MF Industry : Emerging Trends , Outlook & IFA Business 27 th Aug 2014

Confidential

MF Industry : Emerging Trends , Outlook & IFA Business

27thAug 2014

Confidential Confidential : Strictly for Internal Circulation only

Global Overview : Mutual Funds

Global Scale & Depth of MFs is Inspiring !! India on the right track but long way to go ...currently only 0.5% on Global MF Industry , Equity Share < 30%

Size of Mutual Funds Globally !!

Growth of global MFs in last 20 Years

Contribution of Equities to global MF

Assets

Data Source -ICI Global Research Perspective Mar'14 Vol.1 No.1 . Data as on 2013


MF assets as % of GDP : A big indicator !

In Evolved markets , MF Assets have exceeded ~ 50% of countries GDP .

India still at ~5% has huge growth potential

Global Overview : Mutual Funds

Data Source -ICI Global Research Perspective Mar'14 Vol.1 No.1 . Data as on 2013


Year - 2004

Year-2014

50X - 49% CAGR

5X - 17% CAGR

30X - 42% CAGR

10X - 20% CAGR3X - 10% CAGR

Indian MF Industry- Long-term trendExpanding Horizons-Deepening Roots

Source- SEBI/AMFI (AUM-EOP-Jul’14)

Most of growth happened during 2004-2008 .. Last 5 years have been stagnant


Growth Phase of MF Industry

Investor G

rowth

(in C

rs) Total

AUM

Total AUM

Total AUM

Fixed Income

Fixed Income

Fixed Income

Equity AUM

Equity AUM

Source- SEBI/AMFI


After a decade of diverse phases , Industry on the fast-track 20 Lac Crs by 2020 : 2X (15% CAGR) much realistic expectation

Projections

Overall AUM Growth & Potential

10X - 25% C

AGR Gro

wth

Indian MF Industry- Long-term trend

Source- SEBI/AMFI


Flows in to Equity MFs : a Rejoinder ! Equity flows back on track .. Will be the biggest growth driver Recent flows similar to that of 2007-08 bull-run peak Considering this is just the beginning of a mammoth , long-term bull-run , 2 Lac Gross Sales annually seems realistic by 2020

Proj

ectio

ns


Source- SEBI/AMFI


Retail Burst & Growth in Investors Retail participation is picking up fast after a lull of almost 5 Years (Ref Investor Category

Trends) , Total Investors expected to touch 10 Crs by 2020 After 5X growth in last 10 years , 3X growth in next 5 years very realistic expectation

Projectio

ns


Source- SEBI/AMFI


Exponential Growth in SIPs & related Equity Inflows SIPs will remain the main tool for new customer acquisition -Goal-planning approach will help deepen existing book ATS moved from ~1000 to ~2500 in 10 years. Expected to touch ~5000 by 2020 . SIP-Equity Inflows expected to touch Rs.7500 Crs a month New SIPs Already touched 3 Lacs P.M (Peak was 4 Lacs P.M)

Proje

ctio

ns


Source- SEBI/AMFI

Projections


Indian MF Industry-Short Term trendEarly trends encouraging ! Industry poised for Quantum leap ! Gross & Net Sales Trend : Mar’13 to Jul’14

Tre

nd

Rev

ersa

l !

!

Equity moving fast from Net –ve last FY to Net +ve in Apr-Jun Qtr

Equity Avg. Gross Monthly Sales have more than tripled from ~3500 Crs for last FY to close to ~12,000 for Apr-Jul’14 Period

Last entire year sales covered in just 4 months this FY… Net Sales YTD is 13573 Vs -13158 for last FY

Source- SEBI/AMFI/CAMs MFDex


Indian MF Industry-Short Term trend

Source- SEBI/AMFI


IFA Share has marginally gone up over last 2 years from 37% to 40%

IFA Channel business-share Trend



IFA Business : Gross/Net Purchase Share

IFAs contribute 30% of Industry gross sales on Equity side and 15% on the Debt side

Concern - IFA Purchase Share (Gross/Net) very low compared to AUM Share Source- SEBI/AMFI/CAMs MFDex


IFA Channel business-share Trend



Industry is growing ! Are you ???IFA Business Model

ARN series upto 30,000 & ARN series 80,000+ dominate the space Re-iterates the fact that old IFAs who evolved with time & new

generation IFAs keep growing business



How to capitalise this growth…


Need for building dynamism..

IFA Business Model

17


Needs to get a facelift

Transformation required from current model & approach Possible with continues skill & efficiency enhancement

IFA Business Model


Be the “Banker” to your customer !!!! Be the “House-hold banker” to your customers

and provide 360 Degree Solution

IFA Business Model


Tapping salaried work-forces @ work-sitesIFA Business Model

Large number of salaried employees in India remain under-advised for their personal financial needs

Need to have structured approach to tap these potential customers Salary-deduction-based products can fuel the growth in this segment

Indian Railways 14 Lac Employees

Indian Armed Forces

13 Lac EmployeesSBI

2.22 Lac Employees

Infosys1.6 Lac Employees

Reliance Group1.2 Lac Employees

Tata Group4.25 Lac Employees

Wipro1.46 Lac Employees

PNB63,292 Employees


Our Business Enablers

What is RMF doing ……


Products @ Reliance MF


Need for technology adoption

Apr-Jul’14 saw New Customer addition improved in critical segments ,Retail (Affluent) & HNI Category fastest growing segments adding ~5 Lacs New Investors

Retail investor-base depleted over last 5 Yrs due to lack of service & advise !! Need to adopt technology for service and continuous engagement with customers



“Digital” driving financial services transactions

• IAMAI estimates >200 mn internet users in India which is 10 times more that population of Australia!!

