Fiai Bulletin Feb-16

FEBRUARY filtered funds. The program then implements this FINANCIAL portfolio investment after the investor gives his INTERMEDIARIES ASSOCIATION 2016 acceptance. The portfolio is monitored on an OF INDIA ongoing basis and when required, asset allocation rebalancing and other corrective action will be implemented. As the investor approaches the end of his goal, the relevant action required will also be taken. Because of such automation, simplicity in the investment process, and handholding throughout How Robo advisory helps the investment period, robo advisory becomes a If there is one thing that is certain, it is that there is an perfect self-service model for investors with limited abundance of financial products grabbing investors’ time and knowledge, and also for those who cannot attention. Fixed deposits, tax-free bonds, afford the services of financial planners. debentures, provident funds, post-office schemes, For distributors, the advantage lies in the potential to all jostle alongside mutual funds and the stock hit several objectives at one go. One, it keeps costs market; besides insurance making frequent inroads. in check because the online delivery model cost of Within each product as well, there is enough variety servicing customers. Two, it ensures both speedy to bewilder most investors. delivery of advice while keeping quality of advice The result is that investors need to be informed and uniform. Three, it allows them to scale up their client advised in order to make the decision that’s the most base. optimal and get them to their financial goals. Packed The US is at the forefront of the robo advisory schedules and hectic workdays leave investors with revolution, but it is still nascent. A Citigroup report little time or the means to consult financial advisors pegs the US robo advisory market at $14 billion in and make an effort to understand enough to do it on assets under management at end-2014, with players their own. For advisors and distributors, the such as Wealthfront, Betterment, and LearnVest challenge is to reach a larger section of the investing established in the field. The report also estimated the population and still keep costs under control. total addressable market in the UK at just 2.2 per cent of the total industry AUM. Robo advisory solves a good extent of these problems. It automates the process of advice, In the Indian market, online platforms themselves are investment, and monitoring. Delivered online, it new, making robo advisory even newer. Still, these involves little human interaction and thus maintains platforms, such as FundsIndia, Scripbox, My consistency. Within the Indian mutual fund space, Universe, and ArthaYantra have on offer robo the advent of online platforms has allowed robo advisory services in a variety of ways, while still advisory to gain footholds. As robo advisory catches keeping usability simple and easy for investors. The on, it can make financial advice accessible to more potential speaks for itself. For one thing, such people than ever before. services are more appealing to younger investors, which is characteristic of our working population. Several benefits Accessing these young investors now will prove to Robo advisory collects investors’ financial be beneficial over the long term as they move information, goals, risk profile, age, and other forward in their investment journey. For another, as relevant data at the outset. The algorithm uses these the regulator makes online investing easier and inputs to arrive at the most optimal fund portfolio for brings in more players, offline investors may move the investor, taking from a pool of preselected, online.

