Reliance MF’s debt funds corpus crosses Rs 1 lakh crore mark

KR Srivats New Delhi | Updated on January 24, 2018 Published on June 21, 2015

Amit Tripathi, Head of Fixed Income at Reliance Mutual Fund

Sees potential to double debt funds assets under management in next few years

Reliance Mutual Fund recently achieved an important milestone when its debt funds corpus crossed the Rs 1 lakh crore mark. This is significant given that it’s quarterly assets under management (debt funds corpus) stood at about Rs 83,200 crore in end June last year.

BusinessLine caught up with Amit Tripathi, Head of Fixed Income at Reliance Mutual Fund, to better understand the trends defining debt fund flows and the way forward for the fund house in this space.

Edited excerpts from an interview:

What explains the strong increase in your debt funds corpus in last 12 months?

This is for the first time we have crossed the Rs 1 lakh crore mark on the debt side. There are 3-4 reasons behind this performance. First, we have maintained reasonably good overall balance between wholesale and retail. There has also been consistency in performance of our products. We have also been innovating and bringing new products to the market and reaped the benefits of first mover advantage. Our thrust has been to keep products simple and reach investors first.

What is the outlook for debt funds in the current year? Do you see increased interest in equity funds affecting current popularity of debt funds?

We as a country are in the best macro conditions compared to the last five years. We are in such a sweet spot that both markets (equity and debt) will do well. One cannot 100 percent avoid equities. A good macro and likely fall in interest rates will help both markets.

Then, what about debt funds specifically?

The current positive real returns scenario are going to be a big boost to financial savings. You may recall financial savings had suffered in 2011-2014. That is not the situation anymore as liquidity has improved. From our standpoint, I even see our debt fund corpus doubling from here in next few years. Also, I expect interest rates to fall 50-75 basis points in next 12-18 months. This will help both the markets (debt and equity).

How are you positioned to tap this expected growth? Any numbers as regards the business plan?

It would be difficult to give you exact numbers that we are looking at. We have grown very well, but we are not satisfied with the kind of growth in retail segment. There is tremendous scope to penetrate more retail high networth individuals. If our breakup is say 65 percent wholesale, it will be 30-35 in retail. While our institutional business will grow steadily, retail can see much more growth. There is definitely much larger space to occupy on the retail front. We have not yet scratched the surface on the retail front.

Which are the products where you see demand coming from?

There will increasingly be more demand for mid-to-long duration schemes. Allocations could get shifted from liquid to say short term bond funds.

Can you spell out some schemes that could be growth drivers this year?

Biggest driver of assets under management would be those that address 1.5-3 year duration. Our growth drivers this year will be Reliance Short Term Fund; Reliance Corporate Bond Fund and Reliance Dynamic Bond Fund.

Our Reliance Money Manager Fund is also expected to do well and drive growth for us.

Do you see increase in service tax rates affecting demand for debt funds?

It won’t as tax does not drive decision making in such investments. Tax is one of the factors.

Published on June 21, 2015
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