Mutual funds are one of the most transparent financial products, affirms Ravi Kumar Jha – MD & CEO of LIC Mutual Fund Asset Management Limited

Though Indian investors have been investing in mutual funds for decades, it is the wide acceptance of digital infrastructure which has provided a fillip to the growth of India’s mutual funds industry, says its Managing Director and CEO Ravi Kumar Jha

Can you share insights into your investment philosophy and how it guides your decisions at LIC Mutual Fund?
Our investment philosophy is focused on generating risk-adjusted returns in the long term. We generally invest in quality instruments and therein we try to protect capital downside while ensuring that the liquidity needs of our investors are taken care of. In our debt investments, we are mindful of the underlying risks. In equities, we follow a combination of top-down and bottom-up approaches. We select companies which have sound corporate governance practices.

Our research team does in-depth analysis before zeroing in on any investee company. Our investment philosophy also helps us to selectively invest in new-age companies which may show robust growth in the future. We have identified processes, guided by our investment philosophy, which help us to smoothly execute our investment strategies. This approach helps our investors to achieve their financial goals such as funding their children’s education, marriage, retirement planning, etc.

With your vast experience in various capacities, how do you plan to leverage this expertise in your current position? Any challenges and opportunities you foresee in the current financial landscape?
After working in core functions such as investments and sales and marketing for more than three decades with LIC of India, it is a privilege to lead a team of professionals at LIC Mutual Fund Asset Management Limited. We aim to galvanise our sales team and focus on our sales and marketing efforts going forward. We aim to increase our engagement with investors as well as distributors. Getting the mindshare of investors is a challenge for us given the plethora of schemes spread across various fund houses. This needs to be seen in the light of the opportunities ahead.

As per the data released by the Association of Mutual Funds in India (AMFI), the mutual fund industry’s assets under management have crossed Rs 50 lakh crore. At present, the AUM of the Indian mutual fund industry as a percentage of GDP stands at around 14 per cent compared to around 25 per cent for China and more than 100 per cent for developed markets such as the US. This shows that there is more potential for growth in the mutual funds industry in India.

As investors become more aware of the investments in mutual funds, and the possibility that these investments may generate capital appreciation in the long term, they tend to stay invested even during the volatile phases of the stock markets. A rising preference for systematic investment plans (SIP) indicates that investors are following a more disciplined approach to investing in mutual funds. This makes it a large opportunity for the asset management business in India.

How do you think the mutual fund industry in India has evolved over the years compared to its global peers, and what role does LIC Mutual Fund play in this evolution?
The Indian mutual fund industry is in a very nascent stage compared to its global peers. Though Indian investors have been investing in mutual funds for decades, it is the wide acceptance of digital infrastructure which has provided a fillip to the growth of India’s mutual funds industry. With more disposable incomes available and mutual funds penetrating beyond T-30 cities, retail participation in the form of SIPs has seen a quantum jump in the last few years. 

India’s mutual fund industry is expected to grow at a faster pace compared to its global peers in the foreseeable future. As a mid-sized asset management company, we wish to see significant growth in our AUM (assets under management) in the medium term. We plan to contribute to the overall growth of the mutual fund industry with our focus on making investors aware of the benefits of investing in mutual funds. We would like to engage continuously with them.

What is your perspective on the impact of regulatory changes on the mutual fund industry in India?
With the quantum of growth, the mutual fund industry has witnessed, it’s more paramount to ensure that the interest of the investors is always protected. The regulator has brought new changes from time to time depending on the market conditions to ensure that the sanctity of the market remains while the interest of the investors is protected. Mutual funds are one of the most transparent financial products available in the Indian markets. Being a responsible asset management company, we give high importance to regulatory norms and ethical business practices.

How do you plan to leverage technology and innovation in enhancing the services and products offered by LIC Mutual Fund?
LIC Mutual Fund as a fund house recognises the role of technology in the overall growth of business. In addition to our website, for the convenience of our investors, we have recently launched the LIC Mutual Fund investor mobile app that offers a holistic experience to investors as it covers a range of transactions – be it lump sum investments, systematic investment plan (SIP), systematic transfer plan (STP), systematic withdrawal plan (SWP) or redemptions.

It also offers other facilities such as updating bank details, and contact details and setting up payment mandates. We are also in the process of launching our LIC Mutual Fund distributor app for the benefit of mutual fund distributors. Our schemes are also available on many of our partners’ digital platforms. Our investments in the digital space should help our investors and distributors to transact from the comfort of their homes and offices.

If a new investor wants to invest Rs 1 lakh in mutual funds, what would be your advice to them? How does your fund house ensure transparency and trust with its investors
Investors ideally should make their investment decisions based on their asset allocation in the light of their financial goals and their risk profile. If an investor wants to invest for the short term, then he may consider investing in Debt Funds, the duration of which matches his investment timeframe. For example, an investor who is keen on investing for a 2-3 years' timeframe can invest in short-duration funds.

Further, an investor who is keen on investing for the long term – say, more than five years – may consider investing in equity funds or Hybrid Funds based on the risk appetite. We engage with our investors on a regular basis using digital means effectively. Regular updates on investments and market outlook, among other things, are shared along with our portfolio disclosures. We also send emails and text messages to our investors to keep them informed about their investments as well as regulatory developments. Investors can also approach the AMC by writing to us or by reaching our call centre.

Beyond your official role, what are your areas of interest and aspirations within the broader financial services industry?
I advocate the need to save. After the coronavirus pandemic, many individuals have realised the importance of savings. I have realised the importance of insurance in one’s life.  I always like to educate individuals, especially youngsters, to buy adequate life and health insurance. Our society needs dedicated efforts to spread awareness around personal finance. I do my bit by talking to many friends, and family as well as at various forums. I believe that a holistic approach to investing money can make our lives better in the long term.