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46 INDIAN WEALTH MANAGEMENT - ISSUE 2, 2017
THOUGHT-LEADERSHIP
How to drive an evolution in
Indian mutual funds
Taking the spectacular recent growth in India’s mutual funds industry to the next level
requires a clear understanding of the very different needs of customers, according to top
product gatekeepers and asset management experts at a roundtable in Mumbai.
India’s mutual fund industry is develop-
ing at an impressive pace. But as it
moves into its next stage of evolution,
there is a pressing need to segment
clients clearly and offer products that
suit different needs.
This was among the views of senior
product gatekeepers at leading wealth
management firms as well as senior
executives of fund houses – at a recent
thought-leadership discussion by
Hubbis in Mumbai.
The growth of India’s mutual fund in-
dustry has been remarkable over the
past 10 years. It has gone from INR3.26
trillion (USD50 billion) in March 2007
to INR17.6 trillion (USD270 billion) as
of March 2017 – representing more
than a five-fold increase, according to
the Association of Mutual Funds in
India (AMFI).
There are a little over 40 fund houses
operating in the country, selling more
than 2,000 primary fund schemes. In-
dividual investors hold about 46% of
the overall assets.
Yet there is a dire lack of client segmen-
tation, according to senior market prac-
titioners. As a result, product manufac-
turers tend to look at what gatekeepers
refer to as ‘the lowest common de-
nominator’ when creating a product.
Qualified investors are typically HNIs
who tend to be more financially savvy
and experienced, so should understand
better what they are investing in.
TO SEGREGATE OR NOT
In fact, in a Hubbis survey in early 2017
of more than 125 leading professionals
in Indian wealth management, around
75% of respondents said they believe
“There is a pressing need [in India] to
segment clients clearly and offer products
that suit different needs.”
In many other markets, including Hong
Kong and Singapore, investors are seg-
regated as ‘accredited / qualified’ and
retail, which applies to everyone else.
that the segregation of investors into
retail and professional / accredited
would be a good step in taking the
market to the next level.