ASSET MANAGEMENT IN INDIA 2017

Transcription

1 ASSET MANAGEMENT IN INDIA 2017 Targeting the Next Growth Phase Overview & Methodology This new country-focused report examines the opportunities and challenges for asset managers in the rapidly growing Indian market amid regulatory developments on a fee-based advisory model and focus on digital modes of distribution. Data comes from proprietary surveys of managers and retail investors. Qualitative insights are gained from interviews with regulator, large- and mid-sized managers, distributors, and industry associations. Benefits: y Covers the Indian asset management industry in terms of AUM growth drivers and distribution landscape y Reviews the regulatory developments toward adopting distribution and advice-based models y Examines investors digital needs and managers plans for digitalization y Explores investor sentiments and factors influencing investors mutual fund buying decisions y Compares the profitability of domestic, global, and joint venture firms in the Indian market Questions Answered: SUBSCRIPTION DETAILS $19,000 PURCHASE INCLUDES y Digital copy and hardcopy in color y Unlimited online firm-wide access y Exhibits in Excel y Key findings y Analyst support y Interactive Report Dashboards NEW y Executive Summary Video NEW For more information, contact us: ``info@cerulli.com ANNUAL 150 PAGES 110 EXHIBITS y What are the opportunities and challenges for managers tapping the growing Indian market? y How is the market gradually transitioning from basic to complex products to meet the diverse needs of customers? y What could be the impact of the evolving regulations on the Indian industry? y How will the digital landscape evolve and impact fund distribution? y What do managers need to consider in order to build a long-term sustainable and profitable business in India? Cerulli Interactive Report Dashboards NEW Experience Cerulli s digital analytics platform and explore interactive data from this report We are pleased to include these interactive report dashboards with your subscription: 1. Mutual Fund Industry Overview: Understand the size of the mutual fund industry, including assets and net new flows by investment objective. 2. Investor Sentiment and Product Landscape: Analyze asset managers product promotion plans across various fund categories to distributors and retail investors, and map them against responses from Cerulli s survey of retail investors about their intended fund investment decisions. 3. Regulation and Digitalization: Assess the impact of commission disclosures from both investors and managers perspectives, along with investors sentiments about advisory models and managers preferred approaches to implementing the model. Gain insights into investors digital needs and managers digitalization plans. CERULLI ASSOCIATES info@cerulli.com

2 What are Interactive Report Dashboards? As part of your Cerulli report subscription, we are pleased to provide you with Interactive Report Dashboards that allow you to interact with report data in unique ways: ACCESS Access consolidated data from multiple report exhibits in a single comparative view. FILTER DATA Apply filters to Cerulli report analyses including assets under management, net new flows, product type, channel, year, marketplace, and currency. EXPORT Easily build and export custom charts. Export options include; Excel, PDF, or image file. My Account: Joe Q. Sample How to Access Interactive Report Dashboards This service is complimentary and is accessible through our website. Use your unqiue Cerulli website login credentials, and you will find a View Interactive Report Dashboards link to this platform under My Reports. Interact View Dashboard You can also jump to related Interactive Report Dashboards in the report PDF by clicking on the Interact button shown on the left for reference. USER LOGIN To obtain online access, please visit or contact our account management team at: ``info@cerulli.com ` ` CERULLI ASSOCIATES info@cerulli.com

