The last panel discussion of the Outlook Money Conclave 2018, ‘Mutual Funds: The Road Ahead’ was surely one of the most exciting sessions with top fund managers sharing their views on whether the recent surge in mutual fund investments is going to continue.
“2017 has been devoid of volatility but 2018 is going to be volatile,” said Nilesh Shah ,MD, Kotak Asset Management . SIPs are going to be the best option for the investor and there is no alternative to mutual funds. He also said that regulators, manufacturers and distributors have worked hard to ensure that investors are aware. The Mutual Fund Sahi hain campaign has helped. However mutual fund companies will need to come up with relevant products for customers.
According to Sundeep Sikka, ED and CEO, Reliance Nippon Life Asset Management, mutual funds are the first investment choice and people will miss out if they do not invest in mutual funds. There is a lot of growth opportunity as now only 2 per cent are investing in mutual funds. He clarified that LTGC will not matter in the long term.
When it comes to competition, Leo Puri, MD, UTI Asset Management is of the view that the real competition is not from insurance but from other kinds of investment products like chit funds. According to him the arbitrage between mutual funds and ULIPs will get normalised and other sources of future fund flows will come chit funds.
Kalpen Parekh, President, DSP Blackrock Investment Managers said that though the range of alpha has narrowed in the last 2-3 years, he is not worried. “Mutual Fund as a vehicle gives chance to invest from cash funds to international funds. As long as absolute returns out-perform other options, it is fine,” he said. Shah feels that the mutual fund industry will have to add value to investors. Fund managers, he said, using a cricket analogy, have to adapt to modern equipment and be a Virat Kohli instead of a Sunil Gavaskar.
Investors are also increasingly going direct. 60 per cent of transactions are now happening online, a shift we have seen shift in last 2 years. “It is now a given. In the bull market we see a lot of investors going directly to the website to invest online,” said Parekh. Puri agreed that mutual fund companies have to learn to serve direct customers. “ Investors are increasingly seeking tech platforms the world over. You cannot afford not to respond to market demand,” he said.
Costs are going to be a huge issue. But digital is going to drive the costs down and take away a lot of inefficiency from the system. Certain part of fund management will also be replaced by machines.