IDFC funds are true-to-label funds. Taking care of investor interest is in our DNA.
Our product launches are largely counter-cyclical to aim for a better investor experience. We are open to shutting the fund/return money in expensive markets to deliver good investor experience.
We need to improve the track record of a couple of large-cap/diversified equity funds. Our team is being strengthened and is evaluating gaps to bridge performance with the peers. We need to improve retail positioning and brand recall. Hopefully with the launch of IDFC Bank, the brand will become a household name. Finally, we need to strengthen our distribution spread across channels and align more advisors towards the larger goal of getting new investors and making investors happy.
Equity valuations have run ahead of earnings. This could be a long cycle and recovery could be very slow as growth drivers globally are weak and domestic demand is only in pockets. This will test the patience of equity investors (the recent one year has seen record flows in equity funds).
On the other hand, interest rates are elevated and have many structural reasons to come down - positive real rates of return after a decade, improved macro parameters as a country and demand/supply triggers favourable for government bonds. All these indicate that investors must have a longer duration of the debt part of their asset allocations to plug rupee investment risk if rates are headed lower.
Volatility in asset classes and regulations that impact the cost of doing business are the business challenges that the industry is facing. Building long-term orientation towards investing and reinforcing the role of strategic asset allocation for investors are the challenges as well as opportunities to differentiate oneself in the market. It will be interesting to see how technology can transform the fund business as we haven't seen its adoption in the fund business yet.
There is diversity in the number of players but not as much in business strategies and approaches. Hence, competition is cut-throat. There is a need for more approaches to take investment behaviour/discipline to masses, and competition in that respect will be only healthy.
Our first target is great investor experience at all points in time! This is because in retail, most often, high inflows come at peak valuations in the case of equity and at low rates in the case of debt. Thus, investor experience is rarely good. Helping investors and advisors invest right is our core business approach. We have aspirations of scale in size, profitability, good distribution partnerships and a growing family of happy long-term retail investors.