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'Distributors will continue to have a key role'

Anthony Heredia, CEO, BOI AXA Mutual Fund, answers questions related to key industry issues

'Distributors will continue to have a key role'

Revision of expense slabs by the regulator, the push towards passives, and the anticipated entry of several new AMCs translate into a greater focus on cost. Do you believe there is potential to drive the costs (expense ratios) down substantially from the current levels while still running the business profitably?

In my view, costs have come down substantially over the last few years, and while there will always be room for further reductions, they will be limited. Business profitability will be driven primarily by increased scale, and while margins will reduce over time, the overall profitability model for the industry remains intact. That being said, focus on increased customer convenience and positive investment outcomes over the long-term for our investors should remain the key objectives for all of us. If we are able to get this right, profitability may inevitably follow.

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)?

The emergence of direct plans, passive products and new-age platforms has played a role in the overall penetration and growth of the industry. Each of these aspects has its role and contribution to make within the broader ecosystem, and will grow over time. In the same way, distributors will continue to have a key role as they have over the years, especially in the context of extending reach. For all partners in the ecosystem, the key dynamic should always be ensuring the best-possible experience for the investor, and we don't see any obvious conflicts for different stakeholders or emerging trends inter-se in ensuring the same.


Rapid-fire questions:

  • Investment guru/manager you admire the most: Philip Fisher
  • Business leader you'd like to emulate: Jamie Dimon
  • The most rewarding financial investment you've ever made: Making my first ELSS investment in 1996 and sticking with it over a long period
  • Money mantra you swear by: It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong
  • If not a money manager, you'd be: A writer