HDFC Asset Management Company Ltd (HDFCAMC) Q3 FY22 Earnings Concall Transcript

HDFC Asset Management Company Ltd  (NSE:HDFCAMC) Q3 FY22 Earnings Concall dated Jan. 24, 2022

Corporate Participants:

Simal Kanuga — Chief Investor Relations Officer

Piyush Surana — Chief Financial Officer

Analysts:

Dipanjan Ghosh — Kotak — Analyst

Ansuman Deb — ICICI Securities — Analyst

Aditya Jain — Citigroup — Analyst

Mohit Surana — CLSA India — Analyst

Prayesh Jain — Motilal Oswal — Analyst

Ritesh Badjatya — Asian Markets Securities — Analyst

Unidentified Participant — — Analyst

Sahej Mittal — HDFC Securities — Analyst

Abhishek Saraf — Jefferies — Analyst

Hiral Desai — Anived Portfolio Managers — Analyst

Madhukar Ladha — Elara Capital PLC — Analyst

Devesh — Individual Investor — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to Q3 FY ’22 Earnings Conference Call of HDFC Asset Management Company Limited. [Operator Instructions]. From the management team, we have Mr. Navneet Munot, MD and CEO; Mr. Piyush Surana, Chief Financial Officer and Mr. Simal Kanuga, Chief Investor Relations Officer. I now hand the conference over to Mr. Simal Kanuga, who will give us a brief, following which we will proceed with the question-and-answer session.

Thank you, and over to you, Mr. Simal.

Simal Kanuga — Chief Investor Relations Officer

Thanks, Nirav.

Good evening, everyone, and hope all of you, your families are able to manage all Omicron or third wave whatever name we call it by. So the people in our company as of now are working from home. The transition to work from home once again has been smooth.

Start with a quick update on industry numbers. We always spoken about AUM and net flows. We thought it would be useful to throw some light on gross flows, especially on the equity side of the business. For the first nine months of the current financial year, gross flows into equity-oriented funds have added up to INR4273 billion, that is 33.3% of equity AUM, at the start of the financial year. Net flows during the same period where rupees INR1711 billion, that is 13% of the equity AUM at the start of the year. Equity-oriented AUM as at end of December stands at INR17.7 trillion up from INR13 trillion at the start of the financial year.

In the debt category, industry saw net outflows of INR584 billion for nine months ended December ’21 and INR539 billion for the quarter ended December ’21. Liquid fund that’s in net inflows of INR359 billion and INR333 billion for nine months and the quarter-ended December ’21 respectively.

We now move to us. We closed the quarter with an AUM of INR4367 billion and the average for the quarter was INR4471 billion with a split of 46 and 54 in equity to non-equity oriented assets. We continue to service 98% of PIN codes across the country who are 227 branches and 1207 employees. This would not have been possible without the efforts of our 70,000 plus distribution partners.

Our market share in overall AUM stands at 11.7% on QAAUM basis and 12.9% if we exclude ETFs. On actively managed equity-oriented AUM, our market share stands at 11.6%, 14.6% on a fixed income, and 14.8 in liquid AUM. All these numbers are based on quarterly average AUM. Individual investors are now 59.4% of our total AUM. 5.7 million unique investors have trusted us with their capital. For the month of December ’21, we saw inflows of INR11.9 billion across 3.44 million Systematic Transactions.

We launched two new funds during the course of the quarter. One was multi-cap fund and other an index fund called HDFC Nifty Next 50 fund. The ilio [Phonetic] of the multi-cap point as of end of December stands at INR43.53 billion. Over the next few quarters, we proposed to launch a few more sectoral and thematic funds, index funds, and also some ETFs. We are also exploring passive funds in fixed income space.

We made an announcement in December of setting up a wholly-owned subsidiary in ISSC that is GIFT City Gandhinagar. We’ll be launching multiple funds to cater to international investors through this company. We hope to go live with this company during the course of the upcoming financial year subject to regulatory approvals. We now move to financials.

The overall financial performance of the company during the quarter ended December ’21 is similar to the corresponding quarter in December 2020, increased due to an increase in AUM, as well as a more remunerative mix with a higher percentage of equity AUM. However, this increase was tempered by a dilution in margins in some of the schemes. Other income for the quarter ended December ’21 is lower than the quarter ended December ’20. The company is in process of expanding its product bouquet and consequently, that is an increase in expenses on new fund offers. There has also been an increase in routine business development expenditure, as the business moves towards normalization.

In February of 2021, a grant of ESOP was made to certain employee and the expense had employee benefit expenses including the pro-rata amortization of the fair value of the ESOP, as required under Ind AS accounting framework applicable to the company. This is a non-cash charge which is book value-neutral. In the third quarter of FY ’22, this non-cash charge amounted to INR173 million. As communicated earlier employee benefit expenses have increased as the company resumed its practice of annual increments and employee remuneration this year after taking a break from the practice last year due to COVID 19 pandemic.

This is Piyush’s last investor call as HDFC AMC, CFO. He leaves us on the 31st of January and 21:31[Indecipherable] takes over from him starting 1st Feb. Nauzad [Phonetic] joined us in mid of December and has been working alongside Piyush for over a month. We also have Nauzad [Phonetic] on the call with us today. Nauzad [Phonetic] has over 26 years of experience and comes to us from Lupa Systems. He has worked with KKR India for over 6 years and prior to that with group including Kotak Investment Advisors for over 13 years.

Thank you very much for listening and we welcome your questions.

Questions and Answers:

 

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of the Dipanjan Ghosh from Kotak. Please go ahead.

Dipanjan Ghosh — Kotak — Analyst

Hi, good evening, everyone. Just to the 2, 3 questions from my side. One, obviously on the yields, if we see that — if I look at the quarterly average AUM and look at the equity mix that has increased by around 700 basis points over the past year on year, while the yields broadly remained flat. So if you could shed some light?

My second question is if I look at your core sequential increase in investor accounts versus your sequential increase in unique customers there seems to be some dichotomy. So is it because in most of the NF pools or some of the new fund offerings probably with the existing customers are contributing a higher share of incremental flows?

And the third question is if I look at your market share for the individual segment and that active equity individual segment and segregate it into channel-wise direct and regular, probably the market share losses in the direct channel has been significantly higher be it in T30 or B30 compared to regular. So if you can you shed some light as to what is happening in some of the direct channels, we saw the incremental flows through some of the — gross flows, with all the digital channels. Is there is some pressure on that? That’s all from my side. Thank you.

