Reliance AMC's Chaturvedi: A long-term player

In mid-2003, when the benchmark Sensex was cooling its heels in the 3,600 range, Reliance Asset Management Company (AMC) was a no-hoper in the Indian mutual fund (mf) race. Prudential icici, Templeton and HDFC MF were the leaders, having comfortably crossed the Rs 10,000-crore mark (in corpus). Reliance had a corpus of just about half that figure -90 per cent of which was invested in debt instruments -a dozen schemes, a measly investor base of 50,000 and, unsurprisingly therefore, a ranking in the 10-12 bracket. The short point: Reliance AMC, which was amongst the first six companies to get the regulator's nod to commence mf operations, just didn't matter.

Cut to March 2006. An equity scheme from the Reliance AMC stable mops up a record Rs 5,750 crore from investors-the largest ever new fund offer collection in Indian mf history (the earlier record was held by UTI MF, which garnered Rs 4,783 crore in 1992 through UTI Mastergain). The corpus had pole vaulted to Rs 22,000 crore as of February, the investor base has swelled to 21 lakh, the equity-debt mix is a healthy 65-35 across over two dozen schemes. Today, the corpus of Reliance mf matches those of HDFC, Pru-icici and Templeton, and isn't far behind the leader, UTI MF, which had assets under management worth Rs 27,600 crore as of February. And yes, over a two-year period, Reliance has emerged the fastest growing mf (see A Scorching Pace).

The Change Agents

So, what explains this near-miraculous turnaround? In a few words: Focussed communication, targeted at distributors and investors, coupled with a more wholesome product basket. "Right from mid-September 2003, we told distributors to treat us as long-term players," says Amitabh Chaturvedi, President, Reliance AMC. Simultaneously, the AMC began meeting investors to dispel any concerns about the group. "Their (investors) concerns were that the AMC handles only group money as well as about the team that manages money," adds Chaturvedi. To clear the air, Reliance went about the task of communicating about its team, investment process, structure and investment philosophy. For instance, investors were told about the four-tiered structure of the AMC, comprising research team, dealers, fund managers, and head of equity/fixed income.

The Reliance fund also began leveraging synergies across the group, right from Reliance Energy to Reliance Infocomm. For instance, the mf was advertised on the electricity bills of Reliance Energy, the Reliance mobile handset became a channel for communication, as did the Reliance Web World. Details of transactions and net asset values could also be accessed through R World, Reliance Infocomm's value-added service.

Alongside, Reliance AMC also began widening its bouquet of offerings to include monthly income plans, sectoral funds, floaters (schemes that invest in floating rate bonds), and aggressive equity funds. Today, funds of high net worth individuals constitute 85 per cent of the corpus, which perhaps prompted the AMC to flag off its portfolio management scheme (PMS). In less than a year, the PMS venture has mobilised Rs 1,000 crore, with a minimum ticket size of Rs 1 crore. The dull days of 2003 are clearly history.