Infiniti: Case Notes
• Infiniti – 7th out of 27 among mutual funds in March 2006 (from 10th)
• Middle and high income population growing at 10% p.a. in decade to 2005
• 20.9% growth in real disposable income of middle class households in 1999-2003
• New fund offers raising more than 15,000 crore in Q ending 31-Mar-06
• Compared to industry, Infiniti also had a lower level of AUM under equity funds, though share of private sector in mutual fund industry was increasing (Fig2)
• Over 5 years to 2010, working population set to grow by 100 million and consuming category to rise by 280 million
• Penetration levels of financial products low – 8% of India’s population currently insured and 2% (7 million) of bankable population are credit card holders
• Banks account for 30% of private MF sales – large distribution network, established customer relationships
• Fees contribute only 21% of income for Indian banks vs. 30-35% for peers internationally
• MF sales in country have 77% CAGR over 4 years to 2005
• MF new fund offers added Rs.6000 Cr (24% increase over previous year) during 12 months to 31 Mar,2005
• Penetration low in rural areas (3.8%) vs. 13.7% of urban
• 11.8 million (6.7% - 23million unit holders) of Indian households own MF in 2000-01 (49.6% in US, 17% in UK) Table 1. in1998-99, 15 million households (9% - 19 million unit holders)
• Investments in shares and debentures only 3% of investment in financial assets
• Fundamentally conservative nature
• Distribution o Banks o Brokers o Non-banking financial companies o Financial advisors o Post offices
• 3 functions of distributor – give advice, distribute product, promote different financial products
• 2 tier distribution structure – retail sales and institutional sales
• Public bank sectors in highly preferred category but not very effective in terms of generating AUM for Infiniti
• Brand recognition of Infiniti as good AMC was much lower though very well known internationally (not being a bank)
• Sales force –
• Middle and high income population growing at 10% p.a. in decade to 2005
• 20.9% growth in real disposable income of middle class households in 1999-2003
• New fund offers raising more than 15,000 crore in Q ending 31-Mar-06
• Compared to industry, Infiniti also had a lower level of AUM under equity funds, though share of private sector in mutual fund industry was increasing (Fig2)
• Over 5 years to 2010, working population set to grow by 100 million and consuming category to rise by 280 million
• Penetration levels of financial products low – 8% of India’s population currently insured and 2% (7 million) of bankable population are credit card holders
• Banks account for 30% of private MF sales – large distribution network, established customer relationships
• Fees contribute only 21% of income for Indian banks vs. 30-35% for peers internationally
• MF sales in country have 77% CAGR over 4 years to 2005
• MF new fund offers added Rs.6000 Cr (24% increase over previous year) during 12 months to 31 Mar,2005
• Penetration low in rural areas (3.8%) vs. 13.7% of urban
• 11.8 million (6.7% - 23million unit holders) of Indian households own MF in 2000-01 (49.6% in US, 17% in UK) Table 1. in1998-99, 15 million households (9% - 19 million unit holders)
• Investments in shares and debentures only 3% of investment in financial assets
• Fundamentally conservative nature
• Distribution o Banks o Brokers o Non-banking financial companies o Financial advisors o Post offices
• 3 functions of distributor – give advice, distribute product, promote different financial products
• 2 tier distribution structure – retail sales and institutional sales
• Public bank sectors in highly preferred category but not very effective in terms of generating AUM for Infiniti
• Brand recognition of Infiniti as good AMC was much lower though very well known internationally (not being a bank)
• Sales force –