Piyush Surana — Chief Financial Officer

Hi. So first on the margins. I think this is something that we have discussed many times over the past couple of quarters. The challenge on this front has actually got further magnified due to high gross sales in absolute terms as well as the percentage of outstanding equity AUM that the industry has seen. So let me try and explain this to you with an example.

So the size of the equity-oriented mutual fund industry is some INR17 lakh crores or 17 Chilean rupees [Phonetic]. Gross monthly sales are around 50,000 to 60,000 crores. So if you annualize that number, the annual gross sales 35% of industry AUM, while net sales is approximately half of gross gross sales, which like 17% to 18% percent of industry AUM or actually even lower. So just qualifying that the numbers I’m talking are purely illustrative and nothing else. See the industry as a whole is making 70 basis points or so on equity-oriented AUM and 30 to 40 basis points on new flows and net sales over the next two years is, let’s say INR25,000 crores a month that is INR6 lakh crores over these two years. So what we have to margins?

Assuming no mark-to-market gain AUM will go up to INR23 lakh crores or INR23 trillion rupees, but this AUM will have new flows of that INR12 lakh crores and INR11 lakh crores of old AUM. That will be the breakup off the new 23 lakh crore number two years later. So industry will roughly have 50% allocation each from new and old effects. I repeat, I mean just to qualify that the numbers I’m talking are actively illustrative and anything else, to explain the thing and I’m probably oversimplifying things here, but this is the best way to explain what’s happening.

So it would be pertaining to note that lower gross flows or for that matter higher net flows as a percentage of gross flows can alter the situation totally our for that matter rapid rise in the market, coupled with lower gross flows can also make margins look very different. The good news is, the industry is realizing and pricing products better, what we saw happening with some of the NFOs in the recent past is now getting better. Our past experience over the last several years, says that our way out of our normal pricing can’t last forever. In fact, I would say that actually, high distribution costs will ultimately hurt distributors the maximum because direct plans will become cheap and migration from distributor folios to direct folios may happen at a much faster pace, so I guess few distribution partners are realizing this phenomenon.

So what is our strategy in times like these? So we want to balance between two extremes. We are not keen to do business at any price, but at the same time, we do want to not be away from all the action, so we are doing much more, on the other hand, to create the pull for our products via advertising, via communication, the new product launches that Simal talked about. In fact, we have done 6 NFOs this year which would be more than what we would have done in the last several years. What we have done in the last 9 months or so. Interaction including the knowledge flow, working on let’s say the customer data platform, working on the partner integration to the API Gateway, marketing automation, and a variety of other things that we can discuss.

Again coming back to this pricing pressure in the market, we have lived through these kinds of times in the past and look at what happened in 2007 and 2008 or for that matter I think let’s go back to even 1999 or 2000s. I’m not talking from a market or valuation perspective. But the way mutual funds got sold and as they say, she does not repeat, but it does rhyme [Phonetic]. And lastly, we have all been hungry for growth and have actually paid for our growth. In fact, I would say about our industry that we are now half a trillion-dollar industry, I am talking about the mutual fund industry in India, $0.5 trillion of AUM, but if you look at the profit pool, I mean, it’s around $1 billion of profits. I would like to believe that with more players getting listed and some of the listed players with strict margin discipline, we changed the way we do our business. And it’s just a matter of time is what I believe.

Dipanjan Ghosh — Kotak — Analyst

Sure, and the second question, I think the difference between folios and unique customer accounts sequentially looks a little bit different. So is it that on the NFO’s probably we are kind of getting a lot of the older customers are kind of getting the flows out there?

Piyush Surana — Chief Financial Officer

Some bit off on that account, some bits maybe some of the older people may have booked some profits. So net-net, I think the growth in volumes, as well as unique account is almost same. Yeah, that other observation is right.

Dipanjan Ghosh — Kotak — Analyst

Sure. And lastly, one question if I see your market share for the retail and HNI segment in active equity and break it across channels regular and direct be it T30 or B30, we have seen moderation much higher moderation in the direct channel in terms of our market share compared to in the regular. This I am specifically talking only for the retail and HNI Active Equity segment. So I just wanted to get some perspective as to what is happening on those channels and how to think about it going ahead?

Piyush Surana — Chief Financial Officer

So, direct also includes FinTechs. They are the RIA and feed money into the direct plan, and over the last couple of quarters, in fact, very pronounced in this financial year so far, as well as in the last financial year, not so much in the year before they are growing at a rapid pace.

And just let me give you some industry numbers here. These are some broad estimates from the database we have. The total AUM of theirs is around 55,000 odd crores of which 40,000 odd crores is in equity-oriented funds. A more relevant point is that FinTechs as a group have registered over 6 million SIPs in the first 9 months of the current financial year. So there is a key distribution channel. And I think at our end I think we are trying our best to integrate our platform with theirs. We have a partnership with all the key FinTechs. Our teams are working of building this further.

But just to keep one thing in mind that, some of the products, which are getting sold there, for example, I mean one of the highest-selling product on these platforms over the last few months has been technology [Phonetic] funds product that we don’t have, we have seen that over a period of time, it’s important that we have the right set of products for our customers and majority of these FinTech customers are young and first-time mutual fund investors. So another big focus at our end has been on the investor education and investor awareness campaigns, et cetera. How do we ensure that we sell the right product to the right investors, and over a period of time, I think we also believe that our market share within these platforms should also go up compared to where we are today

Otherwise, in most of the other channels. I think we would be in line with the industry. Of course, I think you need to keep in mind that a couple of bank-sponsored AMCs have an advantage where there could be guided or they could be a closed architecture when it comes to the product sold by them, but if you adjust for that then, then I think we would be in line with the industry.

Dipanjan Ghosh — Kotak — Analyst

Sure. Thank you and all the best going ahead.

Piyush Surana — Chief Financial Officer

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Ansuman Deb from ICICI Securities, please go ahead.

Ansuman Deb — ICICI Securities — Analyst

Yeah, good evening to all, and thanks for the opportunity. My question was regarding our initiatives on the passive side. We have been taking some steps on that for the last 2, 3 quarters, and you also mentioned, some of them in your introductory comments. If you could give some more color in what is our strategy on the passive sales both on EF and alternate space and what portion of revenue or what kind of business we can look from this segment may be in some of that 3 to 5 years outlook. Thank you.

