Monday, September 10, 2007

DSP Merrill Lynch Mutual Fund Strategy and Growth

DSP Merrill Lynch MF bullish on asset growth

Saturday, Mar 27, 2004

RIDING the crest of renewed interest among retail investors to invest in equity funds, DSP Merrill Lynch Mutual Fund (DSPML MF) is confident of doubling the Assets Under Management (AUM) to nearly Rs 10,000 crore by the end of 2004 and wants to be counted among the top three funds in the next few years.

The fund is also eyeing the pension pie but would formulate its plans once the pension market is opened up for the private sector and the rules are in place. But its interest lies in managing the PF money rather than in floating pension schemes that qualify for IT rebate under Section 88 or Section 80 CCC (I) for the individual investors.

Speaking to Business Line on the occasion of the opening of the Coimbatore branch of the fund, Mr Alok Vajpeyi, President, DSP Merrill Lynch Fund Managers Ltd, Mumbai, said the fund was not shopping for acquisition of any mutual fund and would prefer to grow rather organically by increasing the value of AUM. He said the assets managed by the fund had crossed the Rs 5,450 crore mark at the end of February 2004 and the growth was substantial since the beginning of this year from around Rs 4,800 crore at the end of December 2003 to Rs 5,458.32 crore by the end last month. The target was to double the value of the assets at the end of 2004 compared to the previous year.

His confidence stemmed from several factors — the impressive performance of the fund in both debt and equity segments and the strong focus on marketing by opening more branches in the country. Coimbatore is the ninth city where the fund is having its own branch. It plans to open branches in Kochi, Lucknow, Kanpur, Ludhiana, Chandigarh, Jaipur, Baroda, Surat and Indore and expand its retail distribution network.

He said both the promoters of the mutual fund want it to be `in the top three' in terms of assets, performance and profitability. With the investment market on the equity side looking `robust', there has been significant improvement in the quality of assets and the value of equity and equity related assets has grown in percentage terms from around 7 per cent or 8 per cent of the total AUM a year back to 29 per cent now providing stability of corpus. Since much of the inflow has come from non-corporate investors, it meant long-term money and that was the `exciting proposition for the business going forward'. Though there was volatility in the market now, he expected that once the elections were over, the markets would rebound.

Answering a question as to whether there was enough quality paper available in India for such a large investment like pension money, Mr Alok Vajpeyi said `more so'. The market size was around $250 billion, the free float was increasing and a number of `fantastic companies' were coming to the market and he expected more market visits in the next few years because of PSU divestment, IPOs and companies on expansion mode coming to the market to garner funds. It was not the availability of quality paper but the mismatch between demand and supply that would an issue to consider.

When asked whether DSPML MF was planning any new launch, he said while he would not be precise about the type of schemes, `We will clearly launch funds' in the next couple of months. He said in the next six to nine months, the fund wanted to be in the forefront of bringing `innovative ideas' in terms of funds. With the relaxation in rules in investing abroad, there was enormous opportunity for funds that had collaborations with international players and since Merrill Lynch was one of the largest fund managers globally, it would have a number of products related to equity, debt, commodities etc.

Mr Saurabh Sonthalia, Head of Strategy and Business Development, DSPML Fund Managers Ltd, said there has been an increase in the participation of retail investors in equity related mutual fund schemes and the investors are becoming savvier as evidenced by the fact that when the Sensex peaked at 6,000+ level, the fund inflow slowed down only to pick up when the Sensex corrected itself to around 5,400 level.

Mr Vajpeyi, who headed the AMFI committee that recommended guidelines on uniform cut-off time for MF investments, termed the SEBI guidelines on uniform cut off time and time stamping on cheques given for investments as `great' and said the protection of investors was `paramount'. The MF industry has a fiduciary duty to the investors and all investors should share the gain or the loss.

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