A Chennai apology - The Honest Truth By Ajit Dayal
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Investing in India - Honest Truth by Ajit Dayal
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31 AUGUST 2012


Last evening, I was supposed to address a Path to Profit in Chennai. Unfortunately, due to personal reasons, I am unable to do so.

My sincere apologies for this inconvenience.

The Path to Profit meetings that my colleagues host, and at which I occasionally speak, give us an opportunity to meet with existing and potential investors in the Quantum Mutual Funds and other attendees who - I presume - come to see if "we are for real".

After one such event three years ago in Hyderabad, a gentleman came up to me and said, "Mr Dayal, I want to shake your hand and see if you are for real." Once the hand shake was over, he promptly asked for a form to start his investment.

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Real - and human

Well, years later we are still "real" and - as my absence from Chennai today indicates - we are human.

We have tooth problems, we have fevers, and we have children who fall down - sometimes all within a span of 24 hours! And, yes, when the white hairs come, the grey hairs suddenly are more desirable. J

But though the physical body changes, the spirit remains as charged up as ever. In fact - with every injustice being meted out to the millions of investors in this country - the spirit of Quantum is on fire. I would hope that observers and investors will agree that much of what we said we would build when we launched our "flagship" Quantum Long Term Equity Fund in 2006, has been built. And will continue to improve upon.

Having said that, there is the challenge of converting our spirit into simple products which you can:(1) invest in, (2) see the benefits of, and (3) feel the seamlessness of dealing with an invisible company and, yet, experience a high-quality level of service.

The Quantum experience

As a mutual fund we address these 3 challenges by:

  • Ensuring there are teams that maintain and improve the research and investment processes that Subbu and I have built over the past 16 years. Our past and existing colleagues have added to the depth of knowledge to ensure we have a "solid" product; this ensures that the "products" or "schemes" are true to their stated objectives;

  • The benefit of these products is most popularly measured by returns; at the end of the day, you - as investors - need to see the reality of returns. And returns come from 2 sides of an equation: lower costs and market conditions. We have no control over market conditions; we cannot tell you when the politicians and regulators will start focusing on what is good for the nation; we cannot predict what central bankers will do; we cannot tell you when the euro will collapse; these are all external factors that we have no control over. And these external factors influence the "price" of the asset and, therefore, the returns you see in your fund account statements. But we do have control over costs. We can control the costs to serve you and to reach out to you. And we can control the costs that you, as an investor, pay to invest in a Quantum Mutual Fund. We have one of the lowest expense ratios in the industry;

  • Jimmy Patel, the CEO of Quantum AMC, has over 18 years of experience in the mutual fund industry. All his past work has been with entities that used the distribution channels. Prior to joining us in May 2010, Subbu and I spent a fair amount of time with Jimmy warning Jimmy that the task of taking our philosophy and our product onto a "direct-to-investor" platform is not easy. Harshad Chetanwala, as Head Sales (oops, I just realised that "Sales" is a very "un-Quantum" word and we should request Harshad to change that: at Quantum Mutual Fund we do not "sell" you our funds, you need to "buy" into our philosophy) has tirelessly strived to reach out to many of you and has been willing to be pinched for a reality check. This part of the "business" remains a challenge since we rely on many external agencies (banks, registrars, transfer agents, telecom, and internet service providers) to prepare your statements, collect your cheques, return your money on time, and give you a seamless, quality service. Meera leads the team that answers all the queries that land up at CustomerCare@QuantumAMC.com. Jimmy and his team have implemented many processes to deliver a great service - and I am sure they will continue to enhance your experience.
Staying close to our roots

It seems that, for many mutual funds, picking securities for their portfolios and focusing on looking after your savings have been overtaken by the conflicts of running a mutual fund "business".

A good doctor starts a hospital to serve more patients. Within days the bonus-driven CEO and CFO start discussing how the doctor can maximise his returns and improve the capacity-utilisation of the equipment by pushing more patients to undergo tests they don't need.

The Indian mutual fund industry has morphed into a grand, well-advertised, and very visible hospital. You, of course, are the innocent patient being shovelled into products you never needed by an opaque distribution system that continues to exert its control over the manufacturers of mutual funds.

Quantum will never lose sight of why we exist, of why we were created.

My father is a doctor. A healer. In a world of monetary doctors, he built a great practice and has a revered reputation.

In Quantum, we are all inspired by what our parents taught us - by the simple values we learnt when the family was eating a meal together.

But we recognise that values and good intentions are not enough - we know that that Quantum experience has to be superior in all the three respects: consistency of product, visibility of benefits, and experience of service.

Our promise was to build such a mutual fund home. Your graciousness has been to trust us, to have faith in us, and to make Quantum Mutual Fund a home for your savings.

I am truly sorry that I could not be there in Chennai, at your home, today - but I hope you will give me the opportunity to make it up to you.

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Suggested allocation in Quantum Mutual Funds (after keeping safe money aside)
Quantum Long Term Equity Fund Quantum 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 India A hedge against a global financial crisis and an "insurance" for your portfolio Cash in hand for any emergency uses but should get better returns than a savings account in a bank
Suggested allocation 80% 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"


Disclaimer: The Honest Truth is authored by Ajit Dayal. Ajit is a Director at Quantum Advisors Pvt. Ltd and Quantum Asset Management Company Pvt. Ltd. The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and has not been authenticated by any statutory authority. The author, Equitymaster, Quantum AMC and Quantum Advisors do not claim it to be accurate nor accept any responsibility for the same. Please read the detailed Terms of Use of the web site. To write to Ajit, please click here.


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2 Responses to "A Chennai apology"

v v r n rao

Sep 22, 2012

you speak about cutting costs,but not maximising returns through judicious investments.Do 'costs' really make such a big difference in final return on investments by the investors?

Like 

CHANDRASHEKHAR

Sep 2, 2012

I get several mails from you, offering different schemes for becoming a member - the truth is i just delete them.
I have no inclination /money /appetite to invest in shares /mutual funds which you are marketing.
But, I love to read your articles Honest Truth etc.
They are really good and make me think on different lines every time.keep it up.
Waiting for the day, i can start investing as per your advice.
Chandrashekhar Kakatkar

Like (9)
  
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