Financial Daily from THE HINDU group of publications
Friday, Apr 09, 2004
Financial Daily from THE HINDU group of publications Friday, Apr 09, 2004 |
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Markets
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Interview `We will improve our retail orientation further' Nilanjan Dey
Mr. M. Damodaran, CMD, UTI Mutual Fund
Kolkata , April 8 EARN hundreds, spend hundreds, sleep well," Mr M. Damodaran, CMD of UTI Mutual Fund, puts it succinctly when asked about his personal views on investments. The fund house he heads, for all its Rs 21,000-crore-plus status, happens to be a completely different ball game. "We are trying to do the right things - research the securities, select the superior and ignore the others... above all, keep the portfolios in shape," he told Business Line. Excerpts from an interview. Are there any gaps in UTI MF's product line-up? You will appreciate that we have quite a number of schemes, both equity and debt. Some of these are balanced in nature. The basic products are all in place. Most of our investors prefer simple options and we provide them with what they need. Depending on their risk appetite, they can construct their portfolios. On the equity side, there are active funds that seek to provide capital appreciation. Then there are index funds for those who are happy with a passive style of investing. As far as the products go, the scope for further fine-tuning always remains and innovations continue to be an issue for fund managers. Please note that we are lately trying to do just that. Consider the thematic fund that was recently launched, one that has drawn some 55,000 applications. The addition of IL&FS MF's schemes - you will hear more from us on this soon - will help us offer a wider array of choices. Not to mention the expected increase in our overall corpus. You have set a very steep target... True. I am actually talking about doubling our current asset size. That implies taking it to the Rs 40,000-crore mark and beyond, a goal that we will try to meet by the end of the year. The fund will try to improve its retail orientation further. We will be telling investors that we have the products, quite a range at that, and the proper transparency to back them. Does that mean that tapping institutional investors will not be a preferred way to grow? I will only say that we cannot say `no' to any particular class of investors. Institutions are an important lot in so many ways. But our stand is that retail investors will be at the heart of our activities. We have numerous retail clients who have put in small amounts in our schemes. As I have said before, many of them are common people for whom UTI MF remains the preferred vehicle for entry into the capital markets. Contrast them with the institutional set, which has its own interests. These can, as they do so often, clash with that of retail participants. We cannot let that happen. Let me add here that there is a need to strictly maintain discipline. UTI MF's liquid fund, not long ago, had actually refused a lump sum investment that came in about ten minutes late. This should be the norm. Don't you need to brush up your delivery channels to get more retail money? It will be obvious to you from our recent initiatives that UTI MF has been trying to connect with a wider audience. Going forward, we are set to increase the number of branches. In fact, our recent agreements with nationalised banks like Indian Bank and Allahabad Bank are based on this strategy. For the moment, however, there will not be any more tie-ups of this nature. But training the people (bank officials) will be an important task ahead of us. At another level, there is need to drive home the point that UTI MF does not have anything to do with the Specified Undertaking that has been formed by the government. Investors should realise that we have created considerable wealth during the past 12 months or so, some of which has been given away through dividend and bonus. They should also appreciate that we have established good systems. Compliance, for instance, is a big thing for us. We do not have people who act as fund managers in the morning and become compliance officers in the evening. Moving over to other aspects, do you think the Indian asset management industry will really make profits soon? Let me just say that not many AMCs will be expected to turn in decent profits, at least in the near term. We will be at the top of the select list of players that are profitable. The industry has seen quite a few interesting developments in recent times. There has been some consolidation. You will have to monitor the pecking order in order to know more... SEBI has lately allowed MFs to launch Fund of Funds (FoFs). Does UTI MF have a view on this? I agree that FoFs can be a good risk diversifier. However, we are not in a hurry to set them off. What ordinary, first-time investors need are plain vanilla products and there is no dearth of such products in our stable.
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