Challenges the US which robo advisory there uses extensively. While robo advisory holds the key to sustained Actively managed funds in India currently hold much growth, there are challenges aplenty. The first is the more potential than passive funds. Given the degree trust that an investor develops when interacting with of qualitative analysis that goes into fund selection, a financial advisor. It is hardly possible to establish a such as sector allocation, quality of stocks that make relationship with an automated system. The lack of a up the portfolio, fund manager ability, and so on, human advisor also brings up challenges in automation of fund selection is well near impossible addressing more complex needs. Further, since and here, human input is crucial. Robo advisory also robo advisory right now considers only mutual funds, does not address investor behaviour or biases, and it cannot provide a comprehensive plan that includes does not provide any motivation. It is not a marketing tax planning and multiple financial products. tool by itself that draws investors in; it is just an efficient way to service customers. A further challenge in the Indian context is the level of complexity in filtering out funds and arriving at an Despite these challenges, robo advisory is gaining investible universe. The ETF market is popularity. Over time, it can gradually change the underdeveloped, unlike markets such as the UK or way financial advice is delivered and consumed. FINANCIAL filtered funds. The program then implements this INTERMEDIARIES ASSOCIATION DIARY portfolio investment after the investor gives his OF INDIA FEBRUARY, 2016 FOR PRIVATE CIRCULATION acceptance. The portfolio is monitored on an ongoing basis and when required, asset allocation rebalancing and other corrective action will be ABOUT FIAI implemented. As the investor approaches the end of his goal, the relevant action required will also be Financial Intermediaries Association of India (FIAI) was formed as taken. a financial distributors’ body to strengthen the cause, development, education and progress of the industry. FIAI's Because of such automation, simplicity in the investment process, and handholding throughout endeavour is to bring all the national & regional players like How Robo advisory helps the investment period, robo advisory becomes a National Distributors, Banks and IFA Associations on one platform perfect self-service model for investors with limited to pursue the industry development and education agenda. If there is one thing that is certain, it is that there is an abundance of financial products grabbing investors’ time and knowledge, and also for those who cannot WELCOME Some of the key objectives of FIAI are to promote and develop the attention. Fixed deposits, tax-free bonds, afford the services of financial planners. Indian financial intermediary industry on professional, healthy and debentures, provident funds, post-office schemes, For distributors, the advantage lies in the potential to Equity Markets have been on a tailspin in ethical lines and to enhance and maintain standards in all areas of all jostle alongside mutual funds and the stock hit several objectives at one go. One, it keeps costs the first month of the calendar year 2016 operations and to work towards protecting and promoting the market; besides insurance making frequent inroads. in check because the online delivery model cost of following cues from global news and interests of financial intermediary and their members Within each product as well, there is enough variety servicing customers. Two, it ensures both speedy volatility. DIIs continue to be net buyers to bewilder most investors. delivery of advice while keeping quality of advice though FIIs have been net sellers in the THE KEY OBJECTIVES OF FIAI ARE: uniform. Three, it allows them to scale up their client Indian stock markets. The inflows in the The result is that investors need to be informed and INDUSTRY DEVELOPMENT: base. last two months in Equity mutual funds advised in order to make the decision that’s the most Promotion & development of the Financial Distribution Industry on optimal and get them to their financial goals. Packed The US is at the forefront of the robo advisory have slowed down yet inflows through professional, healthy and ethical lines. schedules and hectic workdays leave investors with revolution, but it is still nascent. A Citigroup report systematic investment plans - both new & little time or the means to consult financial advisors pegs the US robo advisory market at $14 billion in existing book continued to grow in this INDUSTRY STANDARDS: and make an effort to understand enough to do it on assets under management at end-2014, with players period. FIAI continue to pursue the To ensure, promote and maintain a high professional and ethical their own. For advisors and distributors, the such as Wealthfront, Betterment, and LearnVest Distribution commission service tax issue standards in all areas of operation of financial intermediaries and challenge is to reach a larger section of the investing established in the field. The report also estimated the persistently and further efforts were made their members and to enhance and maintain standards with a view population and still keep costs under control. total addressable market in the UK at just 2.2 per to resolve the issue and reduce the to protecting and promoting their interests. cent of the total industry AUM. financial impact. We also pursued the Robo advisory solves a good extent of these In the Indian market, online platforms themselves are issue of reverse feeds availability in the SUGGESTIONS: problems. It automates the process of advice, investment, and monitoring. Delivered online, it new, making robo advisory even newer. Still, these mutual fund Direct plans for Distributors Engaging with and proposing suggestions & initiatives to the involves little human interaction and thus maintains platforms, such as FundsIndia, Scripbox, My with various stakeholders. industry players, associations and regulators for the growth of the consistency. Within the Indian mutual fund space, Universe, and ArthaYantra have on offer robo As we now enter the last two months of industry. the advent of online platforms has allowed robo advisory services in a variety of ways, while still the financial year, we have many hopes in TRAINING & EDUCATION: advisory to gain footholds. As robo advisory catches keeping usability simple and easy for investors. The mind - Regulators stepping in to solve the on, it can make financial advice accessible to more potential speaks for itself. For one thing, such Sharing of knowledge and giving a forum for enlightenment & Service tax issue, Equity markets settling people than ever before. services are more appealing to younger investors, exchange of ideas within the industry. which is characteristic of our working population. down for investors to see some good Several benefits returns in their portfolios and the Industry ENGAGING OTHER STAKEHOLDERS: Accessing these young investors now will prove to Robo advisory collects investors’ financial expecting some sops for the Mutual Fund be beneficial over the long term as they move Actively engaging with certification bodies including NISM and information, goals, risk profile, age, and other Industry in the upcoming Union Budget. forward in their investment journey. For another, as FPSB for distribution to agree professional standards and relevant data at the outset. The algorithm uses these the regulator makes online investing easier and Fingers crossed and hoping for the best!!! accreditations for financial advisors in India and to drive its inputs to arrive at the most optimal fund portfolio for brings in more players, offline investors may move Gurpreet Singh implementation across the intermediary fraternity. the investor, taking from a pool of preselected, online. Principal Consultant - FIAI