Piyush Surana — Chief Financial Officer

So I think we have been repeating it over the last couple of quarters that I mean at the outset, I’m a strong believer in active management and as an organization, we have stated this earlier and we will want to repeat that if it comes to it. We will be the last man standing in terms of active management. We will leave no stone unturned. We put in all resources required, management benefits to sum it up, I mean whatever is required to create value for our customers.

Having said that, there is a segment which is looking at options on the passive side. We have been filling up our product bokeh. For the last few months, we have done two index products. We have got approval for two more index funds. I mean Nifty100 and Nifty100 equal weight. They will be launching soon. We’ve got approval for nine ETFs that we will be launching over the next several months. We are exploring the ETFs on the debt side as well. Silver ETF is another category where we would like to be present. So I think there is a whole game plan in terms of filling our product bokeh on the passive side and I would say that we would like to be a relevant player on the passive side and a dominant player on the active side. Simply because we also have to keep in mind the pricing and the margins on the passive side and won’t like to grow the AUM just for the sake of it. I think there HDFC group moorings in us won’t allow us to do that, but we want to ensure that we have the full product bokeh.

We remain a one-stop-shop for all kinds of solutions, be it in the active space or in the passive space for our partners, for our investors and doing everything possible to get relevant, I would say a share on the positive side as well.

Ansuman Deb — ICICI Securities — Analyst

Right. So basically in terms of the, you are saying we will be a relevant player, I get that sense and, but in terms of infrastructure in terms of employees all kinds of requirements, are we ready with that in terms of these new initiatives?

Piyush Surana — Chief Financial Officer

Yeah, absolutely. I mean we have a fund manager who has been a veteran in the passive space for a long time. Historically, maybe a couple of years back, this market was very small. Initially, it grew, mainly because of the flows from a couple of institutions, which were a mandate to few AMCs, but as the market is expanding. I think we are looking at everything to ensure that across all channels as well as I mean in all investor segments, we have the right products in place. We have the right processes in place to reach out to all investors on the passive side as well.

Ansuman Deb — ICICI Securities — Analyst

Thank you.

Operator

Thank you. [Operator Instructions] Our next question is on the line of Aditya Jain from Citigroup. Please go ahead.

Aditya Jain — Citigroup — Analyst

Thank you. Thanks for that explanation on the impact of the NFO’s. Just a follow-up on that. So you see, think of the impact of this on the financials, would you say that a lot of that is already in the AUM? So the reason I may say that is, as an example, the multi-cap fund was launched in the middle of December quarter. So while there is a 4,000 unit crore AUM at the end of the period. Maybe sharing the average AUM might be much lower. So in that sense, would you say the impact of this sort of pricing pressure is it yet to come? And could that lead to a drop in yield in 4Q onwards?

Piyush Surana — Chief Financial Officer

I think it’s a matter of various things. As I mentioned earlier, it will depend on the nature of gross flows, as well as the net flows, how much gain comes from MTM versus the flows. So all of those kinds of things. I think NFOs have a certain kind of pricing pressure versus the existing fund. Within the existing funds, I mean the margins are different for various funds as well as, as I have said, I think if the market grows, I mean market delivers higher MTM gain versus the flows the picture would be slightly different.

There have been highly competitive pricing on the NFOs over the last couple of quarters which I talked about earlier. And we are hoping that over a period of time industry will realize that we need to have more discipline on that front. And I guess that should happen sooner than later.

But broadly, I mean I just need to make one point that there is a difference between the margin that we have on the book versus the margin that we get when newer flows are coming in and we need to keep in mind. I now again, when I say the new flows within that also NFOs versus the existing funds. So we need to keep that in mind. Yeah.

Aditya Jain — Citigroup — Analyst

Right. Yeah. So that’s what I was asking towards, the impact of the new flows, could it make a difference in the next quarter, but okay.

On the second part, the second question from my side, if you could just talk about the yields on these sort of not purely passive but things like the equal-weighted index fund, which is not to completely pass but you could say some sort of layer on top of passive, what kind of yield do these contribute?

Piyush Surana — Chief Financial Officer

So Aditya on that ER of the equal weight direct plan is at 40 basis points. So the yield would be somewhere around 30, 32 or 33 basis points.

Aditya Jain — Citigroup — Analyst

Okay, so somewhere between passive and active equity.

Piyush Surana — Chief Financial Officer

Actually, if you say active equity NFOs they are I think cheaper than this [Speech Overlap] but yeah, I think we will look at it this way, like the Nifty 50 Index, one, we run at direct plan at 20 bps expense TR, while the equal weight is at 40 and the Nifty Net 50 is at 30.

Aditya Jain — Citigroup — Analyst

Understood, got it, okay. Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Mohit Surana from CLSA India. Please go ahead.

Mohit Surana — CLSA India — Analyst

[Technical Issues]

Operator

Mohit, sorry. Your voice is breaking terribly may I request you to come on a better reception area. Please.

Mohit Surana — CLSA India — Analyst

[Technical Issues]

Operator

Mohit sorry, we are unable to hear you. May I request you to come back in the question queue? Thank you. The next question is from the line of Prayesh Jain from Motilal Oswal. Please go ahead.

Prayesh Jain — Motilal Oswal — Analyst

Yeah, good evening, sir. Just a couple of questions from my side. Firstly, we see a lot of outflows on the debt segment of the world for the industry? Could you cite some reasons for it, and how do you see the trajectory going ahead for this? And my second question will be on the expenses as to how do you see the expenses trajectory for HDFC AMC going ahead now with the kind of NFO launches? Also some bit more on employee wherein where are the employee additions and how do you see that trajectory going ahead? So these are my two questions.

Piyush Surana — Chief Financial Officer

On the debt side, I think over a period of time as RBI takes away the excessive liquidity that got pumped in post-COVID, I think that will reflect, maybe a bit of like CapEx starting at some point in time. The corporate money, which is their missing and maybe some of the other instruments for example earning some bit of money may have more to like that ETFs, et cetera, from the actively managed funds. But otherwise, no larger trend that we can see on the fixed income side. In fact that our end, we are seeing incremental flows, of course, is trickling in, not very large into the credit risk fund and the risk appetite comes back and people are looking at the top-notch players who did extremely well during the entire credit crisis period. So we are seeing positive stores in that particular front and few other fronts. But yeah broadly to talk about the industry numbers, I think we have seen a decline in that area.

Your second question was on the overall trajectory in terms of people. I think we added our CTO. We will be adding more people on the technology side, on the digital side, on product marketing, and some of those. But otherwise, from an overall headcount perspective, it wouldn’t have changed much. Within that, as I said, some of these areas, which are high focus areas for us, we would have seen people additions.

