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WF: Congratulations on Reliance MF completing 20 years of wealth creation! What would you say have been some of the landmark achievements of Reliance MF over these two decades?
Sundeep: Thank you. I am truly humbled as we complete 20 years of what has been a fantastic journey for all us here at Reliance Mutual Fund. We made a small beginning in 1995, with the launch of two funds, Reliance Growth Fund and Reliance Vision Fund. We were managing 50 Crs from around 15,000 investors. Today, thanks to the unstinted support of our partners, trust of our investors and various stakeholders, we have emerged as India's largest asset management company, managing assets in excess of 2,50,000 Crs across mutual funds, retirement assets and offshore strategies, and serve about 55 Lakh investors and 46,000 distributors.
We are proud about our long-term wealth creation track record of our funds. These two Funds, Growth and Vision, have multiplied the original investments by 80 and 42 times respectively, generating a compounded return of 25% and 21%, significantly beating their benchmark.
In the last 20 years, we had taken several initiatives and brought out innovative offerings across products, services and other aspects of our business. Our learning academy EDGE, one of India's largest Financial Services Corporate University Offering Investor Awareness Programs and a host of Distributor Training Programs - Goal Planning Specialists, CFP, Digital Marketing, e-learning modules, Asia's first and only mutual fund-linked ATM card, free life insurance with systematic investments to insure the financial goal, India's first equity-oriented retirement fund are a few such initiatives.
For our partners, our marque initiative has been Trail Non-Stop, one of the biggest partner support programs whereby the family of the distributor partner would receive the last drawn trail commission in the event of the death of the partner before his normal working age - our commitment to our partners' families. We have developed a dedicated website for our distributors, which is powered by CRM, and loaded with several useful features to provide end-to-end support to our partners for managing their clients and employees.
WF: Your two flagship funds - Reliance Growth and Reliance Vision - are great examples of fantastic wealth creation. Beyond the numbers that are truly staggering, what are some of the important lessons that we as an industry can draw from the history and track record of your flagship funds?
Sundeep: The lesson is simple, and yet powerful. These funds are true examples of the power of compounding, the virtues of long-term investing and wealth creation. Investors who had stayed their course over the years, would have created wealth for themselves, while those who attempted to time the markets, and got swayed by the interim volatility would have lost out.
There is also an important lesson for the partners. If the partner had sourced Rs. 1 Lakh, and had advised the investor to stay over the years, would have earned a trail commission of Rs. 4 Lakh, assuming a trail commission of 1%. This Industry is clearly for the long-term for all the stakeholders.
WF: Nippon Life is increasing its stake in your firm to 49%. In what ways will your business change as a result of this deeper partnership with Nippon Life?
Sundeep: Nippon Life Insurance is Japan's largest private life insurance company managing assets of over 500 billion USD and have an experience of 140 years. Their experience and perspectives add a lot of strategic value to our business.
We have instituted formal exchange of best practices, and have been launching each other's investment propositions in both the countries - Indian products in Japan and Japanese products in India. Our equity and bond offerings in Japan have been met with enthusiastic response already.
WF: What in your view defines the DNA of Reliance MF, which you will seek to preserve and nurture even as your firm keeps evolving along with the market place?
Sundeep: My team here at Reliance has been a source of major strength for us. AMC business is people-centric, and we have consciously built a large, stable and experienced team over the years. Our leadership team, for instance, which includes me, Deputy CEO - Himanshu, CIO Equities - Sunil Singhania and CIO Fixed Income, Amit Tripathi have all been with the company for more than a decade, and have grown from within the system. That's true of many of my other colleagues in the Company. The team is extremely committed and passionate in their work, which I believe is the starting point in creating sustained value for our partners, investors and other stakeholders. Strong emphasis on processes, robust policies & framework for carrying out critical procedural aspects of the business are important areas we have focused on.
WF: What are the priorities that you will focus on over the next 5 years, to make the most of a business growth opportunity that most of us believe is available for the industry?
Sundeep: I am extremely positive about the prospects of the MF Industry. I had mentioned in public forums that the Industry assets will be at least 20 Lakh Crores by 2020. I called it 20-20. Now, I believe this figure will be reached by 2018. The growth will be led by individual investors, whose participation will pick up significantly over the years. The large number of individual investors would be required to be advised and serviced by distributors across the country. There is tremendous scope and opportunity for everyone in this Industry.
At Reliance Mutual Fund, we are consciously building our capability across various aspects of our business - investment management capabilities, robust processes, risk management & compliance practices, our reach and HR capabilities - to contribute and play a significant role in the ascent of the Industry.
WF: Many small distributors are less enthusiastic about business prospects, as they believe there is a clear dis-intermediation wave that may leave them behind, even as the MF industry marches ahead. There is also a fear that lower product costs will mean that only distributors with large scale will survive on margins that will only get thinner. What is your message to the IFA and the small distributor in this context?
Sundeep: A distributor who is large today, did not become large over-night. Most of the large distributors we have in the Industry today had been veterans, who had been pain-stakingly and diligently working over the years, sourcing clients, advising them and servicing them. Their assets today is an outcome of their hard work. As I had mentioned earlier, the Industry provides tremendous opportunities for everyone. However, the orientation clearly has to be long-term.
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