"Active fund managers have been able to consistently outperform the benchmarks," says Ashok Aggarwal, CEO, Escorts Mutual Fund
Escorts Mutual Fund is one of the pioneering private mutual funds in India - one of the earliest entrants to the industry.
Maintaining confidence of investors in mutual funds as credible investing avenues by providing consistent returns in debt, equity and other hybrid schemes in this testing global macro environment is the major challenge.
There are challenges in reaching out to cities beyond tier I cities and also in communicating very clearly the fund-house values and the products and services offered. Further, efforts have to be on mutual-fund products being sold as goal-based solutions. Increasing popularity and convenience of SIPs have been instrumental in mobilising large sums to debt and equity schemes. This is quite encouraging for the industry for operational innovation and efficiency. Mutual funds are also proving out to be an alternative to banking products.
We are investing in both physical as well IT infrastructure. We are creating a new online platform for our potential investors. We are outsourcing back-end services, which will enable the management to fully focus on core fund-management and distribution.
Further, empowering investors through both online as well as offline modes will help us in enhancing our reach and building quality long-term relationships. Consistent client interaction, regular communication and feedback will also help us in evolving our product-and-delivery strategy.
We should differentiate between the cost structures of active and passive funds. Comparing with global actively managed funds, I don't think that our costs are high. Further, in the Indian context in particular, active fund managers have been able to consistently outperform the benchmarks, thus demonstrating the value addition and justifying the cost differential from a passive fund.
We operate at a minimum-cost model and are attempting to increase the AUM by offering specific products to the varied needs of investors. Further, with the launch of our online distribution platform, the cost structure should be far more efficient as overall costs go down.
Outlook for equity and debt
Expectation of improved corporate performance, lower interest rates and huge savings make a compelling case for markets providing positive returns during the next year. With recent repo-rate cut and expectation of benign inflation trajectory, the case for strong debt performance is also on a firm footing.