MUTUAL FUNDS: Best Mutual Funds/Fund Managers
The mutual fund industry has weathered the Covid storm well. Net assets under management (AUM), which had fallen from Rs 27.85 lakh crore in January 2020 to Rs 22.26 lakh crore in March 2020, recovered to Rs 30.50 lakh crore in January 2021 as the economy and markets bounced back from lows. Here are the best funds and fund managers identified by the jury for the Business Today-Money Today Financial Services Awards.
Best Asset Management House (Overall)
HDFC Mutual Fund
Four- Five-Star Funds: HDFC Growth Opportunities Fund, HDFC Small Cap Fund, HDFC Credit Risk Debt Fund, HDFC Medium Term Debt Fund, HDFC Short Term Debt Fund, HDFC Corporate Bond Fund .
HDFC Growth Opportunities Fund, a large & mid cap fund, returned 11 per cent in one year and 9 per cent in five year period ended December 31, 2020. HDFC Small Cap Fund delivered over 20 per cent in 2020 and 11 per cent in five year period ended December 31, 2020. The key was the AMC's strategy to avoid excessively valued businesses. "While we have followed this approach for a long time, in recent times, highly polarised markets impacted performance of some of our funds. However, we persisted with our well-researched views. This patience has been rewarded," says Prashant Jain, Executive Director & Chief Investment Officer, HDFC AMC.
In fixed income, says Jain, the emphasis is on understanding and managing risks. For instance, the risk factor (standard deviation) for HDFC Medium Term Debt Fund stood at 2.37, way lower than the category average of 3.26.
Best Asset Management House - Equity
UTI Mutual Fund
Four- Five-Star Funds: UTI Equity Fund, UTI Mastershare Unit Scheme, Long Term Equity Fund, UTI Mid Cap Fund and UTI Value Opportunities Fund
UTI Equity Fund and UTI Mid Cap Fund gave 31 per cent and 32 per cent returns, respectively, in 2020. "As the pandemic unfolded in 2020, we decided not to be reactive. Our investing process is anchored to return on capital & consistency in cash generation. Our portfolio strategies are very diverse by design, but they rely on these fundamental anchors," says Vetri Subramaniam, Head-Equity, UTI AMC.
Best Asset Management House - Debt
HDFC Mutual Fund
The fund house has the highest number of top-rated debt schemes. The credit goes to the fund managers - Shobhit Mehrotra, Senior Fund Manager - Fixed Income & Head of Credit and Anil Bamboli, Senior Fund Manager - Fixed Income, HDFC AMC. The AMC follows a philosophy of SLR - Safety, Liquidity and Returns. "Our relatively conservative approach has helped us in prudent credit selection and avoiding unfavorable outcomes. Further, we endeavour to manage duration of our funds based on medium-term view on interest rates," say Shobhit Mehrotra and Anil Bamboli.
Best Fund Manager - Equity
Shridatta Bhandwaldar (Canara Robeco MF)
Four-Five-Star Funds: Canara Robeco Equity Tax Saver Fund, Canara Robeco Emerging Equities, Canara Robeco Bluechip Equity Fund.
After the pandemic year, many investors changed their question from 'how much return to expect' to 'how much risk is involved.' The three equity funds managed by Shridatta Bhandwaldar scored well on risk management and have been rated five star. They generated an average return of 25 per cent in last one year and 14 per cent in last five years. "The medium and long term performance of our schemes has been a function of our focus on BMV, Business, Management and Valuation, in that order. The ability to find out earnings surprises ahead of the curve has helped us in delivering outperformance. We have consciously avoided weaker businesses, concentration and illiquid securities," says Shridatta Bhandwaldar, Head-Equities, Canara Robeco MF.
