LIC Mutual Fund focuses on 3 P's in order to meet business objectives and overcome challenges, says Dinesh Pangtey, CEO
Technology is playing an important role in our lives. Several mobile apps and portals are allowing investors to buy direct mutual funds without paying fees. These low-cost investments have the potential to improve mutual fund penetration. Fourteen per cent of the total individual investors' mutual fund AUM is coming from direct plans.
India is still largely an active market as far as the scope of generating alpha on average market returns is concerned. We are in the process of educating investors about the benefits of passive investing. However, a transparent methodology of passive investing with no bias in the selection of stocks is catching up slowly.
Market trends and statistics are now creating awareness of this alternative investment strategy but it may take a bit longer to penetrate in a big way in India.
The mutual fund penetration has largely been skewed to top 30 cities and to address this issue, the market regulator allowed AMCs to charge an additional 30 bps in beyond top 30 (B30) cities instead of B15 earlier. We are in the process of tie-ups with banks and distributors to reach the new investor base.
Impact of new expense slabs
The TER changes are rational and take care of small schemes' expense requirement, like ours. This helps in bringing parity in profitability across mid- and small-sized mutual funds. The impact on sales is yet to be seen.
Risk control in debt funds
We as a fund house have a disciplined approach of 'SLR', where 'S' stands for safety of investment; 'L' stands for liquidity of the portfolio; and 'R' stands for the returns of the portfolio. This process mitigates risks in the current business environment.
For any debt instrument, the fund manager first looks at the safety of investments and then at the liquidity of the instrument and finally the returns of the portfolio. He ensures that the scheme objectives are always top of mind while investing.
As far as side pocketing is concerned, it's an excellent initiative which SEBI has come up with in the interest of investors. We are in the process of implementing the same in the interest of our investors.
As a way forward, our top priority is to focus on 3Ps: product, platform and people.
Product: Focus on equity and duration funds is the top priority as a fund house to increase the client base as well as the bottom line.
Platform: Bringing more well-known banks and distributors under our umbrella with improved scheme performance.
People: Since people are the raw material for our business, retention of productive and efficient employees is the key.