Broker-backed AMCs look to get more of retail investor inflow

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Broker-backed asset management companies (AMCs) are widening their reach with banking tie-ups, more branches and sales presence, for more inflow from retail investors.

Retail participation in the mutual fund sector has been growing. Retail assets are now a fourth of funds’ assets under management (AUM) —Rs 5.3 trillion worth at end-March, 33 per cent higher than the previous year.

Typically, banks enter into tie-ups with AMCs when they have a longer track record. Motilal Oswal AMC, incorporated in 2008, is in the process of entering into such a tie-up with Citibank.

We are also in talks with IndusInd Bank and ICICI Bank,” said Akhil Chaturvedi, executive vice-president.

The fund house is also in the process of expanding its product offering, to get a higher share of individual investors’ inflow. It plans to launch a small-cap fund and an aggressive hybrid one. The latter, say industry insiders, was popular among retail investors last year.

Edelweiss AMC, which acquired JP Morgan’s fund business in 2016, is expanding branches and sales presence. Radhika Gupta, CEO, says the sales force handling the retail business would double to 90 people this year.

The fund house has started working with AU Small Finance Bank and is also in talks with two others in this segment, Ujjivan and Equitas. The aim in this financial year is to expand branches to 20, from 11 last month.

It has around 110,000 retail investors (investors who have less than Rs 5 lakh invested), which together account for 8 per cent of the AMC’s Rs 125 billion-AUM.

IIFL AMC, which has a small AUM of Rs 7.93 billion, says it is also getting serious about retail investor inflow. At present, it has only single-digit participation from individual investors, as a proportion of its AUM.

“We have activated our internal non-banking finance company and broking network to increase participation from retail investors.We recently tied up with six large banks, beside independent financial advisors and national distributors towards this end,” said Prashasta Seth, CEO.

'We are targeting10-15 per cent participation from retail investors as a proportion of our AUM by FY20.”