DSP BlackRock sees growth potential in Northeastern market

With economic activities slowly picking up in Northeastern states, mutual fund company DSP BlackRock sees growth potential in the region.

The company expects a significant rise of around 80% in its assets under management (AUM), from current Rs 160 crore to Rs 250 crore, in the next two years across the seven Northeastern states.

The rise in its AUM in the year 2015 too was impressive as it grew at the rate of 60%, from Rs 100 crore in 2014 to Rs 160 crore in 2015.

DSP BlackRock has 3.05% market share in Northeast, with the leading players being SBI and UTI mutual funds.

“Be it developing roads or railways or infrastructure, the focus of government is on investing in Northeast. We clearly see economic activities to be on a rise in the region. And wherever there is growth, there is potential for us and we expect the same in the Northeast. The trend is already on,” said Rohit Singhania, vice president and fund manager of DSP BlackRock.

Financial illiteracy, unwillingness of investors to take risk, averse to long term investments are few of the reasons, Singhania cited, were behind slow pace of growth for mutual fund market in Northeastern region.

Amongst the Northeastern states, it is Assam that has been the dominant market for DSP BlackRock for all these years. Out of its Rs 160 crore AUM in 2015, the chunk of Assam alone was around Rs 147 crore.

However, the company now plans to get bit aggressive to increase it reach and penetration in other Northeastern states.

“Nagaland, Mizoram and Arunachal Pradesh are untapped states for us. We would be employing more financial advisors in those states to tap the potential,” added Ehsanur Rohman, assistant vice president and sales head of Northeastern region.

He said DSP BlackRock Micro Cap Fund and DSP BlackRock Tax Saver Fund were the two funds that have gained popularity in the region.

Both the funds have given 18.78 and 14.13% returns respectively since inception.

Over the next three to five years, Singhania expects “very strong” return from equity as an asset class vis-a-vis other assets classes like gold and real-estate.

“The last five years have not been so impressive for equities. We see that reversing now as growth rates in the economy picks up. The retail investor should incrementally look at allocating higher share to equities because we feel that equity is likely to outperform all other asset classes in the next three to five year,” he said.

He also expects the demand outlook to pick up against the backdrop of improvement in the economy. He added: “Given the expected pick up in the reforms and GDP growth coupled with falling interest rate, we remain positive on sectors like private sector banks, automobiles, consumer durables, oil marketing companies and capital goods sectors.”