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It has been a rough 2013 for the mutual fund sector. For Arvind Sethi, managing director and chief executive of Tata Mutual Fund, who took over reins a few months ago, the challenge has been twofold. While on the one hand he has been working hard to clearly position their funds in topsy-turvy market conditions, he has also been fine-tuning strategy and their role in the financial industry. He talks to Puneet Wadhwa. Edited excerpts:
It has been nearly six months since you took over the reins at Tata Mutual Fund. How has the journey been this far and what steps have you taken to revive the business?
I was new to the industry and my first year has been one of tremendous learning
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The main steps we have taken are to provide a sharp focus to our fund management and to our sales process. On the fund management side, we got a new chief investment officer (CIO) and have been working hard to clearly position our funds and evolve thinking amongst our fund managers, which will hopefully bring about a greater consistency in returns. I am glad to say the results are already being noticed by the market, especially in our debt funds.
What more can we expect from Tata MF over the next six to 12 months in terms of scheme launches, given the road ahead for the economy and the markets?
Amongst our new launches this year was a dual advantage fund and we have also launched the Tata Rental Opportunities Fund in the alternative investments category. This is different from the usual real estate funds because it will invest in commercial properties which are mostly occupied, as opposed to the other real estate funds which invest in properties which are under development.
We are planning a fund which will invest in global equity markets to provide international exposure to our investors. But by and large, our suite of equity and debt funds is more or less complete. These funds should be able to give investors the investments they need to meet their asset allocation needs, irrespective of the macroeconomic changes that lie ahead.
Besides backing from a strong ‘Tata’ brand, where do you think your strengths lie? What about the weaknesses/ shortcomings? Have you reviewed or developed a strategic plan to address these issues?
We have thought deeply about our strategy and even more fundamentally about our role in the financial industry. We are the only asset management company (AMC) with the Tata name and needless to say that it is a huge plus.
We are leveraging the ‘trust’ which the name evokes by living and breathing it every day in everything we do – to managing funds, to our sales process, to seeing how we can build long-term relationships with our distributors, to educate investors and to delighting customers with our service. Much of this is work in progress and I hope the actions of all our team will speak much louder than any words I could say.
When it comes to finance, especially mutual funds, the ‘Tata’ brand doesn’t seem to resonate or connect with investors. What are you doing to change this perception? How have the assets under management (AUM) been since you took over and what are the strategies?
The main method by which we will deal with ‘perceptions’ is by demonstrating results and nothing can be more effective than that. We are also communicating learning about mutual funds and finance in more interesting ways. You will see more visibility of the Tata Mutual Fund brand in the paid and earned media. During the year since I arrived, our AUM is marginally higher but I would use that number to judge us one year down the road.
Since you joined, the fund house has seen exits and entry of a lot of people, including senior officials. Is the churn not affecting sentiment among your investors?
Not at all but some of the changes have been by design. We are building a long-term business and would like to do things correctly. We have an excellent team and they need to be given time to prove themselves.
You had once said the fund house was so caught up in catching the “flavour of the month”, that it ignored to invest in fund management capabilities. Has anything changed by now that can restore investor confidence in the AMC?
Definitely. We have a reasonably complete product range in both equity and debt and launch products only if they pass the test of being useful and relevant to investors. And needless to say that managing funds is a one of the main focus of our energies because if we don’t do that well then what are we there for.
How do you see the mutual fund sector panning out over the next couple of years given that we could be staring at tougher economic conditions with minimal or no retail investor participation in the equity markets? How does Tata AMC plan to tide over these conditions?
We have a long-term view. We genuinely believe that mutual funds are the best way for people to invest. For a modest fee investors are able to pool funds, have professionals manage them, experts advise them, an excellent Sebi-regulated governance structure to protect them and terrific transparency and liquidity.
If investors have not yet understood these benefits, it is our task to demonstrate the advantages to them. As incomes increase, as the fascination with real estate wanes and as money moves into financial assets, we firmly believe that mutual funds will get their fair share. We are not here only for the next two years but forever.
