MFs will continue to be at forefront for investors, supported by growth of SIPs: A Balasubramanian

"We had, of course, after seeing multiple roadshows, we collected close to about 2,500 crores of AUM, I mean, in excess of 2,400 crores and coming from about 1,20,000 investors and coming from about 13,000 roughly is the pin code, which is nothing but a reflection of the wider participation coming from across the country," says A Balasubramanian, MD & CEO, Aditya Birla Sun Life AMC.


I just want to start by understanding a bit about this NFO and the role the entire distribution space has played in its success. What kind of contribution have we seen from digital partners?
A Balasubramanian: I think the NFO was a great success. We had the highest ever collection from any NFO we have conducted in recent years through the quant fund. It is a diversified equity fund that invests in a mix of large-cap, mid-cap, and small-cap stocks. The stock selections are driven by a model built using machine learning and the involvement of money managers.

The fund is being managed by Harish Krishnan, our co-CIO of equity, along with another expert who has a technology background. We had significant success after conducting multiple roadshows, collecting close to 2,500 crores of AUM, with contributions from over 1,20,000 investors and covering about 13,000 pin codes, reflecting widespread participation from across the country.

The broad participation came from the distribution community, including MFDs, organized channels, and digital channels, indicating widespread interest in the scheme. This reflects two things: first, investors' conviction in continuously investing in equity, and second, the mutual fund industry's commitment to developing products that suit customers while delivering the best possible investment experience. This combination adds value to distribution partners and investors alike, demonstrating our dedication to growing both the mutual fund industry and Aditya Birla Sun Life Mutual Fund's AUM, enabling us to serve more distribution partners and investors continuously. We just closed the NFO last week, and I am happy to share this success with all of you.

Now, let's discuss a recent regulatory development, which might not directly impact you but could be seen positively for asset managers and AMCs like yours. SEBI's move to impose uniform charges on discount brokers could normalize costs, possibly signaling an end to zero-cost brokerage. For asset managers, this might mean a steadier flow of funds as people realize that AMCs and wealth managers are the right way to participate in the market for the long term.
A Balasubramanian: Definitely, I think AMCs will play a significant role in meeting the growing needs of customers. A friend recently asked whether to invest directly in the equity market or through a mutual fund. The preference leaned towards mutual funds, not just for diversification but also for the positive long-term experience. Direct market participation often exposes investors to volatility.

SEBI's recent regulation on broking fees aims at bringing uniformity and transparency. Mutual funds have always been transparent and heavily regulated, offering clear disclosure of portfolio management strategies and risk management practices. From an investor's perspective, asset management through mutual funds remains a robust option. While direct investments can be a small part of their portfolio, the larger component should ideally be in mutual funds, given the advantages they offer. As you mentioned, mutual funds will continue to be at the forefront for investors, supported by the growth of SIPs.

How are you viewing the current valuations? Previously, several large AMCs felt that small-cap and mid-cap stocks were becoming overvalued. Has this sentiment changed? Are funds returning to the small-cap market?
A Balasubramanian: There has always been a debate on valuations. As a fund house, we have remained optimistic about the broader market, including large-cap, mid-cap, and small-cap stocks. Valuation should be considered on a stock-specific and sector-specific basis, presenting ongoing opportunities in the small and mid-cap space.

With the economy's growth becoming more widespread, we continue to focus on stock picking. Valuations are indeed a debatable point. For instance, debating high valuations at an index level of around 17,000 is logical. However, we must also consider the country's growth trajectory over the next five years. As long as growth expectations and supportive economic conditions, such as conducive interest rates, remain strong, valuations should not be a significant concern.

The market will always offer opportunities through sector rotations and undervalued companies. Therefore, it cannot be generalized that high valuations should deter investment. Individual decisions should be based on comfort with specific stocks and sectors.