From the importance of high conviction and agility to the need for risk preparedness and a cool head in volatile times, Bala reflects on his journey as a fund manager and industry leader.
He also opens up on the AMC’s ambitious Rs 10 lakh crore AUM target, the rising role of alternates and GIFT City, and why SIPs remain the “Sabse Important Plan” for Indian investors. Edited Excerpts –
Kshitij Anand: Well, let me just get your perspective. You have seen multiple market cycles over the last three decades. What have been the biggest lessons for you as a fund manager and as an industry leader?
A Balasubramanian: Well, the learnings are many. One thing I have realized as a fund manager, and now for 16 years as CEO, is the importance of having high optimism in what we are doing, and doing everything with conviction and deep involvement. These have been some of my key focus areas.
As a fund manager, staying agile in evolving situations is critical. There is nothing that is entirely right or wrong, but at the same time, you must always do proper due diligence for every decision you take. Being on top of the job means ensuring that all your actions—analysis, interactions, meetings with management, forming convictions, and making investment decisions—are backed by thorough due diligence. Once you do that, you should not worry too much about short-term fluctuations but instead stay with high conviction.
Second, since we are in the capital markets, risks can emerge suddenly without warning. The key is whether you are fully prepared to mitigate and manage those risks. Therefore, you must always ensure you have risk-mitigation processes in place so that such risks do not hurt you. This is another area where you have to remain on top of the job. Being on the front foot during a crisis ensures that you can manage things effectively on the fund management side.
And last but not least—keep your cool in all situations. I believe that remains the key to managing situations more effectively.
Kshitij Anand: Being agile, staying cool, and remaining on top of the job—absolutely. Well said. In fact, you have set a target of ₹10 lakh crore AUM. What would be the growth drivers to achieve that?
A Balasubramanian: As an AMC, we are now completing 31 years in the mutual fund industry. We have always been, and continue to remain, a thought leader. Our aim has always been to build scale, and we have achieved that by being among the top five to six players. In fact, we became the number three fund house in the country in 2019.
One of the things we have consistently done is expand our presence across the country. Second, we work very closely with our distribution channels, which has been a key to our success—by providing knowledge, engagement, and skill enhancement. We also have a separate distribution engagement plan through which we continuously provide value addition to help them grow their business.
Another big agenda is increasing our customer base. We currently manage around 85 lakh unique customers, while the industry overall has about 5.5 crore unique investors. Our aim is to reach more than 2 crore customers. To achieve this, we plan to expand into markets where we do not yet have a presence. New client acquisition remains a key focus area.
With these initiatives, we believe that in the next few years we will be able to reach the ₹10 lakh crore mark. This will be a combination of both mutual funds and our alternatives business. Having spent a good number of years in the mutual fund industry, we have built a strong performance culture. Now, we are expanding that skill set into our alternative business as well.
The alternatives business includes PMS, AIF (fixed income, equity, real estate), and expansion in GIFT City to help investors invest abroad and allow NRIs to invest in India. These strategies will collectively drive us toward the ₹10 lakh crore goal.
Finally, people are the key. We are an established organization, but we must keep our average age young. So, recruiting new talent remains a focus area. For key positions, we bring in young and talented leaders in their early 40s to take the business to the next level of growth. This is also part of our simultaneous focus to ensure that in the next three to four years, we reach this ambitious milestone.
Kshitij Anand: Good that you talked about alternates, because I wanted to get your perspective on where you see the next part of flows coming from. Who would be the big contributors to flows in, let us say, the next three to five years? Would it be equity, debt, or alternates?
A Balasubramanian: I think it will be a mix of all three. Equity would continue to be the driver—that remains the core. Given the fact that a large pool of middle-class income people are still underweight and underinvested in equity, that pie will continue to be the main driver through SIPs and core equity funds.
Hybrid funds will also grow. At the end of the day, there is a large pool of investors—if I categorize them—they are conservative investors, moderate risk takers, and aggressive risk takers. Fortunately, mutual funds provide products for all three categories, and especially we provide solutions across risk metrics, backed by 30 years of an established investment track record.
Alternates are now stepping up because of the wealth effect, which has gone up quite significantly over the last seven to eight years, especially in the deeper parts of the country where businesses have grown, or businesses have been sold, generating wealth. The number of millionaires is also rising. In addition to mutual fund investments, they are looking at alternate opportunities through AIFs, and that is something we are building up.
