JP Morgan Asset Management is one of the latest foreign asset management companies to enter the Indian mutual fund industry. The domestic mutual fund industry, where 32 asset management companies (AMCs) own assets worth Rs 4.8 trillion, is yet to attract big money from household investors. Only 1.8 per cent of the household savings have come into the mutual fund sector. Krishnamurthy Vijayan, whole-time director & CEO of JP Morgan Asset Management, tells Rajesh Abraham that it is aiming at a market share of five per cent in equity schemes over a period of five years. Excerpts:
How's your first scheme, 'India Equity Fund', doing?
We launched the scheme in April this year. It is basically a large cap fund. The performance of the fund has been steady. We collected about Rs 800 crore through the new fund offer (NFO). We are getting about Rs 4 crore on a daily basis.
At present, the assets under management (AUM) of the fund are more than Rs 925 crore. A small portion of the rise in AUM is also due to the appreciation in net asset value (NAV).
Are there any more NFOs in the offing?
We are launching a liquid fund next month. Our plan is to have a suite of basic products in India. In addition to the two products, we will also have an ELSS and a small-cap fund, going forward. We are looking at launching two products a year. At the same time, we don't want to launch complex, or innovative-sounding products. Ours is a relatively mature investment strategy.
Explain your investment style.
We have four people in equity and three in fixed income divisions. On a daily basis, the fund managers here interact with JP Morgan AMC's Pacific Regional Group which is based in Hong Kong to understand what's happening in other markets.
We also have our own proprietary research. We don't believe in outsourcing research reports. Further, we visit 1,000 companies a year, though we may be investing in about 200-250 companies. We also visit companies on our negative list to see if we need to change our earlier opinion.
What do you make of the Securities and Exchange Board of India's proposal to prohibit entry loads on new schemes, if investors buy the product directly from the fund houses?
Most mutual funds sell the products through distributors. We have a contact program in 21 cities and seven branches all over the country. Our strategy is to sell the products through distributors.
Only savvy, or top-of-the-market investors buy the products directly. To reach out to the lower end of the income spectrum, we believe that the distributor-channel is an important component. In China, we have only four branches, but manage assets worth $30 billion.
Are you late in entering India. Can you become a significant player without a big network of branches?
When we entered China in 2003, we were the 24th player. In four years, we are the second largest equity player, and the second largest foreign player. Our target is to capture 5 per cent of the equity market share in five years.
