LIC Mutual Fund, which despite having the huge financial strength, brand salience and reach of its parents LIC and Nomura of Japan, has been struggling for long to make to the big league, is on an aggressive growth path. Ravi Kumar Jha, chief executive of LIC MF, tells TNIE’s Benn Kochuveedan that by the end of the current fiscal the fund house is eyeing an asset under management (AUM) of `1 lakh crore but would be perfectly happy if they touch `75,000-80,000 crore.
What is the trigger that you think is missing despite growth acceleration?
Probably we’ve not been focused on ourselves. But if you look at our growth in the past two-and-half years, you would see that we have grown fantastically. From an AUM of `16,526 crore in March 2023, we are at very close to `46,000 crore now. And that’s a growth rate of 170%.
So, what is the target for this March?
After thorough discussions and planning we’ve given ourselves an audacious target of achieving the `1 trillion AUM by March 2026. If we are able to touch near `1 trillion also we would be happy as that would reflect the trust and brand saliency of our parent. As of March 2024 we were just `27,733 crore, by March 2025 we were at `33,854 crore and now we are close to `46,000 crore.
How confident are you of achieving the target given that you’ve only four months?
I know the `1 trillion is an audacious target but we are pushing ourselves very hard to achieve this. If we could hit `75,000-80,000 crore also, it will appear to be very, very good. Our sales team and the teams from our equity and other main schemes are also confident of making it big.
If you look at the lack of focus which you attributed as the reason for the poor show, is it not mainly because of the inconsistency in the top management as LIC keeps changing the CEO every third year? Does not such short-term leadership contribute to the lack of interest in delivery because whether you perform or not you are not there for a second term?
Need not be. As I have already said, we’ve not been focusing on ourselves, which is to say not focusing on return on our funds, was the main reason for our not so good track record. But as our AUM growth shows now, that’s behind us.
As far I understand, in the mutual fund industry the main point is returns and everything else is secondary. Be it equity or debt, returns should be good. If that’s good, that’s the engine of growth. That means you need really brilliant fund managers and a very strong sales team. Thankfully, we’ve all that in place now who can continue to generate good returns. If that happens, there is automatic pull factor which will grow the AUM.
So the frequent change (every third year a new CEO) in the management has not been the drag on your performance...
I don't think so. Because, since we are a private entity, people come and go. Attrition rate is very high in this industry. Today you are with me, tomorrow you may leave me and you go to some other AMC who will be giving you better pay, better package. So people are always being hunted by other AMCs.
But does not having a CEO for a longer term give consistency in demand, in target, in performance?
I agree with you to some extent. But the main reason as I told you is about fund performance. The quality of fund performance has to be one of the bests. And there should be consistent good returns.
That means you did not have good fund managers in the past?
See, fund managers are also human beings. They take bet on certain stocks, sectors, thinking that that will perform. Sometimes it performs, sometimes it doesn't perform. In equity funds, that volatility keeps on coming. Today I will be number one, tomorrow you can be number two and day after someone can be number one.
What we insist now is that as against the old investment theory of being product-centric, at LIC MF we are process-centric. We believe in process centricity- we follow thorough processes before launching a new fund or investing in a company.
How you have also recently started offering the Chota SIPs. How has it been taken by the market?
In fact, we launched ‘pocket SIP’ (systematic investment plan) in October last year and has been doing well with 1,25,000 and an AUM of Rs 123 crore. Our entry cost is very low at Rs 100 for daily, and Rs 200 for monthly. It is much below the Chota SIP segment where the minimum is Rs 250. Our SIP book is around Rs 4,000 crore.
SIP is the most powerful wealth engine that creates a compounding effect if you remain invested there for a longer period.