Transcript himanshuNAemergingtrends_27062014
MF Industry : Emerging Trends , Outlook & IFA Business
27
th
Aug 2014
Confidential
Global Overview : Mutual Funds
Size of Mutual Funds Globally !!
Growth of global MFs in last 20 Years
Contribution of Equities to global MF Assets
Global Scale & Depth of MFs is Inspiring !!
India on the right track but long way to go ...currently only 0.5% on Global MF Industry , Equity Share < 30% Confidential Data Source -ICI Global Research Perspective Mar'14 Vol.1 No.1 . Data as on 2013
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Global Overview : Mutual Funds MF assets as % of GDP : A big indicator !
In Evolved markets , MF Assets have exceeded ~ 50% of countries GDP .
India still at ~5% has huge growth potential Confidential Data Source -ICI Global Research Perspective Mar'14 Vol.1 No.1 . Data as on 2013
Confidential : Strictly for Internal Circulation only
Indian MF Industry- Long-term trend Expanding Horizons-Deepening Roots
Year-2014 Year - 2004 Investors 1.46 Crs AUM 1,39,616 Crs Touch-points 3000 Distributors 1100 Investors 3.93 Crs AUM 1,00,6452 Crs Touch-points 1,00,000 + KYD Distributors 59,229 Schemes 393 Schemes 1823
Most of growth happened during 2004-2008 .. Last 5 years have been stagnant Confidential Source- SEBI/AMFI (AUM-EOP Jul’14)
Confidential : Strictly for Internal Circulation only
Growth Phase of MF Industry
Equity AUM
Fixed Income
Total AUM
Fixed Income
Total AUM
High Growth Phase Added : 3.1 Crore New Folios 1,68,000 Crs Equity Assets 4,00,000 Crs overall Assets
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Challenging Phase Muted Growth No Growth in Folios Added Only 17,329 Crs Equity Assets Added 2,88,000 Crs overall Assets Confidential : Strictly for Internal Circulation only
Equity AUM
Fixed Income
Total AUM
Will be the most conducive period for MF Industry Expecting a Growth Trajectory , bigger than even 2003-2008
Source- SEBI/AMFI
Indian MF Industry- Long-term trend
Overall AUM Growth & Potential After a decade of diverse phases , Industry on the fast-track 20 Lac Crs by 2020 : 2X (15% CAGR) much realistic expectation Confidential
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Source- SEBI/AMFI
Indian MF Industry- Long-term trend Flows in to Equity MFs : a Rejoinder !
Equity flows back on track .. Will be the biggest growth driver Recent flows similar to that of 2007-08 bull-run peak Considering this is just the beginning of a mammoth , long-term bull-run , 2 Lac Gross Sales annually seems realistic by 2020 Confidential
Confidential : Strictly for Internal Circulation only
Source- SEBI/AMFI
Indian MF Industry- Long-term trend
Retail Burst & Growth in Investors
Retail participation is picking up fast after a lull of almost 5 Years (Ref Investor Category Trends) , Total Investors expected to touch 10 Crs by 2020 After 5X growth in last 10 years , 3X growth in next 5 years very realistic expectation Confidential
Confidential : Strictly for Internal Circulation only
Source- SEBI/AMFI
Indian MF Industry- Long-term trend
Exponential Growth in SIPs & related Equity Inflows
SIPs will remain the main tool for new customer acquisition -Goal-planning approach will help deepen existing book ATS moved from ~1000 to ~2500 in 10 years. Expected to touch ~5000 by 2020 . SIP-Equity Inflows expected to touch Rs.7500 Crs a month
New SIPs Already touched 3 Lacs P.M (Peak was 4 Lacs P.M)
Confidential
Confidential : Strictly for Internal Circulation only
Source- SEBI/AMFI
Indian MF Industry-Short Term trend
Early trends encouraging ! Industry poised for Quantum leap !
Gross & Net Sales Trend : Mar’13 to Jul’14
Equity moving fast from Net –ve last FY to Net +ve in Apr Jun Qtr
Equity Avg. Gross Monthly Sales have more than tripled from ~3500 Crs for last FY to close to ~12,000 for Apr Jul’14 Period
Last entire year sales covered in just 4 months this FY … Net Sales YTD is 13573 Vs -13158 for last FY
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Confidential : Strictly for Internal Circulation only
Source- SEBI/AMFI/CAMs MFDex
Indian MF Industry-Short Term trend
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Source- SEBI/AMFI
IFA Channel business-share Trend
IFA Share has marginally gone up over last 2 years from 37% to 40% Confidential
Confidential : Strictly for Internal Circulation only
Source- SEBI/AMFI/CAMs MFDex
IFA Business : Gross/Net Purchase Share
IFAs contribute 30% of Industry gross sales on Equity side and 15% on the Debt side
Concern - IFA Purchase Share (Gross/Net) very low compared to AUM Share
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Source- SEBI/AMFI/CAMs MFDex
IFA Channel business-share Trend
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Source- SEBI/AMFI/CAMs MFDex
IFA Business Model Industry is growing ! Are you ???
