1. What are the attributes which differentiates your fund house from other fund houses? What kind of benefits do you provide so that an investor would channelize his money into your fund?

A. We were the first to introduce the concept of mutual fund investment in India and take pride in proclaiming having taught the language of investment to the people of India.

e.g. We were the 1st to introduce ULIP way back in the year 1971. Similarly the 1st pure equity fund in India was UTI Mastershare which was launched by us in 1986. In that sense we have been a thought leader by introducing products which fulfil the financial needs of the customer.

Our focus has always been retail, and hence has always developed products catering to this segment of mutual fund investors. We have a product which satisfies the varied needs of every category of investors. To ensure proximity to our investors we have a wide distribution network which is spread across the length and breadth of the country. With more than 125 branches and our CR / CA network we are present in more than 460 districts of India. Our IFA network has more than 36,000 AMFI certified financial advisors spread across our country.

UTI Mutual fund offers its investors varied choices of schemes to choose from depending on his risk–return profile and investment horizon. Depending on his financial goals he can structure a customized portfolio. He can also diversify his investments across asset classes–equity, debt or gold by investing in our various products.

UTI mutual fund provides various facilities to its investors like Systematic Investment Plan- to invest in a disciplined manner, Systematic Transfer plan - to switch over to equity funds in a disciplined way, trigger facilities to realise profits or cut losses at preset levels. One can choose from various convenient modes to invest - like investing online without the hassles of paperwork or through bank ATMs.

Q. With the current economic slowdown and sluggish capital markets wherein investors have become cautious, what kind of investment did you execute to provide fair returns to your investors?

A. The fundhouse has been conservative in its investment decisions. Our conservative stance and experience acquired over different market cycles has enabled us to create wealth for our investors over long term. At opportune occasions we have booked profits and distributed the same by way of dividends. Since 2003 we have distributed more than Rs. 88 bn of wealth as dividends to our investors. Similarly you might like to know that as cheme like UTI Mastershare has consistently rewarded its investors every year with dividends.

Q. In your opinion from which type of a scheme/fund do you see maximum growth coming in?
A. It has been proven that equity assets have outperformed other asset classes over a period of time. Depending on one’s financial needs, one has to have a judicious mix of funds investing in different asset classes in one’s portfolio.

Q. How do you see the industry growing and developing in the next two years? What measures should the government and SEBI undertake on order to boost the growth of the industry?

A. Though the assets under management of the mf industry showed a decline due to the market conditions, there has been a growth of around 28% over the last 3 and 5 years. We expect it to grow further in the coming years. To ensure systematic growth of the industry, it is imperative that there exist uniform regulations across financial sectors for investment products and there is an equitable regulatory structure.

Penetration level of mutual funds in India is presently very low. If we need to propagate the advantages of investing through mfs we require initiatives at the policy level which would promote financial literacy. This could include introduction of modules even in school curriculums.

Today an investor has multiple choices. However most don’t make informed decisions while investing. It is essential that we partner with non-profit organizations including NGOs as well as media owners across mediums to promote investor awareness. This will help us penetrate to the hinterland of India.

Q. The current economic slowdown has impacted significantly the returns on investments. What do you think were the main factors which led to the slump in the industry and fall in the value of AUM?

A. The global meltdown had its repercussions in Indian equity markets too. Hence, the returns under domestic equity funds took a beating last year. More than equity it was the redemptions by corporates in the debt segment which hurt the industry hard. The drying up of liquidity in the months of October and November’08 led to huge redemptions. Retail investors however displayed a great deal of maturity and were investing at every decline. With the formation of a stable government, Indian markets have rallied and so have the equity assets under management. With global economies recovering and investment sentiment improving, we expect the retail participation to improve further in the days ahead.

Q. Has more exposure to debt funds provided a cushion to the fund houses? How long do you think returns from these funds would be sustained?

A. There is always a set of investors both individuals and non-individuals who find the wide variety of debt products appropriate to their risk-return profiles as well as their liquidity requirements. Therefore, debt funds will always be in favor. However, for a fund house to be profitable it would be the stickiness of AUM and the mix of assets in its portfolio that would matter rather than any particular asset class. Debt funds continue to give returns which are atleast 100-150 basis points more than the fixed income instruments of similar investment horizon.

Q. What is your stance on the position of the stock market in the next 12 months? Do you think the fund houses would increase their exposure subsequently to the equity fund in the near future?

A. It is the investors who decide which asset class to invest and add to the aums of mutual funds. Mutual fund would definitely put in efforts to garner more assets under equity as they are mutually beneficial to both AMCs and investors in the long run - to the investors by means of high returns and to AMCs by way of high fees. One has to evaluate returns of equity fund over a long investment horizon say 5 or 7 years and not on short investment horizon.

Q. Do you think rural market has huge growth potential for the mutual fund industry? What steps will you be take in order to reach to these markets?

A. Mutual funds have low penetration in rural and semi-urban markets and there is great potential for them to grow in these areas. We have expanded our branch network to tier II and III cities to reach out to more rural investors. These markets require a brick and mortar structure to expand and our financial centres support the efforts of our IFAs in promoting our schemes. Marketing tie-up with Post offices and PSU banks also enables us to reach out to investors in semi-urban and rural areas. People are comfortable in accessing and using the internet and emerging mediums like the mobile platforms for investments. We hope to enhance the usage of these mediums for transaction processing also in the near future.