After direct push, Jio BlackRock taps distributors to drive growth

Mumbai: Jio BlackRock Asset Management is set to change how it sells its products less than a year after launch, turning to distributors after initially bypassing the powerful intermediary network.

The asset manager, a joint venture between Reliance Industries' Jio Financial and BlackRock, will sign up distributors for the first time since its launch in June last year as it gears up to launch its proposed specialised investment fund (SIF), said managing director and chief executive, Sid Swaminathan, in an interview with ET.

Jio BlackRock, which currently sells its products only directly, will begin offering SIFs through distributors and later extend this approach to its mutual fund schemes.


"We have learnt that this is a diverse market, and there will be a segment of the market that needs an additional level of handholding to make decisions, which can be through an advisor or a mutual fund distributor," said Swaminathan. "Over the course of time, as we launch more funds and products, there will be a need to have that handholding. So, at some point in time, we will be engaging across the rest of the funds as well."

Swaminathan rejected industry chatter that the decision to onboard distributors was because the fund house was unable to grow assets through the direct route as envisaged earlier.

Defending the asset manager's decision to offer only direct plans so far, he said, "Jio BlackRock has 11 lakh investors in its retail business, of which 20% are first-time mutual fund investors. Forty per cent of the retail assets under management (AUM) come from B30 towns that have 14 schemes, with overall assets of ₹15,000 crore, of which ₹4,000 crore are retail assets under management ."

Of the 51-member-strong mutual fund industry, Jio BlackRock and Zerodha MF are the only ones that offer direct-only plans.

In India's mutual fund structure, direct plans are sold by the fund house without involving intermediaries, which eliminates distribution commissions and lowers the total expense ratio for investors.

Regular plans are routed through distributors or advisors, who are paid a commission embedded within the fund's expense ratio. As a result, regular plans typically carry a higher cost, which can weigh on long-term returns compared with direct plans.

Many large private sector banks, foreign banks and national distributors sell mutual funds through regular plans, earning commissions on these sales.

Since Jio BlackRock did not offer regular plans in its products, these channels largely stayed away from distributing its schemes.