UTI Mutual Fund, the country’s oldest fund house, has attained an asset base of over Rs one lakh crore with about one crore investor accounts and is now targetting leadership positions across various segments.
Besides expanding its presence to smaller cities, the fund house is also looking to bolster its offerings in terms of pension and offshore market products, UTI Asset Management Company’s Managing Director Leo Puri said.
UTI AMC, which runs UTI Mutual Fund, is also looking to launch an Initial Public Offer (IPO) to become the country’s first asset management company to go public.
Puri, a dual Masters degree holder from Oxford and Cambridge University of the UK, said UTI Mutual Fund has embarked on a robust growth path and is looking at leadership positions across various product segments.
“We have an old legacy and that legacy was to democratise access to the capital markets. That mandate remains very relevant even today as we continue to have a very low penetration of 2-3 per cent of household participation despite all these efforts.
“Today we (UTI Mutual Fund) have folios of about one crore. The total industry is about 4.5 crore, so we have around 20 odd per cent of the total folios of the industry. But even if we double that, it would not be a very big penetration,” Puri told PTI.
UTI AMC was carved out of the erstwhile Unit Trust of India as a mutual fund in February 2003 and is promoted by the four of the largest public sector financial institutions as sponsors — SBI, LIC, Bank of Baroda and Punjab National Bank.
These four each hold 18.5 per cent stake in UTI Asset Management Company, while US-based fund house T Rowe Price has acquired a 26 per cent stake.
Puri, who has been heading UTI Mutual Fund for about two years now, was earlier Managing Director at global private equity giant Warburg Pincus. He has previously also worked as Director and Senior Advisor with McKinsey.
Asked about the next target after crossing Rs 1 lakh crore in terms of asset under management and one-crore mark in terms of investor folios, Puri said, “Our thought is now turning to from where the next one crore will quickly come from.
Puri said it is expanding its base through expansion into smaller cities and new product segments, it is capturing institutional flows and pensions, and also tapping the offshore markets looking at Indian assets.
“We see very significant growth opportunities and we are very excited,” he said.
Puri said UTI MF is targetting leadership positions across all segments in the asset management business.
“We believe we have an opportunity to retain a leadership role and in many ways our presence is still very strong today.
“If you look at the number of investors and various other factors, whatever challenges the institution may have faced in the last decade, we feel we are on front foot now, as opposed to the back foot, and certainly over the next 3-4 years we are quite clear about what we need to do,” he added.
Puri said UTI MF is investing quite heavily in physical distribution, because despite the digital platforms, physical presence is required to reach out to the investors.
“We are opening new centres. We had announced 100 new centres at the time of our 50th anniversary and we have almost achieved that,” he said.
Puri further said there is a need for new products for more marginalised households.
“Financial inclusion for our kind of products (mutual funds) is different from the same for the banks. We need people who can sustain savings, who will have surplus or disposable income, or post-tax savings that they can put to work. That market is largely untapped.
“We have a number of schemes with state governments. We also have pension schemes. Those kinds of products we can push very hard, because they are low-cost, have moderate risks and are well regulated.
“These are basically products with secure risk and low cost. They will find favour with this segment. That is what we have to focus on,” he said.
Puri said the pension market itself is a very big opportunity for players like UTI MF.
“We have now been mandated by EPFO, we participate in postal life insurance, in NPS and will also look for mandate from private trusts who will follow EPFO into markets. We will bid and participate in those segments. There is a very big opportunity ahead for us,” he said.
“So, if you ask me where will we be in the next 3-4 years from now, I will say we hope to be the leader in the pension segment as well. Then, we also see a growing interest in India from foreign investors. We want to be present in wherever Indian assets are bought and sold.
“Even in the past, UTI has been a pioneer in the offshore markets and we are refreshing that. In 1980s, we were the pioneer, but then somewhere perhaps we did not retain all that focus,” Puri said, while adding that the fund house is focussing again on this segment.
UTI has launched a new fixed income fund which is now the largest India-focussed fund and is bigger than even funds of some large global banks in this segment.
“It is the biggest Indian fixed income fund in an offshore market,” Puri said, while adding that UTI has also launched a new equity fund which is a European regulated product.