Prayesh Jain — Motilal Oswal — Analyst

Okay. Just coming back to the debt closure [Phonetic] in the past, like over the last decade or so, we would have seen this debt AUM growing at a decent 10% to 12% CAGAR. Do you think that kind of trajectory can hold in the next few years as well?

Piyush Surana — Chief Financial Officer

If I look at the overall size of bank deposits in India versus the debt mutual fund, and your observation is right. In fact, that percentage hasn’t changed. The growth has been more or less in line or maybe slightly lower at times than even the growth on the bank deposit side. So there is a long way to go. I think with the last few years, we have seen significant acceptance of equity as an asset class among the retail investors, the SIP flows that we see are primarily in equity fund or hybrid funds. But I think several of us have grown seeing recurring deposit as a product, which was also kind of a SIP in fixed income.

That’s a concept, which hasn’t really taken off, but I guess for a set of investors that could also be an interesting product. I think as an AMC, we are also thinking off working on that and I agree with you, I think, in line with the overall deposit growth, I think that should be there, in fact, should be higher than that because the mutual funds are clearly providing a good and convenient and diversified, highly transparent, I would say product on fixed income investing and as said. There is a lot of potential on the retail penetration of fixed income as a product category.

Prayesh Jain — Motilal Oswal — Analyst

Okay. Okay. Just coming back to the extent part as well. So you know if you look at our OpEx upon AUA, we are roughly around 12 bps income in terms of that? Do you think that we will maintain this or it can trend higher? We’ve been in that 12 bps, for the last three quarters. So do you think that this will grow higher or this will be at this level and [Indecipherable] the level EBITDA margins will decline?

Piyush Surana — Chief Financial Officer

So I think for some time, it should probably remain at this level of course here, you would have to take into account the sub cost which is that one bps, that charge kind of whatever we have till now runs out in the next month. So there’ll be a little bit of a dip because of that but otherwise, we are also investing in other things like technology, a little bit more people here and there. So roughly, we should be there before it starts going down again.

Prayesh Jain — Motilal Oswal — Analyst

We have been, when do you see this trending down in the three quarters [Indecipherable].

Piyush Surana — Chief Financial Officer

Let’s see, a year, a year and a half probably 2 years.

Prayesh Jain — Motilal Oswal — Analyst

Okay. Okay.

Piyush Surana — Chief Financial Officer

Because we are putting in a substantial amount of money in business development cost.

Prayesh Jain — Motilal Oswal — Analyst

Okay. Thank you so much.

Operator

Thank you. The next question is from the line of Ritesh Badjatya from Asian Markets Securities, please go ahead.

Ritesh Badjatya — Asian Markets Securities — Analyst

Thanks for the opportunity. Sir, we have been a good amount of inflows across the industry for the last couple of years and equity is accepted as an asset class that we also mentioned [Technical Issues]. I want to understand in the present situation, how do you see this as a deployment challenge because at one end Central Bank across the world is in the Board of pricing [Indecipherable] and that is having implications on the fixed income market and also on the equity side. So how do we mitigate this transformation time obviously, but how do you those face the investor of time and how do you adjust your investors [Indecipherable]?

Piyush Surana — Chief Financial Officer

I think the investible universe is expanding at a faster pace than the money that’s been flowing to us. We are still a very small percentage of the overall free-float market cap in India. I mean if you compare us with, let’s say, some of the other developed markets, I think the total AUM available to invest in mutual funds in India is substantially lower. And as I mean without taking names you would know better the kind of new players who have been getting listed over the next several quarters, the amount of new listings that one can talk about.

So we haven’t reached the stage where I think there is a — I mean there is a lot of money chasing through a stock. In fact, as a Religare broad-based, the investment universe is only expanding, in the existing, as well as the newer listings that are likely to happen over the next several quarters on other years in India. So we have a long way to go in terms of the capacity of the mutual fund industry to deploy money.

Ritesh Badjatya — Asian Markets Securities — Analyst

But sir if we look at last 2-3 years performance and we have also seen action is very much concentrated in a couple of the stocks. So does the industry take some more time or how do you see that?

Piyush Surana — Chief Financial Officer

It’s actually changing. So of course calendar years 2018, 2019, 2020 were the years, where you are absolutely right. A couple of top stocks accounted for, the bulk of the market returns. I mean if you take the Nifty, the top 5-7 stocks would have accounted for maybe anywhere between 7200% of the returns, but since last year, the rally is becoming more broad base. In fact, that is also reflecting in our performance and then our yearbook, I think there is a beautiful slide on that that how active managers have done well in the past whenever we have seen a more broad based rally and this time is no different. I think the Alpha generation crossed most of our schemes has been quite good and the last year and half its value is becoming broad-based.

So there is the point I made earlier that investable universe is expanding rather than shrinking. If that is a fee up.

Ritesh Badjatya — Asian Markets Securities — Analyst

Thank you, sir. That’s all.

Operator

The next question is from the line of Mohit Surana from CLSA. India. Please go ahead. Mohit Surana may I request you to unmute your line and go ahead with the question, please.

Mohit Surana — CLSA India — Analyst

Sir, my first question is that obviously, you said on an industry level NFO flows are coming at lower profitability. So my question to you is will you not at some point in time, increase the expense ratio on these funds because otherwise, then it will lead to cannibalization of [Indecipherable], you know, existing change right?

Piyush Surana — Chief Financial Officer

Expense ratios are at GAAP only. I mean expenses ratios are at GAAP. I think it’s the function of the distribution call that has been paid in these NFOs and you are right. Over a period of time as flows come in at lower cost as they see more disciplined coming in, in terms of pricing, obviously, I mean I would say, hopefully, you will see better margins in these products as well.

Mohit Surana — CLSA India — Analyst

Understood sir. Sir, the second question is how alternative strategy, they are saying in the past you said that you are on drawing board. So is there anything concrete coming out of there? And what value will these kinds of alternative strategies bring to the company?

Piyush Surana — Chief Financial Officer

So you are right, I think in the last one or two calls, I mentioned about we have plans to enter into alternatives and in the next financial year, you will see us launching a product on the category 2 side. We have filed then application to SEBI for permission to launch a category 3 fund. Over a period of time, we have the ambition to build our presence on the alternative side as well. So that’s very much on track. You would have heard about our plans to add up, a wholly-owned subsidiary in GIFT City.

Mohit Surana — CLSA India — Analyst

Got it. Sir. And any particular value you’re saying that these strategies will bring to the table in terms of profitability in terms of bringing more investors et cetera?

