Nippon Life India Asset Management Limited (NAMINDIA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Nippon Life India Asset Management Limited Earnings Conference Call for 2Q FY '23, hosted by InCred Equities. [Operator Instructions] I now hand the conference over to Mr. Jignesh Shial from InCred Equities. Thank you. And over to you, sir.

Thank you, Parmeet. Good evening, everyone. On behalf of InCred Equities, I welcome all to Nippon Life India Asset Management 2Q FY '23 earnings conference call. We have along with us Mr. Sundeep Sikka, ED and CEO along with the top management team of Nippon Life India Asset Management. I would like to hand over to Mr. Sikka for his opening remarks. Over to you, sir.

Thanks, Jignesh. I think, good evening, everyone, and welcome to our Q2 FY '23 earnings conference call. We have with us our Chief Financial Officer, Prateek Jain; Chief Business Officers, Saugata Chatterjee and Aashwin Dugal; Chief Digital Officer, Arpanarghya Saha; and Fujikake-san, designated from Nippon Life. Our detailed investor presentation and press release have been uploaded on the exchanges as well as our website. Before we take your questions, let me share some comments on the recent industry trends and our quarterly performance. In Q2, equity markets rebound from the lows of June '22. However, it ended on a volatile note due to the ongoing geopolitical concerns, global inflation trends and weaker INR to USD movement. Despite the mixed overall outflow, Indian asset management industry maintained its growth momentum, driven by higher retail awareness. The industry assets rose by 3% in this quarter, mainly driven by higher equity and ETF assets. However, as we look back, the industry assets have grown 4x -- have seen 4x growth in last 10 years. Yet we believe a significant growth potential still remains underlined. Currently, less than 3% of the population invest in mutual funds. In the last 24 months alone, the base of unique investors grew to 36 million, an increase of 69%. Monthly SIP flows touched an all-time high of INR 130 billion, an increase of 67%, while SIP folios increased to INR 58 million, a rise of 25%. The growth in investor base and consistently higher SIP flows clearly indicate investors' preference for mutual funds to achieve their long-term goals. Formalization of the economy, digitalization and higher share of mutual funds and housing savings are expected to be the key drivers for the growth of industry going forward. At Nippon India Mutual Fund, our priority is to be future-ready and capture this long-term opportunity. In Q2, our industry ranking moved to fourth position on quarterly EBIT AUM basis. AUM increased by 7% to INR 2,851 billion. At Nippon India Mutual Fund, investors' interest remains our only constant. We added 1.6 million folios in H1 and continued to have the largest space base -- and continued to have the largest base in mutual fund industry. Our share of industries unique investors was stable at 37% with the base of more than 13 million investors. Systematic flows are stable and a key driver for the industries long-term equity flows. Nippon India Mutual Fund annualized systematic transaction book is at INR 108 billion. Quarterly flows increased by 36% to INR 26 billion. On a gross basis, over 481,000 systematic folios were added in Q2. Our systematic AUM rose by 11% to INR 555 billion. 53% of our SIP AUM has continued for over 5 years, vis-a-vis 22% for the industry. Also, in volatile markets, folios with lower ticket size have demonstrated longer vintage and better stickiness. 14% of our SIP folios have continued for more than 5 years as against every industry average of 10%. Today, Nippon India Mutual Fund offers industries best use in passive category also. With strong growth in industry's passive assets, our ETF ecosystem is already in place and far ahead of peers in terms of investor base and mind share. In this segment, we managed an AUM of INR 638 billion and have a market share of 14%. Excluding the EPFO allocation, which rose to 2 specific AMCs, we have the largest -- we would be the largest ETF player in the country. The gold ETF is the biggest fund in the category, with having INR 66 billion under assets under management. Our share in industry ETF folios rose to 60%. In Q2, we added under 108,000 investors and accounted for 92% of the total industry ETF additions. We have 71% share of ETF volumes on NSE and BSE. Our ETF average daily volumes across key funds remain far higher than the rest of the industry. Our digital-centric strategy is also one of the keystones of our long-term growth and sustainability. We continue to enable new age and experienced investors as well as our partners with a cutting-edge digital solution. In Q2, digital platforms contributed 56% of our total new purchase transactions. Over 766,000 purchases were executed through our digital assets, an increase of 4%. Nippon India Mutual Fund has a well diversified and a nimble distribution base and the wide presence through 275 locations across the country. As of September '22, we have over 87,200 distributors empanelled with us. The MFD base rose to 87,000 with addition of nearly 1,700 distributors in this quarter. Now on the financial performance. For this quarter ended September 30, 2022, profit after tax was INR 2.1 billion, an increase of 81% against Q1 FY '23. Operating profit was at INR 1.9 billion. Operating profit as a ratio of average assets under management was 26 basis points in Q2 FY '23 as compared to 25 basis points in Q1 FY '23. In the past, company has followed consistent dividend policy. In FY '22, NAM India distributed its highest ever dividend with a payout ratio of 96%. Over the last 8 financial years, NAM India has distributed a cumulative dividend of INR 34 billion. In today's meeting, board has approved an interim dividend of INR 4 per share. As we grow organically through physical and online channels, we remain open to evaluate investments in strategic opportunities that add to the profitability or complement our existing business and ultimately are an interest of our minority shareholders. As a signatory to UN-PRI, we have already begun to integrate ESG aspects into our area of strategy, business operations, investment management and governance. We have chosen to prioritize issues such as climate action, diversity, inclusion, corporate governance, business ethics and responsible investment for immediate strategy formulation, execution and disclosure [ forecast ]. Through a combination of responsible investment approaches of screening, ESG integration and active ownership, we remain -- we aim to build a resilient portfolio that will not only provide sustainable returns to our investors, but will also provide a positive environment and social impact. To sum up, I would like to reiterate, at NAM India, investor centricity remains a key theme. We strive to deliver a superior experience and sustainable returns to our investors, and in the process, add value to all our stakeholders. We are confident to continue our trend of profitable growth in coming quarters. With these comments, we are happy to take your questions. Thank you.

