Moneycontrol Mutual Fund Summit unlocks the ₹100 trillion opportunity

India, the fifth largest economic superpower, is all set to achieve the watershed moment of hitting the ‘₹40 trillion mark’ in mutual fund assets, following three decades of hard work by way of investor education and solid performance track record. As the Indian Mutual Fund industry is turning 36, Moneycontrol, India’s largest financial news platform and the flagship digital platform of the Network18 group, honoured this occasion with the inaugural edition of Moneycontrol Mutual Fund Summit – Targeting 100 Trillion. The summit was held at Four Season Hotel, Mumbai, on 14 December. 

The Summit saw enthusiastic participation from the who’s who of the mutual fund industry. Starting from the regulators to CEOs and CIOs of mutual funds, people assembled at the evening included financial advisors, distributors, and investors. The event commenced with the keynote address by chief guest Ananta Barua, Whole Time Member, SEBI. Charting the journey of India’s mutual fund industry since its inception in 1953, Barua stated several cautionary methods to maintain the growth trajectory. He said, “Mutual fund managers should not engage in unnecessary risk-taking. One key area of the thrust of SEBI is that Mutual Funds should address all types of risk that they face.” He emphasised the fact that regulations are carefully crafted to eliminate and minimizeall kinds of risks. “No leverage is allowed. We also have fair evaluations. Funds are totally marked to market. So, the industry will benefit if there is compliance with all rules and regulations rather than it being a burden.”

Echoing Barua’s sentiments, Usha Thorat, Chairperson of the SEBI Mutual Funds Advisory Committee & Former RBI Deputy Governor, shared the phenomenal post-Covid growth of the industry. “Household investment in mutual funds has grown at over 32% CAGR. The number implies our fiduciary responsibility is now more important. It is the role of independent directors to ask the right questions so that the possible sources of conflicts of interest are addressed.” she said.

Echoing the spirit and purpose of the event, The CEO Panel was titled ‘From ₹40 trillion to ₹100 trillion. Opportunities and challenges’. The session was moderated by Kayezad E. Adajania, Editor-Personal Finance, Moneycontrol. The panel comprised Navneet Munot, MD & CEO, HDFC AMC Ltd;Nilesh Shah, MD, Kotak Mahindra AMC Ltd; Neil Parikh, CEO, PPFAS AMC; Sreekanth Nadella, MD & CEO, KFin Technologies; and Radhika Gupta, MD & CEO, Edelweiss AMC Ltd.

The speakers deliberated on the profitable growth of AMCs, the importance of having the right value system, transparency, ethics, investor orientation,and product innovation. “Bulk of the growth for the next seven years is focused on the next array of investors. The investor alpha is more important than the product alpha. The big focus is how do we get more and more investors to understand the power of compounding long-term investing,” said Munot. On talent management, Gupta said, “Cost of talent and compliance are going up, while margins are going down in the mutual fund business. But the opportunity to manage public money should ensure that the industry attracts good talent, despite the challenges.” Shah said, “MF is the most transparent and cost-effective investment solution today. The biggest challenge for the industry is to add value for customers each day; the opportunity is reaching out to 140 crore+ Indians.”

Speaking on concerns over industry profitability, especially with new and niche players, Neil Parikh of PPFAS said, “Profitability isn’t an issue if you control overspending and run with effective schemes that make sense to investors.” On the need to bring in greater efficiency in operations to keep pace with the growing pressure on mutual fund expenses, Sreekanth Nadellasaid technology takes about 40% of their costs as a registrar. “We bring an elevated level of regulated services with delivery at scale, handling 22 crore folios. It’s always good to have more players bring in innovation in the market,” he added.

