Boosting AUM

LIC Nomura is a trusted brand. We have a strong corporate governance framework. Our risk-management practices are one of the best in the industry. We have some unique product offerings such as LIC Nomura MF Unit Link Insurance Scheme (ULIS) and LIC Nomura MF G-Sec Long Term ETF, the first debt ETF in the industry.

Talking about the weaknesses, as compared to the peers, our AUM is currently small in size but we see this as an opportunity to grow in a sustainable manner and we are taking several steps to boost our AUM.

Challenges ahead

The biggest challenge for the industry this year will be to manage customer expectations in terms of stability in investment performance. Mutual funds are expected to constantly engage with end investors in this volatile period so that they are updated about market developments, inherent risks and possible short-term impact on their mutual fund portfolios in order to encourage them to remain invested and benefit from long-term investment opportunities.

From the investment perspective, managing the portfolio risk, particularly in a period of heightened volatility and uncertainty, remains one of the key challenges and focus areas for our AMC. We have taken proactive steps in this direction by strengthening our investment team in the areas of investment research and credit analysis. Disruptive technology and innovations have become the order of the day and all mutual funds need to keep pace with them. A greater focus on digital marketing is necessary.

Competition

The current operating environment in the AMC industry remains fairly competitive and offers a fair amount of diversity to investors. Mutual fund sponsors need to take a long-term view on the Indian capital market and invest in the business for the long term. Encouraging retail participation in mutual funds by penetrating in tier 2 and tier 3 cities is the key. Enhanced and focused investor-education initiatives are welcome steps. New entrants with unique offering and/or niche players are most welcome, who can bring new perspective and diversity.

Retail reach

We are expanding our retail presence and working very closely to ensure the same. Instead of reinventing the wheel, we are strongly leveraging the vast distribution strength of our parent, LIC. We are providing distribution channel partners the right environment and training so that they are mutually beneficial for both the organisation and the distributors, and the distributors are able to offer wider options of financial products to their clients. Currently, over 60 per cent of our retail AUM comes from B15 cities and the figure shows the seriousness of our efforts. We see it as a very big opportunity that penetration of mutual fund products is less than satisfactory in tier 2 and tier 3 cities.