Large distribution houses are more excited about the prospect of market expansion and new investors from the impending Jio moment for the industry than worried about margin compression from rising popularity of passive funds. Passives are a good way to bring in first time investors. Active funds in India will always have a significant place in investor portfolios due to the continuing alpha potential of the market.
The industry’s journey from 4cr to 10cr investors will involve active engagement with new age young investors – and all of us – AMCs and distributors have to find a way to relate with them in the manner they want. Today’s youth will connect with you when they are ready – not when you try to reach out. You need to build an active digital presence, build awareness of yourself and your key messages and then wait for them to reach out when they want to.
MFDs (direct ARNs + sub-brokers of large platforms) are growing faster than the industry in terms of AuM, account for 55% of the industry’s SIP book and about 40% of the equity+hybrids AuM. This segment has been able to demonstrate its value proposition very clearly to its clients.
MFDs are also leading the way in new-to-industry client acquisition in ticket sizes that make a material impact in their investors' lives (as opposed to 100 rupee SIPs that really make no difference to anybody).
The HSBC – L&T integration – which involved integrating over 22 lakh folios – went through smoothly, without any hiccups – a fact that distributors have noted and appreciated. Sales momentum has now picked up over the last 6 months, with the combined entity now present on all large platforms and active engagement happening with MFDs. HSBC’s active fund management presence in 25 geographies around the world enables the team to share global insights and best practices with those distributors who are keen to get global perspectives.
Ankur is working on three aspects to further strengthen distributor engagement: (1) increase fund management team engagement with distributors (2) increase appropriate training interventions in business development areas, with the help of external experts and (3) enhance digital capabilities to smoothen and broaden distributors digital experience with HSBC MF.