The Hindu Business Line : MF industry needs to nurture smaller markets: UTI

Kolkata June 17 UTI MF, which occupied the top slot till recently, has lately lost its numero uno status, its position usurped by private-sector rivals. But it still claims to hold a big share in the hearts and minds of investors, especially the retail ones, claims Mr Jaideep Bhattacharya, Chief Marketing Officer. Here, in a freewheeling interview, he maps the MF's plans and some of the trends that are likely to emerge.

Excerpts.

You don't have distribution tie-ups with large banks, including MNCs. Isn't that a handicap?

We do have relationships with a few banks and are working towards tying up with others. A few foreign banks indeed play a key role on the distribution front, catering often to big-ticket clients. StanChart, for instance, is a very large distributor. This is obviously an area that cannot be ignored by any fund house.

We do see banks as an important force in terms of tapping more investors. The reach and scale of some Indian banks, typically public-sector players, is just too overwhelming.

Smaller centres are still to catch up, while only the big ones keep on growing. Right?

Well, a huge portion of the fund industry's total sales - roughly 80 per cent - comes from the top 10 cities. The next 10 are really quite smaller if you compare the two sets. Evidently, there is a disconnect somewhere. The asset management industry needs to nurture smaller markets.

I understand this is not a new suggestion; it has been said often. Developing strong networks of independent financial advisors may help in some of these markets. A consolidated effort, I believe, will be necessary to address the issue.

As for products, what is likely to sell well in the months ahead?

Let me tell you about debt funds, which many think are being ignored on the whole. Last year, as you know, equity funds had held supreme. And so was the case the year before last. The future, however, may yet see some action on the debt front. It will of course depend on the way the debt market pans out.

This is not to say that longer term funds will suddenly come to the fore. At the moment, various short-term options, especially liquid funds and FMPs, are meeting investors' requirements to a very large extent.

Are FMPs losing out against bank deposits?

It is true that banks have stepped up rates on deposits. The latter command a certain appeal. But if you consider the tax-efficiency part of it, FMPs have a point to make. Observe the recent spate of FMP launches.

You will know that the so-called smart money has been taking to these products actively. It is ultimately for the investor to decide whether he or she should buy fixed-maturity options or go in for deposits.

Finally, are you preparing to market pension products?

You are obviously referring to the opening up of the pensions sector and some of the more recent developments that have followed. While we have not started work on this aspect - I mean devising a proper marketing strategy - the one fact that fortifies our intent is our experience with Retirement Benefit Pension Fund. This provides periodical cash flows to investors, especially the self-employed, after they turn 58.

We have had this fund for well over 10 years and have in the recent past managed to introduce it some very large organisations. Talks with a few more have been going on.

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