3 Chapter 1 Overview Exhibit 1.07 Indian Managers Views on the Macroeconomic Events That Could Impact Their Business Managers see demonetization as having some adverse impact on economic growth and corporate earnings. Source: Cerulli Associates Demonetization impact on economic growth, corporate earnings 5.9 U.S. interest rate hike Uncertainity over government's reform policies (e.g., GST) Fluctuating oil, commodities prices 4.9 Possible U.S. policy changes 4.6 Weak investor sentiment 3.8 Uncertainty in Europe Geopolitical turbulence in Asia Least impact Greatest impact Meanwhile, the government s economic survey released in August 2017 has flagged potential obstacles in meeting the higher end of the 6.75% to 7.5% economic growth projected earlier for the current financial year that ends in March The survey said key factors that could dent economic growth are farm loan waivers and the transitional impact of the GST reform, as noted above. The survey also said that there is considerable room for the central bank to cut interest rates further. In early August, the Indian central bank slashed the repo rate by 25 basis points to 6%. While the RBI has been reducing key rates, the government has also been gradually lowering the rate of interest offered on small-savings schemes in order to align these with market rates. The gradually declining interest rate in the government s small-savings instruments, along with the easing monetary policy of the RBI, could help the industry move investors toward mutual funds. The industry can promote ELSS, which have relatively lower lock-in periods than some small-savings schemes, and which offer tax benefits, to attract these investors. 28 The Cerulli Report Asset Management in India 2017

4 Index of Exhibits Index of Exhibits Methodology Exhibit M.01 Cerulli s India Retail Investor Survey Sample by Wealth Tier Key Questions Answered Exhibit 2.08 Indian Managers Preferred Approach for Adopting the Advisory-Based Model, Exhibit 5.04 Indian Asset Managers Views on Specific Fund Strategies They Will Promote to Various Client Segments, Exhibit 3.03 Indian Managers Views on the Digital Channel That Could Emerge as the Most Preferred for Transactions, Exhibit 6.04 Indian Mutual Fund Managers Operating Revenues and Operating Expenses, FY2014 FY Exchange Rates Exchange Rates...20 Chapter 1: Overview Exhibit 1.01 Indian Mutual Fund Assets Under Management, 2012 June Exhibit 1.02 Indian Mutual Fund Net New Flows by Investment Objective, 2012 June 2017 YTD Exhibit 1.03 Indian Mutual Fund Assets Under Management by Investment Objective, 2012 June Exhibit 1.04 Inflows Gathered Through Systematic Investment Plans, FY2016 and April July Exhibit 1.05 Mutual Fund Holding Period of Investors, June Exhibit 1.06 Indian Managers Views on the Impact of the Government s Demonetization Initiative on Their Business Exhibit 1.07 Indian Managers Views on the Macroeconomic Events That Could Impact Their Business...28 Exhibit 1.08 Interest Rates on Small-Savings Schemes...29 Exhibit 1.09 Key Policy Rates of The Reserve Bank of India Exhibit 1.10 Indian Mutual Fund Assets Under Management by Investor Type, June 2015 June Exhibit 1.11 Indian Mutual Fund Assets Under Management by Investor Type, September 2013 June Exhibit 1.12 Geographical Breakdown of Assets Under Management, June Exhibit 1.13 Largest 10 Indian Mutual Fund Managers, 2015 June Exhibit 1.14 Assets Under Management of Indian Managers with Foreign Ownership, 2015 June Exhibit 1.15 Indian Asset Management Marketplace Overview...38 Exhibit 1.16 State-Wise Distribution of Average Assets Under Management Across Various Fund Categories, June Exhibit 1.17 Detailed Breakdown of Indian Mutual Fund Assets Under Management by Investor Type, June Exhibit 1.18 Detailed Breakdown of Accounts by Investor Type, June Chapter 2: Evolving Regulations: Moving Toward the Advisory Model Exhibit 2.01 Timeline of Key Regulatory Initiatives on Fund Distribution, Advisory Practices, Enhanced Disclosures, and Investor Empowerment Exhibit 2.02 Indian Managers Biggest Concerns for India s Retail Business, Exhibit 2.03 Indian Managers Views on the Impact of Commission Disclosures in Investors Statements of Account, Exhibit 2.04 Indian Survey Respondents Sentiments on Commission Disclosures in Statements of Account, The Cerulli Report Asset Management in India

