Mutual Fund industry will be one of the biggest beneficiaries of RBI policy

The banking regulator, Reserve Bank of India (RBI), has maintained its clear stance on the economy as well as on the interest rate for quite some time. While inflation has been inching up, given the current priority is to get back on growth path, the RBI would pursue an easy monetary policy for a prolonged period. "The MF (mutual fund) industry should be one of the biggest beneficiaries under this circumstance and also remain a fastest growth industry," says

A Balasubramanian, Managing Director and Chief Executive Officer, Aditya Birla Sun Life AMC Limited, in an exclusive interview with Bizz Buzz

What is your view on the ongoing market rally? How has it affected the MF industry?

Overall, the equity market has done well this year on the back of increased optimism on the economic recovery, supported by high liquidity and low interest rates. This rally had a positive impact on the MF industry in terms of growing its size. Overall, the assets under management (AUM) has crossed Rs 30 lakh crore with equity asset under management crossing Rs 10 lakh crore. We as an asset management company (AMC), too, crossed Rs 260,000 crore over AUM with equity assets under management crossing Rs 90,000 crore.

There is an influx of foreign funds into the Indian market? What is the reason?

Foreign flows have been moving towards developed markets such as the US all these years. However, this flow seems to be reversing towards the emerging markets. Given the fact that the Indian economy is poised to benefit out of various steps taken by both the RBI and the government, India should remain one of the large recipients of overseas flows even in the coming year.

The second quarter has just concluded. How did the industry perform?

The industry touched a new high during the second quarter, led by growth in the fixed income schemes. The fixed income assets touched an all-time high. Equity assets got the benefit of pick up in the equity market and therefore, mark-to-market gain was one of the best during the period.

MFs trimmed their positions in sectors like banking and finance, fast-moving consumer goods (FMCG), oil and gas stocks in November. What is your view?

Money managers do focus on sectoral rotation depending upon the valuation and outlook on these sectors at each point of time. I would assume that the movement of exposure in these sectors is the function of sectoral rotation.

The RBI has maintained status quo on key policy rates during its recently conducted review. What is the impact on the MF industry?

The RBI has maintained its clear stance on the economy as well as on the interest rate in the last one year, much better than the past. Their commitment to give high liquidity in the system is strong, in addition to providing stability both in interest rate and currency. While inflation has been inching up, given the current priority is to get back on growth path, RBI would pursue an easy monetary policy for a prolonged period. The MF industry should be one of the biggest beneficiaries under this circumstance and also remain a fastest growth industry.

Positive GDP growth forecast has led AUM of the MF industry crossing the magical figure of Rs 30 lakh crore. What is your future outlook?

Overall, the industry growth will remain big given the fact that MF products provides solutions to every need of the customers. Given the fact that the interest rate is very low in bank-fixed deposits, investors would continue to keep MF products as the next best alternative to any traditional investment.

Is there any new product launch in the offing at your company?

We just concluded our ESG fund launch. Just before this, we completed our offering of Special Opportunities Fund. Both the funds put together, we collected more than Rs1,300 crore coming from more than 130,000 investors.

How are the equity funds performing these days?

All our equity funds have delivered good experience to our investors during the pandemic period and remains the high focus for us to deliver consistent investment performance across all equity schemes.

What will be your advice to retail investors?

First of all, stay invested in one's existing investments to ensure one doesn't steer away from one's financial goals. By portfolio rebalancing, one can keep doing from time to time, based on the changes in the nature of the markets. Having said that, one should also increase both lumpsum and SIP investment into equity for generating long-term wealth. Fixed income schemes in the short-term category will remain one of the asset class to be part of one's asset allocation strategy.