Business priorities and products becoming mainstream
Our immediate focus remains to manage the orderly winding up of our six fixed-income schemes with the objective of returning value to our unitholders at the earliest possible time. We recognise this decision has impacted our 25-year franchise in India and therefore regaining the trust of our investors and partners remains our first priority.
We are also focused on our schemes that are not impacted by the winding-up process. These include 27 open-end schemes, 22 closed-end and seven fund of funds schemes, with over Rs. 50,000 crore of AUM across fixed income, equity, hybrid, overseas, feeder and multi-asset schemes.
In the longer term, we hope to bring more global capabilities to Indian investors. Franklin Templeton recently closed the acquisition of Legg Mason, making us the sixth largest fund manager globally with combined assets of $1.4 trillion. We hope to be able to leverage this to bring innovative products in the solutions, ETF and the smart-beta spaces - areas we see growing meaningfully in the future.
Impact of COVID-19
We were successful in quickly moving nearly 100 per cent of our staff to 'work from home' across all functions. During this period, we launched our new WhatsApp service channel, increased the scale and reach of Franklin Templeton Academy's digital learning platform eLMS and continued to invest in building our digital capabilities for both transactions and service.
We have seen client and business-partner engagement move online and this could be a trend that significantly reshapes the future of work and travel.
Risk review of debt funds
While our priority and focus are to return monies to our unitholders at the earliest instance, we do agree that every challenge brings with it an opportunity for review and learning; such discussions are already underway.
We believe that our role as investment managers is to deploy risk effectively and use that to generate returns. However, what this event has shown is the need for even more robust scenario planning, which includes even black-swan type of events to enhance the resilience of the portfolios.
Separation of distribution and advisory functions
India is still at a nascent market for the payment of advisory fees, with relatively low-ticket sizes and high volumes. I, therefore, see a gradual transition to advisory, which has begun with HNI investors and via online platforms. A key reason for this is that fees charged for small ticket investments may not be able to meet the cost of customer acquisition for the advisor or may end up being too high for the investor to bear. Hence, the 'cost-benefit' dynamics may continue to mean that the mutual fund distributor (MFD) remains the dominant channel for a period of time.
This article was originally published on December 01, 2020.
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