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Ladies and gentlemen, good day, and welcome to the HDFC Asset Management Company Limited's Q3 FY '20 Earnings Conference call hosted by JM Financial Institutional Securities Limited.[Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sameer Bhise from JM Financial.Thank you, and over to you, sir.
Thank you, Aryaman. Good evening, ladies and gentlemen. Firstly, I would like to thank the management of HDFC Asset Management company to allow us to host this call. Without much ado, I would like to pass on the call to Mr. Simal Kanuga. Along with him we're joined by Mr. Milind Barve, the Managing Director; Mr. Piyush Surana, the Chief Financial Officer of the company. Over to you.
Yes, good evening, everyone, and thanks, Sameer. So we'll -- we have uploaded our presentation as well as the results on our website, that's hdfcfund.com as well as on website of the exchanges, both NSE as well as BSE.As usual, we'll start with a quick overview of the industry and our company in particular. We have Milind and Piyush here who will take questions thereafter.Starting this quarter, we have also included quarterly average AUM, we call it QA AUM, figures both for the industry as well as us. Providing average AUM neutralizes impact of period-end movements in AUM. It provides an overview of assets managed over the quarter and represents AUM on which fees are earned. So let me start quickly with the overview of the industry.AUM of the industry as of December 31, 2019, stood at INR 26.5 trillion as against INR 22.9 trillion as of December '18, a growth of 16%. Equity-oriented AUM also saw an increase of over 13% during the same period and is now at INR 10.9 trillion as against INR 9.7 trillion as of December 2018. The corresponding growth in QA AUM was 13% both for overall AUM as well as that for equities. Equity-oriented funds saw much lower net new flows to the tune of only INR 46 billion during this quarter. The silver lining here is gross flows. During the quarter, gross flows for the industry added up to INR 725 billion, which was similar to that of the previous quarter, that is September 2019. The comparable number for quarter ended December 2018 was INR 651 billion. This leads us to believe that investors continue to have faith in equity as an asset class and equity mutual funds, in particular. We would like to attribute higher redemption number to rising markets. The growth in the SIP book to INR 85 billion for the month of December 2019, has further strengthened our belief on continued equity flows. Individual investors now account for 53% of AUM. We now move to HDFC Asset Management. Our QA AUM grew by 14%, and our market share remained more or less flat over the year at 14.3%. The lower market share in closing AUM as compared to that of previous quarter can be partially attributed to calendar year-end outflows and liquid funds. Our total AUM as at end of December 2019, stood at INR 3.69 trillion, split in the ratio of 46:54 for equity to non-equity AUM. The QA AUM for the quarter ended December 2019 was INR 3.82 trillion, materially higher than the closing AUM. We have retained our position of being manager to the largest mutual fund in India. We also continue to maintain our leadership position in actively managed equity-oriented AUM. Our market share in actively managed equity-oriented QA AUM is now 15.8%. Individual investors account for 59.5% of our AUM as against 53.4% for the industry. We continue to be the most preferred choice of individual investors, with market share of 15.5% in individual AUM. Over 5.5 million unique customers identified by their income tax permanent account number have reposed their faith in us, the number of unique customers for industry is 20.3 million. This would mean that well over 1 out of every 4 mutual fund investors have invested with us. Our market share in B30 AUM is 12.6%, which is second highest in the industry, only after SBI Mutual Fund. During the quarter, we have added 7 more branches, all of them in B30 locations. We now have total of 220 branches, of which 144 branches are in B30 locations. Our systematic transaction flow for the month of December 2019 was INR 12.2 billion across 3.42 million transactions. We will now move to financials. Financial highlights for the quarter ended December 31, 2019, as compared to the quarter ended December 31, 2018. The operating profit of the company for the quarter that went by was INR 3,987 million as compared to INR 3,127 million, an increase of 28%. Profit before tax for the quarter was up by 27% to INR 4,660 million as compared to INR 3,683 million. Profit after tax for the quarter was INR 3,525 million as compared to INR 2,433 million, resulting in an increase of 45%. In terms of the 9-month period, so basically 9 months ended December 31, 2019 compared to 9 months ended December 31, 2018. The operating profit for the 9 months was INR 11,567 million as compared to INR 8,397 million, an increase of 38%. Profit before tax for the 9 months was up by 38%, to INR 13,234 million as compared to INR 9,601 million. Profit after tax for 9 months was INR 10,125 million as compared to INR 6,544 million, resulting in an increase of 55%. Our operating profit margin as a percentage of average AUM for the 9 months ended December 31, 2019, is 41 basis points as against 37 basis points for the financial year ended March of 2019. So we would just take a pause here, happy to take any questions. Milind and Piyush are very much available for the same.