DIARY 1

filtered funds. The program then implements this portfolio investment after the investor gives his acceptance. The portfolio is monitored on an ongoing basis and when required, asset allocation rebalancing and other corrective action will be implemented. As the investor approaches the end of his goal, the relevant action required will also be taken. Because of such automation, simplicity in the investment process, and handholding throughout How Robo advisory helps the investment period, robo advisory becomes a If there is one thing that is certain, it is that there is an perfect self-service model for investors with limited abundance of financial products grabbing investors’ time and knowledge, and also for those who cannot attention. Fixed deposits, tax-free bonds, afford the services of financial planners. debentures, provident funds, post-office schemes, For distributors, the advantage lies in the potential to all jostle alongside mutual funds and the stock hit several objectives at one go. One, it keeps costs market; besides insurance making frequent inroads. in check because the online delivery model cost of Within each product as well, there is enough variety servicing customers. Two, it ensures both speedy to bewilder most investors. delivery of advice while keeping quality of advice The result is that investors need to be informed and uniform. Three, it allows them to scale up their client advised in order to make the decision that’s the most base. optimal and get them to their financial goals. Packed The US is at the forefront of the robo advisory schedules and hectic workdays leave investors with revolution, but it is still nascent. A Citigroup report little time or the means to consult financial advisors pegs the US robo advisory market at $14 billion in and make an effort to understand enough to do it on assets under management at end-2014, with players their own. For advisors and distributors, the such as Wealthfront, Betterment, and LearnVest challenge is to reach a larger section of the investing established in the field. The report also estimated the population and still keep costs under control. total addressable market in the UK at just 2.2 per cent of the total industry AUM. Robo advisory solves a good extent of these problems. It automates the process of advice, In the Indian market, online platforms themselves are investment, and monitoring. Delivered online, it new, making robo advisory even newer. Still, these involves little human interaction and thus maintains platforms, such as FundsIndia, Scripbox, My consistency. Within the Indian mutual fund space, Universe, and ArthaYantra have on offer robo the advent of online platforms has allowed robo advisory services in a variety of ways, while still advisory to gain footholds. As robo advisory catches keeping usability simple and easy for investors. The on, it can make financial advice accessible to more potential speaks for itself. For one thing, such people than ever before. services are more appealing to younger investors, which is characteristic of our working population. Several benefits Accessing these young investors now will prove to Robo advisory collects investors’ financial be beneficial over the long term as they move information, goals, risk profile, age, and other forward in their investment journey. For another, as relevant data at the outset. The algorithm uses these the regulator makes online investing easier and inputs to arrive at the most optimal fund portfolio for brings in more players, offline investors may move the investor, taking from a pool of preselected, online.

DIARY 2

DIARY 3

DIARY 4

DIARY 5 filtered funds. The program then implements this portfolio investment after the investor gives his acceptance. The portfolio is monitored on an ongoing basis and when required, asset allocation rebalancing and other corrective action will be implemented. As the investor approaches the end of his goal, the relevant action required will also be taken. Because of such automation, simplicity in the investment process, and handholding throughout How Robo advisory helps the investment period, robo advisory becomes a If there is one thing that is certain, it is that there is an perfect self-service model for investors with limited abundance of financial products grabbing investors’ time and knowledge, and also for those who cannot attention. Fixed deposits, tax-free bonds, afford the services of financial planners. debentures, provident funds, post-office schemes, For distributors, the advantage lies in the potential to all jostle alongside mutual funds and the stock hit several objectives at one go. One, it keeps costs market; besides insurance making frequent inroads. in check because the online delivery model cost of Within each product as well, there is enough variety servicing customers. Two, it ensures both speedy to bewilder most investors. delivery of advice while keeping quality of advice The result is that investors need to be informed and uniform. Three, it allows them to scale up their client advised in order to make the decision that’s the most base. optimal and get them to their financial goals. Packed The US is at the forefront of the robo advisory schedules and hectic workdays leave investors with revolution, but it is still nascent. A Citigroup report little time or the means to consult financial advisors pegs the US robo advisory market at $14 billion in and make an effort to understand enough to do it on assets under management at end-2014, with players their own. For advisors and distributors, the such as Wealthfront, Betterment, and LearnVest challenge is to reach a larger section of the investing established in the field. The report also estimated the population and still keep costs under control. total addressable market in the UK at just 2.2 per cent of the total industry AUM. Robo advisory solves a good extent of these problems. It automates the process of advice, In the Indian market, online platforms themselves are investment, and monitoring. Delivered online, it new, making robo advisory even newer. Still, these involves little human interaction and thus maintains platforms, such as FundsIndia, Scripbox, My consistency. Within the Indian mutual fund space, Universe, and ArthaYantra have on offer robo the advent of online platforms has allowed robo advisory services in a variety of ways, while still advisory to gain footholds. As robo advisory catches keeping usability simple and easy for investors. The on, it can make financial advice accessible to more potential speaks for itself. For one thing, such people than ever before. services are more appealing to younger investors, which is characteristic of our working population. Several benefits Accessing these young investors now will prove to Robo advisory collects investors’ financial be beneficial over the long term as they move information, goals, risk profile, age, and other forward in their investment journey. For another, as relevant data at the outset. The algorithm uses these the regulator makes online investing easier and inputs to arrive at the most optimal fund portfolio for brings in more players, offline investors may move the investor, taking from a pool of preselected, online.

