Business priorities and products becoming mainstream
We remain committed to providing a broad spectrum of investment options, which continue to stay relevant to the changing times. We are benefiting from Nippon Life's 130 years of global expertise in several business operations, particularly in the areas of investment and risk-management practices.
We are witnessing a steady emergence of passive investment products like ETFs. Additionally, we expect that the products making the investment journey convenient for the investors would continue to be in the mainstream. A fine example of such an investment option for the investors is the Nippon India Multi-Asset Fund, which provides the benefit of diversification across four different investing segments within a single mutual fund scheme.
Impact of COVID-19
Our investments in digital infrastructure have helped us reap benefits during this period. Despite lockdown, we have continued to see 700-800 retail investors per day starting their investment journey with us. We had launched Nippon India Multi-Asset Fund in August 2020, which ended up being the most-extensive 'phygital' NFO this fiscal. Our focus continues to be on adopting a phygital journey, which is a mix of physical and digital infrastructure.
Risk review of debt funds
We will be investing only in high-grade assets, securities rated AA and above, in all our funds except the Credit Risk Fund and the Hybrid Bond Fund, the two funds which are dedicated towards high-yield investing.
In the credit-oriented funds, we will focus only on those names where cash-flow visibility is very high and structures are self-liquidating in nature, particularly in high-yield bonds. We will also focus on avoiding concentration risk - something we have suffered from both in terms of illiquidity and bigger impact from a credit event. The overall composition of the portfolio will have to undergo a change, maintaining reasonable allocation to high-grade bonds to manage liquidity going forward. We maintain that this is a viable category, and will come back into the reckoning sooner than later as a more robust and durable asset category.
Separation of distribution and advisory functions
The value addition of a holistic advice for a client-centric approach via advisory platforms has provided a new growth dimension to the industry, with many new entrants joining this space. Industry AUM under the RIA (registered investment advisor) business has witnessed strong growth over the last two-three years. We believe that both advisory and distribution will co-exist and both will play a bigger role in growing the size and scale of the industry.
New skill acquired during the lockdown
Looking back at the past few quarters, I believe the ability to manage an extremely high degree of uncertainty and disruptive business environment is one skill that has been honed and sharpened multi-fold!
This article was originally published on December 14, 2020.
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