A few years back, a report released by Karvy which looked at investor behaviour in both stable markets and volatile markets found that investors who invested in mutual funds through direct plans redeemed their investment when the markets turned volatile.
Keeping this in mind, we spoke to a few online distributors of direct plans to know how they are coping with redemption pressure and keeping things going.
Mukesh Kalra, CEO, ET Money
The transition for staff was smooth and we made sure that every employee has a set up at home.
In addition to that, we have been using apps like ‘Google Meet’ and ‘Mattermost’.
Despite being an online portal, ET Money has witnessed lowest redemptions as compared to the overall industry. The MF industry saw around 35% redemptions whereas we had 20% in March. In fact, we have seen higher inflows in March rather than outflows. Our inflows have doubled year on year in March both in terms of new users and new transactions.
It is absolutely wrong time for any investor to redeem or stop SIP. But middle class Indians don’t understand the negative impact of such actions on their long term wealth. Hence, we are running a nationwide initiative to support our investors. To understand their concerns better, we first ran a survey amongst our users which got 35000 responses, mostly about redemption. We analyzed the responses and have been working with MF industry CEOs to address these concerns with videos.
We have beefed up our support teams to ensure availability. Even after working from home, we have had highest success rate on transaction orders and our query resolution time has come down by 25%.
Gaurav Rastogi, Founder & CEO, Kuvera.in
We have always been a very mobile company. For us, moving to remote work was not much of a challenge from systems and process perspective as everything we do was always on the cloud.
From a people’s perspective, we are still transitioning. We are focusing on communication and regular calls to ensure that the transition is smooth and everyone feels included and committed.
In terms of redemptions in these testing times, I would say that we do not block redemptions. The advantage of an online platform is that accessibility to your investment is not lost under any circumstance. We do try and nudge investors to think through their actions and the impact it can have on long term outcomes.
However, so far we are actually seeing a very resilient retail investor. The redemption value has gone up compared to February but new investment value has gone up simultaneously. We are seeing net investment which is close to 1.5x higher than February. It is partly driven by year-end ELSS flows and also AMFI stopping all offline transactions in MFs. In the past week, we have seen a lot of investors import their folios on our platform to be able to continue to transact
