Vikaas Sachdeva, CEO, Edelweiss Asset Management Ltd, has close to two decades of experience in marketing & distribution of financial products, including 14 years in funds management. As CEO of the AMC, Mr Sachdeva’s core responsibility is to spearhead Edelweiss Mutual Fund and AMC operations across regions. Prior to joining Edelweiss, he was associated with Bharti AXA Investment Managers Pvt Ltf as country head-business development responsible for strategy, marketing, sales, distribution, investor servicing and product management. Mr Sachdeva holds a Bachelor's degree in Commerce and a MMS (Marketing).
Edelweiss Asset Management Company has been constituted as a trust with Edelweiss Financial Services Ltd as the sponsor and Edelweiss Trusteeship Company Ltd as the trustee. Edelweiss Asset Management Ltd has been appointed as the asset management company (AMC) of the mutual fund by the trustee company. The vision of the mutual fund/AMC is to be innovative and universally renowned asset managers providing excellent investment solutions, exemplary services and setting the highest ethical standards.
Replying to Dolly Mirchandani of IIFL, Vikaas Sachdeva says, “At Edelweiss, the core quant philosophy is to build adaptive strategies that beat the market consistently with diversified portfolios.”
Quant funds, while they eliminate human error by investing in stocks based on quantitative model, they are often crticised for failure to adapt to the market conditions quickly compared to other regular equity oriented schemes. What are your views?
This is not necessarily true. One of the pillars of Edelweiss quant philosophy is its adaptive nature. The multi-factor approach used to build portfolios adapts by dynamically increasing or decreasing the weight to particular return/risk factors as the market environment evolves.
Should investors with high risk appetite and those who do not want to bet on fund manager’s skills in stock picking consider investing in quant funds?
Just like different fund managers have styles, quant funds also have different styles. At Edelweiss, the core quant philosophy is to build adaptive strategies that beat the market consistently with diversified portfolios. The endeavor is to provide higher returns than the benchmark at lower risk vis-à-vis the benchmark as measured by standard deviation. In our opinion, a well diversified portfolio will benefit by having both quant and non quant funds in the mix.
Do you think the proposed hike in expense ratio by 25 bps and the removal of service-tax from expense ratio would prevent investors from investing in mutual funds?
I would be able to comment on these only once it’s cleared by SEBI.
If mutual funds are performing poorly, the reasons perhaps lie beyond entry load. Poor performance is a reflection of the poor health of the economy and poor stock-picking skills of many fund managers. What is your opinion on the same?
If you see the Value Research analysis on funds performing below benchmark over a three years and five years time frame, you will find that there are certain schemes which have lagged behind. However, this is not the case for most fund houses. Edelweiss Mutual Fund, for example, has all its three-year plus track record schemes perform very well.
As an investor, one has the choice of taking an advisor’s opinion, or log on to sites like Morningstar India, Value Research or CRISIL to take a more informed decision in case his existing investments are underperforming over consistent periods of time.
Over 65% of the assets under management in mutual funds come from India’s five big cities. To attract investments from rural and semi-rural regions, what should the MF industry do?
The industry needs to have more financial advisors. This in turn will be a ripple effect of more people being financially inclusive from a mutual fund point of view. As we have seen over the last few years, absence of a reasonably remunerative structure has seen financial advisors dwindle. That needs to be changed.
Do you agree that a direct-to-investor approach, which does not use distribution channels, is an economical option for the investor?
There are no differential NAVs (net asset value) to accommodate direct investors currently. I believe that unless an investor is well informed, it makes sense for him to route his investments through a qualified advisor rather than economising on costs.
The ARN renewal fee is hiked from Rs. 250 to Rs. 2,500 for individuals and corporate employees. AMFI had also reduced the validity period of ARN license from five years to three. Will this prevent distributors from small towns to be a part of the distribution channel?
I believe this is being looked into.
According to SEBI, several debt funds and FMPs are making huge investments in specific sectors, raising worries about systemic risk. Do you believe putting a cap will help in diversification and proper risk distribution?
Mitigation of risks always helps in the cause of protecting the end investor. In any case, by their very nature, AMCs are well regulated and have very strong risk management systems which would be pre-emptive rather than reactive on these counts.
Some fund houses are merging their underperforming schemes into larger schemes that are performing better. Will this benefit investors?
It should benefit investors.
Looking at the strong performance of gold, many fund houses have launched gold funds and gold ETFs. However, Edelweiss’s products primarily include equity, debt and liquid funds. Do you plan to launch gold funds or ETFs?
We monitor investor trends closely. However, we also have to ensure that any product launched from our stable measures up to the high standards we set ourselves in terms of core competence, customer relevance and product differentiation. That is amply reflected in our product range currently where we have a complete range of quant products which include an absolute return fund as well.
Comment on the technology initiatives taken to improve customer service?
Customers want simple products delivered to them through simple to understand and easy to operate means. Our customer service platform provides the right amount of ease and convenience to make this happen.
What training programmes are you providing your mutual fund distributors to upgrade their knowledge about the products?
Our sales team trains distributors on the evolution of product categories (quant, new asset classes, etc), global trends as well as softer skill development.
What are the future plans of Edelweiss? Any new products in the pipeline?
As an AMC (asset management company), we have the unique opportunity to leverage on the core Edelweiss DNA and competence to make a difference. We believe that as a new generation AMC, we can provide the right product category levers to act us a fulcrum to expand the industry
Disclaimer: Vikaas M Sachdeva is the Chief Executive Officer of Edelweiss Asset Management Ltd. The opinions expressed above are his own.
Mutual Fund investments are subject to market risk, read all scheme related documents carefully.