Regulatory changes only make things better, and there is huge potential for the MF industry to grow, says Ganesh Mohan, CEO of Bajaj Finserv AMC. In an interview to Siddhant Mishra, he says focusing on generating alpha is more important than having too many offerings. Edited excerpts:
You chose to enter the MF industry at a time of multiple regulatory changes. What was the rationale?
Regulatory changes will keep happening, it’s a continuous process. The regulator has been trying to streamline a number of things, which will only benefit the investor and the industry. What we appreciate about this industry is the huge potential and scope to grow. It is at Rs 40 trillion now, but there is a hope of reaching Rs 100 trillion in the next seven-odd years.
Being investment-led instead of sales-led may generate quality, but is bound to slow revenue and AUM growth. Do you see any hit?
This stems from our vision to only focus on areas where we can generate alpha for investors and add value, instead of having too many offerings. We don’t wish to go for a high-risk and aggressive strategy where we are only trying to maximise returns.
We will have a mix of equity, hybrid, and fixed-income products for investors across categories from institutional to retail, and we seek to prioritise quality over quantity.
Given the huge potential of the industry and increasing investor awareness, there is no dearth of opportunity — which we want to capitalise on. Once we create value for investors, numbers will keep coming in.
The flurry of regulatory changes has upset many distributors. What is the sentiment among distributors associated with your firm?
Distributors form an important part of our business, and they are bound to have concerns. However, they are being heard and the whole idea is to make the industry more friendly for everyone. Short-term challenges will always be there during times of change, but they do get addressed and we work together as a unit.
What are your thoughts on ESG as a theme, given that it has not generated too much traction in India?
ESG as a theme is huge in Europe. We can see the popularity of ESG funds and takers for the theme. While it may not have reached a similar scale in India, we cannot deny the potential it offers. This is a space we are seriously considering.
Consistent underperformance of schemes has prompted the proposal on performance-based fees. How will this affect the industry?
We need more clarity around that, since it’s still in a consultation stage. But we’re in consistent discussions and there will be more details around it soon.