The above maxim championed by Mark Fields, former CEO of Ford Motor Company, perfectly sums up the principle that organisations thrive if your team resonates with the strategy and implements it with a shared vision. Every organisation goes through phases of growth and upheavals caused by internal or external factors.
The mutual fund industry by its very nature is subject to the vagaries of the market, hit by forces that can sometimes be entirely unpredictable. The year 2018 was yet another litmus test for the mutual fund industry which had an exposure of Rs 2,700 crore towards Infrastructure Leasing and Financial Services (IL&FS) bonds.
During its transition from the joint venture, our fund house went through some tough times in the midst of a liquidity crisis that engulfed NBFCs. The erstwhile partner exited the joint venture in December 2019 after which the fund house was rechristened as PGIM India Mutual Fund. At this challenging juncture, during a change in leadership and brand, the task at hand was to regain the trust of all stakeholders.
We opened a line of transparent and open communication among all stakeholders—investors, distribution partners, regulator, and employees. Our words and actions had to be in sync. The first line of defence was to streamline our portfolios by further enhancing our risk management process. We reoriented our fixed income portfolios to prioritise safety and liquidity first.
The leadership team was in constant touch with all stakeholders on how our fund house is progressing towards re-establishing our brand by keeping investor interest first. Taking a step ahead in communication, we were the only fund house to declare our fixed income portfolios daily on our website.
Actively engaging with stakeholders helped us regain lost ground. Transparent communication, focus on risk management coupled with steady performance of our funds helped tide over the crisis. PGIM AMC’s assets under management increased from Rs 5,400 crore in June 2019 to Rs 21,000 crore as of December 2022, after seeing a low of Rs 3,500 crore in March 2020, which is a testimony to this turnaround.
As I look back, the most important element that worked for us was to take a leap of faith on some aspects of our product line and distribution channel with a strong focus on execution in line with evolving market dynamics rather than sticking to a rigid strategy. Taking a leap of faith is required because all data may not be available or then waiting for data may be too late to confirm your thesis. Our experienced team had the autonomy to take faster decisions based on key priorities. This required an environment of mutual trust and confidence. A culture that demonstrates the key values primarily of the importance of people in the business.
PGIM’s purpose “we make lives better by solving the financial challenges of our changing world,” became the guiding light to focus on our goal in moments of crisis.
It is rightly said that businesses are built during a crisis. The challenges we encountered helped us build a strong brand recall by focusing on transparency, communication, the right proposition, and differentiation in a cluttered market.
Lastly, our culture which thrives on open communication has been the key driver of our success and growth. In a market filled with jargon and me-too products, we have differentiated ourselves with an investor education initiative that highlights the holistic life span of individuals and more importantly, focuses on our happiness and well-being, nudges towards retirement which is the most important milestone for everyone, and excellence in international investing from our parent PGIM.