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Saturday, Aug 20, 2005

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Chola Mutual bets on region-specific approach

Aarati Krishnan

Cholamandalam's proposed strategic alliance with the DBS Bank of Singapore is also expected to help expansion plans.

AFTER a slew of new fund offers that have rounded off its product portfolio, Chola Mutual Fund now plans to focus on selling its established funds to new investors.

"We would like to focus on marketing vanilla products such as Chola Growth Fund and Chola Mid-cap to retail investors," says Mr Sashi Krishnan, Chief Executive of Chola Asset Management Company.

To achieve this, Chola Mutual Fund is segmenting the market regionally, with different distribution strategies for each market.

"There can no longer be one single strategy for all regions and investors. Segmentation has to happen. Retail and high net worth investors also require different types of distribution and products," says Mr Krishnan.

In the South, where the fund feels the market is under-penetrated, it is forging new alliances with public sector banks such as Indian Overseas Bank to reach out to investors in the interior towns.

"We've found a strong equity cult in places like Karaikudi and people have developed an appetite for equity funds".

In the East, the fund is working through franchisee arrangements.

It appoints franchisees, who in turn enroll individual agents to market Chola's products.

In the North and the West, where awareness about mutual fund products is higher, Mr Krishnan feels that the fund can piggyback on well-established mutual fund distribution chains such as Bajaj Capital and RR Capital Services.

The fund also has plans to clearly target its different products at different types of investors.

Vanilla funds such as the large-cap fund— Chola Growth Fund and the Chola Mid-cap Fund will be targeted at retail investors; because the fund believes these investors need uncomplicated products.

These investors are encouraged to take systematic investment plans, rather than invest in one go.

According to him, high net worth investors already have a view on their portfolio and need a financial advisor only to help them out with products that can add returns or help them diversify.

"Funds such as Chola Opportunities and Global Advantage are targeted at such investors," explains Mr Krishnan.

Cholamandalam's proposed strategic alliance with the DBS Bank of Singapore is also expected to help expansion plans for the mutual fund.

"With their strong presence in the emerging markets, we can look to explore new cross border opportunities," says Mr Krishnan.

He expects that the alliance will help the fund house raise money from investors in emerging markets, to be channelled into India.

The alliance, once formalised, is also expected to help the fund house in structuring new products.

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