[Operator Instructions] The first question is from the line of [ Omkar Kulkarni ] who is an individual investor.
My question was regarding a higher depreciation and amortization cost this time, what led to that?
You would have read the note on the application of Ind AS 116. So that is not actually depreciation. It is the leases that we have, they start getting depreciated now. So we don't book the rent expense now after Ind AS 116 is kicked in. And out of the expense of depreciation that you see on the quarter, part of it is -- INR 8.5 crore is attributed out of the INR 12.7 crores to depreciation on leases.
Okay. In terms of dividend payout, would you like to maintain this? Or will you be hiking your dividend payout given the surplus position of cash?
So currently, we have nothing to report on dividend payouts at this stage.
Okay. So I would like to know the thinking of the management regarding this. As of now, there is nothing, that's fine.
No, it would be premature. This is Milind speaking. It will be premature for us to judge what the Board will decide in terms of the dividend policy. It will be -- once anything is decided, it will get communicated. It will be -- it will be premature for us to sort of preempt the Board on what the dividend policy would be.
Okay. Given the current equity market conditions, what do you think would be the sustainable AUM growth you can achieve?
See we don't want to give a guidance on AUM growth, but we do believe that Indian investors are significantly under-allocated to equity as an asset class. That is why you see that there is in every -- sort of every month, there is a consistent flow in SIPs. There is also a consistent flow into equity fund. The flow may be sometimes a little higher or lower, depending on at the level of which the market is and the view of the investor to invest at that particular point of time, but we are basically driven by the fact, is that equity ownership in India is very low, and there's a huge headroom for growth for the industry as such, including for people like us who have created a very strong foundation for the equity business.
The next question is from the line of Yash Khandelwal from Deutsche Bank.
Milind, this is my question for you. So my question is regarding the passive space. I do not see the passive numbers on the presentation. If you can talk about what is our market share in the passive space as well as any products which we are -- in the pipeline to launch in the ETF space?
Yes, I'll just give it to Simal who will just mention the numbers, but just to mention to you the passive space is largely dominated by 1 large investor, which is the EPFO who allocates money in the passive products or ETFs. From what we understand, about 75% of the allocation goes to SBI Mutual Fund ETF and 25% is allocated to UTI Mutual Fund ETF. This is what we believe is the situation. But we do not see any active interest from retail investors to buy into ETF. So the ETF number, in some sense, is correct in that -- in terms of the size of the ETF business, but it is misleading in terms of it representing the retail investors' interest in ETF business, is largely dominated by EPFO investment in ETF and it is also, to some extent, driven by the disinvestment programs, like if you are aware, the Bharat 22 programs and the CPSE divestment programs, which take place through ETFs. Most of the ETF number comprises these 3 sources of money, which is the EPFO, the Bharat 22 and the CPSE disinvestment, which is done by the government using the ETFs. If you're looking for a specific number, maybe we can let you know later. But that number, the number -- apart from these 3 sources of money in the ETF, the number is really not material.
Okay. I have 1 more question. Regarding -- so this is not related to asset management per se, but this is related to technological tools, which you have in the company. So my question is related to the fact that do we -- I mean, do we develop tools regarding portfolio management or risk management or settlements within the company for day-to-day operations. My question is because I mean, typically, we see a lot of revenue for global asset managers like BlackRock or for that matter D. E. Shaw comes from the tools, which they develop and the propriety tools which they outsource to other asset managers. So I mean, do we have any such thing in the pipeline? And what is your view on this?
