Stable market to draw in retail, says Birla SunLife AMC

Answering a query on whether there is money coming in from retail into the mutual fund industry, A Balasubramanian, CEO, Birla SunLife AMC says, for the industry as a whole there have been redemptions but for their own fund house they have seen net inflows.

He feels market stability will boost the confidence of distribution community, which in turn will improve retail participation. The retail coming-in depends on the distribution communities’ confidence to convince customers. Also read: How to construct and invest in MF portfolios Below is the verbatim transcript of his interview on CNBC-TV18 Q: What is the sense you all are getting at your company, this kind of highs will be held or do you think we will take a look in at that 6312 or that 21206 and turn back? A: According to us the momentum has been pretty strong and it is coming largely on account of few factors. One, there is a strong belief that more or less we have made the bottom from the way the gross domestic product (GDP) has been behaving, the way IIP has been behaving. So, overall for economic activities more or less we have seen the bottom of the cycle. That is one belief which is clearly emerging. Two, there are other drivers like global economy recovering and Indian interest rates. Q: Are you getting any money at all from retailers, you would know best since you are running a mutual fund? A: There are two ways of looking at it - one is absolute money that is coming in and second is what actually the reaction is when you go and make a pitch that equity as an asset class should come back? In the last five years equities have given somewhat muted returns from the investor’s point of view. At the same time there is a strong belief that the equity returns will come back may be in one go. So, if we go by that belief with the combination of some of the other factors what I mentioned about the belief and second is how some of the outcome towards the political outcome will also come, election outcome. So all those things now make people believe that there is a need to come back. Q: Are you seeing people come back? A: It is quite mixed for example if you have to talk about our fund house independent of the industry then yes we have seen net inflows but for industry as a whole we have seen redemptions. Having said that, it all depends on the fact how well or confident the distribution community is able to actually convince their customers. I would assume that may be on a one to five scale it was maybe at 2, six months back but today it could around 3.5. Maybe as the market stabilises, we will see it probably going to 4.