Getty ImagesThere is a need for a fully independent board of trustees that will ensure that markets regulator Sebi's rules are complied with and the interests of the small investors are protected, said Quantum AMC founder Ajit Dayal. He further said it should be another check and balance that will further strengthen the mutual fund industry.
This could be a significant step after Franklin Templeton AMC has been found guilty of violating regulatory norms in the winding up of six debt schemes.
In a telephonic conversation with , Dayal said that if one person of an asset management company (AMC) is sitting on the board of trustees then we are compromising the interest of investors. "The presence of that one member will make the board of trustees less independent."
"If you want to ensure that investors are well looked after then you should have 100 per cent independent trustees," he said.
He further said the board of trustees is the most underutilised.
He also said markets regulator Sebi should make a regulation that only independent trustees should be on the trustees board, not anyone from AMC, or anyone linked from the management.
"I think this is an oversight from Sebi that they have not put this rule. This should have been done from 1993 but they haven't done it so far," he added.
The trustees job is to ensure that the funds are actually managed in the interests of the shareholders.
Quantum MF is probably the only fund house where the board of trustees is totally independent.
When asked whether Franklin Templeton-like episode could have been avoided if such measure was in place, Dayal said "it is difficult to say whether we could have avoided such situation but in theory, yes".
"In theory, yes, because if the trustees have right information, if the trustees keep on comparing the information they have with what is stated in the prospectus or offer document then possibly if there is a mismatch, they can immediately correct it," he said.
Dayal said a lot of that also depends on the way the trustees take their job. "If they take their job seriously as representative of investors not as friends of AMC... They should recognise who they represent and they represent investors not AMC."
He also said that some 8-10 years ago, Sebi started meeting members of mutual funds' trustees to alert them and make them realise the powers they have.
"I don't think it's still being carried on. It was dead after the Lehman crisis. I believe there should be such meetings so that the regulator can remind the role and responsibilities of trustees," he added.
On the initial public offering (IPO) front, Dayal said Quantum AMC and its parent firm Quantum Advisors are open for initial share-sales but there is no specific timeline for it.
"The IPO is something that we have considered, we are considering. We will do the IPO but we don't know whether it's an 2021 event or 2025 event," he said.
Asset management firms like Nippon Life India Asset Management, HDFC AMC and UTI AMC are already listed on the stock exchanges. Meanwhile, Aditya Birla Sun Life AMC filed preliminary papers with Sebi in April to raise funds through an IPO.
Dayal also founded Quantum Advisors, which manages around Rs 20,000 crore of international investors' money. I V Subramaniam is the MD and group head (equities) at Quantum Advisors.
The duo have recently completed 25 years of working together at Quantum Group.
Subramaniam said Quantum AMC did many firsts internally before the regulator made it mandatory for the industry. These include not charging any entry load, offering direct schemes to investors, mark-to-market valuation of liquid funds irrespective of the maturity, one product per category and the model of using total return index as benchmark for equity funds.
This could be a significant step after Franklin Templeton AMC has been found guilty of violating regulatory norms in the winding up of six debt schemes.
In a telephonic conversation with , Dayal said that if one person of an asset management company (AMC) is sitting on the board of trustees then we are compromising the interest of investors. "The presence of that one member will make the board of trustees less independent."
"If you want to ensure that investors are well looked after then you should have 100 per cent independent trustees," he said.
He further said the board of trustees is the most underutilised.
He also said markets regulator Sebi should make a regulation that only independent trustees should be on the trustees board, not anyone from AMC, or anyone linked from the management.
"I think this is an oversight from Sebi that they have not put this rule. This should have been done from 1993 but they haven't done it so far," he added.
The trustees job is to ensure that the funds are actually managed in the interests of the shareholders.
Quantum MF is probably the only fund house where the board of trustees is totally independent.
When asked whether Franklin Templeton-like episode could have been avoided if such measure was in place, Dayal said "it is difficult to say whether we could have avoided such situation but in theory, yes".
"In theory, yes, because if the trustees have right information, if the trustees keep on comparing the information they have with what is stated in the prospectus or offer document then possibly if there is a mismatch, they can immediately correct it," he said.
Dayal said a lot of that also depends on the way the trustees take their job. "If they take their job seriously as representative of investors not as friends of AMC... They should recognise who they represent and they represent investors not AMC."
He also said that some 8-10 years ago, Sebi started meeting members of mutual funds' trustees to alert them and make them realise the powers they have.
"I don't think it's still being carried on. It was dead after the Lehman crisis. I believe there should be such meetings so that the regulator can remind the role and responsibilities of trustees," he added.
On the initial public offering (IPO) front, Dayal said Quantum AMC and its parent firm Quantum Advisors are open for initial share-sales but there is no specific timeline for it.
"The IPO is something that we have considered, we are considering. We will do the IPO but we don't know whether it's an 2021 event or 2025 event," he said.
Asset management firms like Nippon Life India Asset Management, HDFC AMC and UTI AMC are already listed on the stock exchanges. Meanwhile, Aditya Birla Sun Life AMC filed preliminary papers with Sebi in April to raise funds through an IPO.
Dayal also founded Quantum Advisors, which manages around Rs 20,000 crore of international investors' money. I V Subramaniam is the MD and group head (equities) at Quantum Advisors.
The duo have recently completed 25 years of working together at Quantum Group.
Subramaniam said Quantum AMC did many firsts internally before the regulator made it mandatory for the industry. These include not charging any entry load, offering direct schemes to investors, mark-to-market valuation of liquid funds irrespective of the maturity, one product per category and the model of using total return index as benchmark for equity funds.
