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Benchmark Mutual Fund: Yardstick Builders

Distributors will need to recalibrate their business model and align it with investors rather than product manufacturers.

In many markets today niches are the norm or at least are more prevalent than in the past. In 2001, Benchmark saw for itself a role in passive investing and it has found many takers ever since. “Exchange Traded Funds have become the fund vehicle of choice globally because of their efficiency and transparency. They have also transformed the way investments are done,” says Rajan Mehta, Executive Director, Benchmark Asset Management Company, an active ETF investor himself, as he drives home his belief.

Disappointing AUM growth: The gross inflows in equity funds in the first six months of this calendar year are twice that of 2009. And, the year-on-year equity asset growth is 14 per cent. Yes, there have been redemptions but they are mostly on profit booking. Gross inflows are still robust.

Regulatory changes: These changes are fabulous for investors. The earlier commission structure had created a trading mentality amongst investors in which many of them were unable to create wealth. Aligning the intermediary compensation with investor wealth creation is a great way and will go a long way in promoting long-term equity investment. The distributors (advisors) will have to recalibrate their business model and align it with their clients (investors) rather than product manufacturers.

The road ahead: We are the undisputed leader in the ETF space. We will do all it takes to propagate this evolved method of investing. We will continue to focus on educating the intermediaries and investors on the many advantages of ETFs.