Sundeep Sikka, ED & CEO of Reliance Nippon Life Asset Management spoke to CNBC-TV18 about the outlook for the asset management companies (AMC).

According to Sikka, over the last two-three years, the AMC industry has been growing at 20 percent plus. Moreover, post demonetisation and financialisation of the industry retail flows have been coming in from small cities and towns, which until now was coming only from big cities, he said.

“Till now 80 percent of the industry was in top 15 cities but in the last financial year more investors have come in from small cities and towns.”

"Another major change seen for the industry is that while earlier majority of AUM came in lump sum now we are seeing increasing flows via systemic investment planning (SIPs), which is to the tune of Rs 7000 crore monthly," said Sikka.

According to him, till now the industry was valued based on percentage of AUM but now we need to start valuing AMC businesses in terms of profitability.

Talking about the cap on dealer commissions, he said AMFI has written to Sebi to take the discussions forward. However, if all stakeholders focus on profitability then any cap like this would be positive for AMCs, he added.

With regards to flows into mutual fund industry, he said,"Almost one-third of flows into equity AUMs are coming from SIPs and this is very vital for the industry because the HNI money that comes in, about 20 percent does not stay beyond two years but the SIP money is sticky and so profitable for the MF industry."

First Published:Aug 7, 2018 11:54 AM IST