mutual funds: Can PMS industry grow to rival mutual funds? Here’s what Saurabh Mukherjea has to say

“Provided that there is some degree of regulatory streamlining on how foreign investors sign up for the Indian markets, we will see foreign money come in. Remember that six times more money is invested in China than in India. Even if a fraction of that comes to India, you can imagine the impact it will have on the market, says
Saurabh Mukherjea
Marcellus Investment Managers

You founded APMI (the Association of Portfolio Managers). How many participants are there? What is the purpose of this? We all know that PMS has now become a force to be reckoned with in the market. What can you expect now that you have formed this organization?

Rashim Bagga: I think it’s a great day for APMI, the Association of Portfolio Managers. This is a trade organization and association for all portfolio managers registered with SEBI and there are currently 372 portfolio managers registered with SEBI. APMI has emerged as a unified voice for the industry at large to get the whole piece together.

It’s more of a communication flow to the regulator and from the regulator in terms of the whole piece, getting the whole framework together, getting the voice heard, getting the best practices in place and moving on with more and more pieces coming in and catching up the efficiency and make this as the investor’s choice as an alternative investment.

Thank you for bringing like-minded portfolio managers together to form this association. Until a few years ago, only the high and empowered enjoyed the services of a dedicated portfolio manager, but you have been spreading the message of the benefits of a portfolio manager instead of simply parking your money in mutual funds. How do you see these phenomena growing because it has already experienced great growth in recent years thanks to efforts like Marcellus?

Saurabh Mukherjea: The numbers are mind-boggling. So at the launch event today attended by SEBI director Manoj Kumar, we learned that a decade back portfolio management DPMS (Discretionary Portfolio Management) AUM in India was not even Rs 10,000 crore and today the same industry manages the best share of Rs 3 lakh crore. If you assume that this number will be 17-18% in the next ten years, the sector will be worth about Rs 15 lakh crore, almost comparable to what the stock MFs are managing today.

It has become a big industry and has created a lot of wealth in the corner of the country. I assume that growth will continue. I think there were 70 or 80 PMSs present today. As my colleague Rashim, the director of APMI, told me, 80% of the portfolio management industry by AUM has already applied for the Association of Portfolio Managers in India.

Wealth spreads courtesy of the PMS industry. Regulatory interest in the PMS industry will also increase and trade organizations such as APMI are a natural way to align the interests of consumers, savers and investors with those of portfolio managers and in turn align them with the interests of the supervisor.

Discuss with us some factors or a few challenges, now that it is an organized organization, you would like to address the head that may have shown great growth, but what are some of the factors that you would like to tackle collectively for the benefit of the investors, the growth of the industry and the ecosystem?

Saurabh Mukherjea: There are two areas where there is both consumer interest and regulatory interest. The portfolio management industry is getting its act together. The first is the whole subject of performance benchmarking.

We have 370 odd PMSs in the country, the regulated persons don’t want them to report the performance in a common way.

The regulator also wants an ongoing benchmark on where Marcellus stands in terms of mutual performance, for example White Oak versus Abakkus versus Helios and so on. Thus, great efforts will be made on the part of APMI and regulators to ensure that performance benchmarking for the portfolio management services industry is conducted in a unified, standardized, easily accessible manner.

The second are systems and processes. A lot of money is now managed by this industry as internal, technology and compliance systems and processes differ across the industry. I think everyone has a desire to have some best practices that are widely expected, and we are learning from AMFI in this regard.

I think AMFI has done a great job capturing best practices and I think there will be a lot of focus in APMI on capturing best practices for the PMS industry, serving consumer interests and satisfying the regulator. is that we are doing well.

Let’s talk about the market. It all started with the collapse of raw materials, but now crude oil is also collapsing. Brent costs $108, give us an idea of ​​what the big HNIs do. Is there actually a lot of money waiting to jump into the markets? Is it a good time to take a five, seven or ten year bet?

Saurabh Mukherjea: A few constituencies, such as donations from foreign investors, pension funds are very enthusiastic. In fact, I recently wrote a piece for the Economic Times about how foreign investors are queuing up to get in. There are a number of regulatory issues that they would like to see clarified.

For example the KYC standards, e-signatures for foreign investors, so provided there is some level of regulatory streamlining on how foreign investors sign up for the Indian markets, we will see foreign money coming in. Remember that six times more money is invested in China than in India. Even if a fraction of that goes to India, you can imagine the impact it will have on the market, and the second constituency is clearly the APMI district portfolio managers looking after HNW’s assets.

We have not seen any negative outflows despite all the chaos in the market in Marcellus, we have not seen any negative outflows and speaking with the other portfolio managers at the APMI event, it is also clear that HNWs are still stuck in the Indian stock market. I think those flows will increase as crude oil comes out.

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