The next panel ‘Financial influencers: Democratisation or dilution of advice’with Kalpen Parekh, MD & CEO, DSP MF; Pranjal Kamra, Financial Influencer; and Harsh Roongta, Founder, Fee Only Investment Advisers LLP & Chairperson - ARIAfocussed on the changing landscape of fund advisory and investor awareness with the advent of fin-fluencers. “In the multi-dimensional world of investment with probabilistic outcomes, creating boundaries through regulations alone is not easy. Always show risk first. If you do that, most things will fall into place. We also need to learn the language of the consumer, which the fin-fluencers are doing well,” said Parekh. Recognizing the need as well as the critical role played by fin-influencers, Pranjal Kamra said, “Traditional participants and past malpractices in the market paved the way for us fin-fluencers to show the other side of finance and thus, gain trust. Influencers sell all kinds of things, and the onus on fin-fluencers is a lot more than those of other industries. So, they must be regulated.” On that note, Roongta added that complete information disclosure by fin-fluencers will help investors make informed decisions.

‘Maximising Alpha – Can Active funds truly deliver superior returns?’ was the theme of the CIO panel, moderated by N Mahalakshmi, Senior Consulting Editor, Moneycontrol. The panellists Sankaran Naren, CIO, ICICI Prudential MF; R. Srinivasan, CIO Equity, SBI MF; Neelesh Surana, CIO, Equity, Mirae Asset MF; Anoop Bhaskar, Head, Equity, IDFC MF were unanimous in picking financials as their top pick.On the challenges active managers face in generating alpha, Naren said, “Scale is a benefit provided you are contrarian, and a problem if you are on momentum. We have figured out our own way to deliver alpha with a focus on hybrid, contrarian, and special situations opportunities. Each one has to devise a strategy for themselves depending on their own situation.” “Mutual fund are 8% of the total shareholding pie. So active funds can still outperform,” said Surana. “Size is always an impediment, the larger the size, the higher the illiquidity,meaning a smaller universe to choose from,” said Srinivasan. Bhaskar added an opposite and less talked about dimension, “As against popular perception, especially given the way IPO allocations are done, being a small fund is actually a disadvantage,”said Bhaskar.

The final panel discussion focused on the challenges and opportunities for New Fund Houses, with Sundeep Sikka, Executive Director & Chief Executive Officer, Nippon Life India Asset Management Ltd, Rajiv Shastri, Associate Director & CEO, NJ MF; Ajit Menon, CEO, PGIM India MF andG Pradeep Kumar, CEO, Union AMCas speakers. “The industry’s profitability is under pressure. Investors, regulation, and competition are prompting every player to have a very light structure. We need to talk about how every Indian household becomes a new investor. Scaling up is the only solution,” said Sikka. Shastri said, “Focus on cost, and then on getting the investment processes right. Asset management is boring and we have to just keep doing the same thing and get it right each time.” For new fund houses,focusing on product differentiation is not the only way out. “Like all other industries, as the industry progresses, the key driver of growth moves from distribution to products and then brands. We are differentiating ourselves by focussing on good and authentic story-telling,” said Menon. Kumar highlighted how a process-centric approach has helped his company reach tier 2-3 regions. “With the Union Bank network,we managed to add 65-70% of investors, who were first-time investors in mutual funds. Now, we have a full 1% market share in terms of new unique investors,” Kumar said. 

Besides, the brightest minds from the fund industry, there were other stars who livened up the event. Actor-activist Sonu Sood talked about his calling to give back to society. “Investment in other’s lives gives the best return,”Sood said. Michelin Star Chef, Author, Restaurateur, Filmmaker & Humanitarian, Vikas Khannatalked about ‘Investing in a Billion Aspirations’. Walking the audience through his journey from investing in a banquet in his neighbourhood to bringing the identity of chefs in India through Masterchef, Khanna said, “With Masterchef, I became a part of the grassroot change in India, a country that still identified culinary prowess with bawarchis, cooks, and maharajas. We should invest in brand India,” he said.

Moneycontrol Mutual Fund Summit – Targeting 100 Trillion was also live-streamed on the Moneycontrol website and across social media platforms. The event was co-presented by KFintech, with Reliance Industries Limited as associate partner, Abhi Loans as exhibit partner, and Edelweiss Mutual Fund, White Oak Capital Mutual Fund, Mirrae Asset Financial Services, Canara Robeco Mutual Fund, Union Mutual Fund, and Funds India as event partners.