Indian fund managers set for boom from ‘new generation’ of investors: Cerulli

Fund managers in India need to gear up to meet the needs of sophisticated and wealthy investors and a new generation of investors who will be more investment savvy, says Cerulli Associates in a new report.
India’s mutual funds industry is in a transition phase as far as its product offerings are concerned and will need to maintain a “delicate balance” to serve the needs of the less financially savvy, untapped set of investors in remote cities, and, at the same time, cater to the needs of an increasing number of high-net-worth-individuals, the report says.
The Cerulli survey of retail investors conducted for Asset Management in India 2017: Targeting the Next Growth Phase showed mutual funds are still the most widely used investment vehicles in India. Respondents cited long-term wealth creation as the top reason for investing in funds, followed by creating a retirement buffer and tax savings.

A significant number of respondents also showed an appetite for relatively riskier products, such as funds investing in the banking sector and mid-cap funds.

“We construe this as an early sign of a set of investors desiring products apart from those normally pitched to them,” the Cerulli report said.

‘Multi-asset products’

“A few Indian fund selectors want fund houses to come up with products that can beat market volatility or offer tax efficiency. True multi-asset products, which allocate across different asset categories, rather than balanced funds, which typically follow an equity-to-fixed-income allocation of 60:40, could be explored.

“Other product ideas that could be considered include smart beta and retirement products, as well as products based on environmental, social, and governance criteria.”

One in five retail investors are willing to explore investments in exchange-traded funds (ETFs), after the encouraging response to a follow-on offer earlier this year of the Reliance CPSE ETF in the region.

However, fund managers should take note of the different risk profiles of the investors, ranging from novices to the wealthy, while offering innovative products.

Further, more detailed information is contained in The Cerulli Edge – Asian Monthly Product Trends Edition, September 2017 issue.

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ABOUT THE AUTHOR
Gary Robinson
Deputy Editor, International Investment and Head of Video at Open Door Media Publishing. A fully qualified journalist and filmmaker with more than 20 years' financial services experience, both as journalist and originally as an IFA.

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