5 Index of Exhibits Exhibit 2.05 Asia ex-japan Investors Fees Paid to Their Advisors, Exhibit 2.06 Asia ex-japan Investors Willingness to Pay for Advice, Exhibit 2.07 Asia ex-japan Investors Preferred Mode of Compensating Their Primary Providers, Exhibit 2.08 Indian Managers Preferred Approach for Adopting the Advisory-Based Model, Exhibit 2.09 Indian Survey Respondents on Their Usage of Financial Advisors, Exhibit 2.10 Indian Survey Respondents on Their Most Relied Upon Channel for Investment Decisions, Exhibit 2.11 Indian Survey Respondents on Whether They Are Aware of Any Norms on the Fee-Based Advice Model, Exhibit 2.12 Indian Survey Respondents Sentiments on the Proposed Fee-Based Model, Exhibit 2.13 Indian Survey Respondents on Their Preferred Mode of Compensating Providers, Exhibit 2.14 Indian Managers Views on the Impact on Distribution Channels if the Advisory-Based Model Is Adopted...54 Exhibit 2.15 Indian Managers Views on the Impact of Likely Adoption of Advisory-Based Model on Independent Financial Advisors Exhibit 2.16 Indian Asset Manager Survey Respondents Views on Distribution Channels They Intend to Expand Their Use of This Year, Exhibit 2.17 Indian Asset Manager Survey Responses on Their Top Distribution Partners Exhibit 2.18 Top Wealth Managers Among Indian Investors, Exhibit 2.19 Top Indian Distributors by Average Assets Under Management, FY2016 FY Exhibit 2.20 Top Indian Distributors by Commissions, FY2016 FY Chapter 3: Taking the Digital Route to Enhance Reach Exhibit 3.01 Indian Investors Extent of All Wealth Management Engagement Through Digital Channels, Exhibit 3.02 Indian Investors Touchpoints With Financial Advisors Through Various Modes, Exhibit 3.03 Indian Managers Views on the Digital Channel That Could Emerge as the Most Preferred for Transactions, Exhibit 3.04 Selected Robo-Advisory Services in India, Exhibit 3.05 Snapshot of Services Offered by Selected Robo-Advisors in India...65 Exhibit 3.06 Snapshot of Robo-Advisory Services Poll Among Indian Survey Respondents, Exhibit 3.07 Preference for Human Advisors vs. Using Online Channels Among Asia ex-japan Investors, Exhibit 3.08 Indian Managers Digitalization Plans for Exhibit 3.09 Indian Managers Marketing Budget Allocation, Exhibit 3.10 Indian Managers Preferred Digital Media Platforms for Marketing Budget Allocation, Exhibit 3.11 Indian Managers Views on Percentage of Sales Coming Through Digital Modes, Exhibit 3.12 Indian Investors Touchpoints With Financial Advisors Through Various Modes by Wealth Tier and Age Group, Exhibit 3.13 Sampling of Fee and Commission Disclosures for Select Robo-Advisors...74 Chapter 4: Investor Sentiment and Behavior Study Exhibit 4.01 Survey Respondents Household Financial Holdings by Asset Class...77 Exhibit 4.02 Survey Respondents Key Objectives for Investing in Mutual Funds...78 Exhibit 4.03 Survey Respondents Key Reasons for Investing in Exchange-Traded Funds Exhibit 4.04 Survey Respondents Reasons for Not Investing in Exchange-Traded Funds...80 Exhibit 4.05 Survey Respondents Attitudes Toward Risk by Wealth Tier and Age Group...81 Exhibit 4.06 Survey Respondents Expected Returns from Mutual Funds by Wealth Tier...82 Exhibit 4.07 Extent of Losses Acceptable to Survey Respondents by Wealth Tier The Cerulli Report Asset Management in India 2017

