At a time when the equities and debt markets were at their nadir in June, the Prudential-ICICI Asset Management Company launched three funds and garnered Rs 170 crore. Mark Tucker, chief executive of Prudential Corporation Asia (who overviews operations of the entire Asia-Pacific region), spoke to Salil J Panchal on the group's philosophy towards the Indian markets and the growth plans for the group.
How would you assess Prudential-ICICI AMC's performance in Indian markets so far?
It is very early days for the AMC here. However, in light of the market conditions, this was the top launch (through three funds) of a private sector mutual fund in tough market conditions. It gives the organisation that necessary edge to perform better in the coming months.
We hope, in the coming months, to occupy the leading slot in the Indian mutual fund industry, behind the Unit Trust of India. Once that is done, we will try and take out a share of UTI's market. Here we will need to look closely at the scale of operations for each organisation and its strengths and merits. Over the medium- to long-term, we will need to enhance our retail distribution network.
Despite the growth potential for the mutual fund industry, marketing of such funds seems to be found wanting in India...
It is a concern that understanding of mutual funds in India is not as per expectations. This is where the private sector needs to play its part and enhance distribution systems.
One has seen that the smooth working of the mutual funds industry takes time. Prudential has its strength in designing, developing and marketing new mutual fund products. We have seen the mutual fund industry pie at the Indian markets get bigger. As the private sector mutual fund industry develops, the consumers will become more sophisticated.
This is where the fund managers will have to guide the investors on whether the equities markets will turn around.
What is your assessment of the situation at the Asian markets?
Looking back at the region's markets over the year, we have seen three government systems change, four banking systems collapse and seven currencies slide and five countries facing their worst recession since World War II. It is a highly vulnerable period. A lot would depend on two factors _ the uncertainty surrounding the yen and the strength of the Chinese economy.
What is your exposure in the Asian markets?
We have an exposure of $12-13 billion in markets across the Asia-Pacific. We feel there are attractive valuations there and these are likely to get even more attractive.
Do you feel that, given the current levels of development, India could be looked at separately from the Asian region?
The Asian markets are in different stages of development except Hong Kong and Singapore. Each market would have to be looked at from the valuations there.
As far as India is concerned, we will look at the long-term valuations and apply the bottom-up and top-down approaches.
What would Prudential's policy be in relation to assured return schemes?
The issue will hinge on the consumer needs...there is a section of investors which is not wanting to take risks. There is a need to look at guaranteed products. The crucial issue which needs to be kept in mind by the fund manager is the assets backing those guaranteed schemes. That is why they move to the debt market to support that. It is true that the upside is lower but the risks are also present.
