The Indian asset management industry has seen a sense of cautious optimism with several reforms over the last six months and further reforms expected over the next few months. Speaking exclusively from the sidelines of the CII Mutual Fund Summit, Leo Puri, managing director of UTI AMC says that the volatility in the Indian market is much lesser than peers and he remains fairly optimistic on the mutual fund industry's growth outlook.
Below is the transcript of Leo Puri's interview with Manasvi Ghelani on CNBC-TV18.
Q: How do you see the Indian AMC business?
A: The industry should achieve from here on around a 20 percent year-on-year (YoY) growth which would be a very healthy level for us. So, that is what we are looking at and as you saw the background here is one of optimism, it is essentially saying that if as an industry we get our act together in terms of balancing between customer needs, investor needs, consumer protection and our own long-term sustainability, then we will get that balance right. That calls us to look at our own models for distribution, our fee structures, whether we should have advisors versus distributors, what we should do with customer service and of course what we should do to deepen investor education and literacy. So, it is a very positive message and we can sustain 20 percent growth from here. Q: One word on the Greece crisis, what are you making of it and its impact on an Indian economy like us?
A: Greece is in effect uncharted territory, so nobody knows where it is going to take us. It is clear that it will add in the short-term to volatility. I will just make two comments- one, India has to do everything we can to shore up our defenses up and the RBI has been stating that for some time. So, building up our reserves, the stabilization of our currency, that is all boding extremely well.
The second is we can’t guide what global institutions will do in terms of a certain amount of asset reallocation or a flight to safety. If that happens, we just have to our best to ride that through and use domestic institutions to stabilize if you like the extent we can but as I said earlier, the long-term commitment to India remains very strong. I don’t think investors are going to withdraw other than perhaps on a temporary basis from our markets even if the Greek crisis were to worsen, so I wouldn’t get unduly alarmed by it.
Q: We did talk about the domestic investments, the numbers spiking up in that sense for the industry as a whole and also towards equity but we have certain targets in the beginning of the year as far as the Sensex and Nifty go. Do you think considering the recent developments or the current events that are on ground, we will be able to match up to that and that is in the second half of the year we have probably bounced back and achieved those 9000-9500 numbers?
A: I would all those forecast rather than target in a sense, so they are never predictable how they are going to go. We are going to continue to see some near-term volatility, I wouldn’t want to pretend that we won’t but I am also fairly sure that what we are seeing right now is a period of three year growth for the Indian markets, so whether we will end up with a 8-10 percent growth or 12-15 percent growth remains in doubt but this will be another year of positive growth in Indian equity indices and over three years I am certain that we will continue to be in that mid-teen level year on year which is what the market has been generating over the last decade or so.
Q: He did mention about the increasing infusion in to the equity market, i fact the percentage has gone up but recent volatility- what do you make of this, is there anything to worry or what is your sense going forward as far as equity market goes?
A: We are seeing a certain amount of global rebalancing and markets are non-linear, in that sense you will continuously at any time see a certain amount of rebalancing.
The volatility Indian market has witnessed is much lower than markets elsewhere in the world at this point, if you look at markets like China or Brazil or indeed even Europe for that matter, volatility has been far higher. So, we are seeing a certain amount of rebalancing because of global events. I don’t think it detracts from the underlying confidence that long-term investors have in India and our own households are continuing to stay invested which shows a lot of maturity, so I would essentially ignore the current bout of volatility if you like if I were a household and keep looking at a three year perspective.
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