NEW DELHI: Even though the feel-good factor has returned to the Indian markets after the NDA government’s return to power with a landslide majority, non-banking financial companies (NBFC) remain an Achilles heel. With a spate of recent defaults, the gloom has begun to reach investors. Anuradha Shukla spoke to Radhika Gupta, CEO, Edelweiss AMC, who feels that the NBFC crisis is a short-term glitch. Gupta is largely upbeat about the future of the country’s mutual fund industry. Here are the excerpts from the conversation:
Will the NBFC crisis have any adverse impact on the mutual fund industry?
I do not feel that retail investors have anything to worry, especially about the mutual fund industry. The sector is very transparent and closely regulated. And not all NBFCs are bad.
I think rather than investors, the challenge will be more for the fund managers, who will be extra cautious and selective. Both the Reserve Bank of India and the government are working on it. I do not see much trouble for retail investors as such. A lot of money is coming back into the mid-cap and small-cap space, which is definitely encouraging.
When do you see this crisis being over?
It is very difficult to give a timeline. It can be anywhere from six months to nine months. But the current glitch is just short-term. If you talk about long-term, the prospect is brighter for the mutual fund industry. I have reasons to believe so. The common man’s awareness about mutual funds is much higher than it was, say 10 years back. People have started investing at young age and our mutual fund to GDP (Gross Domestic Product) ratio is still very low. So, there is still a lot of opportunity there.
What are the mutual fund categories where you see maximum growth?
I feel that retirement funds are one area that largely remains untapped. People are looking at retirement very differently and are willing to plan ahead. And it is not just about retiring at 60. There are many people who are planning their retirement at 45 or 50. The retirement option needs to be very flexible here and I see there is much scope here.
How do you view the growth of the company in the coming years? What is your Assets Under Management (AUM) target in the next couple of years?
We are beginning to look upbeat. Our product basket is quite good. We are selective with our products, balancing between B2B and B2C. Going forward, our AMC’s consolidated business will grow to about Rs 40,000 crore from Rs 19,500 crore at present.
Edelweiss Asset Management Company has been working as the asset manager for the proposed Debt ETF (exchange traded fund). How do you see this space?
I see it as a great opportunity to launch India’s maiden Debt ETF focused on CPSEs (Central Public Sector Enterprises) and PSUs (Public Sector Undertakings). Launching an innovative product is both challenging and exciting. The response has been very encouraging.