Can you share the journey of ETMONEY so far? Please tell us about the current scope and reach?
Launched in 2015, Smartspends later rebranded as ETMONEY in 2016. The founding team’s goal was to create a mobile-first way to address the personal finance needs of the people and help our users in taking informed financial decisions. In less than 5 years, ETMONEY has built a robust user base of over 10 million and has about 2.5 per cent share of the Mutual Fund industry’s monthly SIP volume & approaching 2% of monthly SIP value. ETMONEY manages and tracks over INR 20,000+ crore worth of Mutual Fund investments
What are your business goals for the next 3-4 years and what factors will be playing an important role to achieve them?
ETMONEY has always worked towards helping Indian Investors take informed investing decisions. In future, we are looking to strengthen our capabilities by adding specialised products and support our users in making better investment decisions as our core mission. We started with Mutual Funds, added National Pension System (NPS) and Fixed Deposits over time.
As we move into the future, we will other products as well. Our focus is on adding specialized products for our users and create awareness around the same products. Covid has accelerated the shift from offline to online for investment products and our focus is to create delightful digital experiences for investors that help them make better investments and grow their hard-earned savings.
What new products are you planning to launch in the next few months? What is there in the pipeline?
ETMONEY app is possibly the only App in the country outside of bank-owned apps that provides access to multiple financial products at one place. For instance, beyond investment products like Mutual Funds, NPS, FDs, investors also have access to Term Life Insurance, Health & Car Insurance and even Credit Cards. People can also track their monthly expenses automatically through our Android App and keep a tab on their Credit Score. Our core mission is to be the best Investments App and we won’t be complete until we have Stocks, FDs and more innovative Fixed Income Products. So expect us to be one-stop shop for better investment decisions.
What are ETMONEY’s key differentiators from other platforms?
The key differentiators of ETMONEY are -
a. Tools & capabilities to enable the investors take the right investing decision
b. Most reliable transaction experience across all Investment Products
c. And coming soon is personalized investment advisory for asset allocation, portfolio creation & continuous rebalancing that helps reduce risks and better returns.
How do you see the future of the mutual fund sector in India?
Mutual funds is just getting started in India. Despite the high growth, India's mutual fund AUM to GDP ratio remains significantly low at 15 per cent, as compared to a global average of 75 per cent. There is still more than $1 Tn of money parked in savings bank accounts and Fixed Deposits earning negative real interest rates. And if you move that money into Mutual Funds, that will be an exponential growth. Mutual funds are probably one of the few investment products that can be accessed fully digitally & paperlessly. AMFI has done an amazing job by driving awareness about mutual funds. And I think all of us are capitalizing on that increased awareness and adding value to the domain by educating people to take the right decisions.
What is your strategy to target first-time investors and young Indians, since people are showing interest in personal finance and investing like never before?
ETMONEY educates people through differentiated content aimed at simplifying investment jargons for new investors. We regularly produce digital content for, YouTube, ETMONEY blog, educate by answering people’s queries on Q&A platforms like Quora and of course on social media through our presence on Linkedin, Twitter and Instagram. So, education is one of our biggest areas for us. It not just helps educate but also expands market for the industry by driving penetration and bring new investors to the fold. .
We supplement these efforts by developing user-friendly app with tools that make it easy to find best Mutual Funds that suit investors’ investment needs, time horizon and risk appetite. We also have capabilities to help existing investors track their past investments on the App and above all, we have the simplest and hassle-free buying experience once people are ready to take action.
We also differentiate ourselves on how we track portfolios, allow people to slide and dice their portfolios and hence manage investments better. Finally, we have online customer support that answers people’s queries and support them with their investments.
So education, most user friendly and benefits-rich App and helpful support are our primary ways to attract customers.
How has Covid-19 changed the personal finance ecosystem in India?
Soon into the first pandemic wave with the lockdown induced reduction in spending, investors channelized their savings into investments. From August 2020 to December 2020, 4 million new Demat accounts were opened in India. To put this into perspective, financial years 2017 and 2018 saw 4 million accounts added in the entire year. The same uptick has been seen in the Insurance industry. Insurance is now being considered as a necessary risk mitigation tool than merely an investment product for the wealthy. Life insurance industry grew 21% higher in February 2021 as compared to February 2020. This disruption has been seen across the entire personal finance ecosystem.
What are the key factors to consider while investing in mutual funds?
With over 1,500 mutual fund schemes and over 2,500 scheme options, it is quite a daunting task to select a mutual fund scheme for your portfolio. To help our users wade through the confusion, we recently crafted ETMONEY Mutual Fund Report Card which vastly helps investors in improving their mutual fund selection process. The ETMONEY Mutual Fund report card offers the most comprehensive way to evaluate mutual funds in India and aims at giving our users the right indicators to help them make better investment decisions. The evaluation focusses on the two most important factors of selecting a mutual fund a.) Earn good returns for the investors and b.) Take proportionately lower amount of risk, which are further broken down into a number of factors to evaluate the real performance of a mutual fund and its investment-worthiness.
The mutual fund evaluation process looks at a mutual fund scheme’s performance analysis and its downside protection. Our research proves that picking mutual funds basis only past year’s returns often leads to less than ideal results. In fact just looking at returns without understanding the risks taken by a mutual fund scheme to generate those returns is often missed by investors. While performance helps an investor reach closer to his/ her financial goal, a fund’s downside protection will help the investor stay protected by controlling the losses during markets corrections and frequent ups and downs.
It is important to understand if the fund has outperformed the benchmark consistently by assessing its information ratio. It is also important to ascertain if the fund offers higher incremental return for every additional unit of risk taken by analysing the sharpe ratio of the fund. In simple terms, it is imperative for an investor to analyse the returns, risks and the consistency of the fund over different market fluctuations before investing into a mutual fund.