Religare Mutual Fund: Shifting Gears

One way to grow your business is to acquire existing businesses. Its equally important to build on it. Religare has managed to do both. “Personally, I am a value investor and very conservative trying to anticipate the mega-trends, before jumping in,” says Saurabh Nanavati, CEO, Religare Mutual Fund. However, the fund house is an aggressive player in the crowded asset management space.

Disappointing AUM growth: The distribution business is under heavy stress. And the investor has not yet fathomed the benefit of low-cost mutual funds. The way forward is to create financial literacy amongst investors and change the distributor revenue model from high upfront (almost 90-95% of revenue) and low trail (of 5-10%) to a balance between the two.

State of the market: The market has gained unilaterally due to FII inflows which have been very high. So far this year, we have already received close to $18 billion, which is more than 50 per cent of total emerging market inflows. Money from a single source is risky, and the first sign of liquidity tightening in the West or rise in cost of funds, will lead to large withdrawals. Retail needs to step in at that time to balance out.

The road ahead: Trust has to be the buzzword in our business. Our vision is to achieve large scale in all revenue streams; be it mutual funds, PMS or offshore business.

My investing style: I am a value investor and very conservative trying to anticipate the mega-trends, before jumping in.

This article was originally published on October 29, 2010.