Piyush Surana — Chief Financial Officer

I think these are early days, and as I said we have the ambition to put up the whole platform over the next several years. But these are like too early, I would say to talk about the exact numbers.

Mohit Surana — CLSA India — Analyst

Thanks a lot for taking my questions.

Operator

Thank you. The next question is from the line of Karthik from Marial Asset Management [Phonetic]. Please go ahead.

Unidentified Participant — — Analyst

Hi, sir. Thank you for this. I just wanted to understand if you can give me a ballpark figure on the yield on NFOs versus your existing funds?

Piyush Surana — Chief Financial Officer

I think are different products would have different numbers. In fact, I mean it’s all kind of, you can see the direct ER of the funds of not only of us, but the industry and can also look at the distributor plan versus the direct plan and I think you can definitely, I think kind of the full scan.

Unidentified Participant — — Analyst

Okay. Alright, sir. thank you.

Operator

Thank you. The next question is from the line of Sahej Mittal from HDFC Securities, please go ahead.

Sahej Mittal — HDFC Securities — Analyst

Hi, good evening, sir. Sir so my first question was around, I know you answered that part actually to better understand things, given that the new NFOs are coming out very steep distributor commission, so what is your strategy going forward by[Phonetic], could you see some [Indecipherable] over there by increasing our net yield or how do we go about it?

And the second was around if you could indicate some ballpark number of what is the proportion of bank book in our current AUM, current quarterly average AUM on equity side to better understand what could be the pressure on the yields in the foreseeable future?

And the 3rd was around, are there any one-offs in the other income given that we have seen some good returns on a sequential basis? So yeah, those were the three questions.

Piyush Surana — Chief Financial Officer

So again, on the NFO side on the core categories, we only had one fund category left, that was multi-cap the NFO that we did few weeks back. And last year in December, we had Dividend Yield Fund. Now, our core categories is like almost full. There are few products that we have launched to fill our product gap on the international fund side. On the passive side thematic is one area where we have done BFSI fund. We have few more funds in the pipeline. But overall, as I think we have been saying our intention would be to grow as much if not more, in our existing funds. I think the performance has been looking up. We have one of the best-in-class product range across all categories. We have one of the best product lineup on the hybrid and solutions side where we believe there is tremendous potential for us to grow some of the other categories, for example, focused equity which is like very small for us relative to the size of that category and Rushi will be managing that fund and she has a brilliant track record over the last decade or so. There is tremendous scope for us to grow large and mid-cap is another category, which is Gopal managing and there is huge scope for us to grow in that. And like the balanced advantage or variety of other products where we have lot of potential.

So while I talked about the overall margin pressure, because over the last few months, I think financial year till date out of 170,000 crores of equity flows, 40% or so have come through the NFOs. But I would assume that over a period of time, an incrementally higher amount of flows would be into the existing funds, save the money, which is raised in the NFOs and within the NFO also, we are hoping for I would say more better pricing going ahead, does that answer your question.

Sahej Mittal — HDFC Securities — Analyst

Sir, but my question was around can we see some mean reversion in the distributor commission given that these are at elevated level. So is there a possibility over there?

Piyush Surana — Chief Financial Officer

I think as I told you earlier that I think distributors also understand that two higher payout in an NFO means, much lower TR of the direct plan and that’s similar [Phonetic] on a lighter note. But I would say on a serious note as well mentioned when somebody asked a question on the TR of the passive fund that some of the actively managed funds TR is lower than even the passive fund and you have to invest heavily as an organization to deliver over a long period of time, and I’m sure investors and distributors would understand that in the fund houses will have to be well compensated for them for that. So I guess I think we have seen these periods earlier and I’m sure over a period of time, we will see the mean reversion.

Sahej Mittal — HDFC Securities — Analyst

Got it. And the other way it was around what the percentage of our AUM would constitute back book on the equity side?

Piyush Surana — Chief Financial Officer

What? We can’t give that Sahej. So we don’t give a breakup.

Sahej Mittal — HDFC Securities — Analyst

Pardon me, we just [Phonetic] number to understand for next 3 or 4 quarters or we could do some [Indecipherable] calculation to understand you know for how long this yield pressure can continue if it is possible.

Piyush Surana — Chief Financial Officer

No need to explain, right. The yield pressure can continue if the gross flows in the industry, are substantial or material part of the outstanding AUM. So if that continues, we can look at gross flow numbers because finally gross flow and net flows what gets added to the AUM is net flows. But what kind of get reprices the gross flow number, but we can give that split.

Sahej Mittal — HDFC Securities — Analyst

Sure. Thank you and all the best.

Piyush Surana — Chief Financial Officer

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Abhishek Saraf from Jefferies, India. Please go ahead.

Abhishek Saraf — Jefferies — Analyst

Yeah, hi, thanks for the opportunity. So many of my questions have been answered. I just wanted to understand some qualitative color if you can give on our Indian market share, which has been sliding and so if you can just give some understanding in terms of the M2M market share or the gross flow market share and net flow market share, where actually we are getting hurt? And also sir, just one thing that we have, we have also been trying to address these market share losses and now it’s been almost around 2 years that we took some active steps towards that. It appears that the results have still not fallen in line so what according to you still needs to be done that we can start to rest thet market share, especially in the equity AUM.

Piyush Surana — Chief Financial Officer

Sure. So I mean we have in past discussed this at length. We are aware of the reasons behind loss of market share. So let me today spend some time on the AUM and net flow numbers category-wise then I think this should help in understanding how we go about analyzing market share and also the action plan at our end for a way forward. And this process, I might tell you too many numbers and so do pardon me for that.

So let me start with some of the categories, which have grown and have become quite large where our market share in these respective categories is something that we need to address. I think just few minutes back I talked about the focus points, which are now like INR95,000 crores, nearly 5.5% of the industry AUM and our funded INR11,000 crores or so. So we are like a half-percent of our equity-oriented AUM. And we have catch up to do there. Ruchi [Phonetic] is going to manage this fund now. She was managing Templeton’s focus fund, which is among the best performing fund in the category. Our team is working on doing a relaunch of this fund, clear communication of our strategy, and back it up with the information and the distribution, which are required. So we hope to grow our share in this category. I am just giving you 2 or 3 examples, so you can understand the things that we are doing at our end. We’ve also spoken about our miss [Phonetic] door by design on sectoral and thematic space. We strongly believe that the market wasn’t ready and more often than not risk is something that does not get enough due, but sectoral and thematic funds, I’m now finding some space in investors portfolios. The AUM for the industry here is INR1.47 lakh crores. I mean as against let’s say INR84,000 odd crores as of December, 20. The largest contributor to this growth has been the technology fund and then we would like to believe that this has more to do with the recent performance than anything else. And our AUM in this entire space. I mean the sectoral thematic space is INR4,000 crores. In fact, within that, the INR2200 crores came when we launched the banking and financial services fund. We have filed are in the process of filing a couple of documents in this space with the regulator and we’ll be launching these funds or the over the next few quarters. Again, I mean, I think even at the cost of repeating, which we have been saying over the last several calls that we will launch only those funds, which we think have long-term potential and are good investments as of the long date and not something that is just because it’s the flavor of the season as DST MC has never done that and we would like to be very, very conscious off of that fact.

