Edited excerpts from a chat:
After recently taking over as the MD & CEO at UTI AMC, what are the first strategic priorities that you are setting to scale the organisation’s growth over the next 5 years?
The foremost strategic priority over the next five years is to scale our mutual fund AUM to grow faster than the industry, while building a more resilient and diversified growth platform and maintaining strong cost discipline. UTI AMC already has the infrastructure, distribution network and talent required to support significantly higher assets under management.
Operationally, we have already implemented several structural changes to support the next phase of growth. Over the past few years, we have expanded our geographic presence while maintaining net-zero incremental costs by consolidating branches and optimizing operational efficiency. We have also strengthened the on-ground sales structure by improving the manager-to-sales ratio and increasing the emphasis on systematic investment plans, which we believe will continue to remain the bedrock of the mutual fund industry.
We have also enhanced investor and distributor engagement. This is supported by an enterprise data lake for enhanced analytics and customized communication platforms by implementing Salesforce. We are also stepping up our digital presence & brand visibility by building alliances and collaborating with platforms. We recently launched an AI-powered contact center – Vaani, to improve investor servicing.
As a top-tier asset manager we will continue to operate across the full product spectrum. We are supporting our subsidiaries which encompass NPS, Alternatives, and the global distribution of India strategies to emerge as growth vectors in the future. With stronger product positioning, deeper distributor engagement and continued cost discipline, we believe UTI is well positioned to scale meaningfully over the next few years.
At the core of our journey is a 60 + year legacy of empowering investors to achieve their financial goals and aspirations. This purpose remains the foundation that guides our strategy and actions.
How do you view the competitive landscape in the mutual fund industry, particularly with new players, and what strategic priorities are you setting to sustain UTI AMC’s market share and margin profile?
The competitive landscape has become more dynamic with the entry of new players and shifting distribution dynamics. As the industry continues to attract participants from various backgrounds, our strategy is to remain a scale player while broadening our product suite. Furthermore, we are also leveraging technology to simplify access and deepening our focus on investor education.
Distribution is becoming more diversified with fintech platforms gaining traction among young investors. At the same time, mutual fund distributors (MFDs) continue to play a significant role across markets, particularly in onboarding investors beyond the top 8 cities. This trend is in our favour given UTI’s long-standing distribution relationship and brand credibility. While from a margin perspective, consistency of flows, scale efficiencies and a balanced mix across retail and institutional segments will remain key drivers of sustainable profitability. Our intent is clear that we are looking to outgrow the top 10 AMCs over time by improving productivity, widening product relevance and leveraging our underutilized distribution strength.
Mutual fund investors are now worried about the impact of Iran war which comes at a time when the market hasn’t given any return in the last 18 months. What is the best solution to navigate this crisis, besides continuing SIPs?
Geopolitical events can create short-term volatility, with shocks and challenges forming an inevitable part of any investment journey. The idea is not to predict such events but to be prepared for them. Investors should remain invested in a disciplined manner while maintaining diversification across asset classes and investment cycles. Rebalancing asset allocation when it deviates from the target converts such shocks into opportunities. Continuing with SIPs during such period of volatility is equally important as it allows investors to accumulate more units at a lower price and cheaper valuations.
Finally, an 18-month period is too short to judge outcomes in the equity market. Investors should ideally approach equities with a time horizon of 5-7 years within their financial plans. It is this patience, along with the ability to withstand volatility, that ultimately drives wealth creation. We have consistently seen this play out among investors who have remained invested with us for 20-30 years or longer.
How are you deploying cash across portfolios amid the decline in share prices?
Market corrections provide us with the opportunity to gradually invest in businesses where the long-term fundamentals remain intact, but valuations have become more reasonable. We deploy capital in a consistent and calibrated manner. We do not use cash as a tactical tool. Across portfolios, we are focusing on companies with strong balance sheets, visible earnings growth and those that have sustainable market competitiveness. Instead of trying to predict short-term market bottoms, our effort is driven towards using market corrections to strengthen the overall portfolio structure from a long-term perspective. In our asset allocation strategies we rely on our proprietary valuation model to determine the allocation to equity, gold and fixed income.
Which sectors are increasingly looking attractive from both growth as well as valuation perspective for FY27?
We encourage investors to focus on building a well- diversified portfolio rather than focusing on sectors and themes for the core of their investments. Allow the fund manager to actively manage risk and reward opportunities across sectors as they evolve, rather than fixating on what might look good for a specific financial year. Markets do not operate as per birthdays, anniversaries or calendar timelines.
How comfortable are you now when it comes to valuations in the small cap space?
Smalls caps in aggregate are trading at a premium to their historical valuations and to large caps. From a top-down allocation perspective, we remain cautious on the segment as we believe the safety margin appears to be limited. The issue is not that of their market capitalization per se. Large caps typically are better correlated with fundamentals such as market dominance, access to capital, better bargaining power which is reflected in cash flow and balance sheet, depth and breadth of management and superior governance via quality of the Board of the company. That said, given the breadth of the recent sell-off, our fund managers are beginning to identify select bottom-up opportunities in the small cap space.
What is your reading of sectoral rotation at this stage of the cycle, particularly across banking and financials, capital goods, manufacturing, IT services and consumption?
While it is difficult to predict sectoral rotations with precision, our current assessment – based on growth and valuations- suggests several areas of opportunity. We remain positive in the financial sector as valuations are reasonable and the sector has a sustainable growth opportunity. There are long-term opportunities in manufacturing and capital goods as the government’s infrastructure push and supply chain diversification is supporting domestic industrial growth. Consumption will remain a long-term theme as India progresses towards the income and aspiration ladder. In technology services, selective opportunities may emerge as valuations adjust to AI related concerns and global demand begins to stabilize.
What is your view on precious metals? Does it make sense to keep buying gold?
Our view on gold had been constructive for several years, especially after the geopolitical uncertainty following the Russia–Ukraine War in 2022. However, in the present scenario, gold appears to be behaving more like a momentum-driven asset rather than a strategic hedge. I think of its role as a portfolio diversifier at this stage rather than as a compelling investment opportunity.