The compact portfolio of our funds gives clear positioning of our schemes to investors. It also helps the CIO and fund managers focus enough attention on each scheme, thus delivering reasonable returns across schemes.
The perennial issue we have had is that distributors across categories won't look at any scheme that falls short of the threshold in terms of assets.
However, on the back of better performance, our schemes have started to breach this threshold steadily.
Challenges ahead
The retail nature of our business poses a big challenge as well as opportunity to the industry today. The industry needs to invest in marketing and distribution, which are both very cost-intensive and have long gestation periods. In spite of the cost structure of mutual fund products improving for investors and in spite of the fact that mutual funds are an extremely efficient investment option which usually gives excellent returns, the investor base is increasing marginally. This is because the investor is interested in what he will earn per month or on a yearly basis and there is no clear answer to that. Mutual funds do not offer fixed return, which is why they cannot be compared to a bank deposit account.
Competition
Irrespective of market conditions, today the mutual fund industry has a gamut of risk-adjusted, relatively superior-return products available. If an investor doesn't want to invest in equity, then there are hybrid funds; if he doesn't want hybrid funds, then there are fixed-income funds; if not that, then liquid funds. Like a high-quality restaurant, the menu card is ready and very reasonably priced. Investors can make the appropriate choice.
Retail reach
It is very difficult to put a figure. Retail is an expensive proposition both for the manufacturer and the distributor. The effort and transaction cost that go into mobilising a small-amount application is the same as what go into getting a large-amount application. The last mile connectivity will play a very important link and that is where the financial advisor cum distributor comes into picture.
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For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call
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