Thank you very much. [Operator Instructions] The first question is from the line of Kunal Thanvi from Banyan Tree Advisors Private Limited.

So I had 2 questions. First was on the debt side of the business. So if we look at the entire industry and even for NAM India, that has been degrowing for last 2 quarters. I wanted to understand what's happening there? Is it due to performance or is it because shift from active debt to passive debt? What are the factors that are driving the decline in the debt AUM for the industry and NAM India? And secondly, if you see, sequentially, our realizations have improved on an overall basis like and that has resulted into improvement in our core operating yields as well. Also, can you throw some light what are the factors that helped us improve the realization? Like is it that the competition is easing out or the distribution margins are softening up or it is just one quarter wherein we saw higher share of equity and the realizations improved? These are my 2 questions.

I think I'll request my colleague, Aashwin Dugal, our Chief Business Officer to take the first question. And then after that, I'll request Prateek to take the second.

As to your question regarding the debt flows that have reduced first at the industry level and that is quite evident because of the overall deteriorating macros, whereas the Central Bank action worldwide and also being followed by the Central Bank in India, which is to increase interest rates. And the yields across the curve, both the short-term and long-term have gone up quite substantially, especially at the shorter. And hence, we have seen outflows from the debt funds into overnight and liquid schemes. So if you see the trend, you would see that the -- in the last 6 months, our debt funds have lost money, but money has come back into either organized funds or liquid funds. At NAM India, there has been a marginal decline, yes, mainly because our growth over the last 2 years was on the back of fixed income flows and partially from some corporates. And we have seen one or 2 institutions or the institutional investors who exited for the time being who had a higher share with us and from the industry as well. We had a slightly higher share, hence we've seen some dipping share for us.

Realization, Prateek, do you want to take that one?

