Well, the flows are speaking for themselves, a well-run wealth management company such as yours, but is your client community getting a little jittery? Do you have the same visibility on flows and assets that you have actually kind of collected over the last few years, the next two or three quarters could be the same.
Rakesh Rawal: Yes, we look at things on a little more strategic basis, which means that we tell the clients that they need to work on an objective of 14% return, which means that they need to have a certain allocation to products. And as long as there is money outside with my clients, which is increasing penetration and new clients being added, that has very little correlation to what is the state of the market. And this is true, for example, a year before last when the markets were flat, we still grew our AUM by 17-18%. I do not see the state of the market significantly changing the direction of the flows that we are getting.
What are the measures you are taking to improve your distribution, feet on the ground essentially, the RM army which you have right now? How is it? What is the plan for the full year to take it higher?
Rakesh Rawal: One year ago, we were closer to Rs 308, today we are closer to Rs 360. I sense that by the end of the year, we should be closer to 400 or thereabouts. So, the feet on the ground are increasing. But I think the more important thing is that RMs who have been with us for more than three years are controlling 80% of my assets under management and the attrition rates have been zero for the last year. So, the important thing is, of course, to bring in new people, but the more important thing is to retain the existing people because as they grow, they become very valuable, and therefore our focus is on both to retain as well as add.
The one factor that everyone has been talking about, especially for businesses such as yours, we have pretty much seen a one-way bull market and I am not talking about a few patches of correction or consolidation if you will here or there. Given that it has been such a parabolic run-up and a one-way street, would it be fair to assume that whenever the market stalls, flows also would get impacted, and thereby businesses like yours too?
Rakesh Rawal: The fact of the matter is that the confidence of the investor to some extent is correlated to the sentiment of the market. So, it is easier to get flows when it is backed by confidence. When you have a little bit of turmoil, then you have to put in more effort to build confidence and I think that the past has shown that, hey, if we put in that extra effort, the direction of flows does not change. So, yes, if the markets are a little turmoil-oriented, we will have to work harder and we are quite up to it therefore, directionally, I think that the flows will be very healthy for the rest of the year.
How is the mix looking versus in debt, equity right now, and the incremental flows, are they coming towards debt higher?
Rakesh Rawal: No. See, our strategy to our customers is that if you want to get 14%, you need to have about 60-65% in equity mutual funds and close to about 30 odd percent, 30-35% in structures. So, debt has very little meaning in the way that we are sort of conducting our business. And therefore, though, of course, some clients would want to keep some levels of debt, I do not see that changing. The proportion of debt is coming down for us and the proportion of equity is going up. So, from 48% of our total mix of equity funds one year ago, we are closer to I think 52-54% now.