There are a number of tools that we use, most of them are used in our risk management function where we analyze and track risk and create risk budgets and so on and so forth. I don't think India still has an active quantitative approach to fund management. It is very much driven by fund managers and their overall approach to managing and stock portfolio construction and so on. At this stage, it would be fair to say we are not using sort of an algorithm based or a technological tool based approach to portfolio construction.
The next question is from the line of Madhukar Ladha from HDFC Securities.
On Slide 11, we see that the SIP transaction value has actually fallen in the December quarter from INR 12.8 billion to INR 12.2 billion. Any particular reason this is happening?
Yes, there's a very small dip. We don't see much into this dip in the SIP, it's a very small dip. If you look at even -- and in some of it, the systematic transactions are not SIPs. They are what they are called STPs or systematic transfer plans that people have signed. And whenever that period for the STP is over, that money stops coming in. So it's not a material drop. So we don't see this as really a long-term trend. And we do believe that the SIP -- we believe that we have a reasonably good high market share in this whole systematic investing in the Indian -- within the Indian mutual fund industry space. And we think our focus in building this will continue. To some extent that was attributed to the some stoppages in the STPs that would have either come to an end or that would have been stopped by some customers. And sometimes, these STPs are of a higher value, they don't necessarily represent the interest in the overall SIP book.
The next question is from the line of Manish Ostwal from Nirmal Bang.
My question on the overall saving growth rate in the economy and the income trend. So from that perspective, how do you see the equity flows, whether that trend is deteriorating or still because of the lower allocation to this asset class, the flows have continued? So how do you see the economic slowdown impacting close to the business?
See if you look at the 4- or 5-year trend in the growth in the mutual fund industry, and I'll come to the equity allocation also in a minute. If you look at the bank deposit growth in the last for about 5 to 6 years, it has averaged barely around 9% to 10%, while the mutual fund industry has grown at over 20%. So what we are seeing is that there is a greater acceptance for mutual fund products amongst retail investors. A large part of the growth has been driven also by retail investors. So I feel very confident that there is a significant headroom for the mutual fund industry to grow if you compare it with the size of the -- size of the banking deposits in the economy. Yes, there are months based on where the market cycles are where retail investors either are allocating larger amounts towards equity in some periods or some quarters, like we have seen in the last quarter. New flows into equity-oriented products, which includes balanced funds has been relatively lower than the previous few quarters. So we think this is only a matter of time where these flows will start beginning to pick up. Because overall, we are of the belief that the retail investors' allocation to equity as an asset class is itself very, very, very low. And therefore, people's interest in equity as an asset class to an ownership will continue to grow.
The next question is from the line of Madhukar Ladha from HDFC Securities.
The fees and commission line item has grown significantly. It's back at INR 7 crores in this quarter versus just about an INR 80 lakh amount in the last quarter. Any particular reason for this? Ideally this amount should just have gone down.
Madhukar on that, there is -- so the fees and commissions, you're right when you say that it should have gone down because the amortization cycle and the mutual fund commissions coming to an end. However, this also includes commissions paid on our segregated account business and our PMS business. So there has been a payout on that. That is why that amount has gone up.
Any guidance on how this number should be typically or, given that now there's no upfront commission, sorry?
We don't see this to be a material amount and don't see it to be a material amount going forward too.
The next question is from the line of Amit Jeswani from Stallion Asset Management.
Congrats on the decent quarter. My first question is IDFC is on the block. This is pretty much public information. Are we open -- they do about INR 75 crore odd revenues per quarter. So are we open to like an acquisition because we can simply buy them out and carve out a lot of cost. So are we looking at an inorganic route? That's my first question. The second question is, do you see distributors moving away from HDFCAMC because other mutual funds are offering larger commissions?
On your first question, my limited point would be that we are not looking at any particular target acquisition at the moment. We always are open minded in looking at opportunities of acquisitions going forward. And we will look at whether there is any particular synergy in having to make these acquisitions. I don't have anything to comment or report on a particular or any specific AMC that you mentioned about. Your second question is that we do not think distributers are moving away. Our sales teams are actively engaged and I think we have very deep and meaningfully strong relationship with our distribution fraternity. And we think we will continue to get rewarded based on our distribution reach and the investment of -- strength of the investment, sort of offering that we have. And there's no reason to believe, if we look at the sales numbers that we have seen year-to-date for the industry as well as our sales to -- our sales on equity products on a year-to-date basis, there is no reason to believe that the distributors are going away from us.
