Bajaj Finserv – the biggest Indian financial firm not to have an AMC yet – has now launched its fund management business. Its been 10years in the making – but the company has been closely tracking the evolution of tech stack that enables this business, and is now confident that it has evolved to an extent where it can come in with tech-innovations it is known for, to offer good value to investors in a scale efficient manner.
The group consciously chose the organic route rather than acquisitions, as it wanted to build its AMC with its unique DNA – which focuses on innovation, client convenience and a strong value proposition.
Bajaj Finserv will differentiate itself in the fund industry at 3 levels:
- A highly differentiated INQUBE investment process that seeks to derive sustainable alpha from 3 sources – the most exciting of which is the behavioural edge
- Digital approach to everything that the firm does, harnessing the considerable tech strengths its group is known for
- Build a future ready organization by looking at where the industry is headed in 5-10 years, while at the same time remaining very win-win focused to ensure value for investors and partners.
Mandate from the Board is to build an asset management business that:
- Is known for its innovative approach to products, solutions and service,
- Leverages the Group’s strengths in technology to offer better propositions to investors and distributors
- Is agile to respond quickly to a dynamically evolving market and nimble in terms of keeping fixed costs low by harnessing digital solutions
- Grows profitably over time to a size and scale that is consistent with the Group’s scale in other financial verticals
The fund house will launch active strategies only in segments it believes offer scope for sustainable alpha (no large cap active fund, for example). First equity fund will be a flexicap fund which will invest in mega themes. The AMC is looking at smart beta in addition to active funds and will have a full complement across equity, hybrids and debt. PMS, AIFs and offshore advisory mandates are also in the pipeline in due course.
A pivotal catalyst in the growth of Bajaj Finserv’s consumer finance, life and general insurance businesses has been the symbiotic relationship it has nurtured with its distributors. The AMC proposes to build on this legacy of true partnership orientation as it builds out its fund management business.
Ganesh says margin compression in the fund management and distribution business is a reality – it is here to stay and there is no point fretting about it. Better instead to devote energies to find solutions – which include volume growth without adding costs (tech enabled growth) and adding multiple sources of revenue beyond mutual funds. Bajaj Finserv will bring on a single platform all its products and solutions to its MF distributors to enable them to conveniently cross sell a wider range of solutions and develop multiple sources of revenue.