Investor behaviour can many times be confounding. "You can describe it as schizophrenic!" says Srikanth Meenakshi, Founder and Chief Operating Officer, FundsIndia.com, a premier platform for mutual fund investments. He should know - given the role he plays as an intermediary in channelising investor savings into mutual funds.
Providing an example that he described as emblematic of many an unwary investor, he said an acquaintance shifted out of ‘risky’ mutual funds and bought himself a flat a few years ago. The same investor approached him recently to seek his advice on investing in an ‘ICO’ or initial coin offering! (ICO is a kind of crowdfunding using cryptocurrency, which is currently enjoying the speculative surges seen with the tulip mania) This may be an extreme example, but there are hundreds of others who happily bet their money on far more riskier investments such as commodity options as compared to the relatively ‘sedate’ returns offered by mutual funds. "Very few want to take the middle path", he notes.
Handling these kinds of investors as well as those who struggle with financial literacy or numeracy issues is all in a day’s work for Srikanth. The past two years have been hectic but satisfying. Two years ago his platform had 70,000 investors with assets under management at Rs 1,200 crore. Now, they have about 1.5 lakh investors on the platform with assets under management of Rs 4,800 crore. He says, “We are growing at a clip of about 6,000 new investors a month. We are processing about 2.5 lakh SIP transactions a month.” Many other businesses would kill to get those numbers in such a short span of time.
These have been salad days, he agrees, noting that they have ridden the mutual fund wave of the past two years. He also readily concedes that they have benefited from the advertisement campaign organised by the mutual fund industry, especially the ‘ Mutual funds sahi hai’ series. The reputation and credibility built over the past few years on FundsIndia’s advisory and research side has also helped them capitalise on the opportunities, he says.
Srikanth is, however, cautious, self-deprecatingly putting it down to his ‘conservative’ background. He notes that even at their current size, FundsIndia is much smaller than even one per cent of the industry size of nearly Rs 22 lakh crore of assets under management. FundsIndia will need to grow at 100 per cent year-on-year for a couple of more years before they reach a size that will then enable them to consolidate, he admits.
His immediate target is to get 10,000 investors a month with 4 lakh SIP transactions and Rs 100 crore inflow every month through SIPs. He expects the improving payment infrastructure and advancements in mobile technology as well as the potential unlocked by ‘Aadhaar’ identification to help increase numbers rapidly and provide a 'growth bump'. He expects this convergence to increase the conversion rate of investors who come on to the platform to about 50 per cent from around 35 per cent today.
He once again sounds a note of caution while winding up, adding, "The good times don’t last forever and mistakes, too, are often committed during the good times. While there should be aggression, it is important to retain the customer even after the good times end. Secondly, we need to educate investors who are getting in now and set their expectations right."