An Inflection Point in Quantum's Journey Tuesday, Feb 07, 2017
We are writing to you at an important inflection point in our journey.
For years, you have known us as the firm that pioneered the direct-to-investor model and stayed away from the opaque distribution system that has allowed some unscrupulous distributors to flourish at the expense of investors. Those investors have never had a real picture of what they're paying for in terms of commissions.
We have sacrificed our growth of AuM and remained steadfast to our principle of transparency, because we adhere to the simple belief that an investor should know what he is being charged for a service.
As you may well be aware, our stance has finally paid off: SEBI's new rule, instituted October 1 2016, requires asset management companies to disclose all commissions paid to distributors in the Half-Yearly Consolidated Account Statements (CAS) they send to investors. It's a bit short of our ideal scenario, in which a distributor would disclose commissions up front to an investor, but it's a monumental development nonetheless. We are thrilled that our dogged determination on behalf of the common investor has inspired regulatory change and has resulted in real, positive change with a ringing blow for transparency.
From the very beginning, Quantum has adamantly maintained that we have no problem using the distribution model as long as commissions are disclosed to investors. We have been accused of being anti-distributors, of denying others the right to an income, and have weathered a decade's worth of invective from some folks who simply have not comprehended what we've been saying. We have said it over (1) and over (2) again (3) through the years: we are happy to work with distributors if their commissions are disclosed. It's as simple as that.
We are upholding our commitment to use distributors if their commissions are disclosed, and we are pleased to announce the launch of Quantum's Regular Plans for investors from April 1 2017.
Know that it is not a change in our operating philosophy.
Know that it is not a change in our structure.
Know that it is not a change in our fund management style.
As an investor with us, you need to know that India's first Direct to Investor mutual fund is not changing its core and that we will continue to offer our Direct Plans to all investors. All your existing investments, irrespective of whether they have come through distributors, will remain in our Direct Plans at the existing expense ratio.
However, we do recognize that many other investors may need the assistance and the help of a distributor to plan their investments. It is for their benefit that we are launching a Regular Plan by which we can pay that distributor a fee, structured as below.
|Expenses||Upfront Commission||Trail Commission|
|Year 1||Year 2||Year 3||Year 4 onwards|
|Total Commission Paid||0||0.15%||0.20%||0.25%||0.15%|
|- Regular Plan Investors||0||0.15%||0.15%||0.15%||0.15%|
|- Quantum AMC||0||0.00%||0.05%||0.10%||0.00%|
Commissions stated are excluding service tax and any other statutory levies, which will be borne by investors of the Regular Plan and Quantum AMC as per the table above
For Regular Plan investors, any payouts above 0.15% will be borne by Quantum AMC.
In keeping with our philosophy of being a low cost fund, the commission structures proposed here are amongst the lowest in the industry, if not the lowest. The aim is not to make distributors rich, but to compensate them fairly for their advice and for the expenses which they may bear. Further, the distributor doesn't get rewarded if he switches investments in and out of our funds, but only if investors' savings remain with us for the long term: the distributor earns higher commission only after completion of 24 months, thereby encouraging the culture of long-term investing.
We would like to re-iterate the fact that nothing is changing as far as your Fund house's philosophy and low cost stance goes. Finally, and most importantly: know that we appreciate your faith in us over the years and your continued support as we embark upon the next exciting chapter in the Quantum Mutual Fund story.
Mutual fund investments are subject to market risks read all scheme related documents carefully.
Please visit – www.QuantumMF.com to read scheme specific risk factors. Investors in the Scheme(s) are not being offered a guaranteed or assured rate of return and there can be no assurance that the schemes objective will be achieved and the NAV of the scheme(s) may go up or down depending upon the factors and forces affecting securities markets. Investment in mutual fund units involves investment risks such as trading volumes, settlement risk, liquidity risk, default risk including possible loss of capital. Past performance of the Sponsor / AMC/ Mutual Fund does not indicate the future performance of the Scheme(s). Statutory Details: Quantum Mutual Fund (the Fund) has been constituted as a Trust under the Indian Trusts Act, 1882. Sponsor: Quantum Advisors Private Limited. (liability of Sponsor limited to Rs. 1,00,000/-) Trustee: Quantum Trustee Company Private Limited. Investment Manager: Quantum Asset Management Company Private Limited. The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.