So in terms of realization, there are mix factors where it is not one-off. I think we have been maintaining that. Look, it would be hovering around these levels unless there is a drastic change in the, what do you call it, the asset mix. Here, I think 2 or 3 things played out for the quarter. One, we have actually -- we had a better share of equity. That was one. Secondly, in terms of flows and in terms of our fixed income realization, there has been a marginal increase out there. We have been -- we have mentioned in the past as well, as the yield keeps growing in the fixed income scheme. Now so dissect this from the fact that the assets are going out. But more importantly, yields in these fixed income schemes are going up. As the yield goes up in these categories, our propensity to charge slightly higher improves. And so we have rationalized some of our TERs into the debt schemes and we have been able to improve our realization out there. Besides, on the ETF side, we have seen a slight improvement in the realization marginally due to some regulatory interventions of requiring only 1 basis point to be kept aside for the investor education. So these are a couple of factors which are, I would say, these are not one-off, but these are sustainable ones, which has helped us in this quarter to improve our realization.

And like, historically, you have been suggesting that over medium to long-term, the realization could see some tapering off because of the new assets coming in. That's something used to be the case, right?

That's right. So as and when we will see as the old asset [indiscernible] versus the new asset [indiscernible] this change happens, then obviously we will see some decline. But as I mentioned in this call, look, as you see money coming into the fixed income assets and the realization at the elevated level as what we're seeing right now, our propensity to charge higher. And also when the cycle will return -- when you will see returns which is in the range 8.5% to 9%, at that point of time, our propensity to charge will be even higher. So we would already -- we will have the AUMs in place because money would have moved into these categories which has gone out now and also the yields will be higher, and therefore, you will get the double impact. And I'm sure that will be able to offset the realization dip in the equity assets.

Now just one more if I can squeeze in. So if we look at our asset mix and our market segments, so over last 2 to 3 years, what we've seen is that we -- like on an overall basis, our market share is quite stable now, like between 7.2% to 7.4%. But within that segments like equity and debt, like one gained market share or have been losing market share. For example, in debt, like we gained some market share last year and now we are again losing it back. But 2 segments have been gaining market share are liquid and others, like that's where we have gained market share and we continue to gain there. But from an overall profitability business point of view these are low-yielding assets. Now like what -- how do we look at this from a longer term perspective because this will mean like increasing market share in the categories which are lower-yielding given them to a first-mover profitability for us?

Well, the way I see it is I think I don't -- would not read too much into the fixed income. I think that's lower because overall environment we have seen investors have been changing to shorter end of the curve and this will keep happening. So I don't see any loss because I think this is fungible. I think short-term, long-term. I'd say, investors will keep changing across different cycles. So I'm not too worried about that. I think as far the equity is concerned, clearly I think from our perspective, the green shoots are already there. Yes, I think as you are aware, we had certain challenge in equity couple of years back. At this point of time, the majority of our funds, if you were to see, on one year perspective are in the quartile one or quartile 2. And even -- just to know some of our funds are already a 3 year basis also rolling basis moving to the quartile one. And the fact that the increase in SIP folios tells you that I think the new investors with the flows have already started come into equity. So maybe couple of quarters down the line, I think you will start also seeing the lag effect of his positive activity that is happening on ground and equity market share also should move up.

The next question is from the line of Lalit Deo from Equirus Securities.

My question was on the distribution side. So like if we see the banking channel, so about like one year ago, the share of AUM business coming through the bank share was about 10%. However, it has declined to about like 8.5%, 8.7% in this quarter. Now with majority of our scheme now performing back to Q1 or quartile one and quartile 2, so what is like the outlook over there? And like how is the response are you getting from the banking channel?

So from our perspective, banks any which way for us were about 9% in overall scheme of things. And if you take the direct out, it was about 18%, 20%. So from our perspective, even if that decline, it doesn't really means much for us. However -- and I would ask Mr. Chatterjee to talk about how he sees inner flows going forward.

So in case of the banking channel, what was our handicap earlier were the approvals, like we did mention now since the equity performance has come back. Good part is that in most of the channels and the banks, we have the approvals in place. The approvals are now getting converted into business volume for us on the equity side. We have a bit of catch up on the debt side in some of the banks. But most of the banks, if you see, are either equity players or SIP players where the approvals which have come in in the last 2 or 3 quarters are going to help us where now majority of our funds are approved in most of the retail in the wealth bank. The numbers will start reflecting as we go ahead because equity comes with a lag. SIP numbers have started coming in. The net sales is improving. Hopefully, this ratio will start improving in the next 2 quarters from hereon.