Best Fund Manager - Debt: Deepak Agrawal (Kotak MF) & Best Value Creator Fund - Debt: Kotak Corporate Bond Fund
Four-Five-Star Funds: Kotak Corporate Bond Fund, Kotak Dynamic Bond Fund, Kotak Bond Short Term Fund
These schemes carry lower risk than peers. For instance, standard deviation for Kotak Dynamic Bond fund stood at 2.92 as against the category average of 3.98. "We form our macro view and identify investment opportunities across the interest rate and credit curve. We continuously make appropriate changes (increasing / decreasing duration) in the portfolio based on our macro view. We also monitor credit and investment concentration," says Deepak Agrawal, EVP & Debt Fund Manager, Kotak Mahindra AMC. otak Corporate Bond Fund, managed by Agrawal, has been rated as five-star. It delivered 9.63 per cent in 2020, without taking too much risk. It had given a return of 8.88 per cent in three years and 8.58 per cent in five years till December 31, 2020.
Best Value Creator Fund - Equity
SBI Small Cap Fund
The fund has delivered decent returns with relatively lesser risk. It had given a one year return of 33.51 per cent and a five year return of 15.56 per cent as on December 31, 2020. It has the highest consistency score among actively managed equity schemes. "From a return perspective, a majority of the attribution from a five-year perspective is from three stocks - Graphite India, Dixon Technologies and JK Cement. Graphite was a jackpot; we bought the stock when the sector was going through a terrible time because it was very cheap (on asset valuations) and the sector was a global oligopoly. Though our objective was capital protection, we ended up making 10x in a year. You do not get luckier than this," says R. Srinivasan, CIO-Equity, SBI Mutual Fund.
INSURANCE
The insurance industry was on an innovation overdrive even before Covid stuck. The pandemic expedited the process. The business, which ran primarily on the back of insurance agents, turned digital within a short period. WhatsApp, email and chat became the preferred modes for on-boarding customers and settling claims. The following six insurers from life and general categories stand out in Business Today-Money Today Financial Services Awards 2020-21
Best General Insurance Provider of the Year
SBI General Insurance
A diversified portfolio, well distributed between urban and rural India, helped SBI General Insurance emerge as the Best General Insurance Provider of the Year. "Our presence in health, home and SME helps us stand apart," says P.C. Kandpal, Managing Director & CEO at SBI General Insurance. As of February (YTD), FY21, crop insurance has contributed 29 per cent to the business, followed by property (17 per cent), motor (24 per cent) and health (16 per cent). The insurer is focused on rural business too; 26 per cent of its business comes from rural India. "Our mission is to service Bharat with specific focus on Tier-III and beyond," says Kandpal.
Under sandbox, it has got approval for Shagun - Gift, a personal accident cover that you can gift to family and friends.
Best Life Insurance Provider of the Year
Life Insurance Corporation
The life insurance behemoth held on to its pole position again. Its new business market share rose 3.86 per cent to 68.76 per cent in FY20 as it prepares itself for an IPO.
M.R. Kumar, Chairman, LIC, focused on three key areas during the Covid crisis. "We focused on claims settlement, especially related to Covid, and generating more digital payments for smooth cash flow," says Kumar.
For insurance agents, LIC created an application called Ananda, an end-to-end platform for selling insurance policies. Though overall premium collections from protection and guaranteed plans dipped 5.65 per cent and 18.86 per cent, respectively, as on February 2021, the premium in the ULIP category saw 1,592.41 per cent growth. "Running stock market operations without disruption was another key area," says Kumar.
Best Health Insurance Provider of the Year
Star Health & Allied Insurance
Star Health & Allied Insurance, which started out 14 years ago, was the one pushing Irda to make way for standalone health insurance companies. "We don't have a large banking partner or backing of a large industrial group and yet we command over 30 per cent market share in the retail health insurance business. Internally, retail commands over 90 per cent," says S. Prakash, Managing Director, Star Health and Allied Insurance.
The insurer saw an over 50 per cent dip in number of policies sold post Covid-19 but digitisation helped it retain its pole position in BT-MT Financial Services Award 2021. "Digital sales have increased by more than 60-70 per cent for us. We are focusing a lot on process automation. We have given our network hospitals a dashboard so that transactions can be streamlined. Predictive and augmented analytics help us introspect. As we grow year-on-year, digital will help us provide customer-friendly services."
