Ashish Gupta, chief investment officer (CIO) at Axis AMC, believes profit-taking in the markets is not much of a concern because foreign investors remain under-invested. He tellsSiddhant Mishrathat the fund house has focused onoverhauling its salesand distribution structure, besides diversifying schemes.
Edited excerpts:
The recent state poll results have brought confidence of stability. Plus, even the US heads into polls this year, so the uncertainty will play out globally. As far as profit-booking goes, I don’t see much cause for concern because foreign investors remainunder-invested in India. On the retail side, there have been consistent flows, largely via systematic investment plans (SIPs). This is more of an ‘asset allocation decision’ rather than trading bets with the intention to take money home once the indices rise. What is important is that the markets did well, and earnings were strong in the first two quarters. We need the earnings momentumto continue.
Will the AMC’s focus be more on passive schemes?
Passives do address a need, butI am agnostic between active and passive schemes. The high SIP levels show that new investors are getting a good experience. The longer the investment horizon, the better the returns. As long as they are coming in for the long haul, the mode of investingdoesn’t matter much. Theregulators have done a great job in this regard. Earlier, a lot ofmis-selling took place, when there were upfront commissions. Now, commissions are trail-based, it is in the interest ofsales people that customershave a good experience.
How do you see the competition influencing the way businessis done?
We are only beginning to scratch the surface in terms of number of investors. Most of new AMCs are coming in with differentiated distribution strategies. It won’t be a case of everyone vying for a share of the same pie, but the pie itself getting bigger. The way fintechs are operating shows mutual fund distribution strategies are changing. The number of SIPs opened by them in December has been significant. Besides direct sales, we have the distributor channel, private wealth channel, distribution through banks, and now fintechs are also becoming big.
But with no incentives, distributors are unhappy …
That is not necessarily true.
Distributors have made this a family business. Supposing one is managing `500-600 crore in AUM (assets under management), there is a perpetuityof `5-6 crore. Notwithstanding changes to the expense structure, even if the markets grow at11-12%, the AUM will double every five years or so. As much as the industry has prospered, so have the distributors.
You took charge at a testing time…
Despite the reaction in themarket to the events at theAMC, we didn’t see massiveoutflows. Most of the investors and distributors remainedsupportive. However, somelarge institutions, who investprimarily in our debt funds, had put us on hold. We have put in checks and balances in place and as a result, the institutions have now come back. Our debt AUM, which was `70,000 crore in March 2023, had exceeded Rs 90,000 crore by September.
How has the approach andbusiness strategy changed?
We have a new sales and distribution structure in place. There is not much of a change on the debt side. What we focused on was a marketing push to increase the market share. We strengthened the organisation structure on the sales side, but not so much on the fund management side. With markets having become value-focussed, we have decided to diversify the pool of schemes.