Challenges the US which robo advisory there uses extensively. INDUSTRY UPDATES While robo advisory holds the key to sustained Actively managed funds in India currently hold much growth, there are challenges aplenty. The first is the more potential than passive funds. Given the degree KEY DEBT MARKET INDICATORS DATA FOR MONTH: FEBRUARY 2016 of qualitative analysis that goes into fund selection, trust that an investor develops when interacting with As on As on As on Change Change a financial advisor. It is hardly possible to establish a such as sector allocation, quality of stocks that make Benchmarks 31-Jan-16 30-Dec-15 30-Nov-15 (Month) (Quarter) up the portfolio, fund manager ability, and so on, relationship with an automated system. The lack of a 364 Day Tbill 7.17% 7.24% 7.18% -0.07% -0.01% human advisor also brings up challenges in automation of fund selection is well near impossible 91 Day Tbill 7.25% 7.21% 7.08% 0.04% 0.17% addressing more complex needs. Further, since and here, human input is crucial. Robo advisory also 10-year Benchmark (7.72% 2025) 7.78% 7.76% 7.64% 0.02% 0.14% robo advisory right now considers only mutual funds, does not address investor behaviour or biases, and 3 Months Certificate Of Deposit (CD) 8.05% 7.25% 7.27% 0.80% 0.78% it cannot provide a comprehensive plan that includes does not provide any motivation. It is not a marketing 3 Months Commercial Paper (CP) 9.15% 7.60% 7.68% 1.55% 1.47% tax planning and multiple financial products. tool by itself that draws investors in; it is just an AAA Corp Yields - 1 Yr 8.80% 8.60% 8.20% 0.20% 0.60% efficient way to service customers. AAA Corp Yields - 3 Yrs 8.65% 8.50% 8.25% 0.15% 0.40% A further challenge in the Indian context is the level Bank Rate 7.75% 7.75% 7.75% 0.00% 0.00% of complexity in filtering out funds and arriving at an Despite these challenges, robo advisory is gaining RBI LAF-Repo rate 6.75% 6.75% 6.75% 0.00% 0.00% investible universe. The ETF market is popularity. Over time, it can gradually change the RBI LAF-Reverse Repo rate 5.75% 5.75% 5.75% 0.00% 0.00% underdeveloped, unlike markets such as the UK or way financial advice is delivered and consumed. Foreign Exchange Reserve($ bn) 355.10 350.36 353.64 4.74 1.46 Brent Crude Oil ($/bbl) 34.08 36.57 46.75 -2.49 -12.67 Gold ($/oz) 1111.80 1060.00 1142.35 51.80 -30.55 US Fed Funds Rate 0.50% 0.50% 0.25% 0.00% 0.25% US 10-yr Gilt 1.92% 2.27% 2.15% -0.35% -0.23% CRR 4.00% 4.00% 4.00% 0.00% 0.00%

Source: Various (BSE, NSE, SEBI)

DOMESTIC MARKETS - KEY INDICES % Returns as on 31st January, 2016.

Indices Close 1 Month 3 Month 1 Years 3 Years 5 Years 7 Years Trailing PE S&P BSE Sensex 24870.69 -4.77 -6.70 -14.78 7.74 6.66 9.72 18.08 NIFTY 50 7563.55 -4.82 -6.23 -14.14 7.83 6.91 9.81 20.22 S&P BSE 100 7651.70 -5.51 -6.62 -14.06 7.91 7.00 9.81 19.61 S&P BSE 200 3191.12 -5.52 -6.26 -12.36 9.06 7.42 9.92 19.91 NIFTY 500 6339.45 -5.73 -6.10 -11.54 9.77 7.82 9.50 22.08 NIFTY MIDCAP 100 12469.10 -6.92 -5.81 -4.99 14.27 9.92 11.31 25.43 S&P BSE Small Cap 10869.84 -8.17 -3.94 -4.06 13.89 7.53 7.63 54.98 S&P BSE Midcap 10417.26 -6.51 -5.08 -2.99 15.23 11.38 13.06 24.64 NIFTY NEXT 50 18399.00 -7.90 -6.76 -5.87 14.49 11.39 12.22 20.31 Source: BSE & NSE. Returns are calculated on absolute basis for less than one year and on CAGR basis for one year or more.

