Navi Mutual Fund, a venture of Flipkart co-founder Sachin Bansal, is a new entrant in India's mutual fund space. We speak to its MD and CEO, Saurabh Jain, about the fund house's plans and future launches.
By offering an index fund for six basis points, you're setting a new benchmark at a time when some of the established fund providers have in fact raised the expenses of their passive funds. But is it economically viable to run it at that price point? At what scale of AUM do you break-even?
We are looking to provide maximum value to investors through scale. With the projection of the investor base growing from two crore to 10 crore in the next 10 years, we don't have to worry about the possibilities of scaling.
How do you view the passive vs active debate? Do you think the days of the latter are over?
We believe there isn't a winner in the active vs passive debate. The idea is which suits an investor better.
We believe for most, passive makes sense not because of returns, but because it removes the subjective bias associated with active and gives investors a means to make wealth without giving away a chunk of their money as cost.
There are areas where active funds seem to have significant benefits, particularly in schemes where the money sticks for long, for example, ELSS schemes.
With so much talk about passives and smart beta these days and a lot of new and existing players eyeing it, even this segment can become overcrowded. So how do you stand out from the rest?
India is currently going through a phase where digital penetration is leading to massive growth in the mutual fund space. There are several products that we believe have not been explored as well as several aspects of current products that have not been fully understood by investors. We believe the following would act as key differentiating factors:
You don't have a well-entrenched brand like some of your bank-sponsored peers and distributors won't have much incentive either given your focus on keeping costs low. So, how do you plan to succeed with distribution?
We believe in empaneling with partners who are aligned on selling what benefits the investor first. We are seeing traction of such partners on our platform. Also, leveraging our tech strength is going to help us play a vital role in pushing direct distribution.
Can you provide some visibility on your roadmap for future product launches? What kind of products can we expect from you on the fixed-income side?
We are aiming to launch around five-six more products within the current financial year. These would mainly be on the passive side. They will offer investors exposure to both domestic and international markets.
There are currently a lot of fixed-income products with very limited differentiation in costs and returns. We are still evaluating the kind of products that can bring value to our investors in the fixed-income space.
Given your focus on passives, what are your plans for the legacy products you have inherited from Essel?
We will continue to offer the existing active products and add more as and when we see the need from our investors.