'Mutual funds have now become mainstream'
Sunil Subramaniam, MD of Sundaram Mutual Fund, says that while mutual funds have gained popularity, the real test of investor confidence will be when they have underperformed for a sustained period
Jan 7, 2019
Last year was one of the best years for the industry, whereby mutual fund investments can now be said to have become mainstream. The shift from physical to financial savings is now here to stay, though it will invariably face challenges and there will be years when the growth/AUM declines. But I think we have passed the inflection point where the question to invest or not to invest in mutual funds has been answered.
Investors have, by and large, had a good experience, given that the markets have been going up. The real test will come when there is a sustained period of underperformance stretching for a couple of years, which is bound to happen at some point but hopefully this is some years away given that we are still in the recovery phase and have some time to go before we can make prognosis of a recession.
AMCs have increasingly realised that the secret to retain investors and distributors is service. In some ways, efficient and timely service is even more important than fund performance as both investors and distributors have become more mature but at the same time more demanding when it comes to service.
This is an industry where the financial advisor is integral to the long-term success of the investor and the AMC. Most investors need the comfort of a human advisor who understands them and can handhold them, especially during prolonged times of market underperformance. So, at Sundaram, we see both the personal advisor and the digital interface go hand in hand and complement each other.
USP of investment strategy
At Sundaram, we have always prided ourselves in being innovators. We were the first to launch a branded and pure mid-cap fund, a PSU fund, an entertainment fund, a rural fund and now a services fund. Being a mid-sized player, we need to innovate to grow and we have been consistently doing that and will continue to do so. Our Rural Fund's AUM has gone up five times over the last two-three years.
Impact of SEBI's reclassification
This has really been a boon to us, for we are a fund house that was always true to mandate. Further, this has also opened up a lot of categories for us where we do not have funds and so we are planning to come out with a string of NFOs to fill in these gaps.
Becoming more investor-friendly
We are making significant investments in our digital capabilities. Using our digital assets, investors and distributors will be able to transact in a completely paperless and frictionless manner.