Disappointing AUM growth: I would certainly say that the industry is going through a paradigm shift, but this is not the first time that falling commercials have led us to a hybrid solution. We have seen huge erosion in capital in 2008, a long fallow 2009, and then a sudden rise again in the second half of 2010. It is natural for investors to book profits on old investments and wait on the sidelines with new money. Without the distributor nudge, the outflow would be more than inflows.
Regulatory changes: I believe that the initiatives will make us think innovatively about delivering a more relevant product to a market segment that will probably value simplicity, transparency and price over other factors: after all we Indians are 'Lajo jis' at heart.
State of the market: My answer really would be the question “In what framework do you want me to evaluate it?” If the framework is the last few months or the next few months, my answer would be “I am clueless”; we can at best make a guess. Unfortunately, that is equally true of each expert that I have met.
The road ahead: We have begun business at a very tough time, but this is also an opportunity for us. We do not have so much invested financially and emotionally in the old ways of doing business that we cannot afford change.
My investing style: I am pretty boring. Mutual funds that too index funds and short-term debt funds are my only investments now. I have moved out of most active equity funds other than those where I have SIP's since in my view, very, very few fund managers have really been able to better (risk adjusted) an index fund.
This article was originally published on November 11, 2010.
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