Another category for example is the large and mid-cap front. I think we added INR5,000 odd crores, but our market share is shared under 5%. I think our performance is strong and will be able to build on it. Multi-asset allocation fund or for that matter, the entire hybrid and solutions bokeh that I talked about, we are one of the best in class. I would say product bokeh with the long-term performance track record in that category, and there is tremendous opportunity there. So whether it’d be large Cap, FlexiCap, Mid Cap, or Small Cap, we are looking at each and every category, wherever there is scope for us to grow and won’t leave any stone unturned. Earlier I talked about some of the other categories where there are more product launches likely to have been, for example, on the international fund side on the fund of fund side, et cetera. And then I’m not talking passive here. We are talking about active funds. Because I think the market share loss is something that, they do ask about.

In fact, one of the largest categories to see flows has been the dynamic asset allocation category, or what’s known as a balanced advantage. It seems INR50,000 crores plus net flows in these 9 months and INR20,000 crores of that have been through NFO. We have a top-tier performance across time periods 1 year, 2 years, 3 years, 4 years, 5 years, and even longer in the category. In fact, over a 25-year period, I think it’s one of the best performing funds in the mutual fund industry in India and I would request you to check out numbers for yourself. And in our opinion, I think our thought process, our style for this category. If there is some misunderstanding in the way people bucket us, I think we would like to address those so better times ahead. We have seen I think flows and Flexi Cap and Multi-Cap categories because of some of the larger NFOs. We have a reasonable share in these flows because of our recently launched Multi-Cap fund, but still, there is huge scope for us to grow there. I mean I can go on. So we are on the born[Phonetic], as you would appreciate these things don’t change overnight. I mean, I would like to mention that we are doing everything possible and hopefully should see results sooner than later whether things on the client services side, whether on increasing engagement with time with our distributors across all channels, engaging them through NFOs, which also helps us. I mean in our Multi-cap NFO, we saw the participation of over 13,000 distributors, whether it’s the communication, more segmented, more targeted whether enhancing our digital platform, our customer analytics providing both an investor as well as our distributors, newer, more soft transacting with us. So I think we are on the ball end and hopefully, that you should see the results, as I said earlier, sooner than later, including like couple of other things that we are doing.

But lastly, I would like to add one thing that as an organization, we would always want to balance between market share and margins because we do not necessarily subscribe to the idea of doing business at any price, we are of the opinion that market share at any margin might not be the best idea. People respect us for that balancing over the last several years and we would also like to believe that getting share at any price is not a sustainable strategy and hope that the industry will see rationalization at the industry level sooner than later.

Abhishek Saraf — Jefferies — Analyst

Thanks for your comprehensive response to that. So just one follow-up sir, does this imply that as you mentioned that in many funds, our market share is low in many categories. So we would be continuing with the — means more NFOs would be expected in thematic and another sectorial kind of funds and so that would be a right assessment. Right?

And secondly, you had mentioned that recently the NFOs pricing has been more favorable towards the manufacturers, so can you just give some color on means, what was the earlier net ER which was accruing to the mutual funds, and what would have been the recent experience?

Piyush Surana — Chief Financial Officer

[Indecipherable] the pricing is not favorable to the manufacturers. But I mean, on the other point on the NFOs, as I told you earlier that on the core categories, we are like almost we have a presence across all categories, after the SEBI classification where I mean the categorization of funds, we have a presence in almost every category, There are four categories, Thematic Funds or Sector Funds, International Funds, Passive Funds, and Fund-of-Fund. These are the four where I think we have some more work to do in terms of hitting our product bokeh, but otherwise, on the core categories, our focus would be on enhancing the market share that we deserve in each one of those categories.

Abhishek Saraf — Jefferies — Analyst

Thanks a lot and all the best. Sir, thank you for your response.

Piyush Surana — Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Prayesh Jain from Motilal Oswal. Please go ahead.

Prayesh Jain — Motilal Oswal — Analyst

Yeah, thank you for the opportunity again. Just a couple of more questions. So when you say if the gross flow in the overall AUM increases, basically we’re talking about legacy assets versus new assets. Any sense on HDFC AMCs mix between, [Indecipherable] in the last couple of years, how this has changed?

Piyush Surana — Chief Financial Officer

So Pre-TER [Phonetic] you are saying, what was the AUM before on say 1st April 2019 that way?

Prayesh Jain — Motilal Oswal — Analyst

Yes sir. The definitive mix, how it has changed from the legacy asset, so if stayed in 2000 FY ’20, what was the AUM on the and pre-TER and today, what is the share of that?

Piyush Surana — Chief Financial Officer

We don’t have that incense because [Speech Overlap]. What he is saying is to see what money would have gone out and what would have come in. We don’t have that breakup.

Prayesh Jain — Motilal Oswal — Analyst

Okay. Yeah, because that would be the impact that you would be talking about right when the new flows come in. I have decided [Phonetic] to much lower than these, it is not just the NFO, but even in the existing schemes, when the older AUMs are going out of the system and the newer AUM is coming in the old scheme as well that will also cause the impact right?

Piyush Surana — Chief Financial Officer

So that’s what we’ve been talking about many quarters. I mean, each quarter we kind of mentioned this. And it’s a continuous process which is going on and that is one of the main factors, which is leading to the dilution in the margin.

Prayesh Jain — Motilal Oswal — Analyst

Okay. And secondly, any color on what I kind of yields these alternate assets can make, the schemes that you’re planning to launch and on a gross basis and as well as on the net basis?

Piyush Surana — Chief Financial Officer

So alternatives is like vast space. I mean, the way you think of it let’s say, what kind of yield on a hedge fund, but there is one alternative strategy or another alternative strategy. It would be difficult to give any number. At this stage, it depends on what kind of product segment, what kind of investor segment, that we target over a bit of time. So, you will hear more from us, maybe a few quarters down the line in terms of what we are doing in that space.

