In an annual review on fund families, we spoke to mutual fund honchos to get their views on some of the pressing issues facing the industry. This is what Jimmy Patel, the CEO of Quantum Asset Management Company had to say:
What factors would increase the appetite for investing in mutual funds beyond the top 15 cities?
I clearly believe that in order to tap investors beyond the top 15 cities, simple products and processes need to be introduced. There should be transparency in all actions voluntarily and not forced transparency. Beyond the top 15 cities, investors tend to need a one-on-one touch and communication; hence we should establish channels to have a one-on-one conversation with investors either through well trained distributors or directly as fund houses. In fact, it's always better to meet & greet investors on a regular basis. Currently we are tapping a new breed of distributors in these locations and they need a lot of handholding, just to ensure that no mis-selling takes place beyond the top 15 cities. Finally we should not let the investors feel that they are alone and dependent only on the distributors. I think these measures are integral to expand the reach of mutual funds beyond top 15 cities.
Have the direct plans seen greater retail participation?
In fact we are the only fund house who sticks to 'direct' in a true sense and our folios shows that we have largely retail clients. The total expense ratio of direct plans is lower than that of regular plans to the extent of savings in distribution costs. Direct plans enable investors to invest directly through the fund house instead of distributors. Moreover we believe retail inflows are more sustainable in the long run than a corpus dependent on corporate money. However with the growing number of users coming online, we think larger participation is achievable through the online model, the industry needs to increase internet and online banking penetration. Even our online investment processes are seamless which is also one of the vital reasons in attracting more retail investors. Online investment gives you the convenience of investing at your own time, and allows for ease of research while sitting at home, moreover, at Quantum we have a portal which allows investors to invest online without any paperwork.
What investor education initiatives has your AMC taken?
At Quantum MF, we initiated investor education way before SEBI mandated the same last year. In 2009, Ajit Dayal, Chairman of Quantum Asset Management Company started what we call the “Path to Profit” as a road trip across 4,000 kilometers to create awareness about the benefits of investing in mutual funds. The road trip covered 7 cities in South India, beginning with Bangalore, and then moving on to- Mysore, Coimbatore, Madurai, Salem, Pondicherry and Chennai. Our intentions were very clear, to travel across various cities in India and guide investors, both existing and potential through the investment process & educating them about the basic concepts of savings and investment. We still follow the same principles for all our investor education events. During these events we guide investors and help them solve their investment related quires. We have also undertaken investor education programs for the Rajiv Gandhi Equity Scheme in association with NSE and CVL, and have conducted many other programmes across the regions of Maharashtra and Mumbai with CDSL and BSE Investor Protection Fund.
What's the road ahead for your AMC?
We will remain direct and look forward to offer a more state of the art invest online platform. We plan to remain retail focused and will continue to be transparent with our investors and stakeholders. We will continue offering simple products that make sense in the long run. Our focus would remain on keeping costs as low as we can. We want to remain genuine money managers. At Quantum we aim to build India's premier investment management company by offering our clients a disciplined research and investment process to take advantage of the long-term investment opportunities that exist across various asset classes - while balancing the inherent risks of investing in an evolving market.
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