Sikka: Growth focus
Dubai, Oct. 14: Anil Ambani’s Reliance Capital Asset Management will focus on innovative products and smaller cities to capture a bigger share of the mutual funds business, which is expected to grow to Rs 20 trillion by 2020.
At present, the country’s second largest mutual fund house in assets has 12 per cent share of the Rs 7 trillion industry.
“Growth in the mutual fund sector would be possible on the back of changing savings pattern of retail investors and higher participation from smaller towns and cities,” Sundeep Sikka, president and CEO of Reliance Capital Asset Management, told The Telegraph.
In the next 5-10 years, household savings patterns are expected to shift from bank deposits and physical assets such as gold to mutual funds, including exchange traded funds.
“Changes in regulatory environment, which allows mutual fund companies to manage pension and insurance assets, could add another Rs 5 lakh crore to Rs 7 lakh crore in the next 5-10 years in the asset management industry,” said Sikka.
At present, mutual funds form only 3 per cent of the total household savings compared with 56 per cent for banks and 20 per cent in life insurance.
“Growth would further be amplified because of increased participation from smaller locations,” Sikka said.
Reliance Mutual Fund is planning to be present in every district of India within the next four years.
“RMF market share increases as we go deeper into tier 3 and 4 cities and that will be our focus area for retail penetration,” said Himanshu Vyapak, deputy CEO, Reliance Capital Asset Management.
Earlier, Sebi chairman U.K. Sinha had said the industry had to go beyond the top 15 cities for “good and sustained business”.
Reliance Capital is also looking at expanding its retail customer base from 7 million to over 10 million in the next 5-7 years through investor awareness as well as the launch of simple products such as Portfolio SIP.