The next question is from the line of Dhvanil Shah from Motilal Oswal Financial Services.

This is Prayesh Jain. Just 3 questions. Firstly, if you look at how the redemptions have shaped up on the equity side for the industry, those have been kind of increasing in the last couple of months. Any early trends to be capped there, that is some profit taking or some issues out there where there are increased redemptions? Secondly, on the fee and commission expenses, we've seen an increase. What is that pertaining to? And thirdly, from an other income perspective, do you think that the current run rate that thought you will achieve in this quarter, given if the yields remain where they are and possibly even the equity markets kind of see steady returns, do you see these kind of other income sustainable? Those will be my 3 questions.

So I mentioned in the call that these fees and commission expenses are pertaining to our AIF and PMS businesses. So in AIF, still, we have -- we pay upfront commissions. So that's where the -- if you get a larger amount of asset raise in the quarter, you'll see some marginal increase out there in terms of fee, but obviously, the corresponding revenue will come with the lag effect. So that is the expenses in the fee and commission side of it. In terms of realization, as I mentioned that, look, this is -- these are more sustainable at this point of time. If we see the interest rate picking up from here, then a lot of money will come into the fixed income category, all the money which has gone out will come back to the fixed income category from the corporate and institutional investors. And then they will ride on to the fact that, look, when their interest rates goes down as part of the cycle, then there will be a higher yields will be made into these products. And when there are higher yields, our propensity to charge will be higher. So if you see overall on the fixed income side, 2 things have happened. One, if you see last 2 and a half years, a lot of money has gone out from the longer duration and credit funds and come into the shorter end of the curve and into liquid and other money market fund. And the second part is that, look, in these funds also, the returns were fairly low. They were sub-5.5%. And therefore, our propensity to charge expenses are lower. But our average yield on these products are likely to go up in the coming quarters.

Prateek, my question was more on the other income that we've reported in this quarter, whether that is sustainable given the way the AUMs are moving and the equity markets return?

See, these are all mark-to-market. And as shared in the past, total of the total investment -- total cash flow available, 82% of those assets have been invested into our own scheme into mutual funds. And of that, barring the seed capital investment which we have made into equity, remaining are into our fixed income schemes only across the categories. And so obviously, as the yield goes up, our realization will increase from hereon. But we do not give any kind of forward guidance on our other income. But there are no major assets which are into the risk categories at this point of time, which I can tell you.

As far as the redemptions are concerned, if we were to look at the net equity flows, I think in the industry ex of arbitrage for the 4 quarters have been 28,000, 20,000, 23,000, I think it's broadly in the same range. Yes, I think from our perspective, I think one thing is very critical as I think is there any early trend of redemption? Clearly, whenever the market is volatile It's the H&I investors, the bulk money which goes out, moves up fast and comes in, movement is faster. That's exactly the reason we try to face -- we'll focus more on granular business, retail business and SIPs, which is a lot more sticky. So I think from our perspective, I think we are not trying not witness any kind of redemption at this point of time. And I think for us, I think the trend could be a little different from the industry because our business is very, very retail.

Just one more question there. So from a flow perspective, I know you don't give any data as such what flows are, is there a trend of increasing flow market share for Nippon India on the equity side in the last couple of quarters? Can you at least give that indication?

From over many last quarters, I think we have seen the trend getting positive. I think if I was to look over a trend line over the last 36 months from net negative, so we have moved to net positive.

But the market share is -- market share has obviously been going up, but is it there in line with the overall equity market share or is it lower than that?

So the net sales market share is inching up towards the equity market share. So that is the reason why you will find month-on-month our equity market share is also now improving.

[Operator Instructions] Next question is from the line of Manjeet Buaria from Solidarity Investment.