My second question is, what kind of cash are you comfortable being on the balance sheet? Because our dividend payout ratio last year was 66%. We do have a lot of cash on the books. So what kind of cash do you think that this cash is more than enough. Above this, I'm going to give out 100% dividend payout or 80% after dividend distribution tax.
I think I don't want to. As I said earlier in the reply to another question, I don't want to prejudge what the Board will decide on dividend, but the Board is mindful of the fact that we have significant cash in the AMC balance sheet. And as you have seen from the trend that we have presented, that there is a trend of -- sort of either of a fairly high dividend payout ratio that we have been giving. So I think the Board will be mindful of this fact that we would like to have a healthy payout ratio. What that payout ratio will be for the current year and going forward, would be difficult to prejudge what the Board will decide.
Sir, one more thing, why are we not so active on the EPFO market while other AMCs are? Like is it only that government AMCs get that? Is it something like that?
You're absolutely right. I think the EPFO allocation of the ETF money that comes every month to them, as what we understand, is that they have a policy of giving it only to government-owned mutual fund or asset management companies. And therefore, 75% is -- as per our understanding, 75% is going to SBI Mutual Fund and 25% to UTI. But clearly, it is not going to any private sector asset management company.
Right. So any new pension opportunity that we are tapping, we did something like last quarter, new pension money. Is that something that we are looking at aggressively like global pension money? Because now 1 of our competition is a large player, Nippon, I'm speaking about in the pension market. Is that something you're tapping aggressively on?
No, we will continue to focus to grow our international business wherever we are able to. We are in dialogue with a number of prospective people who could be looking at providing us mandate. Our international business is about $1.8 billion. And what we are pleased is that it has come from very high-quality sovereign funds, university and domains and institutions. So it is a part that we will continue to sort of focus on the growth, it appears reasonably small compared to our overall size of assets under management, which is almost USD 53 billion plus, but we have a meaningful amount of $1.8 billion or thereabouts in our international mandates where we are managing or advising the client on their India investments.
Sir, my last question is what is the typical bps that you will get from pension fund? Like is it like if you can give a broad range that would also be enough that, what's the typical yield that we get on international money?
Each of the mandate is very different. In some cases, there is a fee, in some cases, there's a fees lower and there's a performance fee attached with it. So almost every case is very unique in the way based on the size of the mandate, based on the -- what type of strategy they want us to sort of pursue, the pricing is very difficult to put a number on as an average because it is both -- in many cases, it's a mix of performance fee and a flat fee. In some cases, it's just flat fee. And sometimes, some of the international money is also coming to our existing mutual fund products, in which case, they pay the normal TER that we charge in our mutual funds, may be in the direct plan.
The next question is from the line of Piran Engineer from Motilal Oswal Securities Limited.
Congrats on the quarter. I just have a couple of questions. Firstly, is our redemption rate in equity mutual funds lower than that of the industry? If you could just broadly guide us to where you all would be? Because I believe the industry is at about 20%, 25%.
I think you're right. And if I look at the year-to-date flows in our funds and compare our market share in gross flows and share in redemption and then look at our share in the net flows, I'm pleased to find that our share in the redemption is lower than the industry. And that is why our share in the net flow is reasonably strong.
Would it be meaningfully lower? Is it marginal?
I don't know what you mean by meaningfully lower, but yes, no, it is not marginal, it is meaningfully lower.
Okay, okay. And sir, my second question. It's probably a bit technical, but I noticed that your yields have improved, your revenue margins have improved Q-on-Q. But if I go back and look at your schemes and see in which schemes you all have increased TER or cut TER, I noticed that over the last few months, you all have cut TER more than increase TER, yet your weighted average revenue margin has improved Q-on-Q. So I'm a bit puzzled by this.
I think our operating profit margin has remained at 41 basis points, is that is what you have mentioned?
