Entry of deep pocketed players like Jio into the MF industry– with their digital-first, low-cost propositions will expand the market but may not necessarily disrupt it very significantly. Unlike other businesses where cost was used as a disruptor, cost is less of a driver in fund selection– potential of healthy returns is more relevant – especially when costs of active funds are anyway quite low.
New age investors are likely to gravitate towards digital-first propositions. MF ecosystem – including AMCs, RTAs, platforms and MFDs should scale up their digital solutions to remain relevant for younger investors. This is the time for every player to deepen their moats – around fund performance, advise delivery, service delivery – to ensure that you not only ringfence your existing clients, but also remain competitive in the quest to win new investors who come to the industry through enhanced visibility created by deep pocketed new players.
Equity market can remain volatile over winter as oil prices play out their seasonal upswing. Sundaram MF is maintaining overweight positions in consumer discretionary and financials and has turned a bit cautious on capital goods / engineering which have run up sizeably.
Sunil urges MFDs to rein in investor enthusiasm to invest increasingly in small cap funds. Too much money chasing this segment is never a good idea. Try to steer fresh equity allocations to flexicap and large &midcap segments. Good time to reinforce the merits of BAFs and even multi-asset funds given their gold exposure.
Sundaram’s focus on quality names hurt its mid and small cap funds performance during the sharp rally, but is now getting increasingly validated by the market as weak names sell off and quality withstands volatility better.