Mutual Fund investments in India have witnessed a sharp growth with total assets under management reaching an all time high of INR 20 trillion. Average monthly retail investments through SIPs (systematic investment plans) grew to INR 4000 crore a month compared to INR 2000 crore a month for the year 2015. Fincash, a Fintech company, focuses on mutual fund distribution and offer solutions on money market, tax planning and even long term planning.
Started in 2016 by Gaurav Perti and Pawan Kumar, Fincash provides a completely paperless process while targeting online users. Team NewsBarons spoke with Gaurav Perti, Co-founder and CEO at Fincash to understand their unique model and proposition and growth of mutual funds as an investment option.
NB: Mutual Fund investments have witnessed a sharp growth? To what factors do you attribute this growth to?
Gaurav: While the Mutual Fund industry grew at over 20% p.a. from 2012 to 2015, in the last 1-year the industry has added INR 5 trillion of assets and grown by 30%. From January this year, we have added nearly INR 3 trillion of assets to the industry. A higher proportion (60%) of these have come from the individual segments and not companies. There have been numerous tailwinds to the sector such as favorable markets, easier KYC (Aadhaar eKYC), demonetization and AMFIs campaign around investor awareness (“Mutual Funds Sahi Hai”). All these have given a push towards the retail investors.
NB: Are investments in mutual funds metro dependent? What is the penetration level in small towns and other such locations?
Gaurav: Penetration level of mutual funds in India ranges between 1-2% compared to developed markets that have levels over 50%. The top 15 cities in India contribute about 80% of the overall Mutual Fund assets. From a standpoint of even run-rate, only 18% of asset comes from beyond the top 15 cities. What is heartening to know is that while the industry grows at 30% overall, the rate of growth on the smaller cities is more like 41% p.a. Awareness levels about mutual fund investments are quite low in other areas but we are witnessing faster growth.
NB: Explain the working model of Fincash?
Gaurav: Fincash is a unique model focussed towards the money market space. The money market space is an investment option used by companies and even individual investors for investing for very short periods ranging from as short as 1 day to a week or even a month. We are a Mutual Fund distributor and offer solutions on money market, tax planning, and even long term planning.Our investment and wealth management products are a smart blend of technology and financial knowledge. Making investment simplified and available for all is our ultimate goal. We bring you some of the best investment products designed by our experienced team. Our products are easily understandable, more accessible and quick to invest. At Fincash, investors can transact and monitor all their investments hassle-free in just a few clicks.
NB: How do you differentiate yourself from other similar service providers?
Gaurav: Fincash provides a completely paperless process and we target online users. We also try to target the users via the money market funds space, we are trying to simplify the process of investment in India.
NB: What would be your advice to people wanting to invest in mutual funds?
Gaurav: Mutual funds are a very easy, regulated and professionally managed route to invest money. If developed markets are anything to go by, then the penetration levels in India have to increase further. Whether, it is any goal, retirement planning, tax planning or any other objective, Mutual Funds are the easiest route to invest money. The industry has been around for decades and it’s very well regulated which should give investors comfort rather than going for options like chit funds, small village schemes etc. Even if one is unsure, one should seek the services of a financial advisor or planner or expert, and invest small to test it out and see the difference. Start small, but start. The earlier one starts the better it is.
NB: You have recently raised funds. Where do you wish to deploy them?
Gaurav: Fincash will use the funds to strengthen its technology and expand its team. We intend to broaden our product portfolio as well as enhance the customer interface. With time, we will add to our customer service staff too.
NB: What are your expansion plans with respect to the geographical presence and product portfolio?
Gaurav: We plan to have a pan-India presence soon. In terms of our product portfolio, we plan to add many more features for users around fund analysis, fund ratings, user profiling, and portfolio analysis.
NB: What is the Mission 2020?
Gaurav: We wish to be amongst the top online player in the investment space for retail customers.