AMC Speak 09th October 2014
Taking distributor engagement a notch higher
Amar Shah, Head - Retail Business, ICICI Prudential MF
 

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ICICI Prudential MF has been deepening its distributor engagement significantly in the last 3 years. Not content to rest on past initiatives, Amar and his team have introduced Tarakki Times - a monthly distributor newsletter which complements I Pru Touch - their mobile investment solution enabler. I Pru Insights is a recent investor engagement initiative that has also been launched. Engagement is not an end in itself - it's a way to build trust and confidence, which is perhaps the biggest business enabler in the money management business. Amar discusses not only his engagement initiatives, but also what his company is doing to build trust and confidence and thus scale higher.

WF : What was the thinking behind launching "Tarakki Times"? When was it launched?

Amar : "Tarakki Times" is a monthly newsletter from ICICI Prudential AMC for the esteemed advisor community, launched in this fiscal year as an effort to constantly deepen engagement with them. Our objective for launching "Tarakki Times" has been to communicate key views of the fund house to the financial advisors; and aid them to serve investors better. This newsletter also recognizes the achievements of advisors, through its segment "Tarakki Corner" which features Tarakki stories of advisors every month. Further, the newsletter captures various congregations and events held for the advisors.

WF : What has been the main focus of content in this publication? How often is this publication produced? How is it circulated? Can your distributors access Tarakki Times on I Pru Touch?

Amar : Tarakki Times compiles our key views published in the important and reputed media platforms, in form of authored articles and interviews from ICICI Prudential AMC spokespersons along with product reviews published by various third party research agencies. The intent is to get our key communication messages in one place. The informative content is centered around our belief as a fund house on different subjects like the latest macro- and micro-economic trends, investment themes and products for the relevant scenario. It is published every month, and the printed copy reaches the doorstep of advisors in the first week of the month. It is also circulated by e-mails, and uploaded on our advisor mobile application- IPRU Touch.

Click Here to view the latest edition of Tarakki Times

WF : There are two information sources that you have recently started promoting - Tarakki Times and I Pru Touch. How are the two different and how do they complement each other?

Amar : The two communication initiatives complement each other very well. IPRU touch is a useful tool which helps advisors to tailor investment solutions using investment planning tools in form of several calculators (For example-SIP planner, Retirement Planner, Child's marriage & Education planners). It gives the required NFO updates, quantitative data for schemes, news and market updates, concept videos and product presentations. On the other hand, Tarakki Times captures the relevant investment themes in a particular market scenario. Also, Tarakki Times is a step to strengthen the bond with advisors, by acknowledging and highlighting their achievements in the industry. Both these communication tools together equip the advisor with informative content that could help them in recommending the right product to investors for long-term wealth creation.

WF : A common refrain we hear from distributors is information overload from the MF industry. In this context, how do you try to ensure relevance and topicality of information you are putting out through these media?

Amar : 'Tarakki Times' being a monthly property, ensures that every month the latest views of the fund house relevant to the market scenario reach the IFA channel. As for IPRU Touch, the application has consistently demonstrated systematic and regular upload of fresh content to deliver an optimal content experience.

WF : Has the experience in terms of new flows into equity funds in recent NFOs been good? Are you seeing healthy flows into existing schemes with track records?

Amar : Since September 2013, ICICI Prudential AMC has been launching closed-ended schemes through a series of fund launches that focus on the value theme and with economic revival in the offing, the focus moves to growth strategies.

We are witnessing consistent flows across our NFOs as well as existing schemes. The flows through the closed ended schemes account for around 15% of our total gross equity sales in FYTD August 14. A total of 1.03 lac folios were created across the closed ended products launched since November 2013. Out of these approx. 45% are unique investors.We believe that the strategy of launching close-ended NFOs has seen success since the investor experience on the basis of returns has been very good.

Close-ended funds offer a good investment vehicle to investors, with a focused vision and a long term view that capitalizes on certain themes and sections of the market.At ICICI Prudential AMC, new products are launched only based on an investment / market view rather than a sales view.

Products based on methods of investing than sector / market cap criteria

The closed ended schemes that we have launched are not based on sectors or market cap criteria. Some of the closed ended schemes that were launched by industry in past failed because of this. Our closed ended schemes are based on themes of value and growth which are methods of investing.

Launched right products at appropriate time

In 2007, while industry focused on infra theme despite the fact that we were managing the largest infra fund that time with best track record, we did not push the theme. Instead, we launched Focused Bluechip Equity Fund in May 2008. In August - September 2009, we introduced RIGHT Fund, a 10 year closed ended equity fund which is rated 5 star by Value Research and has been a top quartile performer. In 2012 we launched US Bluechip Equity Fund. All these products have given investors a very good performance.