DOMESTIC MARKETS - KEY SECTORAL INDICES % Returns as on 31st January, 2016.

Indices Close 1 Months 3 Months 1 Year 3 Years 5 Years 10 Years Trailing PE S&P BSE Auto 17046.03 -7.95 -6.17 -14.71 15.77 14.57 14.23 18.92 S&P BSE Bankex 17603.89 -8.92 -10.97 -22.50 6.50 8.17 13.32 13.93 S&P BSE FMCG 7438.52 -5.50 -5.21 -10.11 8.36 16.30 13.99 43.72 S&P BSE Healthcare 16304.98 -3.55 -9.75 4.08 26.68 20.85 16.65 36.74 S&P BSE Metal 6894.01 -6.81 -5.66 -32.35 -13.40 -15.50 -0.36 NA S&P BSE Oil & Gas 9258.06 -3.11 2.12 -8.73 -0.36 -0.05 7.54 14.02 S&P BSE Realty 1208.95 -10.07 -11.86 -33.26 -18.60 -10.79 NA NA S&P BSE TECk 5928.25 -2.06 -3.05 -3.39 16.03 9.98 9.35 20.97 Nifty India Consumption 3337.95 -7.44 -4.18 -5.43 12.93 14.68 12.27 28.38 Nifty Infra 2424.40 -12.45 -14.44 -26.41 -1.82 -4.00 1.04 17.06 Nifty Media 2468.40 -6.25 2.63 4.71 10.72 11.51 9.11 47.23 Nifty Dividend Oppt 50 1789.80 -6.52 -5.30 -17.84 0.77 5.24 NA 15.42 Source: BSE & NSE. Returns are calculated on absolute basis for less than one year and on CAGR basis for one year or more. *Return for CYTD (Year To Date) is calculated on absolute basis.

DIARY 12 filtered funds. The program then implements this portfolio investment after the investor gives his acceptance. The portfolio is monitored on an ongoing basis and when required, asset allocation rebalancing and other corrective action will be implemented. As the investor approaches the end of his goal, the relevant action required will also be taken. Because of such automation, simplicity in the investment process, and handholding throughout How Robo advisory helps the investment period, robo advisory becomes a If there is one thing that is certain, it is that there is an perfect self-service model for investors with limited abundance of financial products grabbing investors’ time and knowledge, and also for those who cannot attention. Fixed deposits, tax-free bonds, afford the services of financial planners. debentures, provident funds, post-office schemes, For distributors, the advantage lies in the potential to all jostle alongside mutual funds and the stock hit several objectives at one go. One, it keeps costs market; besides insurance making frequent inroads. in check because the online delivery model cost of Within each product as well, there is enough variety servicing customers. Two, it ensures both speedy to bewilder most investors. delivery of advice while keeping quality of advice The result is that investors need to be informed and uniform. Three, it allows them to scale up their client advised in order to make the decision that’s the most base. optimal and get them to their financial goals. Packed The US is at the forefront of the robo advisory schedules and hectic workdays leave investors with revolution, but it is still nascent. A Citigroup report little time or the means to consult financial advisors pegs the US robo advisory market at $14 billion in and make an effort to understand enough to do it on assets under management at end-2014, with players their own. For advisors and distributors, the such as Wealthfront, Betterment, and LearnVest challenge is to reach a larger section of the investing established in the field. The report also estimated the population and still keep costs under control. total addressable market in the UK at just 2.2 per cent of the total industry AUM. Robo advisory solves a good extent of these problems. It automates the process of advice, In the Indian market, online platforms themselves are investment, and monitoring. Delivered online, it new, making robo advisory even newer. Still, these involves little human interaction and thus maintains platforms, such as FundsIndia, Scripbox, My consistency. Within the Indian mutual fund space, Universe, and ArthaYantra have on offer robo the advent of online platforms has allowed robo advisory services in a variety of ways, while still advisory to gain footholds. As robo advisory catches keeping usability simple and easy for investors. The on, it can make financial advice accessible to more potential speaks for itself. For one thing, such people than ever before. services are more appealing to younger investors, which is characteristic of our working population. Several benefits Accessing these young investors now will prove to Robo advisory collects investors’ financial be beneficial over the long term as they move information, goals, risk profile, age, and other forward in their investment journey. For another, as relevant data at the outset. The algorithm uses these the regulator makes online investing easier and inputs to arrive at the most optimal fund portfolio for brings in more players, offline investors may move the investor, taking from a pool of preselected, online.

