Chief executive officer Ved Prakash Chaturvedi of Tata TD Asset Management has guided his Rs 2,500-crore company up the high road as it registered over 200 per cent growth rate in the last financial year. With the stock markets showing ever-more signs of improving health after an extended spell in the doghouse, the prospects for Tata TD Asset Management look more than bright.

Tata TD Mutual Fund was in restructuring mode last year. What was the need?
The objective was to enable a long-term growth game plan and put our three-to-five year rolling plans into action. It was imperative to put our product delivery platforms and service technology in place to enable investor delight.

The entire range of servicing operations was revamped. We worked very closely with our distributors and partners, including banks, to acquaint them with our systems and services. We have offices in 14 centres across the country. Repositioning our existing product portfolio and launching new funds has been a crucial component of our restructuring exercise. The Tata Short Term Bond Fund mopped up Rs 100 crore in just its initial public offering (IPO). Likewise, the Tata Income Plus Fund IPO garnered about Rs 200 crore.

These figures are very encouraging, since both these funds were introduced during depressed capital market conditions. Recently, we launched the Tata Index Fund, an open-ended index fund with Sensex and Nifty plans. This has also been received extremely well. Our overall assets under management has increased from Rs 780 crore in July 2002 to Rs 2,275 crore as of end-July 2003. That’s a more than 200-per cent increase in one year.

How would you describe your product portfolio?
Some of our key products are among the top three performers in their respective segments. In the equity fund segment we have the Tata Pure Equity Fund, a bottom-up, diversified equity fund investing in companies that are profitable. The Tata Select Equity Fund concentrates on a few sectors that are doing well. Then there’s the Tata Equity Opportunities Fund, which has a more aggressive stock portfolio, and the Tata Tax Saving Fund, where the investor can stay invested for three years, while saving on taxes.

We have two balanced funds: the Tata Balanced Fund, a mix of debt and equity markets, and the Tata Young Citizen’s Fund, a lifecycle financial planning product for children. In the debt segment we have the Tata Short Term Bond Fund, the Tata Gilt Securities Fund, the Tata Income Plus Fund, the Tata Income Fund and the Tata Liquid Fund. We will remain a broad-spectrum and broad-market fund, servicing every investor group according to its needs.

In these tricky times, how should an investor plan his investment?
The avenues for investment depend on various factors, such as age, earning and risk-taking capacity, returns needed and the terms of investing. The thumb rule is that equity funds deliver higher returns over a longer period of time (five to ten years), but the risk is equally high. Debt funds traditionally invest in fixed-income securities, hence the risk is not so high. Returns here are moderate over a period of time.

That is a broad difference between the two funds. We generally advise people to invest in a mix of debt and equity. The ratio is simple: 100 minus your age will be the percentage invested in equity; the rest go into debt. This means that the older one gets, the lesser the exposure to equities.

Why choose mutual funds?
Mutual funds are exceptionally good investment vehicles to park your funds. There are four reasons for this. First, they are liquid, which means one can redeem units in two-three days. Second, for a very small amount of money an investor can buy into quality stocks. For example, for Rs 10,000 an investor gets a basket of the 30 best stocks, which is otherwise impossible at that price. Third, you are availing the services of a professional fund manager who studies the market and invests on your behalf.

Not every investor can be market savvy. And, lastly, typically funds operate in the interest of the investor, and there is a risk management in place to ensure this happens. These could be the reasons why even companies are looking at mutual funds.

How are you going to target potential investors?
We have initiated several efforts to enhance our overall family of investors. We are working through our distribution channels like banks and financial advisors to educate the potential investors about the need to save, and to show safe avenues to park funds. We are also cross-selling our products to our existing investors. Besides, one can also log onto our website to check what we call the ‘360-degree wealth planner’. This will help potential investors to discover and identify their investment requirements. Investors can also download forms and interface with us through the website. Also, we will be reaching them through our direct mail campaign and one-to-one interactions.

Where do you see the mutual fund industry a couple of years from now?
The greatest advantage of the mutual fund industry is the fact that an investor can fine-tune his or her risk-return appetite. For example, mutual funds offer the option of investing purely in debt or equity or a mix of the two.

The industry will keep growing at a rapid pace. With people increasingly understanding the convenience of mutual funds, it will become the preferred choice of investment. Market segmentation will get finer and there will be a large number of products. Indians may even be able to, through the mutual-fund route, invest in stocks abroad. Likewise, the international community may invest in Indian stocks.

Customer service will undergo a major shift. You could even invest through your ATM card in the future. The banking and mutual funds industries are similarly sized in many developed countries, but in India the mutual fund industry is about a tenth of the banking industry. The growth potential is immense.

What’s the Tata Mutual Fund agenda for the future?
Our motto remains to help people save wisely. We expect this to help us generate investor goodwill. To this end, we are also looking at some product launches, especially in the context of the equity markets. Maybe even a floating rate fund, a safe bet in a violate debt market. Post-working life financial planning, neglected in the past, is increasingly becoming a necessity. We plan to introduce products in this segment too.

Typically, a lot of mutual fund sales happen through friendly neighbourhood advisors. We are looking at working more intensively and extensively with such individual financial advisors. We will use education to equip them to sell not only our products, but also the concept of mutual funds. Also on the agenda is some amount of brand building through direct marketing, the Internet, media advertising and point of sale. Some of these steps have already been initiated. You will definitely see more of us in the coming years.

Uploaded on December 2, 2003