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Harshad Chetanwala: Let me start off with the universe first and then I will come to the question that you have put forward. I think that’s very important when we say that a big player like Jio and BlackRock when they come in to create a lot of buzz around, we have to understand that today despite of all the efforts that the industry has done, we have grown to around 3.75 crore unique investors in India, which also includes NRIs. So, the market space is huge.
There’s always the potential for a new player to come in, and then put forward their products and reach out to a bigger audience. So, I believe it should not stop with just Jio and BlackRock, there has to be many more good players that need to come in. There are already very good players who are doing very well for the industry and that’s what we are seeing in the numbers, the way in which the acquisition is happening, and the way people are investing through mutual funds.
Coming back to the question of yours, which is related to passive funds, we all have seen what passive funds have been doing in the last couple of years, particularly post Covid. In fact, it started off way back in I think 2019 where the focus on passive funds performing better than the active funds.
There have been multiple reasons for this. Today, if in case we look at that data again, because the markets have surged in the last one quarter or more than that, we look at that data and I would not like to split it between just and I would not like to restrict this conversation only up to the large-cap and I will bring in large and mid-cap and flexi-cap category.
If you look at that, and there are close to around 140 or 150 funds, which are actively managed and out of which if I put them on a horizon of a three year or a five year, more than almost 50% of these active funds have performed better than the passive funds or if in case I make an index fund, a Nifty 50 Index fund as a benchmark. So, there is always a space for a good active fund to do better.
If in case they are able to generate returns no better than the benchmark, very frankly, but yes, we have seen globally that passive funds have been one of the most preferred options by the investors and that trend has picked up in India but we have still believed that it is better to create a blend of active and passive.
Coming back to Jio, of course, they have a lot of reach in terms of different types of distribution channels that they can come up with. Another space which probably a new asset management company can focus on is probably reaching out beyond the top cities or towns, because that’s where I think, barring the reach, I think education is very important. All those things we have done, education is the key.
In the end, whosoever comes with any disruptive idea, this is an asset management business, till the time the assets are managed in the right way and generate returns for the clients. That is where the investors are going to put their money in.
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