Broker-backed AMCs look for more individual investor inflow

Broker-backed asset management companies (AMCs) are widening their reach with banking tie-ups, more branches and sales presence, for more inflow from individual investors.

Individual (retail in financial parlance) participation in the mutual fund sector has been growing. Retail assets are now a fourth of funds’ assets under management (AUM) — ~5.3 trillion worth at end-March, 33 per cent higher than the previous year.

Typically, banks enter into tie-ups with AMCs when they have a longer track record. Motilal Oswal AMC, incorporated in 2008, is in the process of entering into such a tie-up with Citibank. “A couple of months back, we partnered with Standard Chartered Bank. We are also in talks with IndusInd Bank and ICICI Bank,” said Akhil Chaturvedi, executive vice-president.

The fund house is also in the process of expanding its product offering, to get a higher share of individual investors’ inflow. It plans to launch a small-cap fund and an aggressive hybrid one. The latter, say sector insiders, was popular among retail investors last year.

Edelweiss AMC, which acquired JP Morgan’s fund business in 2016, is expanding branches and sales presence. Radhika Gupta, CEO, says the sales force handling the retail business would double to 90 people this year. The fund house has started working with AU Small Finance Bank and is also in talks with two others in this segment, Ujjivan and Equitas. The aim in this financial year is to expand branches to 20, from 11 last month. It has around 110,000 retail investors, which together account for 8 per cent of the AMC’s ~125 billion-AUM.

IIFL AMC, which has a small AUM of ~7.93 billion, says it is also getting serious about retail investor inflow. At present, it has only single-digit participation from individual investors, as a proportion of its AUM.