Union Kbc: Union KBC MF aims to have 5 lakh SIP accounts in 5 years

Union KBC Mutual Fund, the joint venture between Belgium's KBC and Union Bank of India, is targetting to have five lakh SIP accounts in the next five years as it revs up its sales engine to seek out more first-time investors, says company chief executive G Pradeep kumar.The mutual fund company, which is sharpening its focus on the retail business side, also expects to turn profitable in the next three year's time, he added."We never targeted to eat into the market share of our peers. So, on an average, if you see, about 2/3rd of our investors are first time investors in mutual funds. In total we have added about 1.41 lakh investors. 60-65% of them are first time investors," Pradeep kumar, who joined Union KBC Asset Management Co as CEO in March 2010, told FC in an interview.The distribution model of the fund house, which has assets of over Rs 2,700 crore, has so far has been based on the strength of Union Bank which has an extensive branch network with about 4,000 branches and a large number of customers who are presently not mutual fund investors."We do institutional business also but you know the retail business is a more profitable and stable. Our institutional business is worth about Rs 2,000 crores today," he said.Instead of assets under management (AUM) target, Union KBC MF has a target for systematic investment plans (SIPs) that allows investors to invest using small periodically amounts instead of lumpsum amount. "For us, now about a third of investors approximately are SIP investors. We are sharpening our focus on SIPs, increasing our sales force by 25 per cent this year. The new sales executives, who will come in, will be focussed on SIPs. In five years time, we should have atleast five lakh SIPs with us if not more," he said. On profitability, the CEO said: "We are not profitable yet but I am quite confident that we can be profitable in the next three year's time.Unfortunately, the first three years of our existence, was marked with difficult markets and investors were not coming to the industry due to negative experiences elsewhere. But now, our funds have a good track record."On new products, Pradeepkumar said the fund house will launch closed end equity funds only with a trigger option. "Otherwise, point to point returns may not be optimal for investors. It is important to create a positive experience for investors.In mutual funds, the litmus test is how much return the investor makes when she redeems her units. That is the reason we launched the Union KBC Trigger Fund Series 1 and 2. Series 1 delivered 30 per cent returns in just over eight months and we wound up the Fund and returned the money," he added.Pradeep kumar said the mutual fund industry has to put the investor at the centre of operations." We are a industry that is dependent on markets and if the markets fall 20 per cent, we cannot say my fund fell by 15 per cent. It may be factually correct but investors will not be happy."kumarshankar@mydigitalfc.com