No, no, I meant the top line margin. If I just calculate your operating income divided by quarterly average AUM, it has improved despite TERs having been cut in some of your large funds like Balanced Advantage or Hybrid Equity. So I'm just trying to think about it bottoms-up as to why -- what explains the dichotomy.
So some -- the fee income also includes the fee that we get on our portfolio management or segregated account management business, which includes the TMS business. Sometime -- and that fee sometimes is not very sort of evenly spread in every month or every quarter. It comes about in -- either in the calendar quarter, which is the last quarter of the calendar year and so on.
Okay, okay. That answers my question.
The next question is from the line of Nikhil Walecha from Sundaram Asset Management.
type="A" />I just need a small data point. What was our net new sales in the equities?
We don't disclose our net new sales numbers. Nobody in the industry does it and for that reason, we also don't disclose those numbers.
type="A" />Okay, fine, no problem. And can you share our strategy in B30 cities? I mean I'm looking at the numbers and our share is marginally increasing in the B30 cities. So what is the strategy over there? Is it because -- I mean, are we able to earn more yields over there or is it more helping in our growth?
No, I think we do believe that the under-penetration or under ownership of mutual fund in the B30 is very, very strong in the sense that the opportunity to grow business in B30 is very strong. And just to let you know that we have about 219 branches, of which about 144 branches are in the smaller -- in the B30 towns. So we have almost 65% of our branch network in the B30 -- beyond in the B30 geographies. And we see that as a -- it's an important part of your strategy to focus on business from the smaller towns, where we, I think, both the strength of our brand and our distribution is very high. And we have very strong market shares in a number of small towns. In fact, as you heard from my colleague, our AUM from the B30 cities, we are #2, and we are #2 only to SBI Mutual Funds.
The next question is from the line of Nischint Chawathe from Kotak Securities.
So actually partially answered my question, but just to get a clarity. Basically, the -- around INR 25 crore odd difference in revenue from operations on a quarter-on-quarter basis, one can say broadly, most part of it was because of PMS income. You're saying on the quarter, and also when I look at revenue from our revenue from operations, there's almost a swing of INR 25-odd crores. And I think your AUMs have broadly been sort of stable. So from a run rate of what -- quarterly revenue run rate of INR 505 crores to around 498 -- around INR 500 odd crores, you've kind of moved up to around INR 525 crores. So I'm just sort of saying that broadly, this INR 20 crores may have come in on account of PMS. Is that a fair way to guess?
Yes. I mean, you're probably around the number.
Sure. And this kind of tends to be kind of comes in once a year, right? So maybe if all things remaining similar next quarter, you might still be kind of closer to INR 500 odd crores. I mean, is that ...
That depends on a number of things, how the market behaves, what are the flows like, a lot of other things.
No, so the limited point is that this quarter you had PMS, is there anything else that comes in the next quarter? Any other specific line item or whatever, which can be kind of swing the numbers by 4%, 5%?
We don't have any sight of anything yet. And even -- I don't think we want to kind of make any specific comment on that.
The next question is from the line of Amit Nanavati from Nomura Securities.
Congrats on good set of numbers. I know you don't disclose your flow information, but if you can just qualitatively share across distributor segments, be it banks, IFAs, where you're seeing gaining market share, losing market share? I understand looking from an AUM perspective might -- your -- the fund performance also is at play here, but broadly, you've by and large managed market share and maintained market share barring whatever performance-related adjustments, I wouldn't want to make. If you look at bank's AUM per se, Y-o-Y basis, you wouldn't have grown, the bank AUM wouldn't have grown. So if you can give some color on which -- on that.