• India to cross Internet user population of USA and will be the 2nd biggest Internet User country after China

% of urban population digitally equipped

% population < 2.4 lakh 2.4-7.2 lakh >7.2 lakh

44+ 1% 5% 16%35-44 4% 12% 23%25-34 7% 23% 32%18-24 14% 25% 46%

Annual household income (INR)

Mutual Funds, online penetration is only 4%

Online transactions are increasing with CAGR of 35%

MF target investor segment will have 20 mn. Digitally

enabled investors by 2016


Technology Adoption @ Reliance MF

Confidential Confidential : Strictly for Internal Circulation only 26

THE FIRST EVER ONLINE PORTAL FOR RMF PARTNERS

A major leap in our constant endeavor to enhance our product suite, service and over all Partner experienceA major leap in our constant endeavor to enhance our product suite, service and over all Partner experience

Now all of these can be addressed by a click of a button


Business Easy – Core Functionality

27


Distributor Initiated Transaction

4


The eLearning EDGE

Online mini courses Animated Courses Video Courses

Game based learning Quizzes / Assessments Page turners InductionInduction Case

studyCase study

MotivationalMotivational

Life skillsLife skills

Technical skills

Technical skills

Exclusive for partners registered on Business Easy Portal-www.rmfpartners.com

Exclusive for partners registered on Business Easy Portal-www.rmfpartners.com


Industry will grow….its time to multiply your efforts ! Overall external environment most

conducive for exponential growth

Investor will remain at the core of the business model

Expand Business Domain :- Deepening Relationship value from

existing customers Enhance business breadth by New

customer acquisition/ worksite models Continual Self-Enhancement is a must

Skill-set & Knowledge development Adopting best-in-class practices

Use of innovative mediums & approach For Investor Awareness For Sales /Online Conversion For ongoing communication &

Servicing

Synopsis


Believe in your convictionInspired by true story on 27th Dec 1975, the ‘Chasanala’ Coal mine in Bihar got flooded with water in which 572 workers were caught. It is an intensely dramatic film about the human heart; that as long as it beats with love and with hope, there will always be a dawn waiting at end of the blackest of nights and you must always believe in your own conviction !!

Paani yahi par hai ! Abhi dikh nahi raha… Jab

ayega tab tayar rehna !

Thank You


Significant increase in New SIP numbers since Feb’14 onwards .Growing SIP numbers indicate confidence of retail-investors coming back to equities

Current SIP Penetration to total MF Retail investor-base (3.5 Crs) is 15% . Just by increasing it to 50% will take us to 1.5 Cr live SIPs. That culminates to SIP inflows of ~7500 Crs Per Month / Rs.60,000 Crs Per Annum !!!

Indian MF Industry-Short Term trend

Confidential Confidential : Strictly for Internal Circulation only 34

1SIP Investor : 3 years

Long Term Revenue for 3 years Sustained and incremental growth Reduces the risk of investor dropout

1 Family = 4 SIPs

Acquisition Through SIP : Family Harvesting

Family Harvesting

IFA Business Model


IFA Business Potential

July 2014July 2014

July 2015July 2015

2X Activation

2X Activation

4X New SIPs

4X New SIPs

5X Inflows

5X Inflows

5X Inflows

5X Inflows

Just by doubling the number of active IFAs can enhance business exponentially

Back


Investor Category Trends- AUM

Mar’13 Mar’14

Apr-Jun’14 Qtr shows steady growth across Investor categories Retail (Affluent) & HNI Category are the fastest growing categories which is a very encouraging ,

especially after a stagnant last FY . HNI Category will be the next growth driver Corporates still dominate the MF Industry with almost 50% Share


Introducing First-of-its kind, a 360o Embedded Financial Advisory

Solution empowering investors with customized integrated financial

solutions to “Achieve Financial Goals through Right Planning”

Facilitating investments in a systematic manner by diversifying across

equity, debt and gold asset classes

Introducing First-of-its kind, a 360o Embedded Financial Advisory

Solution empowering investors with customized integrated financial

solutions to “Achieve Financial Goals through Right Planning”

Facilitating investments in a systematic manner by diversifying across

equity, debt and gold asset classes

Reliance Portfolio SIPReliance Portfolio SIP

Embedded Financial Planning Solution through SIPEmbedded Financial Planning Solution through SIP

Enjoy the benefit of diversifying across different asset classes in just Rs 5000!



Reliance Portfolio SIP –Answers for all your customer’s questionsReliance Portfolio SIP –Answers for all your customer’s questions

“Customer for Life” Concept Once your customer , Always your customer !!!

Your ARN hard-coded with the SIP Mandate

Long-term Revenue Opportunity from High Trail

Dynamically manage investments in all environments

Ability to charge fees to customer

A win win situation for you and your investors!



Reliance PSIP vs Single SIP

39

Investments Single Scheme SIP Portfolio SIP Approach to investments Product Oriented Goal Oriented

Assessing Individual's Risk Profile

Not available Available

Investments across Asset Classes

Not possible Possible

Financial Advisory Not possible PossibleCustomization of Portfolio Not possible Possible through Recommended

option or Investor's Choice optionDiversification Manual Automatic Meeting varied financial goals

One objective met through one scheme investment

Objectives such as Wealth Creation (equity), Regular Income(Debt), Idle Cash Management (Liquid) & Gold Accumulation (Gold)

Convinience of investing Multiple Mandates Single Mandate for multiple schemes

Documentation High Low Reallocation Not possible One can carry out the change in asset

allocation as well as change in the schemes

Account Statement Multiple scheme wise Single Consolidated Goal Oriented

Reliance PSIP - A New Thought to Asset Allocation


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MF Industry : Emerging Trends , Outlook & IFA Business 27 th Aug 2014

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