I wanted to understand, as the competitive intensity in the industry goes up and different players will have to pay more commissions to the distribution partners, as you have seen in some NFOs, how easy is it to claw back these commission levels? So once the higher levels are given its pace that to permanently?

So I think from our perspective, the way we see we have always been very clear that long-term business models cannot be paid -- can be made by paying higher brokerages. So we've been very conscious of it I think. So I think whatever is sustainable, we will not like to do something which is not sustainable from a long-term point of view. So I think from our perspective, I think we have never gone overboard wherein we will have to do -- undo things later.

The next question is from the line of [ Aditya Dilip, Metaverse Equity Fund. ]

My question is, NAM is collaborated with DWS Group to provide portfolio management and advisory services in European market for Indian government bond ETF. So as far as the current situation is concerned, the recession part, so what would be the upcoming plan from Nippon and as Indian business is showing the stable growth as compared to the European market? So that is my question.

Our launch of product in DWS is in line with our strategy to grow our non-mutual fund business and offshore business. As we have mentioned in the past, I think we closely work with Nippon Life team globally to look at opportunities where we can collaborate with the various group companies of Nippon Life. There are many more such initiatives where work is in progress. This fund was launched just about a month back. I think at this point of time, it is just started. And I think we clearly see -- I mean, there will be a couple of other products which will be launched across the globe, but the focus will remain to get more money into India.

The next question is from the line of Dhvanil Shah from Motilal Oswal.

This is Prayesh here again. Just your thoughts on your -- on the hybrid segment, the industry has seen a lot of outflows in the past few months. Is there any particular reason for that why that has kind of picked up in the last few months?

So [indiscernible] the hybrid section -- hybrid category prior to the volatility in the market, there was more flows coming into the large cap, midcap, those categories. And like you are rightly saying, last 6 months we have started seeing more flows in hybrid. More so, it is more as the volatility increases, the trend shifts towards balance funds, hybrid funds. So we are seeing that trend happening today. I think if the volatility continues for the next 6 to 12 months, this category will start growing. And that should be a good thing for the industry because these are stable long-term assets which come in balance funds.

My question was, they were actually dictating outflows, not inflows.

No, outflows in hybrids are not happening this time. In the last 3 months, 4 months rather, the net sales is positive. It can be due to some NFO which has come in which might lead to outflow in certain particular part of the quarter, but the trend is still positive. You have to add -- hybrid categories includes the equity hybrid funds, it includes balance advantage funds, it includes asset allocation funds. So the category is very large. It's not only one particular category which comes under hybrid.

And what are the plans for future launches with regards to all the scheme categories?

So I think from our perspective, I think we broadly feel our portfolio is complete. I think we will not be launching any funds under this to come up with new NFOs. I think where you see more launches will be I think whether it could be systematic, international or passives.

The next question is from the line of Sahej Mittal from HDFC Securities.

First of all, my 3 questions are; there's some improvement in the equity yields, so is this something structural? Are these yields -- is this a improvement structural in nature? And can this be -- is this sustainable? Second was around, there's some dip in the staff cost. So any color on this? And thirdly was on your channel mix, so there's some sharp dip in the share of banks. If you could throw some color out there as well? I'm sorry if you have already answered these questions, I joined the call a bit late.

No issues. In terms of yields, the overall yield is slightly marginally up as compared to the previous quarter. And as I explained in the past, this is predominantly because we have improved our realization on the fixed income schemes, and I've given a detailed explanation to that. And also, our asset mix has marginally improved in terms of longer term high yielding assets. And these are pretty sustainable and not one-off. Also, as Sundeep was mentioning that, look, we'll keep working in terms of our product offering, the distribution commission, which are sustainable and will not go overboard in terms of extending higher distribution commission for a faster growth. So that is one. In terms of staff cost, this is marginally lower and these are related to certain provisions, et cetera. And there is no structural thing, which I can see up in here. And with regards to the channel mix, again, if I see the last few quarters, it used to be in terms of overall share, including the direct sector. It used to contribute about 10% and now they are 9%. So again, there I see a very marginally decline there. And that is because banks, if you see overall from an industry perspective also, the bank share has come down.