So I'll make a few quick observations on what we see, and some of it may not be necessarily a trend and some could be. So as you know, there are 4 distinct channels. We have the IFA channel, we have the bankers' bank channel, then we have national distributors. And the fourth, which is not a channel, but the way to call it, is where people invest directly. If we look at the first 3 channels, by and large, their shares has been consistent in the past. I would probably attribute a small dip in the share of the banking channel for the industry. For us, it is not so noticeable. But for the industry, the contribution from the banking channel has indeed dipped. For us, I don't find it very strongly noticeable. In our case, I do find 2 quick observations on this, and it's an interesting question. I do find that there are more and more investors investing directly into mutual funds for the industry in general. And that rate of the industry AUM, which is in direct plans is growing every year-on-year. As far as the share in the gross flows, the industry has a fairly -- it is an increasing trend of flows, which are coming in direct plans. And that is something which might be a little bit -- might be a sense of a trend. For example, as per our understanding from what the data that we have seen, we have almost 18% of the gross flows now coming into the direct plans for the industry. For us, the share of direct business coming through our gross flows, and I'm talking only of equity products, is as high as 23%. So this seems to be an increasing number of share of the direct sales in the total gross sales, clearly, for the industry, but very much strongly evident in our case.
Okay. Sir, so just a follow-up. So if you can just give some color on profitability of direct channel versus a distributor-led channel. I understand the commission difference is kind of netted off basically through your TERs. But beyond that, is your profitability, given that the scale has ramped up in direct is better than the regular channel ex of the commission pay-offs.
No. As you know, the -- basically, the difference between the direct plan and the sort of the regular plan or the broker plan is really the commission. So effectively, the margin on whether it is money comes through the direct channel or through the broker channel, the margin is more or less the same.
The next question is from the line of Himanshu Khona from Morgan Stanley.
This is Subramanian, my questions have been answered. Congrats on a good quarter.
We move to the next question. The next question is from the line of Sagar Jethwani from Phillip Capital.
So my question is basically, what would be the difference between equity schemes and non-equity schemes, the fees percentage?
You're talking about percentage of fees?
Yes, percentage fees charged on equity.
Okay. I'll explain it differently in the way which might help you better. Broadly, margins in equity are between 80 to 90 basis points. I'm giving you a broad range, and I'm not mentioning up a specific number. The margins on debt funds are anywhere around 35 to 40 basis points. So that is the difference between -- and the margins in liquid funds vary between 7, 8 to 10 basis points.
The next question is from the line of Shubhranshu Mishra from Bank of Baroda Capital Markets.
Congratulations on a good set of numbers. Two quick questions. One is with respect to the market share in liquid funds. We've seen -- we've gained quite a bit of market share after the IL&FS crisis, and we now have been shedding some more to market share. Just want to understand what would be a stable market share for us if we have to look at it from a 12 to 18-month perspective? That's my first question.
See it is very difficult to make a projection on future market share because the investments in the liquid funds is usually more from the institutional or corporate sources, so they tend to be a little lumpy. If you look at our market share, while on the closing AUM, our market share has dipped a little bit on a year-on-year comparison. But if you look at average AUM of liquid funds managed by us in the October to December quarter '19 as compared to October, December quarter '18, we have maintained our market share. It has not come down on an average basis because I generally believe actually that the average AUM number is a more robust number because it tells you the business volume done over the 90-day period for the average. It also tells you the number on which the fees are charged. So on an average AUM basis, our liquid fund market share has actually remained stable year-on-year basis.
Well, sir, my second question was different. But then if you look at the average number for institutional chunky flows, don't you think it will be an aberration in the calculation?
Can you repeat the question?
Sir, my point here is, limited point here is that it will be institutional flow, which will be largely chunky. So if you look at the average number, it will give you an aberration, right?
No, there are large investors who come in, but then there are large investors who go out also. So on an average, it does move by INR 4,000 crores, INR 5,000 crores over a week or 10 days. But by and large, if you -- that's why if you take a slightly longer period like a quarter's average, it tends to remain reasonably stable because there are people coming in, but there are people going out as well also.
Right. And my second question is more to do with NJ Invest which happens to be one of our largest distributors. Now they've got a PMS as well as MF license. Of course, it will take time to scale up, but then how do we look at the relationship with NJ Invest specifically going forward?
Shubhranshu, we have a great relationship with NJ, and that continues. The PMS business of theirs has been there for quite some time. As we understand from whatever has been made public by NJ, when it comes to mutual funds, they are planning to do some bit of passive and some bit of smart bid strategy. So in our opinion, and I think they have been pretty vocal about it. This is not going to be conflicting with their existing business. So we don't see that to be a challenge as such. Yes, one of our largest partners, they have been so for last 19 odd years or 20 years of our existence. We have a great relationship with them.
