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MF Industry : Emerging Trends , Outlook & IFA Business 27 th Aug 2014

MF Industry : Emerging Trends , Outlook & IFA Business 27 th Aug 2014. USD 29 Trillion. Global Overview : Mutual Funds. Size of Mutual Funds Globally !!. Global Scale & Depth of MFs is Inspiring !!

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MF Industry : Emerging Trends , Outlook & IFA Business 27 th Aug 2014

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  1. MF Industry : Emerging Trends , Outlook & IFA Business 27thAug 2014

  2. USD 29 Trillion Global Overview : Mutual Funds Size of Mutual Funds Globally !! • Global Scale & Depth of MFs is Inspiring !! • India on the right track but long way to go ...currently only 0.5% on Global MF Industry , Equity Share < 30% Growth of global MFs in last 20 Years 7 Times Contribution of Equities to global MF Assets 50% Data Source -ICI Global Research Perspective Mar'14 Vol.1 No.1 . Data as on 2013

  3. Global Overview : Mutual Funds MF assets as % of GDP : A big indicator ! • In Evolved markets , MF Assets have exceeded ~ 50% of countries GDP . • India still at ~5% has huge growth potential Data Source -ICI Global Research Perspective Mar'14 Vol.1 No.1 . Data as on 2013

  4. Indian MF Industry- Long-term trend Expanding Horizons-Deepening Roots Year-2014 Year - 2004 3X - 10% CAGR 10X - 20% CAGR 30X - 42% CAGR 50X - 49% CAGR 5X - 17% CAGR Most of growth happened during 2004-2008 .. Last 5 years have been stagnant Source- SEBI/AMFI (AUM-EOP-Jul’14)

  5. Growth Phase of MF Industry Total AUM Investor Growth (in Crs) Fixed Income Total AUM Fixed Income Equity AUM Equity AUM Total AUM Fixed Income Source- SEBI/AMFI

  6. Indian MF Industry- Long-term trend Overall AUM Growth & Potential • After a decade of diverse phases , Industry on the fast-track • 20 Lac Crs by 2020 : 2X (15% CAGR) much realistic expectation Projections 10X - 25% CAGR Growth Source- SEBI/AMFI

  7. Indian MF Industry- Long-term trend Flows in to Equity MFs : a Rejoinder ! • Equity flows back on track .. Will be the biggest growth driver • Recent flows similar to that of 2007-08 bull-run peak • Considering this is just the beginning of a mammoth , long-term bull-run , 2 Lac Gross Sales annually seems realistic by 2020 Projections Source- SEBI/AMFI

  8. Indian MF Industry- Long-term trend Retail Burst & Growth in Investors • Retail participation is picking up fast after a lull of almost 5 Years (Ref Investor Category Trends) , Total Investors expected to touch 10 Crs by 2020 • After 5X growth in last 10 years , 3X growth in next 5 years very realistic expectation Projections Source- SEBI/AMFI

  9. Indian MF Industry- Long-term trend Projections Exponential Growth in SIPs & related Equity Inflows • SIPs will remain the main tool for new customer acquisition -Goal-planning approach will help deepen existing book • ATS moved from ~1000 to ~2500 in 10 years. Expected to touch ~5000 by 2020 . SIP-Equity Inflows expected to touch Rs.7500 Crs a month • New SIPs Already touched 3 Lacs P.M (Peak was 4 Lacs P.M) Projections Source- SEBI/AMFI

  10. Indian MF Industry-Short Term trend Early trends encouraging ! Industry poised for Quantum leap ! Gross & Net Sales Trend : Mar’13 to Jul’14 • Equity moving fast from Net –ve last FY to Net +ve in Apr-Jun Qtr • Equity Avg. Gross Monthly Sales have more than tripled from ~3500 Crs for last FY to close to ~12,000 for Apr-Jul’14 Period • Last entire year sales covered in just 4 months this FY… Net Sales YTD is 13573 Vs -13158 for last FY Trend Reversal !! Source- SEBI/AMFI/CAMs MFDex

  11. Indian MF Industry-Short Term trend Source- SEBI/AMFI

  12. IFA Channel business-share Trend • IFA Share has marginally gone up over last 2 years from 37% to 40% Source- SEBI/AMFI/CAMs MFDex

  13. IFA Business : Gross/Net Purchase Share • IFAs contribute 30% of Industry gross sales on Equity side and 15% on the Debt side • Concern - IFA Purchase Share (Gross/Net) very low compared to AUM Share Source- SEBI/AMFI/CAMs MFDex

  14. IFA Channel business-share Trend Source- SEBI/AMFI/CAMs MFDex

  15. IFA Business Model Industry is growing ! Are you ??? • ARN series upto 30,000 & ARN series 80,000+ dominate the space • Re-iterates the fact that old IFAs who evolved with time & new generation IFAs keep growing business Source- SEBI/AMFI/CAMs MFDex

  16. How to capitalise this growth…

  17. IFA Business Model Need for building dynamism..

  18. IFA Business Model Needs to get a facelift • Transformation required from current model & approach • Possible with continues skill & efficiency enhancement

  19. IFA Business Model Be the “Banker” to your customer !!!! • Be the “House-hold banker” to your customers and provide 360 Degree Solution

