In a move to make choices for DIY investors simpler, SEBI came up with scheme categorisation two years back. Post categorisation, the mutual fund industry still has over 5,600 schemes, spanning across dividend, growth, open-end and closed-end plans and options. For an investor to identify the right package which would suit his risk profile and investment objective is still a tedious exercise. Thus, hand-holding is required for investors who are new to mutual funds.
Though mutual fund distribution is transforming with the recent strategic investments in many fintech firms to capitalise on the opportunity of AI and robo-advisory, the industry still needs to be matured enough to accept this holistically.
At YES Mutual Fund, we have launched schemes to offer comprehensive corporate and treasury investment solutions that help investors achieve short- to medium-term financial goals. Currently, the investor category is dominated by institutional players. Once we launch our equity-product suite, we shall cater to major T30 and B30 locations through our business centres and also through our distribution partners to mobilise assets, especially from the locations where we do not have a presence.
Impact of new expense slabs
A superior portfolio and performance are more critical than the expense ratio. Advisors and investors will continue to choose superior products. Having said that, distributor remuneration is important, and this must be kept in constant review as well. At YES, once we launch equity funds, we will always ensure a constant review in order to be abreast with the competition.
Risk control in debt funds
The safety of our investors' money is of utmost importance to us. We have incorporated a very stringent internal credit-assessment process which reduces our reliance on external rating agencies significantly. We are also very selective when it comes to the types of instruments we invest in. We have continued to stick to really strong issuers and groups that have been able to weather the current storm well. We believe sidepocketing to be a good practice introduced by the regulator.
Key challenge
Post the IL&FS blowout, multiple defaults and credit-rating downgrades have wiped out a chunk of returns of multiple debt funds. This has shaken investor confidence. The current scenario has made fund houses very responsible and vigilant in building debt portfolios and to have a sanity check on the issuers by not relying just on credit-rating agencies. From the beginning, we have ensured a robust mechanism for the selection of issuers and primarily focused on a quality portfolio. We want to ensure that we expand our product basket into equity, considering the reasonable valuation and investor needs. We want investors to experience our expertise and have a fruitful financial journey.
This article was originally published on December 10, 2019.
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