So that remains unchanged?
Absolutely.
The next question is from the line of Nitin Rao from Alpha Ideas.
Sir, this is regarding the different kinds of channels, and you mentioned how there is a megatrend playing out with more and more direct source coming in. Sir, if you look at the sister companies in the HDFC Group like HDFC Bank or HDFC Life, they have invested aggressively in technology, partnering with the FinTechs. In fact, HDFC Life had a tech deal also. So what are we doing to expand opportunities in the retail space to attract millennials that would be something different over there?
Yes. So if you look at our digital offering, today, you'll be happy to know that almost 69.1% of the transactions that are coming, they're coming on some digital channel. And this includes the digital channel that we have on our own, which is the HDFC MF online and we have a mobile application of that version. So I think combined with our offering of HDFC MF online and other FinTech company sort of applications, where -- actually close to 69.1% of our flows are coming electronically. So we do see more and more acceptance of the electronic channel as a method of doing business. We see that as a trend. Even if you look at the 9 months for the last period, it has grown from 61% -- 64%, 65%, 66% to 69%. And that percentage will only continue to grow. So we are investing heavily in technology. I can -- I will share the exact numbers separately subsequently with you, but we are investing in technology. We have a 17-member strong digitization team, which is looking at expanding our digital sort of footprint and trying to get -- create applications and processes, which helps people both for onboarding them as well as to provide them ease of making transactions or entering into transactions with us. And we are seeing the benefits of that in the terms of the consistent increase in the flow of transactions coming on our own platform itself.
Sir, one more follow-up is, are there any product innovations we can improve for targets because any -- like in insurance, there is bite-size insurance or toffee-size insurance, something like that? So can we use our digital heft to create some kind of a new kind of products, which cannot be copied by the competition or we have an edge over there? Is there something we can do along those lines as well?
So it is true that, basically, any product that we launch first needs regulatory approval, and it has to be in line with what the SEBI guideline on product launches are. And there are different categories of funds, and within each category, we are required to have only 2 plans which is like a broker plan and a direct plan. You cannot create a third plan, which is something else or only for digital investors or something like that because we have to follow the principle of consistent treatment for all the unitholders in terms of not providing any particular benefit of one type class of unitholder or another class of unitholder. Given that background, I don't say that innovation is not possible, but it is to create a different product is not something that we see as easily practical now because it will get -- anybody will be able to replicate that product based on anything that we do. So -- but as I said, our focus is to continuously invest on our digital footprint and see that we are able to increase the ease of transaction for clients who want to sort of deal with us digitally. And we are happy to say that the trend is consistently increasing.
Sir, one last question. Sir, we have seen in China and other companies, some of these mega big tech companies disrupt their traditional asset management companies. Do you think that is possible in India? Say an Amazon launches something or even WhatsApp, WhatsApp is launching its payments this year. So do you think because they already have a large set of users and hundreds of millions of subscribers, you perceive it as a threat or do you feel that the trust of the HDFC Bank and the regulatory framework ensures that we continue our dominance?
I think it is a combination of a number of things. I don't think people would want to invest other than the -- in brands that people have trust with. And I'm not saying HDFC is the only one. There are a number of others as well, but it will be very difficult to be disruptive simply on the basis of technology because people will -- there are a number of very successful FinTech companies, which are offering -- but they are all various transaction-oriented applications, they're not offering differentiated products because anything that is done by one can be replicated by the other. I understand your question, but I find it hard to believe that something like that can be made, disruptive sort of presence can be made in the Indian context.
Sir, globally, that hasn't happened, right? The BlackRock, the T. Rowe, and the large global players continue...
But Alipay has done it in China.
Alipay has been very, very niche only for the money market [indiscernible].
The next question is from the line of Yash from Yes Bank. You may go ahead with your question. [Operator Instructions]. We'll take that as the last question. I would now like to hand the conference back to the management team for closing comments.
I'd just like to thank all the people who have been on this call for their interest in our company and thank you very much from myself and my team at HDFC Asset Management Company. Thank you.
Thank you very much. On behalf of JM Financial Institutional Securities Limited, that concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.