Quantum Mutual Fund was established as India's first and only direct-to-investor mutual fund instead of taking the conventional path of empanelling distributors. Additionally, Quantum pays no commissions to distributors, thus allowing us to keep costs low. Since there is only one plan and one 'transparent' expense ratio, this means less confusion for investors and no conflict of interest to promote the distribution channel.
Unlike most fund houses, Quantum has nine products that cater to equity, debt and gold. We have never launched and will never launch FMPs. We only launch schemes we believe will add value to the investor and not damage his portfolio, which is one of the reasons why we don't launch small- and mid-cap funds.
We have a robust customer service/grievance-resolution mechanism. Stock-picking is a team-driven approach.
I find that tier 1 cities like Mumbai and Delhi are saturated with a number of mutual funds trying to grab the slice of the same pie, whereas our on-road personal experience in tier 2 cities and B15 locations is quite an eye-opener. Not many people even know mutual funds exist, let alone investing in them! The industry needs to wisely use the 2 bps allocated for investor education to actually spread the word, rather than taking it as a pseudo branding opportunity.
Quantum relies heavily on the internet. Therefore, for us the growth of our investor base becomes directly proportional to the penetration of the internet in India.
Challenges ahead
While we are extremely bullish on the India growth story, the promises made need to translate into ground results - fairly quickly now. We expect a global shakedown around the corner due to the loose monetary policies of some nations and also believe that India will not be as badly hit as the rest of the world.
Quantum believes that the Sebi has its heart in the right place and tries to come up with regulations that will ultimately benefit investors. However, the minimum net worth requirement of 50 crore for fund houses totally baffles us.
Competition
We need many more AMCs to reach out to people and ensure that the penetration of mutual funds in this country is encouraged. Ideally, even individuals should be allowed to start AMCs!
By allowing eligible individuals/professionals to start AMCs, we will encourage good and honest players.
Retail reach
We don't have any targets! Forcing highly unachievable targets could lead to mis-selling. Therefore, we follow the philosophy of advising our investors, telling them what products are best for them, given their age profile and risk appetite, and then allowing them to buy our funds, rather than selling the funds to them.
This article was originally published on December 02, 2015.
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