Outlook Money Conclave
The Future of Mutual Funds
Increased adoption of modern technology such as digitisation
can help mutual fund houses generate higher returns, and the
benefits can be passed on to customers
The Road Ahead For Mutual Funds: (from left) Nilesh Shah, MD, Kotak AMC, Kalpen Parekh, President, DSP BlackRock Investment Managers, Malini
Bhupta, Outlook Money Editor (moderator), Sundeep Sikka, ED & CEO, Reliance Nippon Life Asset Management and Leo Puri, MD, UTI AMC
A
fter a bull run in 2017
when retail investors
flocked to mutual funds
in hordes, the Indian asset
management industry is gearing up for
heightened volatility in 2018. However
this time investors are prepared,
thanks to the awareness programmes
conducted by the industry.
At the Outlook Money Conclave,
the panel on ‘Mutual Funds – The
Road Ahead’ discussed the merits
and risks of going direct and how
technology can help add value to
mutual funds.
According to Nilesh Shah,
managing director, Kotak Mutual
Fund, Indian fund managers will
have to maintain the tradition of
outperforming the benchmark indices.
“We will have to come out with
relevant products for our customers.
As long as we have products that
service the needs of customers, as
long as we have fund managers who
deliver value to customers, and as
long as we have distributors who can
carry the message to investors, I think
future of mutual fund industry sahi
hai,’’ he said.
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Even the latest hurdle – Long
Term Capital Gains tax – would not
have a major impact on the mutual
fund industry, according to Sundeep
Sikka, ED and CEO, Reliance
Nippon Asset Management Ltd. “A
majority of investors until now were
looking at gold and real estate. Even
after 10 per cent LTCG tax the kind
of returns MFs can generate will not
be impacted. For the small investor
who is investing Rs 500 or Rs 1000 in
SIPs, it does not matter,’’ Sikka said.
Pointing out that mutual funds
Given that alpha is
shrinking, fund houses
will have to respond
through different
kinds of products and
different price points
Outlook Money April 2018 www.outlookmoney.com
Kalpen Parekh,
President, DSP BlackRock
Investment Managers
will always compete with other
retail products, Leo Puri, MD,
UTI Mutual Fund, felt that the real
threat for mutual fund industry is
from other products such as para-
financial services and chit funds, not
insurance. “Many retail investors
have put money in derivatives and
plantation funds without a clue as
to what they were doing, which I
think is from where the continued
flow into mutual funds will come,”
according to Puri.
Mutual funds are a vehicle
that gives investors a window to
invest, right from a cash fund to an
international fund. So there’s a huge
range available, pointed out Kalpen
Parekh, President, DSP Blackrock
Investment Managers.
“Over time, passive funds
will also grow and the same
asset management industry will
benefit and participate from that.
Penetration levels are too low. So the
first step is to bring the investors to
mutual funds, and not only equity as
a category,” Parekh said.
According to Sikka, reduction
in alpha will happen in large-cap