himanshuNAemergingtrends_27062014

Report
MF Industry : Emerging Trends , Outlook &
IFA Business
27thAug 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
Confidential : Strictly for Internal Circulation only
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
Data Source -ICI Global Research Perspective Mar'14 Vol.1 No.1 . Data as on 2013
Confidential
Confidential : Strictly for Internal Circulation only
Indian MF Industry- Long-term trend
Expanding Horizons-Deepening Roots
Year-2014
Investors
3.93 Crs
Year - 2004
AUM
1,00,6452 Crs
Investors
1.46 Crs
AUM
1,39,616 Crs
Touch-points
1,00,000 +
Touch-points
3000
KYD
Distributors
59,229
Distributors
1100
Schemes
1823
Schemes
393
Most of growth happened during 2004-2008 .. Last 5 years have been stagnant
Source- SEBI/AMFI (AUM-EOP-Jul’14)
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Growth Phase of MF Industry
Total
AUM
Fixed
Income
Total
AUM
Fixed
Income
High Growth Phase Added :3.1 Crore New Folios
1,68,000 Crs Equity Assets
4,00,000 Crs overall Assets
Confidential
2008 to 2014
2003 to 2008
Total
Fixed
AUM
Income
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
2014 to 2020
Equity
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
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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



Projections
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
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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
Trend Reversal !!
Equity moving fast from Net
–ve last FY to Net +ve in AprJun Qtr
Confidential
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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
Source- SEBI/AMFI/CAMs MFDex
Indian MF Industry-Short Term trend
Confidential
Confidential : Strictly for Internal Circulation only
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
Confidential
Confidential : Strictly for Internal Circulation only
Source- SEBI/AMFI/CAMs MFDex
IFA Channel business-share Trend
Confidential
Confidential : Strictly for Internal Circulation only
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
Re-iterates the fact that old IFAs who evolved with time &
new generation IFAs keep growing business
Confidential
Confidential : Strictly for Internal Circulation only
Source- SEBI/AMFI/CAMs MFDex
How to capitalise this
growth…
Confidential
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IFA Business Model
Need for building dynamism..
Financial Planning
gaining prominence
Increasing awareness
becoming critical
Technology to increase
reach, convenience &
reduce cost
Confidential
• Growth across asset classes
• Shift from product offering to providing
solutions
• Savings Vs Investments
• Skill enhancement
• Awareness campaigns for investors
• Innovative means of transaction &
engagement
• Trading through stock exchange platform
Confidential : Strictly for Internal Circulation only
17
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
•
•
•
•
•
Confidential
Savings a/c
Recurring Deposit
Fixed Deposit
Insurance (ULIP)
Liquidity
Confidential : Strictly for Internal Circulation only
Mutual Fund
•
•
•
•
•
Liquid Funds
SIPs
FMPs
Equity MFs
Linked ATM Card
IFA Business Model
Tapping salaried work-forces @ work-sites
Indian Railways
14 Lac Employees
SBI
2.22 Lac
Employees
Infosys
1.6 Lac Employees
Reliance Group
1.2 Lac Employees



Indian Armed
Forces
13 Lac Employees
Tata Group
4.25 Lac Employees
Wipro
1.46 Lac Employees
PNB
63,292 Employees
Large number of salaried employees in India remain underadvised 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
Confidential : Strictly for Internal Circulation only
Our Business Enablers
What is RMF doing ……
Confidential
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
Confidential
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Source- SEBI/AMFI/CAMs MFDex
“Digital” driving financial services transactions
• 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 2nd biggest
Internet User country after China
% 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
Confidential : Strictly for Internal Circulation only
Technology Adoption @ Reliance MF
Service
Confidential
Business
Confidential : Strictly for Internal Circulation only
Learning
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
Confidential
Confidential : Strictly for Internal Circulation only
26
Business Easy – Core Functionality
Service
Support
Customer
Campaign
Reports & MIS
Lead
Management
Brokerage
Details
Activity
Management
Contact
Management
Confidential
Business
Easy
Confidential : Strictly for Internal Circulation only
The Learning
Edge
27
Distributor Initiated Transaction
4
Confidential
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The eLearning EDGE

Online mini courses
 Animated Courses
 Video Courses



Game based learning
Quizzes / Assessments
Page turners
Life
skills
Technical
skills
Induction
Case
study
Motivational
Exclusive for partners registered on Business Easy Portalwww.rmfpartners.com
Confidential
Confidential : Strictly for Internal Circulation only
Synopsis
Industry will grow….its time to multiply your efforts !
Asset
Allocation
Skill
Enhancement
Product
Innovation

Overall external environment most
conducive for exponential growth

Investor will remain at the core of the
business model

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
communication
&
Servicing
Investor

Right
Communica
tion – Right
Medium
Enhancing
ERV

New
Customer
Acquisition
Confidential
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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 !!
Paani yahi par hai ! Abhi
dikh nahi raha… Jab
ayega tab tayar rehna !
Confidential
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
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IFA Business Model
Acquisition Through SIP : Family Harvesting
 Long Term Revenue for 3 years
1SIP Investor :
3 years
 Sustained and incremental growth
 Reduces the risk of investor dropout
1 Family = 4 SIPs
Family Harvesting
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IFA Business Potential
Back
July 2014
12,000 IFA
2X
Activation
93,000
Monthly New
SIPs @ATS
Rs.2500
4X New
SIPs
Monthly
Inflow-Rs.23
Crs
AUM in 5 Yrs
Rs.1395 Crs
5X
Inflows
5X
Inflows
Monthly
Inflow-Rs.112
Crs
AUM in 5 Yrs
Rs.6751Crs
July 2015
24,000 IFA

3.75 Lacs
Monthly New
SIPs @ATS
Rs.3000
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
Confidential
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Reliance Portfolio SIP
Embedded Financial Planning Solution through SIP
 Introducing First-of-its kind, a 360o Embedded Financial Advisory
Solution empowering investors with customized integrated financial
Reliance Portfolio SIP
solutions to “Achieve Financial Goals through Right Planning”
 Facilitating investments in a systematic manner by diversifying across
equity, debt and gold asset classes
Enjoy the benefit of diversifying across different asset classes in just Rs 5000!
Confidential
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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
A win win situation for you and your investors!
Confidential
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Reliance Portfolio SIP
Reliance PSIP vs Single SIP
Investments
Single Scheme SIP
Portfolio SIP
Approach to investments Product Oriented
Goal Oriented
Assessing Individual's
Risk Profile
Investments across Asset
Classes
Financial Advisory
Customization of Portfolio
Not available
Available
Not possible
Possible
Convinience of investing
Possible
Possible through Recommended
option or Investor's Choice option
Manual
Automatic
One objective met through Objectives such as Wealth Creation
one scheme investment
(equity), Regular Income(Debt), Idle
Cash Management (Liquid) & Gold
Accumulation (Gold)
Multiple Mandates
Single Mandate for multiple schemes
Documentation
Reallocation
High
Not possible
Account Statement
Multiple scheme wise
Diversification
Meeting varied financial
goals
Not possible
Not possible
Low
One can carry out the change in asset
allocation as well as change in the
schemes
Single Consolidated Goal Oriented
Reliance PSIP - A New Thought to Asset Allocation
Confidential
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39

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