6 Index of Exhibits Exhibit 4.08 Most Important Factors That Influence Survey Respondents When Investing in Mutual Funds Exhibit 4.09 Most Important Product Features That Survey Respondents Look for When Investing in Mutual Funds by Wealth Tier...86 Exhibit 4.10 Survey Respondents Key Sources of Information for Mutual Funds...87 Exhibit 4.11 Survey Respondents Average Mutual Fund Holding Period by Type Exhibit 4.12 Survey Respondents Key Reasons for Investing Through Online or Mobile Channels...88 Exhibit 4.13 Locations Where Survey Respondents Have Seen Mutual Funds Advertisements...89 Exhibit 4.14 Investments That Survey Respondents Are Considering Over the Next 12 Months...90 Exhibit 4.15 Broad Mutual Fund Categories That Investors Are Looking to Invest in Over the Next 12 Months...91 Exhibit 4.16 Specific Mutual Fund Products That Investors Are Looking to Invest in Over the Next 12 Months...91 Exhibit 4.17 Survey Respondents on Their Preferred Indian Managers...92 Chapter 5: Product Landscape and Wealth Management Trends Exhibit 5.01 Indian Asset Managers Biggest Challenges When Promoting Their Funds to Fund Selectors Exhibit 5.02 Snapshot of Number of Funds by Product Category, December 2013 June Exhibit 5.03 Indian Asset Managers Views on Broad Fund Strategies They Will Launch or Promote to Distributors, Exhibit 5.04 Indian Asset Managers Views on Broad Fund Strategies They Will Promote to Various Client Segments, Exhibit 5.05 Indian Asset Managers Views on Specific Fund Strategies They Will Launch or Promote to Distributors, Exhibit 5.06 Assets Under Management in Exchange-Traded Funds and Fund-of-Funds Products, 2012 June Exhibit 5.07 Assets Under Management in Overseas Fund-of-Funds Products, 2012 June Exhibit 5.08 Top Global Funds of Funds, June Exhibit 5.09 Commitments and Funds Raised by Alternative Investment Funds in India, December 2012 March Exhibit 5.10 Indian Asset Managers Views on Their Operational Capability to Launch Alternative Strategies, Exhibit 5.11 Assets Under Management by Portfolio Manager Type, March 2013 March Exhibit 5.12 Number of Clients by Portfolio Manager Type, March 2013 March Exhibit 5.13 Breakdown of Assets Under Management by Investment Categories for Discretionary and Non-Discretionary Portfolio Managers, December 2016 March Exhibit 5.14 Survey Respondents Preferred Type of Portfolio Manager, Exhibit 5.15 Survey Respondents Key Reasons for Using Portfolio Management Services Exhibit 5.16 Salient Requirements for Infrastructure Investment Trusts and Real Estate Investment Trusts Chapter 6: Profitability Review of Asset Managers in India Exhibit 6.01 Indian Mutual Fund Managers Classified by Ownership, FY Exhibit 6.02 Largest 10 Indian Mutual Fund Managers, FY2014 FY Exhibit 6.03 Indian Mutual Fund Managers Average Assets Under Management by Firm Classification, FY2014 FY Exhibit 6.04 Indian Mutual Fund Managers Operating Revenues and Operating Expenses, FY2014 FY The Cerulli Report Asset Management in India