the US which robo advisory there uses extensively. Challenges GLOBAL MARKETS – KEY INDICES % Returns as on 31st January, 2016 While robo advisory holds the key to sustained Actively managed funds in India currently hold much Indices Close 1 Months 3 Months 1 Year 3 Years 5 Years 10 Years growth, there are challenges aplenty. The first is the more potential than passive funds. Given the degree RTS Index (Russia) 741.62 -1.97 -11.98 0.92 -23.00 -17.30 -5.71 trust that an investor develops when interacting with of qualitative analysis that goes into fund selection, Nasdaq (USA) 4613.95 -7.86 -8.70 -0.46 13.69 10.91 7.30 a financial advisor. It is hardly possible to establish a such as sector allocation, quality of stocks that make up the portfolio, fund manager ability, and so on, Nikkei 225 (Japan) 17518.30 -7.96 -8.20 -0.88 16.32 11.27 0.47 relationship with an automated system. The lack of a Dow Jones Ind Avg (USA) 16466.30 -5.50 -6.78 -4.07 5.92 6.47 4.26 automation of fund selection is well near impossible human advisor also brings up challenges in All Ordinaries (Australia) 5056.60 -5.39 -4.39 -8.92 1.05 0.83 0.41 and here, human input is crucial. Robo advisory also addressing more complex needs. Further, since FTSE 100 (UK) 6083.79 -2.54 -4.36 -9.86 -1.04 0.42 0.57 robo advisory right now considers only mutual funds, does not address investor behaviour or biases, and Bovespa (Brazil) 40405.99 -6.79 -11.91 -13.86 -12.25 -9.86 0.80 it cannot provide a comprehensive plan that includes does not provide any motivation. It is not a marketing Shanghai Composite (China) 2737.60 -22.65 -19.07 -14.73 4.71 -0.44 NA tax planning and multiple financial products. tool by itself that draws investors in; it is just an S&P BSE Sensex 24870.69 -4.77 -6.70 -14.78 7.74 6.66 9.72 efficient way to service customers. Hang Seng (Hong Kong) 19683.11 -10.18 -13.06 -19.68 -6.05 -3.47 2.29 A further challenge in the Indian context is the level Source: bloomberg.com. Returns are calculated on absolute basis for less than one year and on CAGR basis for one year or more. of complexity in filtering out funds and arriving at an Despite these challenges, robo advisory is gaining *Return for CYTD (Year To Date) is calculated on absolute basis. Sorted on basis of 1 Year returns. investible universe. The ETF market is popularity. Over time, it can gradually change the INSTITUTIONAL ACTIVITY (Rs. Crores) underdeveloped, unlike markets such as the UK or way financial advice is delivered and consumed. JANUARY-2016 01-Jan-15 To 31-Jan-16 Debt Equity Total Debt Equity Total FIIs 2,312.73 -11,126.44 -8,813.71 48,169.33 6,679.66 54,848.99 Mutual Funds 5,167.70 7,327.80 12,495.50 4,45,204.20 76,386.80 5,21,591.00

FOREX Currency movements against INR Source: bloomberg.com

% Change % Change % Change 31-Jan-16 31-Dec-15 31-Oct-15 31-Jan-15 (Month) (Quarter) (Year) 1 US$ 67.78 66.15 65.27 61.87 -2.40% -3.70% -8.72% 1 Euro 74.07 72.50 71.67 70.03 -2.12% -3.24% -5.45% 100 Yen 56.26 55.09 53.92 52.40 -2.08% -4.16% -6.86% 1 Pound 97.76 98.35 99.93 93.13 0.60% 2.22% -4.74% 722

MUTUAL FUND MONTHLY DATA Amount in Rs. Crore (Source: SEBI) TYPE AS ON 31ST DECEMBER 2015 FOR DECEMBER 2015 MONTH No. of No. of Assets Sales Purchases Net Sales Schemes Folios (Rs. Cr.) (Rs. Cr.) (Rs. Cr.) (Rs. Cr.) A Income/ Debt Oriented 1,619 79,51,820 8,07,297 12,32,511 12,01,132 31,379 Schemes (i+ii+iii+iv) i Liquid/ Money Market 54 3,51,093 2,32,970 11,65,764 11,60,504 5,260 ii Gilt 41 68,165 17,463 2,351 2,108 243 iii Debt (other than assured return) 1,517 75,32,514 5,55,364 64,396 38,520 25,876 iv Debt (assured return) 0 0 0 0 0 0 v Infrastructure Development 7 48 1,500 0 0 0

