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 Nilesh Sathe, the CEO of LIC Nomura Asset Management Company had to say:
What factors would increase the appetite for investing in mutual funds beyond the top 15 cities?
Is it easy to sell mutual funds? Look at their characteristics. First, returns are subject to market risks (So are insurance products like Ulips but they never disclose so!). Second, low rate of commission. Insurance offers 35 per cent while MF offers paltry a few basis points. Even high licence fees insurance agent pays Rs 250 for 3 years, MF Agent has to shell out Rs 3,000 for the same period. (Till recent times, it was Rs 5,000). Also there is no attraction to take up an agency due to low remunerative. There are hardly 28,000 feet on street to sell MFs as against over 18 lakh insurance agents. If all stake holders, including regulators, address these issues sincerely, business is likely to grow beyond top 15 cities.
Have the direct plans seen greater retail participation?
No. For two reasons, first, most of the existing investors are not aware of the facility and second, many have linkages with their agents.
What investor education initiatives has your AMC taken?
We have designed our IEA Plan in the beginning of the year taking into account the 2bps earmarking as per regulations. We will have hoardings in major cities where we have presence. We have advised our 26 area offices to conduct at least one IEA Programme every month. We have advised our offices to conduct at least 2 such programmes in colleges for the students.
What's the road ahead for your AMC?
Whatever steps we have taken during the last 16 months to make our MF a professionally managed fund house, have now started giving results. Our AUM is on the rise and we are confident to cross Rs 10,000 crore mark shortly. We have streamlined the processes and strengthened our marketing and fund management teams. We have designed new products and have been in print and electronic media quite aggressively. We want to grow at a superlative speed and regain the lost glory quickly. LICMF should be the MF of choice.
Brief us about your personal investment philosophy?
My philosophy is simple, buy when everyone sells and sell when others buy and don't keep all eggs in one basket. Being a public servant, I do not have huge surplus left for investment but I think, that is the reason why I am always cautions and vigilant about my investments. I have about 30 per cent of my investable surplus in Equity, 20 per cent in MF, 20 per cent in Bank FDs and 20 per cent in cash so that I should be in a position to buy equity at every fall in Nifty.
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