7 Index of Exhibits Exhibit 6.05 Indian Mutual Fund Managers Operating Revenues and Operating Expenses by Firm Classification, FY2014 FY Exhibit 6.06 Indian Mutual Fund Managers Operating Profit Margin by Firm Classification, FY2014 FY Exhibit 6.07 Indian Mutual Fund Managers Operating Revenues and Operating Expenses as a Percentage of Average Assets Under Management, FY2014 FY Exhibit 6.08 Top 10 Indian Mutual Fund Managers by Operating Profit Margin, FY2014 FY Exhibit 6.09 Top 10 Indian Managers by Operating Revenue as a Percentage of Average Assets Under Management, FY2014 FY Exhibit 6.10 Top 10 Indian Managers by Operating Expenses as a Percentage of Average Assets Under Management, FY2014 FY Chapter 7: Institutional Developments Exhibit 7.01 Investment Stipulations of the Employees Provident Fund Organization Exhibit 7.02 Investable Assets of the Employees Provident Fund Exhibit 7.03 Asset Allocation of Exempted Schemes of the Employees Provident Fund Organization, Exhibit 7.04 List of Managers Managing the Employees Provident Fund Organization s Assets Under Portfolio Management Services Exhibit 7.05 Performance of Managers Managing Employees Provident Fund Organization Assets, FY Exhibit 7.06 Assets Under Management of the National Pension System and Atal Pension Yojana, March 2013 June Exhibit 7.07 Assets Under Management of the National Pension System by Manager, March 2013 June Exhibit 7.08 Investment Stipulations for the National Pension System and Other Pension Funds Exhibit 7.09 Investment Allocation of the National Pension System, March 2015 March Chapter 8: Fund Passporting Exhibit 8.01 Mutual Funds Approved Under the ASEAN Collective Investment Scheme, April Exhibit 8.02 Southeast Asian Asset Managers Views on the ASEAN Collective Investment Scheme, Exhibit 8.03 Managers Views on Whether the Indian Market is Ready for Fund Passporting Exhibit 8.04 Indian Managers Views on Likely Advantages of Potential Fund Passporting Exhibit 8.05 List of Indian Managers With Offshore Products Exhibit 8.06 Indian Survey Respondents Willingness to Invest in Overseas Markets, Exhibit 8.07 Indian Survey Respondents on Concentration of Overseas Funds, Exhibit 8.08 Indian Managers Likely Concerns in Implementing Potential Fund Passporting Glossary Index of Companies The Cerulli Report Asset Management in India 2017

8 Company Index Company Index Altamount Amundi ASK Group Axis Asset Management BlackRock...69 Blackstone Group BNP Paribas Asset Management...120, 123, 125 BNP Paribas Wealth Management Brookfield Asset Management Client Associates Coal Mines Provident Fund Organisation Credit Suisse , 143 CRISIL...128, 132, 133 Dai-ichi Life Insurance Company...36 Deutsche Asset Management Deutsche Bank DSP BlackRock Mutual... 32, 33, 63, 79, 105, 110 Edelweiss Asset Management...32, 63, 79, 102, 105 Embassy Group Essel Finance...33 Fidelity... 69, 113 Franklin Templeton Asset Management...21, 36, 63, 113, 115 FundsIndia... 32, 79 GIC...11 Goldman Sachs Asset Management HDFC Bank... 27, 117 HDFC Mutual... 63, 105 HSBC Asset Management , 120, 123, 125, 126 ICICI Bank... 27, 117 ICICI Prudential Mutual , 105 ICICI Securities Primary Dealership IDFC Mutual... 33, 105 IIFL , 122 IIFL Asset Management IIFL Wealth Management IL&FS Infra Asset Management India Infoline Indiabulls Invesco... 36, 113 J.P. Morgan Asset Management...113, 115, 117 Julius Baer Karvy PMS KBC Asset Management... 36, 113 Kotak Mahindra Mutual...21, 36, 63, 102 The Cerulli Report Asset Mangement in India

9 Company Index Legg Mason...69 Mahindra Mutual...21, 34, 126, 127 Mirae Asset Global Investments Morgan Stanley Motilal Oswal Asset Management Motilal Oswal Securities...63 Nippon Life Asset Management... 36, 113 Nomura Nordea Peerless Mutual...33 PineBridge Pramerica Asset Management , 117 Reliance Nippon Mutual , 105 Religare Enterprises... 36, 113 Samsung Asset Management SBI Mutual... 78, 102, 110, 129, 131 Schroders... 69, 102 Scient Capital State Bank of India...27 Tata Mutual... 36, 127 Trivantage Capital Trust Capital Union Bank of India...36 UTI Mutual , 131 Value Partners...69 Waterfield Advisors Yes Bank The Cerulli Report Asset Management in India 2017