IDBI Mutual Fund MD and CEO Debasish Mallick says current
market conditions is a good opportunity to introduce equity oriented mutual
fund schemes. However, in an interview with Chirag Madia, he says indian
markets will take some time to recover fully from its high till the time
European debt issues are resolved.
IDBI MF is a relatively new player in the industry. How is
the company dealing with regulatory changes made in the last three years?
As a new player, there will always be challenges as we don't
have large assets under management (AUM) to begin with. Being new also means
that we would have to introduce new products. Currently, we have six funds out
of which 3 are retail funds.
In the current financial year, we have plans to come out
with products from debt as well as equity side. We look at current market
condition as a good opportunity to come with market-oriented products and we
expect inflows to get stabilised in the days to come.
What is your distribution strategy for the fund house ?
Our largest distributor is IDBI bank (our sponsor). IDBI
bank has about 850 branches, out of which over 650-700 branches are marketing
our MF products. We want to engage more with IDBI bank, but that has not be
possible to the desirable extent till now primarily because we had limited
number of of products. We require more products which investors need. IDBI is
and will continue to remain largest distributors for us. We are actively
looking at engaging institutional distributors.
Do you think that smaller distributors will again start
selling MF products ?
After the ban on entry load in August 2009, there was a need
for incentivising the IFAs and this move of charging transaction is in the
right direction. But it will take some time to know how these regulations play
out. While it will be difficult to go back to the entry load structure, under
the given circumstances, this is also the best thing that could have been done
by the regulator.
Besides there are quite a few structural changes which are
going to take place in the distribution segment, which will lead to more robust
distribution network.
When do you look at break-even for the fund house ?
Break-even is likely to take some time, but question remains
how long? It will depend on how the products are marketed and managed. It
should happen once I do good work on mobilisation as well as deployment by giving
superior returns. Then, more investors will come into the fund which can result
in earlier break-even. We are here for the longer haul and would like grow at a
faster ace.
Interest rates have remained at elevated levels, do you
think it has peaked out or do you see more hikes in the months to come ?
Its a policy move to push up the interest rates higher. I
have serious doubt whether it can be rolled back in a short period of time. I
feel perhaps one or two more quarters where there could be at least some more
hikes in the benchmark rates. Primarily this could happen because inflation is
still disturbing there. Secondly, there would be additional borrowing by the
government, which has already been indicated by them.
However I don't think there will be a hike of 50 basis
points at one go; but there could be two hikes of 25 basis points in the months
to come.
I think atleast one rate hike is due in the coming policy
meet and other hike in December.
Source: http://www.financialexpress.com/news/its-a-good-time-to-introduce-marketoriented-products/861246/0
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