ARN series upto 30,000 & ARN series 80,000+ dominate the space
Confidential
Re-iterates the fact that old IFAs who evolved with time & new generation IFAs keep growing business Confidential : Strictly for Internal Circulation only
Source- SEBI/AMFI/CAMs MFDex
How to capitalise this growth…
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Confidential : Strictly for Internal Circulation only
IFA Business Model Need for building dynamism..
Financial Planning gaining prominence
• Growth across asset classes • Shift from product offering to providing solutions
Increasing awareness becoming critical
• Savings Vs Investments • Skill enhancement • Awareness campaigns for investors
Technology to increase reach, convenience & reduce cost
• Innovative means of transaction & engagement • Trading through stock exchange platform
Confidential : Strictly for Internal Circulation only
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IFA Business Model Needs to get a facelift
Transformation required from current model & approach Possible with continues skill & efficiency enhancement Confidential
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IFA Business Model Be the “Banker” to your customer !!!!
Be the “House-hold banker” to your customers and provide 360 Degree Solution
Bank
• Savings a/c • Recurring Deposit • Fixed Deposit • Insurance (ULIP) • Liquidity
Mutual Fund
• Liquid Funds • SIPs • FMPs • Equity MFs • Linked ATM Card
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IFA Business Model Tapping salaried work-forces @ work-sites
Indian Railways 14 Lac Employees Indian Armed Forces 13 Lac Employees Tata Group 4.25 Lac Employees SBI 2.22 Lac Employees Infosys 1.6 Lac Employees Wipro 1.46 Lac Employees Reliance Group 1.2 Lac Employees PNB 63,292 Employees
Large number of salaried employees in India remain under advised for their personal financial needs Need to have structured approach to tap these potential customers Salary-deduction-based products can fuel the growth in this segment Confidential
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Our Business Enablers
What is RMF doing ……
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Confidential : Strictly for Internal Circulation only
Products @ Reliance MF
At the forefront of innovation in the MF industry; introduced various new products & facilities
• Reliance P-SIP , a embedded advise solution first time in the industry • SIP-Insure – Free life insurance cover along with MF investment • First Gold FoF • First fund house to launch various sector funds like Banking, Pharma, Media & Entertainment • Reliance Any Time Money Card – clubbing MF investments with convenience of debit cards
Sharp Product Positioning
• Clear product positioning helps in managing suitability for customers
Consistent track record of performance across market cycles
• Top quartile performance across all categories of funds • Reliance Tax Saver Fund (ELSS) selected as “Best funds with 5 year returns” • Reliance Small Cap Fund, Reliance Tax Saver Fund (ELSS), Reliance Dynamic Bond Fund & Reliance Money Manager Fund rated CPR 1 by CRISIL
Wide bouquet of product across asset classes
• Well diversified portfolio of 38 open-ended schemes – 18 equity, 13 debt, 1 balanced & 6 ETFs • Covers the entire range of financial needs, i.e., growth (equity), income (debt), capital preservation (liquid), diversification (hybrid) • New Product Ideas -REITs , Pension Funds ,Infra-Bonds ,AIFs Confidential
Confidential : Strictly for Internal Circulation only
Need for technology adoption
Apr Jul’14 saw New Customer addition improved in critical segments ,Retail (Affluent) & HNI Category fastest growing segments adding ~5 Lacs New Investors Retail investor-base depleted over last 5 Yrs due to lack of service & advise !!
Need to adopt technology for service and continuous engagement with customers
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Source- SEBI/AMFI/CAMs MFDex
“Digital” driving financial services transactions Confidential •
IAMAI estimates >200 mn internet users in India which is 10 times more that population of Australia!!
•
India to cross Internet user population of USA and will be the 2 nd Internet User country after China biggest % of urban population digitally equipped Annual household income (INR) % population 44+ 35-44 25-34 18-24 < 2.4 lakh
1% 4% 7% 14%
2.4-7.2 lakh
5% 12% 23% 25%
>7.2 lakh
16% 23% 32% 46%
MF target investor segment will have 20 mn. Digitally enabled investors by 2016 Mutual Funds, online penetration is only 4% Online transactions are increasing with CAGR of 35% Confidential : Strictly for Internal Circulation only
Technology Adoption @ Reliance MF Service Business Learning
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Now all of these can be addressed by a click of a button
THE FIRST EVER ONLINE PORTAL FOR RMF PARTNERS A major leap in our constant endeavor to enhance our product suite, service and over all Partner experience
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Confidential : Strictly for Internal Circulation only
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Business Easy – Core Functionality
Service Support Customer Campaign Reports & MIS Lead Management Activity Management Brokerage Details Contact Management
Confidential Business Easy
Confidential : Strictly for Internal Circulation only The Learning Edge
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Distributor Initiated Transaction
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Confidential : Strictly for Internal Circulation only
The eLearning EDGE
Online mini courses Animated Courses Video Courses Game based learning Quizzes / Assessments Page turners Life skills Technical skills Induction Motivational Case study
Exclusive for partners registered on Business Easy Portal www.rmfpartners.com
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Synopsis
Industry will grow….its time to multiply your efforts !