  20. IFA Business Model Tapping salaried work-forces @ work-sites Indian Railways 14 Lac Employees Indian Armed Forces 13 Lac Employees Tata Group 4.25 Lac Employees • Large number of salaried employees in India remain under-advised for their personal financial needs • Need to have structured approach to tap these potential customers • Salary-deduction-based products can fuel the growth in this segment SBI 2.22 Lac Employees Infosys 1.6 Lac Employees Wipro 1.46 Lac Employees Reliance Group 1.2 Lac Employees PNB 63,292 Employees

  21. Our Business EnablersWhat is RMF doing ……

  22. Products @ Reliance MF

  23. Need for technology adoption • Apr-Jul’14 saw New Customer addition improved in critical segments ,Retail (Affluent) & HNI Category fastest growing segments adding ~5 Lacs New Investors • Retail investor-base depleted over last 5 Yrs due to lack of service & advise !! • Need to adopt technology for service and continuous engagement with customers Source- SEBI/AMFI/CAMs MFDex

  24. “Digital” driving financial services transactions • IAMAI estimates >200 mn internet users in India which is 10 times more that population of Australia!! • India to cross Internet user population of USA and will be the 2nd biggest Internet User country after China MF target investor segment will have 20 mn. Digitally enabled investors by 2016 % of urban population digitally equipped Annual household income (INR) Mutual Funds, online penetration is only 4% Online transactions are increasing with CAGR of 35%

  25. Technology Adoption @ Reliance MF

  26. Now all of these can be addressed by a click of a button THE FIRST EVER ONLINE PORTAL FOR RMF PARTNERS A major leap in our constant endeavor to enhance our product suite, service and over all Partner experience

  27. Business Easy – Core Functionality

  28. Distributor Initiated Transaction SAVE MORE TIME & COST WITH OUR NEW DISTRIBUTOR INITIATED TRANSACTION. 4

  29. The eLearning EDGE Technical skills Life skills • Online mini courses • Animated Courses • Video Courses • Game based learning • Quizzes / Assessments • Page turners Induction Case study Motivational Exclusive for partners registered on Business Easy Portal-www.rmfpartners.com

  30. Synopsis Industry will grow….its time to multiply your efforts ! • Overall external environment most conducive for exponential growth • Investor will remain at the core of the business model • Expand Business Domain :- • Deepening Relationship value from existing customers • Enhance business breadth by New customer acquisition/ worksite models • Continual Self-Enhancement is a must • Skill-set & Knowledge development • Adopting best-in-class practices • Use of innovative mediums & approach • For Investor Awareness • For Sales /Online Conversion • For ongoing communication & Servicing

  31. Believe in your conviction Inspired by true story on 27th Dec 1975, the ‘Chasanala’ Coal mine in Bihar got flooded with water in which 572 workers were caught. It is an intensely dramatic film about the human heart; that as long as it beats with love and with hope, there will always be a dawn waiting at end of the blackest of nights and you must always believe in your own conviction !! Paaniyahi par hai ! Abhidikhnahiraha… Jab ayega tab tayarrehna !

  32. Thank You

  33. Indian MF Industry-Short Term trend • Significant increase in New SIP numbers since Feb’14 onwards .Growing SIP numbers indicate confidence of retail-investors coming back to equities • Current SIP Penetration to total MF Retail investor-base (3.5 Crs) is 15% . Just by increasing it to 50% will take us to 1.5 Cr live SIPs. That culminates to SIP inflows of ~7500 Crs Per Month / Rs.60,000 Crs Per Annum !!!

  34. IFA Business Model Acquisition Through SIP : Family Harvesting 1SIP Investor : 3 years • Long Term Revenue for 3 years • Sustained and incremental growth • Reduces the risk of investor dropout 1 Family = 4 SIPs Family Harvesting

  35. July 2014 Back IFA Business Potential 2X Activation 5X Inflows 4X New SIPs 5X Inflows July 2015 • Just by doubling the number of active IFAs can enhance business exponentially

  36. Investor Category Trends- AUM Mar’14 Mar’13 • Apr-Jun’14 Qtr shows steady growth across Investor categories • Retail (Affluent) & HNI Category are the fastest growing categories which is a very encouraging , especially after a stagnant last FY . HNI Category will be the next growth driver • Corporates still dominate the MF Industry with almost 50% Share

  37. Reliance Portfolio SIP Embedded Financial Planning Solution through SIP • Introducing First-of-its kind, a 360o Embedded Financial Advisory Solution empowering investors with customized integrated financial solutions to “Achieve Financial Goals through Right Planning” • Facilitating investments in a systematic manner by diversifying across equity, debt and gold asset classes Reliance Portfolio SIP Enjoy the benefit of diversifying across different asset classes in just Rs 5000!

  38. Reliance Portfolio SIP Reliance Portfolio SIP –Answers for all your customer’s questions “Customer for Life” Concept • Once your customer , Always your customer !!! • Your ARN hard-coded with the SIP Mandate • Long-term Revenue Opportunity from High Trail • Dynamically manage investments in all environments • Ability to charge fees to customer A win win situation for you and your investors!

  39. Reliance Portfolio SIP Reliance PSIP vs Single SIP Reliance PSIP - A New Thought to Asset Allocation

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