Prayesh Jain — Motilal Oswal — Analyst

Okay, great, thanks a lot.

Operator

Thank you. The next question is from the line of Hiral Desai from Anived Portfolio Managers. Please go ahead.

Hiral Desai — Anived Portfolio Managers — Analyst

[Indecipherable] I Just had one question. So to your comment, wherein, you said that HDFC would always want to balance market share and profitability, so as investors, what is the one metric we would sort of look at it for this to sort of play out? So should we look at the operating margin and is there a threshold below which you guys don’t want to go? And let’s assume that pricing remains irrational for a while, then you know, sort of, how do you guys think about it?

Piyush Surana — Chief Financial Officer

I think as I mentioned a balance between the two, I think over the last 21 years in this organization, what we have always tried to balance is scale. That’s important for us. Quality, that’s important for us. I mean, the quality of AUM and quality of business that we do and profitability and ensuring that we have a balance and in all of these, not chasing a scale at the cost of profitability at the same time not missing on opportunities which could from a strategic perspective be important for us to be present in. I mean I mentioned earlier that we would like to remain a dominant player in Active Equity, Active Fixed Income, Active Money Market, but we would also like to have a relevant market share on the passive side because there would be a segment of investors who are looking at those kinds of products and we have to have a one-stop-shop to provide all solutions to our investors. So I think we’ll do balancing among all of these.

Hiral Desai — Anived Portfolio Managers — Analyst

[Speech Overlap] means I appreciate that. So as investors, just wanted to know is there are quantifiable outcome that we can focus on? So I appreciate sort of the way you guys are approaching it, but as investors [Speech Overlap] fluid and a subjective statement. So I just wanted to get some thoughts on that. So like is there a focus on our threshold OPM number? Is there are threshold on maybe the profit numbers. So I just wanted to get thoughts on that. Is there a quantifiable outcome that we can track?

Piyush Surana — Chief Financial Officer

This is also the market structure as it evolves, right. A few years back, that would have been a different number because passive didn’t exist. A few years later, it could be different because we’ll will also have the alternatives at our end. Right. So, it also has to be seen in the context of where the asset management industry is and where it has been, and where it will be. All we are trying to ensure is that we have a scale in the business, we are dominant players, wherever there is an opportunity on the asset management side, want to be a one-stop-shop to cater to all investors whether they are institutional investors or the individual investors to ensure that we have a share across product categories, to ensure that we have fair share across channels of distribution and tomorrow if there are other alternative channels like FinTech that we talked about some time back on their other channels to be present there, at the same time ensuring that we are best in class profitability. I think that’s how I would like to put in.

Hiral Desai — Anived Portfolio Managers — Analyst

Got it and the other question was on a 9-month basis since you don’t want to quantify the impact that NFO flows are having on the yield, overall, can you just give us some sense on a 9-month basis, what is the kind of impact that some of these flows would have on the yield? So would it be like a half-year basis or 1 basis point kind of impact on the yield. Just the noise because of NFOs.

Piyush Surana — Chief Financial Officer

So I think just to clarify, I think we gave NFOs as an example but it’s also the existing book versus the new flows and within the new flows again margins are different in NFOs versus the money that is coming into the existing fund. The fresh flows into existing funds come at a lower margin than what we are ending on the book. And of course, NFOs are the ones where the pricing pressure is more intense or the competitive pressure is more intense. So it is a question of gross flows, net flows within the gross flows, existing funds versus the new funds or within the existing funds also different products, we have different kinds of profitability. So it’s a mix of all of those things, just to clarify, it’s not only pure NFOs.

Hiral Desai — Anived Portfolio Managers — Analyst

Got it, got it. Thanks a lot for answering all the questions and wishing Piyush all the very best.

Piyush Surana — Chief Financial Officer

Thank you. Hiral. Thank you. The next question is from the line of Kaushik Agarwal from Hitterm Securities [Phonetic].

Unidentified Participant — — Analyst

Yeah, hi, sir. I hope I am audible and thank you for the opportunity. Sir, there are two questions that I wanted to ask. So first is or around the PMS AUM. We have seen a decline on a quarter-on-quarter basis, so just wanted to know the reason for the same and how is the top line for the company during the quarter has been impacted?

That’s number one and number two, I wanted to understand like excluding NFO, what would be the component of NFO in our total expense. So just wanted to understand on a sustainable basis, what would be the quarterly run rate for the operating expenses for the company?

Piyush Surana — Chief Financial Officer

So on the PMS side, one large client booked profits and that’s reflecting in the PMS AUM. And on the other side, I mean it’s not that we really — we don’t give that number in terms of the breakup of our flows NFOs or the other clues.

Unidentified Participant — — Analyst

Okay. Sir, just one follow-up — [Speech Overlap]

Piyush Surana — Chief Financial Officer

So you are asking about the cost part of it associated with NFOs, right?

Unidentified Participant — — Analyst

Yes, sir.

Piyush Surana — Chief Financial Officer

Sorry, I misunderstood it on the NFOs on the business development cost. So the further breakup of the operating expenses is not there. But yeah, it would be a couple of crores.

Unidentified Participant — — Analyst

Yeah. Understood, sir. And sir, just one last question on around this outlook regarding this PMS AUM. How do you see this book growing in medium to long-term perspective?

Piyush Surana — Chief Financial Officer

So just to add on your earlier question in terms of expenses, you know if you look at the difference between the trailing quarter that would be the incremental cost and NFOs and some degree of business development. So we don’t really give exact numbers, but that will give you a fair idea.

Unidentified Participant — — Analyst

Understood, understood sir.

Piyush Surana — Chief Financial Officer

What was the second question, we didn’t get that?

Unidentified Participant — — Analyst

Sir just follow up on this PMS AUM your outlook over the period of time. How do you see this book growing for the company and just wanted to understand what kind of yield are we making in this book?

Piyush Surana — Chief Financial Officer

I mean, so and as I mentioned about alternatives. So I think that included reviving our PMS business as well. And you’ll hear more on that front over the next few quarters, what we are doing on the PMS. So when I talked about the alternatives, earlier I mentioned about category 2 and category 3 funds, but that also includes what we do on the segregated accounts on the overall PMS, yeah.

Unidentified Participant — — Analyst

Okay. Thank you, sir. That’s it from my side.

