Freedom was always your option

Posted On Sunday, Jan 01, 1950

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On August 1st, 2009 the Indian mutual fund industry enters a new era.

 

After years of pushing mostly irrelevant products through a distribution channel that grew fat on the ignorance of investors, the Indian mutual fund industry has been forced to lay bare the facts. From August 1, 2009 all Indian mutual funds will have a cap on what they pay their distributors. And investors can pay their distributors and financial advisors what they believe to be the value of the advice given.

 

Over the years, the elephants in the Indian mutual fund industry - and the distributors that made these elephants dance to their tune - have spread a series of questionable “facts”.

 

Each “fact” was in many ways designed to support the immoral practice of letting commissions earned by many distributors determine which mutual funds they recommended. Funds were sold based on the commission structures paid to distributors, not based on which funds were best suited for the investors.

 

The elephants in the mutual fund industry were happy to dance along to the tune of many distributors. Every time a fund was sold (or mis-sold) it meant a larger “total assets under management” for the industry – and more fees for the mutual fund house. And better salaries and bonuses for all in the system.

 

Now, the mutual fund industry is in new territory, not because the giants chose to take the side of the good and right (in fact, they fought it) but because the regulator put a stop to the rot. The days of the symbiotic relationship between the elephants and the distributors are over.

 

From August 1st. the mutual fund industry has to learn to focus on what is good for the investor. A new playing field for those not used to it. So many in the mutual fund industry stands at the gate, nervous and anxious – they don’t know what is on the other side. The side that says, “This area reserved for those who are fair and care about their investors”.

 

Welcome to the world of Quantum Mutual Funds.


Well, the good news for investors is that Quantum Mutual Funds – the ant of the mutual fund industry - has been standing on the “correct” side of that gate for a long time.

We have been here since 2006.

Not paying commissions to any distributors because we were alarmed at the scope for mis-selling in the industry.

 

Not because the law told us to be on the “correct” side, but because we were keen to build a business around a “correct” practice.

 

It has been a lonely existence, talking to investors, explaining to the media why we do what we do.

 

Quantum Mutual Fund was the 29th Asset Management Company, but the 1st to be clear which side of the gate we were on.

We were the smallest mutual fund house amongst all the dancing elephants, but we had the biggest idea: we were keen to build a piece of heaven here in the troubled world of mutual fund investing.

 

And what is heaven?

 

Pretty simple, actually, and within reach.

Quantum Mutual Fund offers investors simple products that can earn a respectable rate of return for the savings of the investors. Across asset classes.

 


Suggested allocation in Quantum Mutual Funds


Quantum Long Term Equity FundQuantum Gold Fund (NSE symbol: QGOLDHALF)Quantum Liquid Fund
Why you should own it:An investment for the future and an opportunity to profit from the long term economic growth in IndiaA hedge against a global financial crisis and an "insurance" for your portfolioA hedge against a global financial crisis and an "insurance" for your portfolioCash in hand for any emergency uses but should get better returns than a savings account in a bank
Suggested allocation80 %20%Keep aside money to meet your expenses for 6 months to 2 years

Disclaimer : Past performance may or may not be sustained in the future. Mutual Fund investments are subject to market risks, fluctuation in NAV's and uncertainty of dividend distributions. Please read offer documents of the relevant schemes carefully before making any investments. Click here for the detailed risk factors and statutory information"

Our investments are based on processes, not on whims and fancies of star fund managers.

We evaluate risk, and shy away from greed.

We focus on the long term and don’t watch the TV channels for “tips” or “expert opinions” to guide our investment decisions.

 

If you wish to double your money, we said in published advertisements three years ago, please do not invest with us.

Yes, we are strange, we speak in plain English.

 

Our focus is on lowering costs: as more investors like you sign on to our simplicity, our assets will grow – like they have over the past 3 years. We expect that the costs and expenses of operating our mutual funds should be amongst the lowest in the industry. Which means more of your money gets to be invested in the stock markets. Having more of your capital work for you in the stock market is half the battle won.

The other half of the battle is to grow your savings into a long-term pool that you can use in the future is to invest your capital in a sensible way.

 

The future.


So, what will life be like for us after August 1st?

More of the same.

 

We wake up every morning and head to the office after a good night’s sleep.

We never had any sleepless nights all these years because we had nothing to feel guilty about.

Neither did we launch popular products that have a limited shelf life for your investment returns.

 

We have made our share of investment mistakes.

And we hope we have learnt from them by improving the investment process to ensure we don’t repeat the same mistakes again.

 

We like the feel of the grass on this side of the gate where we stand: it feels fresh, clean, and uncomplicated.

And for the past three years we have built a growing community of investors who also like the feel of what we do.

 

Heaven was always here for you to experience – come, try it for yourself.

Anytime: Before or after August 1st.

This Quantum ant is here to stay.


Note: This article was first carried on www.equitymaster.com

 

Above article is authored by Quantum.

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