The top strength of our mutual fund is our people. Our employees stepped in to declare that all their incremental mutual fund investments will be done in Kotak Mutual Fund. We evaluate all our decisions against only one parameter: will it [a decision] help us increase or maintain our clients' trust and confidence?
Challenges ahead
From an investment perspective, we have to manage risk and return. We are required to outperform the market. Winning clients' trust and confidence through consistent and superior performance is the biggest challenge that we have to face on a daily basis.
From a business point of view, we face a serious challenge due to our belief of managing funds like our kids. We don't have more funds than what we can afford. We have only one large-cap fund called Kotak 50. We don't have the luxury of having three large-cap funds with three different strategies to ensure that one fund will end up doing well. The Sebi's efforts on consolidating mutual fund schemes are a testimony to our approach. We face the biggest challenge of convincing clients that 'their' returns and fund returns should be the same. Simply evaluating a fund house based on the performance of few schemes is not appropriate.
Competition
In the US there is much more diversity in terms of product offering as well as number of players. A higher number of players and products have resulted in excess of 100 per cent AUM-to-GDP ratio in the US as compared to about 13 per cent in India. If India has to expand market, certainly two hands are better than one. However, a compulsory retirement plan like 401(k) and outsourcing of money management by the insurance sector will help the mutual fund industry reach more customers in a rapid way.
Retail reach
Retail investors are the most important reason of our existence. We would like to be the investment manager to every Indian. We would like to be remembered for bringing as many retail investors as possible in financial assets. We take inspiration from the quote: If goals are noble, means will follow.
This article was originally published on November 20, 2015.
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