Third, we are quite bullish on GIFT City. Many investors in India want diversification. After fulfilling their needs through mutual funds, they also want to diversify by investing outside the country. That is something we want to act as a gateway for.
So, if you look at all of them, mutual funds will remain the core. Alternates will cater to the growing needs of HNIs, family offices, and ultra-HNIs. GIFT City is for everyone, since many investors want to invest abroad, which becomes dollar investing. And the fourth is passive. In order to ensure we provide a bouquet of products, we will also focus on fund-of-funds along with hybrid asset classes.
Kshitij Anand: The AMC has been somewhat of a comeback story. You have spent 30-odd years in the system. You have seen the ups and downs of the market cycle as well as the company. Can you help us understand—although I know this could be a very long conversation—briefly, how did you really help the AMC business bounce back and become so profitable?
A Balasubramanian: Since I have a history of seeing the ups and downs, at each stage we have gone through these cycles. Recently, we bounced back again, similar to what we experienced in 2009, in 2014, and also in 2002. Each time, that is the power of the brand and the power of the willingness to change.
Kshitij Anand: I think agility is the word.
A Balasubramanian: Yes, agility.
Kshitij Anand: Yes, you mentioned agility.
A Balasubramanian: Agility, yes. One, there is always a need for growth. At the same time, when we are also growing faster, we go through some breaks. These breaks make you feel sad and jittery and force you to revisit some of your decisions. That is something we have done. After one or two years of challenging times, we brought in changes to processes and systems. Nothing is carved in stone, so we needed to revisit people-related changes and process-related changes.
Sometimes old organizations also need new blood. We normally give growth opportunities internally, but wherever there is a need, we also bring in external talent. The way we turned around was by bringing in external talent. You have interacted with Harish Krishnan, our Co-CIO Equity—he came in. Then, we added a portfolio manager for midcaps. We did the same thing in sales. Many of us had been doing sales, but when someone comes from outside, they bring in new thoughts and ways of doing things.
So, new blood—that is something we have added in each of the functions: sales, management, marketing, etc. Everything is evolving, and what we did 15 years back could now be history. Therefore, we need to reinvent the wheel, and we have done that with an open mind.
This has resulted in two to three things. One, on equity performance—today I am happy to say almost 75% of our equity funds are ahead of peer group averages. At the same time, in fixed income, we have always maintained leadership, with almost 95% of our funds consistently outperforming peer competitions. This is the result of the changes we brought in, which in my view will help take the business to the next level of growth.
Kshitij Anand: In fact, next is a very interesting question. We know SIPs as a Systematic Investment Plan, but you have termed it as Sabse Important Plan. How has that campaign helped you?
A Balasubramanian: See, I can take pride that Aditya Birla Sun Life AMC was one of the early promoters of SIPs in the country. We may not have been the very first, but we were definitely among the earliest one or two.
Kshitij Anand: And we are seeing around ₹27,000 crore worth of flows happening.
A Balasubramanian: Correct. Secondly, we were also the first to introduce payroll savings plans in the country, which is now called salary SIP. Earlier, we used to call it payroll savings plan, now it is referred to as salary SIP.
The whole purpose is linked to goals—everyone has goals, and those goals can only be realized through SIPs as an investment method. So, we were debating and discussing how to bring in urgency around doing SIPs. If I keep saying SIP, SIP, SIP, it is fine, but it may not create urgency. The moment you say SIP Now, it brings that urgency. It is not tomorrow, not yesterday, not sometime in the future—it is today. Life itself is about today, living in the present. So, SIP Now is essentially about living in the present.
This campaign was meant to drive the seriousness of SIPs for investing with a purpose—goal-based investing. It also ensures that people stay invested for the long term. After all, nobody talks about short-term goals—everyone’s goals are medium to long-term. Therefore, your investments should also match that period for which you have set your long-term goals.
That is why we created SIP Now. We even came up with slogans like SIP Now, and created materials that kept harping on this message. We did this around four to five years back. Since it was a powerful campaign, we thought of revisiting it, bringing it back, and continuing to highlight it.
In fact, our SIP numbers have been growing. I think I mentioned the industry figure of around ₹27,000 crore. Today, we ourselves have about ₹1,150 crore of SIP flows, and this number will only keep growing.
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