Our lineage is our big strength. Principal is a Fortune 500 company, with over 135-year experience in the asset-management business. And our JV partner Punjab National Bank, with over 6,000 branches, provides us a great distribution platform and access to a large potential customer base. I believe that the quality of our management, commitment of our people, our work environment and passion to do it the right way are our biggest strengths.
Our plan for the next three-five years is to consolidate our position as a dominant player in long-term asset accumulation and asset-management business. We are also aggressively pursuing bringing in unique global investment options from our international product suite to our clients.
Challenges ahead
The total asset under management as per cent of GDP is still in single digits and there is a very high concentration of business in top ten cities and with large institutional/high net-worth investors.
A big challenge is to increase participation of diverse classic retail investors. Industry players will need to remain resilient and adaptable to continuously evolving regulatory changes, some of which may significantly impact companies' business models and financial results.
Managing volatility will be one of the key challenges. While markets are usually volatile, we expect much higher volatility as a result of the US macro situation and the likely Fed action, the weakness in commodity prices and the impact on liquidity as a result of global capital flows.
Domestically, the stress in the rural economy; the somewhat slow pace of reforms, which means that the gain in the macro economy aren't yet reflecting in ground-level improvements; the delayed recovery in capex cycle; and the stress in the banking system are what we would need to watch out for. On the fixed-income side we would need to be watchful of the credit environment and any potential negative surprises on macroeconomic parameters.
Competition
It is a highly competitive marketplace, with the top ten AMCs controlling 80 per cent of the market share. At the same time, the market is potentially large enough for even smaller AMCs to grow and for new players who are in a position to create a unique value proposition for customers. I don't believe that new players are needed only to expand the reach in a fast-evolving digital world.
Retail reach
We have explicit targets for growing our retail business. Globally, Principal is known for its long-term retirement solutions targeted towards individual investors. We aspire to have a similar brand positioning, i.e., long-term asset accumulator and asset manager in the local market place. To meet our goal we are working towards building long-term strategic alliances with key distribution houses at central as well as nodal levels.
This article was originally published on December 01, 2015.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