In the middle of last year many stocks were available at bargain prices, especially those of small- and mid-cap companies,some with extremely strong balance sheets but a temporary blip showed up in their profit-and-loss accounts. The slowing economy saw profit growth of these companies slip and, therefore, the prices of their stocks not just went for a toss, but took a huge tumble. Spotting a turnaround in them whenever the economy rebounded, we were amongst the first to launch a series of closed-ended NFOsaround the value investing theme focusing on small- and mid-caps that were available quite inexpensive just before the cycle turned.

Thus, a closed-ended fund also allows product houses to tailor investments according to the opportunities in the market, with a play on the various themes that are current. Currently, with economic revival in the offing, growth strategy also has the potential to offer reasonable returns to investors over a 3-5 year period.

Better choice to fund managers

Such schemes allow a fund manager leeway in picking less-liquid stocks without worrying about redemptions and instead concentrating on building a good portfolio. Further, Most investors miss out on making gains, probably because they moved out too early. A closed-ended fund of three years or more ensures that investors stay invested for the entire duration of the fund.

Large investment team

The team size of 17 experienced people in the equity investment side gives us comfort that there are adequate resources for managing a large product suite.

Dividend option only

The uniqueness in terms of our product offering lies also in that fact that we have launched funds with dividend options only. Obviously when the next bear market happens when the funds are in existence, the NAV will fall but we are confident that the only dividend option would have given the investor a better experience.

Investment Experience

We believe that the strategy has seen initial success since the investor experience on the basis of returns and dividends declared has been very good.

Investment experience through our Recent NFOs(Dividend Pay-out for our Close-ended Schemes)

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Past performance may or may not be sustained in future. After payment of dividend the NAV has fallen to the extent of payout and distribution taxes if applicable.

Less than 1 year on absolute basis

NAV of the schemes are adjusted for dividend

WF : What more should we be doing to bring in more new investors into mutual funds and spread the "Tarakki" wider? Have there been any new initiatives on the investor front?

Amar : We believe that the Indian mutual fund industry is poised to grow with good fundamentals - good number of healthy asset management firms and robust regulations. The product is well built in terms of transparency, product positioning and performance, running on a relative return basis. A fund house that performs well will be in a position to gather investor's money for all categories of funds-be it equity, or debt.

Product Suite

It is also important to create a product suite that meets the latent needs of investors or ensures suitability. For example, a general tendency of Indian investors is to invest in equity when markets are surging high and pull out money when the markets are underperforming- which may not necessarily lead to the best investment experience.

For such investors, we have products like ICICI Prudential Balanced Advantage Fund, a fund that seeks to capture upside by increasing allocation to equity when the markets are declining, and protects downside by reducing exposure to equities when markets are rising- completely reverse of what retail investors normally do. This could also be a product for maiden investors to start off with, owing to Lower volatility and equity taxation. It is a suitable bet for investors with moderate risk profile as the portfolio is constructed keeping in mind the conservative risk profile of investors.

Investor-Friendly Communication

It is also important to create investor-friendly communication to educate the investor and help them take the right investment decisions in order to meet their financial goals. ICICI Prudential AMC has been very actively conducting initiatives on this front. The fund house has adopted various mediums - print, outdoor, digital, investor camps - to grow investor awareness and education.

Investor Awareness Camps

With support from an active panel of prominent and professional trainers, and by tie-ups with leading media houses the company is regularly conducting awareness camps. The content is structured based on the target audience. We have tie-ups with well-known financial experts for targeting specific groups. For example, we conducted Investor awareness camps for Army through Karthik Jhaveri (Transcend), Doctors, Lawyers, Journalists, corporate employees, colleges and institutes.

For instance, in smaller cities and towns, the content is elementary in nature and the company prefers to deliver these workshops in local languages. In case of the top 15 cities, the content includes technical aspects. These camps demystify the world of investments including mutual funds and address specific queries raised by investors.

In addition to these camps, the company has been extensively engaging the youth through social media platforms. There are regular posts on the Facebook page where investment concepts are explained in simple language, articles on investments and best practices are shared. The company also uses the direct mailers route to communicate with existing and prospective investors on simple information on concepts that may help them make informed investment decisions.

Investor Newsletter

Apart from our investor education initiatives, we have launched a monthly newsletter for investors - "IPRU Insights" in October 2014. We recognize that a dose of relevant insights on markets and investment concepts is crucial for investors to help them build a portfolio that can ensure achievement of financial goals. This newsletter is an endeavor to give relevant investment guidance and help investors make an informed decision about their investments for long term wealth creation.

The newsletter consists of several segments which include- product of the month (highlights a product from ICICI Prudential Stable, which we believe is relevant in the current scenario, fundaclear (concept based articles) tips to invest better, articles on relevant investment themes and a lot more. Currently, the newsletter has been launched in a digital version, which will reach the inbox of every investor. Going forward, we plan to take this initiative to the next level, by sending printed copies to our investors.



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