So there, I'd just like to add to what Prateek mentioned. It's the fact that in the last few months, we've seen some bit of institutional money from wealth counters, et cetera, have been mobilized. Some of that has moved out at the industry level. And -- but the SIP business and the long-term seasonality continues to come in.

And one thing was -- so I mean on the staff cost, [indiscernible] there's this dip sequentially. So is there some reversal in this line item? Is there some reversal in the staff cost?

No, no. See, like in the first quarter, there were certain -- like incentives, et cetera, which got realized, got paid out. And if you see the standalone results, there is nothing, but it is to do with our subsidiaries. So certain PLI expenses which got booked into the first quarter. And therefore, there is a marginally, I would say, staff cost has declined.

And in terms of your yields on the debt, so the yields on the debt has -- in the debt scheme have improved. So is there a change in the mix towards the credit risk point of those costs?

Again, I am telling you. See, what you have to understand is that, look, while assets may change, what we have done is we have gone and improved our realization by changing PR, which we dynamically keep evaluating. What is the return which an investor -- or what is the return which fund is generating. And based on that, we -- and what is the expenses our competition is charging. What is vis-a-vis our performance result competition. Based on all these factors, we keep evaluating what is the expense we should charge on our debt schemes. And there, what we've done is we have changed realization in some of our schemes, which have resulted in a better realization. Now this is not to be seen that, look, in these categories, monies have come in and normal. These are completely -- these are 2 different strategies. So while money may -- but overall yields have gone up because of the underlying returns generated by the papers. And therefore, we've been able to increase our expenses.

And any color on the yields, how they are shaping up on the equity side?

So again, we have not seen significant change out there. Our sharing remains pretty much the same as what we were paying earlier. And obviously, as I mentioned that, look, the more and more new money replaces the old assets, then obviously, we'll see some decline. So over a period of time, we may see 2 to 3 basis points of decline if this money gets replaced by the new assets.

But the trend is still -- and the equity yields are still depleting. That's the correct understanding, right?

So on the existing scheme, they're not. But if the new AUM comes and the old asset typically is going down, then obviously, you will see some decline in the equity yields.

And for us in Q2 -- I mean, given that the flows in the equity schemes for the industry were a bit soft. So for us, how have the flows been? Maybe if you witnessed net outflows or net inflows?

No, no, we were net positive in terms of inflows. And this was broadly in the range of our quarter one only.

And any color on the market share in terms of net flows?

We don't disclose those numbers.

The next question is from the line of Dipanjan Ghosh from Citigroup.

Just 3 questions from my side. One, just continuing the previous discussion, would you like to quantify the differential between your existing and new yields on the equity business? My second question is on the SIP business. If you can give some color on what is the key distribution channel or origination channel for the SIP a bit more direct or printed laid out to the distributor? And third question from an industry perspective, what you witnessed is that there have been significant amount of flows that is going into the NFOs, seems that the incumbents are already present, but throughout they're not able to be [indiscernible] similar to that of the newer NFOs that is coming in. So how do you see this particular -- how do you want to kind of see this from medium term perspective, given that a lot of new AMCs are also in the pipeline? That will be all from my side.

Dipanjan, if you can just repeat your first question.

My first question was, if you can just -- in the previous discussion you mentioned that the new yields continue to be lower than the existence yields on the equity business. So would you like to kind of quantify what is the differential out there?

So in the past -- again, on the cost of repeating. See, on the old assets, our average distribution commission trade was around 50 to 60 basis points. However, if you see now, it is more on a TER sharing basis. So obviously, for different distributors, we share different amount of fees and it ranges between 55% to 70% of our TER share or DTER we share with our distributor. So that is a difference, because in the past old assets, we have paid higher upfront commission and which are no longer allowed. And therefore, it is entirely on trail. And therefore, the sharing mechanism has come in. And we share almost 55% to 70% to our various categories of distributors.

