LIC MF eyes over 30% growth in biz this year

LIC Mutual Fund is looking at increasing its penetration into the non-traditional markets to grow its assets under management (AUM) to around ~32,000 crore by March from ~25,000 crore last March, despite a tepid show in the first quarter.

To achieve this high level of growth of around 32 per cent, the fund house is banking on growing its business from beyond top-15 cities or B-15 cities.

The fund house saw only a 12 per cent growth in its total annual average AUM in the first quarter of the current financial year at ~20,000 crore.

The 17th largest fund house company which has a market share of only 1.17 per cent, had achieved quarterly average AUM of ~21,450 crore in FY17. Its quarterly average AUM rose to over ~22,000 crore in first quarter.

“While the industry grew 32 per cent in FY17, we have grew 64 per cent,” its newly appointed chief executive Raj Kumar told PTI on Friday.

“In the current fiancial year, the industry is expected to grow 20-25 per cent. But we are looking at growing the AUM by at least 32 per cent, and take the total AUM to ~32,000 crore by the end of the financial year,” he said.

Close to 47 per cent of its business come from Maharashtra, Gujarat and Goa; 5.7 per cent come from individual basis from the national capital region and Bengal. All other states chip in a mere 1 per cent of volume on an individual basis.

Therefore, the fund house is relying on the B-15 cities through SIP route to increase Insurance behemoth LIC has bought an additional stake of over 3 per cent in public sector Bank of India for about ~450.88 crore.

The Bank of India sold 33,500,000 shares equivalent to over 3.12 per cent equity to LIC through an open market purchase on a preference shares allotment on June 28, volumes.

The industry is getting 15 per cent of its business from B-15 cities now, whereas in case of LIC MF, it stands at 16 percent. “We need to go to B15 cities and that too by adopting the SIP route,” Raj Kumar said, adding its active total folio counts at 3.37 lakh.

“We plan to make it to 3.6 lakh by the end of the financial year,” he said. Similarly, under systemic investment plans (SIPs), its count stands at 67,000 currently with a value of ~18 crore.

Kumar said the company is planning to increase its folio count under SIP to 1 00,000 and thus grow the value to ~30 crore by March.

Coming on the B-15 cities, the company has a monthly SIP inflow of 10,000 with a value of ~2 crore. “However, we are planning to increase SIP folio count from B-15 cities to 15,000 and its value to ~3 crore by the end of the financial year.” As of now, the company has 46 funds in its bouquet.

Out of it, 23 are open-ended funds and the remaining funds falling under the category of close-ended funds comprising fixed maturity plan, hybrid fund and equity funds.

Now the company is looking at the launch of new funds under various segments. “While, we've already filed for a short-term fund, in future we’re also looking at the launching an arbitrage fund which is currently missing in our bouquet of offerings,” he said.

“We are proposing to start instant redemption facility in our liquid fund shortly and its back end testing with RTA has already been done and are currently in talks with a private sector bank for the same,” Kumar said.

The company is relying heavily on its IFA channel for its growth. It has employed 33,000 IFA's and 8,000 of them were active ones at present. “We are in the growth phase and we'll be growing through distributor/IFA fraternity and the genesis comes from the company’s parent organisation, LIC which is having a very strong tied agency-model in place,” Kumar said.

The fund house saw only a 12 % growth in its total annual average AUM in the first quarter of the current financial year