Overall external environment conducive for exponential growth most Asset Allocation
Investor will remain at the core of the business model Skill Enhancement Right Communica tion – Right Medium
Confidential
Investor New Customer Acquisition Product Innovation Enhancing ERV
Expand Business Domain :-
Deepening Relationship value from existing customers Enhance business breadth by New customer acquisition/ worksite models
Continual Self-Enhancement is a must
Skill-set & Knowledge development Adopting best-in-class practices
Use of innovative mediums & approach
For Investor Awareness For Sales /Online Conversion For ongoing Servicing communication &
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Believe in your conviction
Inspired by true story on 27th Dec 1975, the ‘Chasanala’ Coal mine in Bihar got flooded with water in which 572 workers were caught. It is an intensely dramatic film about the human heart; that as long as it beats with love and with hope, there will always be a dawn waiting at end of the blackest of nights and
you must always believe in your own conviction !!
Confidential
Paani yahi par hai ! Abhi dikh nahi raha … Jab ayega tab tayar rehna !
Confidential : Strictly for Internal Circulation only
Thank You
Indian MF Industry-Short Term trend
Significant increase in New SIP numbers since Feb’14 onwards .Growing
SIP numbers indicate confidence of retail-investors coming back to equities
Current SIP Penetration to total MF Retail investor-base (3.5 Crs) is 15% .
Just by increasing it to 50% will take us to 1.5 Cr live SIPs. That culminates to SIP inflows of ~7500 Crs Per Month / Rs.60,000 Crs Per Annum !!!
Confidential
Confidential : Strictly for Internal Circulation only
IFA Business Model Acquisition Through SIP : Family Harvesting
1SIP Investor : 3 years Long Term Revenue for 3 years Sustained and incremental growth Reduces the risk of investor dropout
1 Family = 4 SIPs
Family Harvesting Confidential
Confidential : Strictly for Internal Circulation only
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IFA Business Potential
July 2014
12,000 IFA 2X Activation 93,000 Monthly New SIPs @ATS Rs.2500
4X New SIPs Monthly Inflow-Rs.23 Crs 5X Inflows
AUM in 5 Yrs Rs.1395 Crs 5X Inflows
July 2015
24,000 IFA 3.75 Lacs Monthly New SIPs @ATS Rs.3000
Monthly Inflow-Rs.112 Crs AUM in 5 Yrs Rs.6751Crs
Just by doubling the number of active IFAs can enhance business exponentially Confidential
Confidential : Strictly for Internal Circulation only
Investor Category Trends- AUM
Mar’13 Mar’14
Apr Jun’14 Qtr shows steady growth across Investor categories Retail (Affluent) & HNI Category are the fastest growing categories which is a very encouraging , especially after a stagnant last FY . HNI Category will be the next growth driver Corporates still dominate the MF Industry with almost 50% Share
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Confidential : Strictly for Internal Circulation only
Reliance Portfolio SIP Embedded Financial Planning Solution through SIP Reliance Portfolio SIP
Introducing First-of-its kind, a 360 o Embedded Financial Advisory Solution empowering investors with customized integrated financial solutions to “
Achieve Financial Goals through Right Planning”
Facilitating investments in a systematic manner by diversifying across equity, debt and gold asset classes Confidential
Enjoy the benefit of diversifying across different asset classes in just Rs 5000!
Confidential : Strictly for Internal Circulation only
Reliance Portfolio SIP Reliance Portfolio SIP –Answers for all your customer’s questions “Customer for Life” Concept
Once your customer , Always your customer !!!
Your ARN hard-coded with the SIP Mandate Long-term Revenue Opportunity from High Trail Dynamically manage investments in all environments Ability to charge fees to customer Confidential
A win win situation for you and your investors!
Confidential : Strictly for Internal Circulation only
Reliance Portfolio SIP Reliance PSIP vs Single SIP Investments
Approach to investments
Single Scheme SIP
Product Oriented
Portfolio SIP
Goal Oriented Assessing Individual's Risk Profile Not available Available Investments across Asset Classes Financial Advisory Customization of Portfolio Not possible Diversification Meeting varied financial goals Convinience of investing Not possible Not possible Possible Possible Possible through Recommended option or Investor's Choice option Manual Multiple Mandates Automatic One objective met through Objectives such as Wealth Creation one scheme investment (equity), Regular Income(Debt), Idle Cash Management (Liquid) & Gold Accumulation (Gold) Single Mandate for multiple schemes Documentation Reallocation Account Statement High Not possible Multiple scheme wise Low One can carry out the change in asset allocation as well as change in the schemes Single Consolidated Goal Oriented Confidential
Reliance PSIP - A New Thought to Asset Allocation Confidential : Strictly for Internal Circulation only
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