How is the increasing proliferation of direct plans and the new age platforms changing the dynamics between the three key stakeholders - the investors, the distributors, and the manufacturers (AMCs)?
Given the very limited penetration of mutual funds in India, there is room for everyone in the growing mutual fund industry. Technology-enabled new-age platforms are increasing reach and scope by bringing younger and newer investors to the industry. Whether to invest directly, via an MFD (mutual fund distributor) or through an RIA (registered investment advisor) is a personal choice. However, one caution to keep in mind is that new to industry and direct investors can have a poor investing experience due to lack of knowledge, patience and discipline.
It is often said that investment returns don't mirror investor returns and the main culprit is often behaviour. More than the changing dynamics between investors, distributors and manufacturers, I think the growth of ETFs (exchange traded funds), accessibility of PMS (portfolio management services) products and alternatives, and advances in technology will be bigger drivers of a shift in dynamics. The line between the manufacturer and distributor/advisor is blurring globally and we are starting to see this happening in India as well.
Many people these days take to equity investing by owning the stocks directly. Innovations like smallcase are further catalysing this trend. What implications do you see on the businesses of mutual funds? Can they pose a challenge to the growth story you would envision for the fund industry?
One can either see innovations like smallcase as a disruption or an opportunity. But the positive side is that such innovations act as enablers for investors to make a shift to market-linked products (including mutual funds) from traditional assured-returns products and that is a far bigger opportunity than any short-term competition that a product like smallcase may pose. Many such innovations were first seen as disruptors yet have proven to be enablers in the long term, including the growth of digital and the use of technology.
- Investment guru/manager you admire the most: Warren Buffett
- Business leader you'd like to emulate: Tim Cook
- The most rewarding financial investment you've ever made: An SIP in Franklin India Prima Fund over many years
- Money mantra you swear by: Each drop makes an ocean - patience and discipline will be rewarded
- If not a money manager, you'd be: I would be doing something in the tech space