On the other question on SIP or mix, so the mix of business as we've seen in the last 2 to 3 quarters, the digital and the fintech partners have started contributing decent to our overall mix. Right now, as we speak, 60% of the business is coming from MFDs, which are primarily IFA for us and some of the banking channel partners have started giving us money. They have given us tips. And the remaining around 35% to 40% is coming through the fintech partners. So that is broadly the mix of SIP numbers which are coming to us. And what are we witnessing is we are also increasing the absolute count on a month-on-month basis. So right from a ratio point of view and as well as absolute numbers, both are seeing a growth, both the categories are growing for us when we consider SIPs. The third question was on NFO, right? You did you asked something on the NFO. What was that?

Basically, from an industry perspective, what we see is that the incumbents have particular scheme similar to midcap, large cap, flexi cap. So can you see schemes -- NFOs coming in from the smaller players in similar categories where the flows are probably a bit higher than in the combined of what the incumbents are wandering in particular months or quarters. So from that standpoint, given that a lot of newer AMCs have [ loopholes ] in terms of schemes that are introduced or there are also new AMCs in the pipeline. So how would you kind of think of opportunity loss in kind of new flows in [indiscernible] for larger players live yourself?

I think broadly the way I see this, as Sundeep described, any new or old AMC, I think any new fund launched -- I mean, tell them it will add value to the portfolio in the long run, investors will keep investing. I think any new MFO becoming, whether there is higher brokerage or capability to pay, from a long-term point of view, that is not sustainable. I mean, ultimately, these are all open-ended schemes. One can garner x assets through an NFO. But for these assets to be sticky, A, is to add value to the investor from a performance point of view. And B and the more important thing is it has to be granular and sticky, because we have seen when the bulk money comes, it goes out also at the same speed. So I think from our perspective, our focus is not to get distracted with the new NFOs which are coming in the industry. I think we'll keep continue focusing on our existing schemes. And wherever we see any vacuum for us to -- an opportunity for us to launch new products which can add value to the investors, we'll do that. Otherwise, I think our focus will only on be open and existing schemes.

Just a small follow-up on the second answer. You mentioned that almost 35% to 40% of SIPs are coming into the digital or fintech channels. Could you shed some color on the quality of customers in terms of retention or average tenure in terms of redemption on the SIP or maybe more from a geography or each perspective? And if you can shed some color on that particular portion of the SIP business that is coming in?

I think it will be very difficult to give these kind of details, but I think we continue evolving. I think we continue to evaluate. I think whether it's coming from an offline channel, even if coming from distributors, IFAs or whether banking or a -- we continue to evaluate again the stickiness of the assets, I think which distributors, which channel we will promote more I think -- and again, from a geography point of view. But again, it will be very difficult to point out how a particular pocket, whether geographically or channel-wise it works. But I think our endeavor is, I think as we mentioned earlier, I think the sticky assets, 50% of our [indiscernible] as I mentioned in my opening address also, today if you look at the stickiness of the SIPs that we have, today, the majority of our SIPs, up to 53% of our SIPs are there for more than 5 years. So I mean, that is I think our focus. I think -- and we are using a lot of artificial intelligence and business analytics to continue both to upsell as well as continue to increase the longevity of the SIPs.

The next question is from the line of Rahul Picha from Multi-Act.

Sir, just wanted a couple of data points. What is your current blended yield on your equity book? And what is the yield on the new flows that you are getting?

So we don't give product-wise yields on this one. And what was your second question?

No, sir, second question was I wanted the yield on the new flows. But if you can't give specific yields, even if you can give out the differential between your current book and the new units, that will also be fine.

No, I just explained to you that, look, on the old assets, the average distribution commission paid out would be in the range of 50 to 60 basis points. And on the new money which we are receiving, post the change in the regulation, what we said that, look, we share almost 55% to 70% on average of our TERs to various distributors in different categories.

And this 55% to 70% in terms of basis points, how much would that be?

No, no, each -- different scheme has a different TER. So nowadays from a study perspective, there is a calculation of TER. Post that, we remove the scheme-related expenses to arrive at distributable of the distributable TER. Of the distributable TER, we share this money.

That was the last question for today. On behalf of InCred Equities, that concludes this conference. Thank you for joining us. And you may now disconnect your lines.