The Hindu Business Line : `There are more investors in funds today than before'

MR RAJAN Krishnan, Vice-President, Sales & Marketing, Principal Mutual Fund, is not your everyday, high-pitched sales executive. He actually stops short of talking much about what many others of his tribe would have gone to town with.

"True, MFs have done admirably in metros and are getting closer to investors in well over 100 towns across India. But this isn't enough," is his considered opinion.

Excerpts:

This may be somewhat repetitive, but is your industry doing too many NFOs?

I realise this is a difficult question to answer, but you have to see how new launches have helped perpetuate the equity culture. There are more investors in funds today than before. And NFOs have played a role here, especially in bringing some of the newer investors into the MFs' fold.

If you consider only equity funds, you will know how fresh offers have in recent days acted as the basis of growth. I also hope clients understand where they are putting their money in when distributors come to them with new investment proposals.

How is the market for FMPs shaping up?

There is appetite for fixed maturity plans, which fund houses have found out in their effort to establish closer ties with customers. The market for these products, as you would know, exists chiefly in metros, among wholesale clients.

As things stand, one tends to gauge the need for FMPs and then work out a proposal. From time to time, one does get to hear of good deals happening in this space. FMPs have been launched consistently in the past and in future too the market can expect these to come with some degree of regularity.

Are funds really making a difference to investors in smaller towns?

Thanks to technology, fresh transaction capabilities are being added to the existing infrastructure. But it does not matter whether we are in 100 centres or 150. What matters is reach, and we are still in the early stages on that count. Much more has to be done if there has to be a material difference. Take, for instance, banks, especially the smaller ones. These can play a major role in distribution. Some of the smaller entities are becoming bigger in terms of expanded networks. That their coverage is increasing cannot be denied.

In the days ahead, fund houses are likely to benefit further from the way they penetrate the market.

Are ELSS sales really happening or is it still too early?

Tax-savers have not had a great fan following in the past. While new regulations concerning ELSS are welcome, it is indeed early days. For many players, there are just not enough assets to manage. Hopefully this will change soon as investors put the current tax norms to good use. The ELSS category will be watched closely from now on.

How is your new fund positioned?

This will be a fund aimed at tapping opportunities in infrastructure and services, two areas that are expected to drive economic growth. Mind you, this will not be a purely sectoral play. The focus is instead on key themes, ones that investors should appreciate even as they look for newer ways to allocate their surpluses to equity.