Mature investors now look at equities for long run: Bandhan MF chief

In a Q&A, Vishal Kapoor dwells on the fund house's plan to renew growth momentum following the acquisition of IDFC MF and re-branding exercise

With the acquisition of IDFC MF and re-branding now over, Bandhan MF will look for renewed growth momentum by investing in focus areas like expanding physical presence and leveraging technology, says Vishal Kapoor, CEO, Bandhan MF in an interview with Abhishek Kumar. Edited excerpts:

With the IDFC to Bandhan transition now complete, what would be key focus areas?

The new brand and shareholding we now have, provide the team with new energy and impetus to refocus our efforts. We are seeking commitment from shareholders to invest more heavily in growth areas, which includes expanding to new markets and also strengthening our presence in the existing ones. There are also plans to invest heavily in technology and leverage it for both distribution and tapping new product ideas. We also intend to invest more in fund managers and analysts. These plans will get into motion now that the branding is complete.

With Bandhan Bank already having a strong network, is Bandhan MF's direct presence really required?

Bandhan Bank is one channel for distribution just like other banking channels. Branches for mutual funds still hold importance as a local sales and service presence.

The equity team now has a new head in Manish Gunwani. Is there any change in the fund management processes to elevate scheme performances?

In equity fund management, processes play a very important role. It has to keep on evolving. Every market cycle has learnings and these learnings need to be incorporated in the process. This is where Manish Gunwani's expertise and experience will be valuable for us. Fund performances are cyclical in nature. At any given point of time, a fund house's certain schemes are seen doing well, others not. This is because a scheme's performance depends on which part of the market is moving in which direction. The idea is to remain grounded and keep improving.

IDFC MF has launched a unique offering in US Treasury Bond 0-1 Year FOF. Which investor segment does it target?

The product is meant for investors looking to build a corpus in dollars. This happens when an investor expects a foreign currency liability at some point of time in the future. This liability can be a child's education, foreign medical treatment or a vacation. There are alternatives to our product like the Liberalised Remittance Scheme (LRS) or a currency swap but there are complexities associated with these options. Moreover, remitting money through LRS will soon attract a 20 per cent tax collection at source, leading to blocking of a portion of capital. The MF route provides a convenient and low-cost option to such investors. Also, someone might have a view on the currency movement and would like to execute the information. Our product will come handy for such investors.

With the market not delivering any returns in the last 18 months, has it been difficult to bring money into equity funds?

The situation is actually contrary. Investors have shown a lot of maturity during this period by consistently putting more money into equity funds. This is not the case in such market phases previously. If you look at the systematic investment plan (SIP) data for the last year or so, the monthly collections have consistently gone up. Even in February, when the market was volatile, investors poured in a net of Rs 15,700 crore into equity funds. Investors have started seeing equity funds as a long term investment product meant to achieve a goal in future.

Debt funds continue to see outflows despite improved yields. When do you expect money to again start flowing in?

Money went out of debt funds post Covid due to high inflation and low interest rates. The prospects of rate hikes and the subsequent mark-to-market losses also made investors jittery. This forced investors to stay away from debt funds. Now that there's a belief in the market that most of the rate hike is behind us, investors may soon re-allocate money to debt.

What are your plans on the AIF and PMS front?

We do have licences for PMS and AIF. We run just one PMS strategy and plan to add a few more in coming years. The other plan is to have a presence in the GIFT city, which will allow us to service foreign investors.