'Not AUM rank, market penetration is priority'

Q&A/ U K Sinha

UK Sinha, chairman and managing director, UTI AMC, who is steering the organisation in an highly competitive environment, tells Ashutosh Joshi and Rajesh Abraham why he is not worried about monthly AUM rankings and also shares with them his long-term goals.

According to data, UTI AMC slipped to No. 2 position...

I view this as a sign of market maturity. In any market, there is always one entity which has 70-80 per cent share. As it matures, there emerge three-four entities, which corner 50 per cent of the market.

Had UTI not been bifurcated, we may have had Rs 80,000-1,00,000 crore assets. A majority of the schemes that went to SUUTI were wound up. So, when you are talking about No. 1 position you should remember that we are only a four-year-old company.

Today, we have 30-32 players. I won't be surprised if the number increases to 40 or 50. Basically, my message is: I'm not worried about who is No. 1 or No. 2 in a given month. My concern is how much more penetration I can have in the remote corners of the country.

Is the trust in the UTI brand still there?

When I'm saying that we will win the trust of retail investors, it is not a one-off thing. It is a constant process. We have succeeded in that to a great extent. You cannot grow three times without the trust of investors. The way other funds are able to gain assets and the way we are gaining assets are entirely different.

For the major part of the industry, more than three-fourths of players' assets are coming from top eight cities. In our case, more than half of the assets are coming from outside the top 20 cities. This UTI is entirely different from the old UTI. This is not owned by the government. This UTI provides market-based compensation. The board takes all the decisions. Our executives have well laid out delegation of powers.

What are you doing to build expertise in new assets such as gold ETFs and realty funds?

We will be ahead of the industry. We are launching the gold ETF on Monday, we are building expertise in infrastructure by recruiting eminent sector experts. We have a good team for derivatives and a good team for developing new products.

Pension is another big area. A person who retires at the age of 60 is likely to live for another 18 years. In the country, 87 per cent of the population has no pension plan. UTI has taken a major initiative in the pension space. A total of 90,000 people have our micro-pension scheme.

But insurance companies offer similar products and get people attracted...

There are three clear-cut regulatory arbitrage in the industry. For instance, mutual funds cannot use a celebrity. Next is about assured returns and guarantees.

Mutual funds cannot assure a guarantee, while others can for the same kind of products. The fine-print is difficult for people to understand. People are not sure what is guaranteed "" the capital, 2 per cent returns or 100 per cent returns?