LIC MF charts a path to recovery

NS Vageesh Mumbai | Updated on January 11, 2018

Begins aligning portfolios as a first step

It would seem the most obvious thing for a mutual fund from the LIC stables to top the chart — considering that LIC is a powerhouse in the financial sector, the dominant player in the insurance industry as well as a major investor. Yet its mutual fund arm ranks a distant seventeenth in an industry with over 40 players.

New pros at the helm

Capturing the leadership position is going to take a lot of work across multiple fronts and over many years. “The journey has begun,” says Rajesh Patwardhan, Chief Marketing Officer, LIC MF, striking an optimistic note. A new team of fund managers and analysts has been in place during the past one-and-a-half years, recruited from the market at competitive salaries and with a clear mandate to turn things around.

“As a first step, we have begun aligning our portfolio to the needs of our clients. Secondly, we have tried to provide returns consistently across quarters. Thirdly, we have increased our connect with our distributors, ” he said.

These preliminary steps have begun paying off. The assets under management has risen to around ₹25,000 crore from ₹9,000 crore in a little over a year’s time.

Aims 25% equity component

Although this is still small by industry standards, it is nevertheless a beginning and gives confidence to the distributors that the MF intends to make a serious bid to be on top and therefore makes it easier to sell than before.

The equity component of the AUM is about ₹2,600 crore (or about 9 per cent) and the goal is to help bring it to about 25 per cent in the next two years. Liquid funds are, however, the entry point for most clients, especially on the corporate side, says Saravana Kumar, Chief Investment Officer, LIC MF.

They prefer to try out a fund’s liquid schemes first with some of their surplus funds and if they are satisfied, then they entrust more funds to the equity side too, he said.

A key marketing initiative to improve penetration into urban, semi-urban and rural areas is to reach out to LIC’s agency force of about 1.4 million agents. Rajesh Patwardhan said as a first step, 250 of the top agents would be approached to help cross-sell the mutual fund schemes to their clients. This initiative is expected to cover about 5,000 agents by the end of the year.

Published on July 10, 2017

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