Best Motor Insurance Provider of the Year
Bajaj Allianz General Insurance
Bajaj Allianz General Insurance has been focused on the motor segment since the beginning. "In the 2000 decade, when our peers were afraid of going beyond the regulatory requirement of 5 per cent in the motor segment as it was not profitable, we went all out. We were among the first ones to do OEM tie-ups and cashless and quick settlements," says Tapan Singhel, MD & CEO, Bajaj Allianz General Insurance Company. An insurer can settle a claim below Rs 50,000 without a survey. "Such claims are settled in less than 20 minutes at Bajaj."
Under sandbox, Bajaj Allianz launched a Pay-As-You-Use policy in 2020. "During lockdown, when cars were parked, people wondered why they should pay the full premium. That is when we came out with this policy so that people can buy a kilometre-based policy."
In another sandbox product, 'V-Pay', the insurer settles the full claim without deduction.
Best Term Policy of the Year
Max Life Smart Term Plan
Insurance products cater to a broad segment of people. Thus, designing customised products is tough. Max Life Insurance's Smart Term Plan tries to get past this problem. "We wanted to sell a term plan that you can personalise. We also wanted to drive protection plans given their limited penetration. Flexibility, a subset of customisation, was another focal point for us. The policy has variants in terms of premium payment and payouts. So, people can pay for a limited period or long term. The nominee can take money in tranches. Policyholders can also increase the term coverage during the policy period," says Prashant Tripathy, Managing Director & CEO at Max Life Insurance.
The feature-rich policy covers 40 critical illnesses and comes with a return of purchase price option too. In 2020, Max Life came out with a Covid rider that provided additional financial assistance and enhanced life cover if a person tested positive for the infection.
Best ULIP Policy of the Year
ICICI Pru Signature Policy
At ICICI Prudential Life Insurance, Ulips constitute nearly 48 per cent of the product mix. Launched in 2019, the company's ULIP, Signature, is one of the most popular products among customers. Features like loyalty rewards, systematic withdrawals and low cost make it a big draw for customers. "Transparency, low-cost structure and customer centricity form the bedrock of the product," says N. S. Kannan, Managing Director & CEO at ICICI Prudential Life Insurance.
"Long-term is key in life insurance. It is positive for both policyholders and life insurers. This product encourages long-term behaviour by incentivising customers to remain invested by returning all the premium allocation charges (that get added to the fund value) at regular intervals," says Kannan.
"Since a lump-sum payout could prove to be a challenge to manage for ULIP policyholders due to uncertain market conditions, we offer the option of a systematic withdrawal plan. We also have an ability to combine different plans and provide solutions to customers that suit them best."
As the regulator ponders over bringing back index-linked insurance policies (ILIPs), Kannan looks forward to launching products in this space.
PENSION FUND: Best Pension Fund House
HDFC Pension Management
As National Pension System (NPS) gains traction, the focus is shifting to the seven pension fund managers and how they are managing subscribers' money. In a year when the overall AUM of NPS crossed Rs 5 lakh crore, the award for the Best Pension House goes to HDFC Pension Management based on our in-house research.
The fund house has delivered 16.92 per cent returns in equity, 14.48 per cent in corporate and 13.82 per cent in the G-sec category over the last one year. Its AUM grew 48.33 per cent to Rs 8,438.93 crore as on December 2020 compared to Rs 5,687.33 crore in December 2019. "We have already crossed Rs 15,000 crore AUM and are hoping to close FY21 at Rs 16,000 crore," says Sumit Shukla, CEO, HDFC Pension Management. Now that HDFC Pension also has point of presence licence from the pension regulator, it is going aggressive on distribution apart from managing the pension money. "We are looking at different ways to reach out to the customers digitally. Post-Covid, PFRDA allowed the usage of Aadhar database, so now we have a seamless digital journey without a physical contact, which has helped us in a big way." The fund house has over 6.5 lakh subscribers now.