B Growth/ Equity Oriented 474 3,47,13,413 4,05,662 9,764 13,410 3,646 i Schemes (i+ii) ii ELSS 58 68,42,283 41,100 297 834 537 Others 416 2,78,71,130 3,64,562 9,467 12,575 3,109

C Balanced Schemes 27 23,45,392 42,193 649 5,160 4,511 D Exchange Traded Fund (i+ii) 57 7,11,548 17,660 1,342 2,018 676

i GOLD ETF 13 4,50,795 5,773 47 1 46 ii Other ETFs 44 2,60,753 11,887 1,295 2,017 722

E Fund of Funds Investing Overseas 31 1,31,101 2,023 36 15 21 Total (A+B+C+D+E) 2,208 4,58,53,274 12,74,835 12,44,301 12,21,734 22,567 Source: SEBI

DIARY 13 filtered funds. The program then implements this portfolio investment after the investor gives his acceptance. The portfolio is monitored on an ongoing basis and when required, asset allocation rebalancing and other corrective action will be implemented. As the investor approaches the end of his goal, the relevant action required will also be taken. Because of such automation, simplicity in the investment process, and handholding throughout How Robo advisory helps the investment period, robo advisory becomes a If there is one thing that is certain, it is that there is an perfect self-service model for investors with limited abundance of financial products grabbing investors’ time and knowledge, and also for those who cannot attention. Fixed deposits, tax-free bonds, afford the services of financial planners. debentures, provident funds, post-office schemes, For distributors, the advantage lies in the potential to all jostle alongside mutual funds and the stock hit several objectives at one go. One, it keeps costs market; besides insurance making frequent inroads. in check because the online delivery model cost of Within each product as well, there is enough variety servicing customers. Two, it ensures both speedy to bewilder most investors. delivery of advice while keeping quality of advice The result is that investors need to be informed and uniform. Three, it allows them to scale up their client advised in order to make the decision that’s the most base. optimal and get them to their financial goals. Packed The US is at the forefront of the robo advisory schedules and hectic workdays leave investors with revolution, but it is still nascent. A Citigroup report little time or the means to consult financial advisors pegs the US robo advisory market at $14 billion in and make an effort to understand enough to do it on assets under management at end-2014, with players their own. For advisors and distributors, the such as Wealthfront, Betterment, and LearnVest challenge is to reach a larger section of the investing established in the field. The report also estimated the population and still keep costs under control. total addressable market in the UK at just 2.2 per cent of the total industry AUM. Robo advisory solves a good extent of these problems. It automates the process of advice, In the Indian market, online platforms themselves are investment, and monitoring. Delivered online, it new, making robo advisory even newer. Still, these involves little human interaction and thus maintains platforms, such as FundsIndia, Scripbox, My consistency. Within the Indian mutual fund space, Universe, and ArthaYantra have on offer robo the advent of online platforms has allowed robo advisory services in a variety of ways, while still advisory to gain footholds. As robo advisory catches keeping usability simple and easy for investors. The on, it can make financial advice accessible to more potential speaks for itself. For one thing, such people than ever before. services are more appealing to younger investors, which is characteristic of our working population. Several benefits Accessing these young investors now will prove to Robo advisory collects investors’ financial be beneficial over the long term as they move information, goals, risk profile, age, and other forward in their investment journey. For another, as relevant data at the outset. The algorithm uses these the regulator makes online investing easier and inputs to arrive at the most optimal fund portfolio for brings in more players, offline investors may move the investor, taking from a pool of preselected, online.

