Mr. T. S. Ramakrishnan joined LIC Mutual Fund Asset Management Limited as Managing Director & Chief Executive Officer on March 01, 2022. He has a very rich experience of over 34 years, at LIC and its subsidiaries/associate companies. Prior to this he was associated with this organization as Officer on Special Duty (OSD). He was also General Manager (Mumbai) at LIC Housing Finance Ltd and Regional Manager (Hyderabad) at LIC of India, Hyderabad. Mr. Ramakrishnan is a Bachelor of Commerce (Hons.) and PGDIM and has been awarded Fellowship from the prestigious Insurance Institute of India. Indian Economy & Market decided to piece together the past and the future initiatives of the fund house and Mr. T. S. Ramakrishnan, Managing Director & Chief Executive Officer obliged even though he took the reign just five months back.
“With combination of organic and inorganic growth we aim an AUM to Rs 50,000 crore by 2025-26”
“When you are disciplined enough to invest on a regular basis and patient enough to not get carried away by short term volatility, only then your portfolio gets the wings of consistent returns and compounding effect thereby leading to wealth creation. Retail investors have a tendency to sell in panic and buy during euphoria. It should be other way round. One should keep investing through SIP and increase the SIP amount during volatile or falling market.”
How do you plan to increase AUM in LICMF?
We have charted out a 5-year rolling plan. We endeavour to take our AUM to Rs 50,000 crore by 2025-26. We plan to achieve this with a combination of organic and inorganic growth. Sustainable and profitable growth is our objective. We will focus on our debt funds to build the volume while equity funds to strengthen the investor base and sustainability. Additionally, we aim to penetrate Tier 2, 3 and beyond cities to reach masses. I firmly believe in the long-term potential of the mutual fund industry on the back-drop of its under-penetration. Coupled with LIC’s strong brand presence across the country and rising significant retail investor interest, we will achieve this target without doubt.
Do you plan to launch any new schemes? What is the process that you follow before launching any portfolio?
Yes, indeed. In September 2021 we launched our NFO on Balanced Advantage Fund and were successful in raising over Rs 1200 crore. We would like to continue this momentum in 2022 as well. As a responsible fund house all our NFOs shall be launched with a single objective of offering right product to our investors at an appropriate time. We do consider investor preferences, suitability, market trends and our readiness before launching any fund. We have now launched Money Market Fund (Debt Scheme) and planning to launch Multi-cap Fund (Equity Scheme) soon. We are also planning a couple of thematic strategies for the Financial Year 2022-23.
After two years of spectacular return by equity mutual funds the first half of 2022 did not start on a good note? How do you see it panning out for the rest of the year?
Volatility is the essence of the markets. The only way to manage such volatility is by remaining invested for long run. The longer you remain invested, the lesser is the impact of short-term volatility. History suggests that equity is one of the few asset classes which has consistently generated returns beating inflation in a long run. So, the key is to remain invested and top up during corrections in the market.
With respect to market outlook, we believe India is in a sweet spot with growth coming back, credit growth showing positive signals, corporate profitability improving with rising demand and correcting commodity prices. Government high frequency data too shows optimism building up. However, fear of recession in the West may keep markets volatile. A strong macro coupled with inbound led demand growth should make India a preferable investment destination for domestic institutional investors, foreign institutional investors and retail investors.
In all these turbulence in the equity and debt market, latest SIP numbers are very heartening to note. Do you see any correlation in MF returns and these flows? Will it taper with fall in equity?
Indeed, it is very heartening to see consistent Systematic Investment Plan (SIP) flows in the industry. It only revalidates the conviction and potential of retail investors. India is far below the global average when it comes to mutual fund presentation. I expect this to continue, and we may see higher inflows as our per capita income increases. Our regulator and the industry players are leaving no stone unturned when it comes to creating awareness about mutual funds. Mutual fund is a simple and investors friendly investment product. Additionally, investment experience of mutual funds is making investors gradually move out of traditional investing of Fixed Deposits (FDs) and Gold and look for mutual funds. This is a good and encouraging trend.
In current market condition what asset allocation would you recommend to investors with moderate risk?
In the current market condition, the investors should look for Balanced Advantage Fund, wherein the asset allocation is taken care within the fund automatically aligning to the market conditions. Investors need not bother much about the asset allocation. Unlike plain Equity funds where once you invest, you might run the risk of liquidity should market fall, Balanced Advantage Fund is an unique product category which has an inbuilt liquidity mechanism to benefit from market volatility. Investor investing in such category need not worry about liquidity or timing the market, the fund strategy takes care of it.
What is your take on passive investing and should one have in his portfolio?
India’s economy is in growth path. If you recollect in the past when China was in the same phase, Chinese economy grew in double digit for over a decade. When the economy grows the underlying markets witness sharp up move. India is already growing faster than the rest of the world. This makes a clear case for equity index funds and ETFs. Investor who wants to participate in growing India may invest in passives funds. The popularity of passives funds has already been established in the developed economies and it is catching pace in India as well. Lower cost, easy monitoring and simplicity of the product is making investors turn towards passive funds. LIC Mutual Fund currently manages four ETFs and two Index Funds. We remain positive on these funds and are planning to come up with more passive funds to capture the potential of economic growth and rising investor affinity of these products.
What will be your advice to retail investor as of now?
Investing is like a marathon and not a sprint. I have framed a formula for financial independence. It goes like:
D x P = C x c (D times P equals C times lower case c) Where,
D stands for ‘Discipline’
P stands for ‘Patience’
C stands for ‘Compounding’
c stands for ‘consistency’
You need to have discipline and patience to achieve financial independence. When you are disciplined enough to invest on a regular basis and patient enough to not get carried away by short term volatility, only then your portfolio gets the wings of consistent returns and compounding effect thereby leading to wealth creation.
One should develop discipline to invest in regular investments and not get intimidated by short term volatility. Retail investors have a tendency to sell in panic and buy during euphoria. It should be other way round. One should keep investing through SIP and increase the SIP amount during volatile or falling market.
