Indian Mutual Fund Industry

Transcription

1 Indian Mutual Fund Industry Changing Paradigm Ashok Suvarna COO, Birla Sun Life Asset Management Company Limited July 21, 2012

2 Agenda History Competitors Mutual Funds Industry - Global Indian MF Industry Statistics Distribution Model Mergers & Acquisitions since 2000 New Products / Innovations / Services in MF Industry Regulatory Changes paradigm change Growth Drivers

3 History Phase I ( UTI) 1963 Unit Trust Of India (UTI) formed by an act of Parliament Phase II ( entry of public sector) MFs launched by SBI, Canara Bank, LIC, Indian Bank Phase III ( ) Emergence of private funds - 11 MFs formed Phase IV ( ) Regulations introduced SEBI (Mutual Funds) Regulations, 1996

4 Competitors Banks Insurance Government Savings Schemes Public Provident Fund Post Office Saving Schemes National Savings Certificate Govt. Bonds etc

5 Competitors Edge Capital Protection Assured Returns

6 Where MFs score Liquidity Wealth Creation Group of Investors with common goals

7 Schemes Offered

8 Global MF Industry - FUM Total Net Assets of Mutual Funds Americas Europe Asia & Pacific Africa , , , , , , , , , , , , , , , , , , , , , World Net Assets 17, , , , , , , Source: ICI as of Dec 31 In billion US $

9 Global MF Industry No. of Schemes Total Schemes of Mutual Funds Americas 13,763 14,475 15,459 16,459 16,953 18,018 19,799 Europe 30,060 33,151 35,210 36,780 34,899 35,292 35,713 Asia & Pacific 12,427 13,479 14,847 14,909 14,795 15,265 16,198 Africa World Scheme Count 56,867 61,855 66,347 69,032 67,551 69,518 72,657 India Source: ICI as of Dec 31

10 Growth of Indian MF Industry % Change in AUM FY05-06: 55% FY06-07: 41% FY07-08: 55% Source: SEBI

11 Trends Category Total AUM As on 31st March 2003 Average AUM for as on March 2012 A) Unit Trust Of 13,516 58,922 B) Bank Sponsored 4, ,677 C) Institutions 5,935 5,799 D) Private Sector 1 Indian 10,180 #131,662 2 Joint Ventures Predominantly Indian 15, ,487 3 Joint Ventures : Predominantly Foreign 29,883 74,245 Grand Total (A+B+C+D) 79, ,792 # Foreign Category added with JV: Foreign for March-12 Source: AMFI

12 Asset Mix Source: AMFI

13 Composition of Asset Under Management Source: AMFI Data as of March 31, 2012

14 Folio Count by Asset Class Source: AMFI Data as of March 31, 2012

15 Distribution Model Asset Management Company Market Distributors Open Architecture distribution model i.e. There is no compulsion for a distributor to be exclusively tied to a single Mutual Fund The main channels of distribution are: NBFCs (Brokerage firms) ; Banks & Wealth Management service providers and Independent Financial Advisors (IFAs)

16 Insights on Distribution of Mutual Funds Source: AMFI Data as of March 31, 2012

17 New Products Launched in the last decade 1. Liquid Funds 2. Monthly Income Funds 3. Sweep Plan 4. Fund of Funds 5. Fixed Maturity Funds 6. Interval Funds 7. Exchange Traded Fund (ETFs) 8. Arbitrage Funds 9. Capital Protection Oriented Schemes 10. Thematic Funds

18 Innovations since Systematic Investment Options a) Systematic Investment Plan (SIP) b) Systematic Withdrawal Plans (SWP) c) Systematic Transfer Plans (STP) 2. Trigger Plans 3. Same day redemption a) Insta Cheque facility b) Cheque Writing c) T+0 redemption from Liquid funds (withdrawn subsequently)

19 Innovation since 2000 contd.. 4. Alternate transaction Platform a) Online mode i. AMC websites ii. Distributor website b) Mobile based i. Customized application mchek, NGPAY etc ii. Sms based services iii. Unstructured Supplementary Service Data (USSD) c) Call Center and IVR d) KIOSK e) Debit cards 5. Stock Exchange Platform

20 Service Standard improvements Multi modes of money movement 1. Additional Payment Modes a) ECS b) RTGS c) NEFT d) NECS e) Internet Banking f) Debit card 2. Emergence of Payment Aggregators Bill Desk, Tech Process etc 3. Core Banking Services 4. Speed Clearing

21 Changing League Table FY ending FY ending Rank Fund House Rank Fund House 1 Unit Trust of India 2 Prudential ICICI Mutual Fund 3 Templeton (India) Mutual Fund 4 HDFC Mutual Fund 5 Birla Sun Life Mutual Fund 6 Standard Chartered Mutual Fund 7 SBI Mutual Fund 8 Kotak Mahindra Mutual Fund 9 Jeevan Bima Sahayog Mutual Fund 10 Zurich (India) Mutual Fund 1 HDFC Mutual Fund 2 Reliance Mutual Fund 3 ICICI Prudential Mutual Fund 4 Birla Sun Life Mutual Fund 5 UTI Mutual Fund 6 SBI Mutual Fund 7 Franklin Templeton Mutual Fund 8 DSP BlackRock Mutual Fund 9 Kotak Mahindra Mutual Fund 10 IDFC Mutual Fund Source: AMFI

22 Mergers & Acquisitions since 2000 Sr No Details Date 1 Birla Mutual Fund took over Apple Mutual Fund January, Pioneer ITI Mutual Fund was taken over by Templeton Asset Management April, Zurich India Mutual Fund sold to HDFC Mutual Fund June, Sun F & C Mutual Fund sold to Principal Mutual Fund May, IL & FS Mutual Fund transferred to UTI Mutual Fund July, Alliance Capital Mutual Fund taken over by Birla Sun Life Mutual Fund September, IDFC acquires Standard Chartered Mutual Fund March, Religare Enterprises acquires Lotus India AMC November, L&T Finance acquires DBC Cholamandalam AMC September, Goldman Sachs AMC acquires Benchmark AMC March, L&T Finance acquires Fidelity s Indian MF March, 2012

23 Key Regulatory Changes Sr No Description Effective From 1 Dividend Distribution Tax FY AMFI Registration Number made mandatory for distributors March PAN made compulsory December Charging of NFO expenses to schemes disallowed January KYC made mandatory for investments February Zero Load Regime June Sighting of funds for NAV allotment November 2010

24 Zero Load regime Entry load was disallowed with effect from August 2009 Upfront commission to distributors to be paid by the investor, directly 80% of institutional business & 95% of retail business is through a Distributor A Push Model!! Source: AMFI

25 Key challenges 1. Geographical Spread 70-75% business from 5 cities AUM by Geography (contribution by top 5 Cities) In Percentage 30-Sep Dec Mar-12 Mumbai 48.65% 44.59% 42.13% new Delhi 11.48% 13.39% 13.23% Bangalore 5.12% 5.26% 5.54% Chennai 4.92% 5.06% 4.80% Kolkata 4.58% 4.98% 5.42% Total 74.75% 73.28% 71.12% Source: Association of Mutual Funds in india 2. Cost of servicing significant rise in cost of servicing an investor 3. Revenue thin margins vs. cost of doing business 4. Customer awareness - Mutual funds figuring 1.8% of household savings mix. (The gross investment rate at about 35.8% of GDP)

26 Questions? Indian MF industry has grown 8 times in the last decade

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