‘Broad basing of market will help fund managers generate alpha’

Given our performance in the last few years, we are confident of growing faster than the market. Our expectations are not based on an annual basis because our business has inherent volatility. If GDP grows by 6.5-7 per cent, this industry should grow by 15-odd per cent. And if this industry grows at 15 per cent, we would definitely want to grow faster than that. We are working on this broad road map. In the last five years, the industry has more than doubled, and we have tripled.

The growth in the bottom half of the industry may appear faster due to the base effect. There is increased competition, whether it is from smaller or bigger guys. I think investors will always look for the track record of the fund manager and the reliability of the fund house. I think older fund houses have the benefit, as the new guys do not have a track record. It takes time to build a track record and be seen as someone reliable to park your money. To that extent, the old fund houses inherently have that benefit. Investors also look at performance, and that is what matters in the long run. There is enough evidence of fund houses that were called small in the past growing magnificently given that they have performed well and attracted investment interest.

We have not focussed on one particular channel to grow our business. We have pretty much focussed on what we call all the traditional channels, including IFAs, banks, and national distributors. We are also focussing on fintech and a direct-to-customer channel where investors come to our platforms to transact directly. We are also expanding our manpower on the sales side. Five years ago, we used to employ about 350, and it is about 550 now. Most of the addition have happened on the sales side

No. Even without the incentive, we see a phenomenal benefit in expanding in these markets because our brand gives us a natural pull. Our reach into smaller cities will continue. In fact, it has been about 18 months since we started this virtual relationship manager channel. Our team members are centralised in a particular location, and a set of ARNs across the country are mapped to them. We are seeing great success in terms of reaching smaller markets. Distributors in these towns are excited about a call going out from our side and dealing with us because there is a natural affinity for the brand. We are planning to expand the team to ensure that we reach out to these markets.

There are several things that are actually in favour of us as a country. If the GDP grows at 6.5 per cent, there is no reason why the financial markets do not sustain the level of enthusiasm that we are witnessing from investors. Within this period, the market may go up and remain flat. Everybody relates with the index to gauge the interest level in the market, but we see many opportunities outside the index due to the broad basis of the market. Our expectation is that you will find many more corporates doing well than we have seen in the past several years. Broadbasing to the market will help fund managers generate alpha. Our expectation is that the markets will stay buoyant. We are not really as influenced by whether the index movs. We are far more interested in seeing how the environment is developing, given all these structural reforms that have happened, and then being able to identify the opportunities that get presented.

We stopped accepting lump sums in July. The pace of flows has reduced from Q1 level, but it continues to get us into flows through the STP stroke SIP route, thanks to the performance and the level of investor interest in this category. We continue to get roughly 25 per cent of what we used to get. We still think it is an area where investors can compound their investments. Having said that, we would like to watch the trend a little longer before we decide to open up.