Financial Daily from THE HINDU group of publications
Thursday, Feb 12, 2004
Retail participation in MFs on the rise
Mumbai , Feb. 11
RETAIL participation in mutual funds schemes has nearly doubled in the last six weeks.
Asset management companies attribute this to renewed retail interest in the stock market, change in investment mindset of retail customers and shift in asset management companies (AMC) internal focus from assets under management growth (AUM) to investor base growth.
Mr Mrugank Paranjape, Vice-President - Operations, Prudential ICICI Asset Management Company, says that the number of folios have increased by over 35 per cent in the last six weeks.
While Prudential ICICI recorded 1500 transactions a day in 2003, this has grown to over 3500, so far this year.
Birla Sun Life AMC currently has about 6 lakh investors. "We have an annual average of 2000 communications a day, this has shot up to 3300 plus, over the last few weeks," said Mr Ravi Sharma, Head- Marketing, Birla Sun Life AMC.
Communication indicates client interaction that includes a new subscription, redeeming a scheme and lateral shift between two schemes in the same fund house.
Another indicator of the increasing maturity of the industry is the reconfiguration of corporate and retail investors across schemes.
Previously all funds - whether they were intrinsically corporate or retail - had majority corporate participation in the AUM. This trend is now changing and corporate participation is dwindling in schemes such as Fund of Funds, Monthly Income Plan (MIP) that are essentially retail products.
According to Mr Paranjape, "Ninety five-ninety eight per cent of investors in the Pru ICICI Fund of Funds are retail; the initial public offer for this fund was closed at around Rs 300 crore." Similarly, Birla Asset Allocation Fund closed its Initial Public Offering (IPO) with Rs 120 crore and 18000 investors.
Small and medium enterprises are the few non-retail investments that continue to be part of products such as MIPs.
Advertising and other marketing tools are also applied in ensuring the "right fit" between investors and products, according to AMCs. "We are now planning to convert our financial planner and other tools that are on our Web site from digital to paper form and use this to run financial health clinics across the country," said Mr Prakash Dalal, Kotak Mahindra Mutual Fund. Kotak currently has about 900 customers coming in every day and with the lack of large sales team sizes, advertising, investor meets and the distributor network are used to dispense product and investing information.
The shift to broadbase the industry is also evident from the targets that AMCs set for themselves during IPO. These include number of investors and folios over and above the size of the corpus.
The Tata MIP Plus IPO has a target to reach at least one lakh investors, says Mr Ved Prakash Chaturvedi, Chief Executive Officer, Tata TD AMC.
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