Operator

Thank you. The next question is from the line of Madhukar Ladha from Elara Capital plc. Please go ahead.

Madhukar Ladha — Elara Capital PLC — Analyst

Hi, good evening. Thank you for taking my [Technical Issues] the AUM, the average AUM is up about 5% QoQ while the [Technical Issues]AUM is up only about 1.2%. I know that there was a mark-to-market impact in December, especially. But what should we read? Is it more, because of performance or did we lose some further market share and slow [Phonetic] because December was very strong as active equity stores are concerned? So that’s my first question.

And the second question is, you know, on other income, this quarter again other income sorts of spiked up. Is there any one-off? so that will be helpful.

Piyush Surana — Chief Financial Officer

Hi, Madhukar. So I’ll answer the other income first and Navneet will take the other one. So, on the other income, you know that we got a large book of investments in our own debt, mutual funds, and interest rates have varied. So part of it is that and part of it is like you said, the one-offs that we have. So last year we had some one-offs and this quarter also there is some one-off because we have also got investments in other things besides this. So there some MTM gain there. So I wouldn’t take the number that we have this quarter as something which can be factored in every quarter.

Madhukar Ladha — Elara Capital PLC — Analyst

And we quantify the one-off element?

Piyush Surana — Chief Financial Officer

I don’t think we want to do that, but if you look at the trailing quarter then you’d probably get a good idea of where it should be given, where interest rates were at that point in time.

Unidentified Speaker —

Okay. And the other question on the market share. So right, I think you can see it in the investor presentation, market share has come down, and it’s a combination of a few things including maybe a slightly lower share in the inflows. The gross flows that I talked about earlier would have come to us relative to the market share, we have on in the equity segment, but I mean, given the, I would say the comprehensive answer in terms of the categories where we have the potential to grow and some of the other things that we are doing as an organization to stem the fall in the market share.

Madhukar Ladha — Elara Capital PLC — Analyst

Right sir. So anything more that you’re doing on the performance side.

Piyush Surana — Chief Financial Officer

I think performance, as I mentioned earlier that if you look at the last one or two years, I think as the value has become broad-based when the markets were extremely polarized. And we had a certain view on the economy and markets versus I think the way markets have played out over the last one or two years. Our performance has improved very significantly. Nothing much has changed in the portfolio, just that we had a — as I said, we are in a certain view on the economy and in sectors. Finally, it has played out that way and in a very long run, I think we have one of the best performance track record. There still maybe if you look at three to [Phonetic] five years, I think it started improving and then you see that. I mean, the improvement in performance over the last one, two years in couple of categories will start reflecting in the three to five year as well. While the longer-term performance I think has been absolute. When I say longer-term, I’m talking about like 20 to 25 years it has been absolutely best in class. So I think, yeah, I mean, it’s in the right direction and we feel very confident that more and more investors, more and more distributors all our partners would start noticing it and hopefully sooner than later, we would see that reflecting in the flows as well.

Madhukar Ladha — Elara Capital PLC — Analyst

Thank you, sir. All the best. Thank you, Madhukar. Thank you. The next question is from the line of Abhishek Saraf from Jefferies India. Please go ahead.

Abhishek Saraf — Jefferies — Analyst

My question was answered. Thanks a lot.

Operator

Thank you. Ladies and gentlemen due to time constraints, we’ll take the last question. The next question is from the line of Devesh, an individual investor. Please go ahead.

Devesh — Individual Investor — Analyst

Yeah, hi, good evening. Just a quick question, Navneet from the comment you made that performance has been visible in terms of improvement trajectory compared to peers. So I have done quick research as you were talking and I took as HDFC Balance Advantage Fund and I could see that many of the platforms we are rated as single star compared to other competitors which is on all time frame lesser returns on TER other than us, and still we are rated at single star. I know these are external properties and assets. But do you have a team who sort of tracks these reports and sort of communicates to the market? How do we sort of work around this?

Piyush Surana — Chief Financial Officer

No, no, absolutely, I mean, while of course where the best part of our industry is that its extremely transparent. You get the daily NAV and there is a tremendous, I would say media scrutiny that is tremendous scrutiny from lots of Analyst across the board and we get all of these rankings, ratings and then the commentaries from various experts. I think at our end whether it is an investment team, our product team, everybody keeps a very, very close track of that and over a period of time as I told you that the improvement in the performance that we have witnessed and you talked about the Balance Advantage Fund and I would request you to look at this, I mean to check out the numbers for your sense across all time periods 1, 2, 3, 4, 5 or even longer. I think it’s appearing right at the top. There is a category, which has got the highest amount of positive flows and at our end also we are hopeful that as a performance gets noticed and this fund has one of the longest track record in the industry as well. So I think as the investors and distributers notice that improvement in performance. I’m sure should reflect flows as well.

Simal Kanuga — Chief Investor Relations Officer

Sir. In terms of ratings, what you mentioned this generally happens with a lag. So hopefully those one and two stars should start going up in case of balanced advantage.

Devesh — Individual Investor — Analyst

Right. And just as a follow-up. I mean, do we have any sort of communication with these platforms are we leave it to them for sort of reflect those changes on their own timelines. The reason I’m asking is direct-to-retail advisors, they sort of research and probably get misguided by just looking at ratings and things like that. That’s the reason.

Piyush Surana — Chief Financial Officer

Exactly. You are absolutely right. So two things, one is that of course I think these are independent agencies. We usually respect them. They are objective and of course one can argue with the difference, how do I put it. I think with the different methodology. But over a period of time, I think all of them have I would say the investors’ attention on those ratings, but on the second part, I think the job at our end is to go and explain our investment style, our investment philosophy, our investment process and the way the team has been managing these funds that there are cycles in the market, there are cycles, I think when one style of investing performs better versus the other time period. And how should one investor or a distributor or an advisor should look at those fund across times, I mean across market cycles is a job at our end and that’s what, I mean our product team along with our investment team along with our marketing team, that the job at our end. But we respect all the rating agencies that give an independent and objective rating. As you rightly said, I mean investors look at that. Our job is to ensure that investors just don’t look at what happened in the recent past, but I think a more longer term track record as well as the philosophy with which these funds have been managed.

Devesh — Individual Investor — Analyst

Sure. Thank you. Thank you very much.

Operator

Thank you very much. I now hand the conference over to Mr. Navneet Manoj [Phonetic] for closing comments.

Unidentified Speaker —

Thank you for attending this call and I wish you all good health and a great year ahead.

Operator

Thank you very much. [Operator Closing Remarks]