Sundaresha Subramanian & Sanat Vallikappen

Mumbai: “Will you leverage the large customer base of Airtel for distributing your products?,” we asked Sandeep Dasgupta, CEO, Bharti AXA Investment Managers, which is the Airtel promoter’s joint venture in the mutual fund space. Answering in the negative, Dasgupta said he is building a distribution force with 5500 agents across the country who will do the job for him.

“We are determined to go the whole hog. Initially, the focus will be to build a strong domestic retail-oriented business. So, the primary focus will be to launch the basic products. Though there are a number of structured products, the bulk of the money goes into the basic categories of diversified equity funds, money market funds and shorter end cash funds,” he says.

The core theme was to produce simple products which the investors feel comfortable with. “Something he sees close to him,” he says.

Though AXA, the overseas partner, has enough expertise in the space, the global and other niche products would have to wait until next year.

The fund house has at present filed offer document of four schemes-one equity, three debt for Sebi approval.

While the entire fund management team is on board with seven members, Sandeep is busy these days building the team of sales personnel. He is targeting over 60 offices across the country.

Dasgupta brings valuable experience of building a fund house from scratch at Deutshe Asset Management.

He feels a lot has changed in the mutual fund industry since he first helped launch a greenfield mutual fund business, eight years ago. “The awareness has increased significantly.

That is benefiting lot of new players. The entry of investors from Tier II and Tier III cities and newer sections from the metros has broadened the market,” he says.

The overall performance of funds, both fixed income and equity, across fund houses has been reasonably good, which has also helped the cause.

Dasgupta sees the industry moving the US way, wherein the leading mutual fund player has a market share of less than 2%. But right now his focus is not market share.

“We need to be good first. We can become big later. Over time, we will grow to be different and emerge as a dominant player. In the next five years, we feel the industry will mature and we are looking at a market share of at 4-5%,” he says.

There are plans to build a strong distribution army of agents.

“We have started the process of empanelling distributors as early as February and we have received a number of confirmations too,” he says.

But is it difficult to motivate an agent to sell in a scenario where the commissions on selling an unit linked insurance plan (Ulip) is far higher.

“At this stage, I don’t see much of an overlap happening. Mutual fund as a product is far superior than Ulip. Mutual funds allow lot more liquidity and the basket of choice is wider. I feel over time, MFs will create their own space,” Sandeep exudes confidence.

He also rules any possibility of a direct sales force as it would be “prohibitively expensive.”

Sandeep has worked in a few interesting features in his schemes like an ECO plan, which financially incentivises investors opting to go paperless, a daily systematic investment plan, which helps the investor beat volatility more efficiently, and a quarterly dividend plan, which promises dividend every quarter.

All such features would work better if the market gets out of its vicious ways. Sandeep feels much of the pain that the market has seen between January and April is due to the global factors led by the subprime mortgage crisis in the US.

“Inflation caused by rising crude prices and food prices has aggravated the situation. The worst is not over yet. But a fair bit of discounting has already taken place.”

Going ahead, Sandeep says the market won’t remain one way. “There will be volatility in the short term.”

Source : DNA