 cities and trained over 1000 relationship managers. These training workshops generally last for over 2 days culminating in tests and assessment. We have seen a very high level of involvement and excellent feedback on the quality of training provided. In few occasions, we have also engaged in customer seminars in presence of the financial intermediary. Lastly we also consciously prepare specific “Train the Trainer” modules to ensure that there is a knowledge transfer for greater participation.
What's the road ahead for your AMC?
We have embarked on three initiatives for next 2 years. To attract quality assets, be it from retail, high-net worth or even corporate investors. We would like our investors to believe in our investment philosophy, our risk management processes and respect our high level of transparency. We can build a sustained business model only if are able to retain assets and draw more investors through satisfied existing customers. Our Sales team has been fully trained to work towards this. Expand our reach in smaller towns through physical presence, focus on training intermediaries and offering simple products to the investors. Tirelessly work towards consistent investment performance in line with the stated investment objective of the fund.
Brief us about your personal investment philosophy?
I have followed simple rules of investments since the last two decades and that is asset allocation. I have always allocated my assets in a prudent manner among cash, fixed income and equity. For Cash I always prefer Liquid Funds, for Fixed Income, I invest in Tax free Bonds, FMPs and small amount in FDs for my family members. I watch my investments regularly and care for it as I would do with my car or my pet. Lastly, I always tell myself that I know very little. I have to learn every day. The market teaches you so much.
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