Challenges the US which robo advisory there uses extensively. BECOME A FIAI MEMBER While robo advisory holds the key to sustained Actively managed funds in India currently hold much more potential than passive funds. Given the degree growth, there are challenges aplenty. The first is the FIAI invites all National Distributors, Banks and The FIAI members will be privy to our reports of qualitative analysis that goes into fund selection, trust that an investor develops when interacting with IFA Associations to become its members to be immediately prior to submission with regulatory such as sector allocation, quality of stocks that make a financial advisor. It is hardly possible to establish a able to successfully pursue the objectives of the bodies. relationship with an automated system. The lack of a up the portfolio, fund manager ability, and so on, body in interest of the entire industry & distributors Members will have the opportunity to engage with human advisor also brings up challenges in automation of fund selection is well near impossible at national level. eminent people and organisations through a range addressing more complex needs. Further, since and here, human input is crucial. Robo advisory also robo advisory right now considers only mutual funds, does not address investor behaviour or biases, and Membership Benefits of events. it cannot provide a comprehensive plan that includes does not provide any motivation. It is not a marketing FIAI provides an excellent opportunity to Members will be able to reach remote areas by the tax planning and multiple financial products. tool by itself that draws investors in; it is just an participate in the process of building a think tank use of the planned FIAI regional/ zonal offices. efficient way to service customers. A further challenge in the Indian context is the level that puts forth well-researched and independent FIAI will undertake services for promotion of of complexity in filtering out funds and arriving at an Despite these challenges, robo advisory is gaining points of view on topic relevant to the financial financial business of its members and the investible universe. The ETF market is popularity. Over time, it can gradually change the products distribution / advisory practice. development of the securities market. underdeveloped, unlike markets such as the UK or way financial advice is delivered and consumed. Members will be able to suggest and participate in FIAI will undertake studies /surveys on important building of the research subjects and the matters and access to such report will be helpful underlying reports. for the business practices of its members. Members will get access to the updates of Registration Process regulatory and business changes. To become a member, kindly contact us...

CONTACT FIAI Communicaton Address: #2004, The HUB, Tower Registered office: Navjivan Society, Office No. 1209, 2A, 10th Floor, One Indiabulls Centre, 841 S. B. Marg, Building No. 3, Lamington Road, Mumbai - 400 008. Elphinstone (W), Mumbai - 400 013 Website: www.fiai-india.org

Suggestions & feedback: Email: [email protected]

DIARY 14 filtered funds. The program then implements this portfolio investment after the investor gives his acceptance. The portfolio is monitored on an ongoing basis and when required, asset allocation rebalancing and other corrective action will be implemented. As the investor approaches the end of his goal, the relevant action required will also be taken. Because of such automation, simplicity in the investment process, and handholding throughout How Robo advisory helps the investment period, robo advisory becomes a If there is one thing that is certain, it is that there is an perfect self-service model for investors with limited abundance of financial products grabbing investors’ time and knowledge, and also for those who cannot attention. Fixed deposits, tax-free bonds, afford the services of financial planners. debentures, provident funds, post-office schemes, For distributors, the advantage lies in the potential to all jostle alongside mutual funds and the stock hit several objectives at one go. One, it keeps costs market; besides insurance making frequent inroads. in check because the online delivery model cost of Within each product as well, there is enough variety servicing customers. Two, it ensures both speedy to bewilder most investors. delivery of advice while keeping quality of advice The result is that investors need to be informed and uniform. Three, it allows them to scale up their client advised in order to make the decision that’s the most base. optimal and get them to their financial goals. Packed The US is at the forefront of the robo advisory schedules and hectic workdays leave investors with revolution, but it is still nascent. A Citigroup report little time or the means to consult financial advisors pegs the US robo advisory market at $14 billion in and make an effort to understand enough to do it on assets under management at end-2014, with players their own. For advisors and distributors, the such as Wealthfront, Betterment, and LearnVest challenge is to reach a larger section of the investing established in the field. The report also estimated the population and still keep costs under control. total addressable market in the UK at just 2.2 per cent of the total industry AUM. Robo advisory solves a good extent of these problems. It automates the process of advice, In the Indian market, online platforms themselves are investment, and monitoring. Delivered online, it new, making robo advisory even newer. Still, these involves little human interaction and thus maintains platforms, such as FundsIndia, Scripbox, My consistency. Within the Indian mutual fund space, Universe, and ArthaYantra have on offer robo the advent of online platforms has allowed robo advisory services in a variety of ways, while still advisory to gain footholds. As robo advisory catches keeping usability simple and easy for investors. The on, it can make financial advice accessible to more potential speaks for itself. For one thing, such people than ever before. services are more appealing to younger investors, which is characteristic of our working population. Several benefits Accessing these young investors now will prove to Robo advisory collects investors’ financial be beneficial over the long term as they move information, goals, risk profile, age, and other forward in their investment journey. For another, as relevant data at the outset. The algorithm uses these the regulator makes online investing easier and inputs to arrive at the most optimal fund portfolio for brings in more players, offline investors may move the investor, taking from a pool of preselected, online.

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Communicaton Address: #2004, The HUB, Tower 2A, 10th Floor, One Indiabulls Centre, 841 S. B. Marg, Elphinstone (W), Mumbai - 400 013 Registered O ce: Navjivan Society, O ce No. 1209, Building No.3, Lamington Road, Mumbai - 400 008.