Get All Access for $5/mo

'Mutual funds have seen a phenomenal increase' People are getting more and more comfortable with market linked returns, and are moving away from contextual savings and the trend is likely to continue, says R. S. Srinivas Jain, Executive Director & Head of Strategy, SBI Mutual fund in an exclusive interview with Entrepreneur India. Edited Excerpts

By Paromita Gupta

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

R. S. Srinivas Jain, Executive Director & Head of Strategy, SBI Mutual fund

What kind of growth have mutual fund investments have seen? What are the key trends?

There has been a phenomenal increase, and it is due to a couple of parameters like Covid and also moving of financialisation of assets as part of Covid and overall literacy levels going up. In the mutual fund industry, we ran a campaign 'Mutual fund sahi hain'. That has been a big attributor to visibility and understanding of the product. Another trend we are seeing is that people are getting more and more comfortable with market linked returns. They are moving away from contextual savings. And that trend will continue because of the potential to generate better returns than contextual savings. There is also digital penetration. There is easy access to products. Over 90% of mutual fund sales in India is digital. The bigger thing is fintech distribution, through advisory service and the whole revolution that has come in wealth management capability has been really helpful. Regulatory push has driven growth. Moreover, penetration is growing at an accelerated pace, but when you consider the potential the industry has and other traditional products, we are still miniscule.

If you are a lay investor with a marginal exposure to risk, then large cap oriented index based funds are best to get in

What measures are you taking to increase the growth?

Fintech entities are trying to educate people. Organically, we are also running campaigns to get more distributors in the industry. Primarily, the industry is a B2B2C kind of business, but regulation has pushed us to go more towards B2C, as they are more competitive and cheaper.

Which category is seeing bigger traction within the mutual fund segment?

Individual assets are still largely oriented towards equity, but institutions are mostly debt-oriented, largely on a shorter duration. The long duration funds have started coming now with ETFs and government bonds. But largely its equity and small cap funds are in a frenzy because they have done very well. Historically, it is the large and midcap category that have seen traction.

What kind of returns can they expect from mutual funds?

If you are able to generate between 200 to 300 basis points over and above the risk-free return, then the risk that you have taken is worth it. If returns are between 7 and 8%, then 2-3% over and above that should be an ideal long term average. But there are good years when you can have 15-16% and then there are years you can have negative. On an average, equity for a very long time (20 years) should be between 10-12%.

What portfolio of mutual funds do you suggest?

It's specific to individual risk profiles and risk appetite. If you are a lay investor with a marginal exposure to risk, then large cap oriented index based funds are best to get in. Once you are a sophisticated investor and know what your risks are, you have a lot of corpus available, you can take exposure in thematic funds, small caps.

Are we as a country, leaving our love for fixed deposits and moving towards mutual funds?

The trend is on but it is not settled. It is volatile. Everytime there is a market crash event, there is a tendency to go back to traditional assets. But that's also because people have not seen the longer cycles. The good news is it is structurally moving. Institutional investors, EPFOs are all looking at equity. And over a period of time, there will be more flexibility.

Do you think that overall mutual fund adoption is better than equity?

Yes and No. There are more demat accounts than mutual funds, but in terms of sticky assets or repeat assets, it's more of mutual funds. We have more than one crore customers investing in mutual funds every month.

In times to come, do you see businesses likely to be bigger investors in mutual funds?

We have bucketed all our products from one day to 10 years. Anybody can choose one or combination of products. Good thing that is happening on the fintech side is they are taking our products and custom building to individual requirements. They take a bouquet of 50 products, pick 5 based on your risk profile and sell it.

Paromita Gupta

Entrepreneur Staff

Features Writer with Entrepreneur India

Covering news and trends in AI and Metaverse segments. An avid book reader running her personal blog on the side. You may reach me at paromita@entrepreneurindia.com. 
Starting a Business

He Started a Business That Surpassed $100 Million in Under 3 Years: 'Consistent Revenue Right Out of the Gate'

Ryan Close, founder and CEO of Bartesian, had run a few small businesses on the side — but none of them excited him as much as the idea for a home cocktail machine.

News and Trends

Tech Burner's Anarc Smartwatch Achieves INR 3 Cr Sales with USD 1 Mn Investment

Anarc features a patented octagonal design by Thought Over Design and Seymourpowell, with a medical-grade stainless steel body. It includes advanced technology like a Hisilicon chipset, AMOLED display, and seven-day battery life.

Business Solutions

Get Down to Business with Lifetime Access to Microsoft Office 2021 for Mac for 70% Off

Unlock essential Office tools with a one-time purchase — ideal for entrepreneurs and professionals looking to streamline their workflow.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Marketing

4 Neuromarketing Hacks to Reach More People and Maximize Results

You don't need to be a neuroscientist or have a big budget to start upping your conversions immediately.

Science & Technology

How AI-Driven Knowledge Can Build a Smarter Culture in Your Organization

AI is changing the way we share knowledge and reducing gaps that hinder collaboration and productivity. Many questions have been raised about the impact full AI integration will have on team culture. For me, it represents empowerment and an opportunity to create a continuous learning environment.