Industry may sustain current growth trajectory

Comment: Nilesh Shah, MD, Kotak Mahindra Asset Management Company

The Indian asset management industry has matured and grown, reaching an all-time high of Rs 23 trillion assets under management (AUM) as on end of June 2018. ‘Coming of Age’ is the theme for this year’s CII Summit, providing a platform for industry stakeholders to come together and debate over current issues, address challenges and identify levers for further growth.

The high growth trend observed over the past few years continues, largely driven by inflows in the retail segment. We expect the asset management market to become an Rs 50 trillion industry by 2023, representing 18 per cent year-on-year growth.

While the industry is expected to sustain the current growth trajectory amid secular tailwinds of demographic changes, wealth creation and financial deepening, some challenges will demand a relook at business strategy. The emergence of new digital channels, new geographies and changing investment orientation of customers cannot be discounted as the industry looks at the new phase of growth. Companies will need to make bold moves to accelerate capability building and deliver operational efficiencies.

The Indian market has consistently generated alpha returns over the last 10-15 years, but is it sustainable? What can asset managers do to differentiate themselves and create value for clients while ensuring consistency of performance?

How will distribution evolve with the emergence of new digital channels? Is this a fad or a key disruption in the market landscape opening up new avenues of growth? Can the digital reach of the new age distributors create new customer segments across under-penetrated geographies? What capabilities will asset managers need to develop to target alternative channels? What are some of the operational challenges AMCs are facing to incorporate new regulations and guidelines?