Handful of Reliance equity schemes have been facing redemption pressure and have underperformed its peers in the last two years. In an interview with Muthukumar K and Chirag Madia, Sundeep Sikka, CEO at Reliance MF, says on a net basis, they are still getting inflows worth R400 crore into equity funds every month. Excerpts:
Reliance MF equity schemes have been witnessing huge outflows. Why?
The reality is that we have close to 22 lakh systematic investment plans (SIPs) that accounts for 30% of market share and our investors are committed for 10 to 20 years. Today people are coming to us with a long-term view and our gold funds is a case in point, where we are seeing huge inflows.
On the equity side, markets have slowed down and post regulatory changes two things have happened. Firstly, out of over R2 lakh equity assets in the industry, over R70,000-80,000 crore came during 2006-08. We got about 30% of such inflows. So when the Sensex tanked from 21,000 to 8,000, investors started booking profits.
Secondly, post entry load ban in August 2009, inflows have slowed down. Hence, the new asset figures (for our equity funds) is lower against the high asset base which we have had earlier.
On the other hand, there are reports that industry is losing over 1 lakh folios every month, but we are actually adding same number of folios in our gold funds.
We are getting net inflows of R400 crore every month on the equity side. Over 10 lakh investors have committed new SIPs in the last one year and in the last three months we are adding over lakh folio every month in our gold funds. 60% of total inflows into gold exchange traded funds) have come through Reliance gold ETFs since April.
Are you bringing changes in fund management style ?
We go through cycles of ups and downs and lot of our assets which we had were on the mid-cap side. In the last two years mid-cap segment has not performed.
If we look back from April this year till date, all our equity funds are either number one or are close to number one; so we have already done the changes. In the fund management it is important to be in the top quartile. While we have restructured our portfolio, our fund management style remains the same.
What steps are you taking to attract investors.
We want to build quality assets and its not only about equity assets. We are happy to get more number of small-ticket size investors through SIP compared to lump-sum investments. I am very happy if I get SIP of R2000 for 10 years rather than getting R2.4 lakh lumpsum, as we believe it is good for the industry, investors as well as the market. We are trying to build-up long term sustainable business model.
How have new RBI norms on bank investments into liquid funds impacted the industry ?
MF Industry is divided in two parts; 70% of the assets are in liquid. Post December of this year, total money in the industry will be R40,000 crore which at the peak used to be over R1.5 lakh crore. While we have tried to de-risk ourselves from all this, it is also a cautious strategy to keep adding value to MF investors, even if we loose some market share on the liquid side.
