NJ Group's NJ Wealth has been India's largest MF distributor for years. The NJ Group has recently received SEBI's go-ahead to launch its own mutual fund business. Tell us when would you launch your first product and what are your plans for the company?
The NJ Group's distributor services platform, NJ Wealth, is the oldest technology based platform in the financial services industry in India making it India's original fintech initiative. A deep rooted respect for data and an unstinting focus on serving investors is at the centre of our operating philosophy.
With assets of over Rs.2000 crore, NJ Asset Management has been offering PMS for over 10 years. In our PMSs, we have been offering rule based investment options for quite some time now and our experience in this space makes us believe that the retail market is now ready to benefit from this model.
We are very excited that the approval process has culminated and we have received the final approval. We have moved quickly to file for approval of our products as well. Based on our estimate of the timelines, our effort will be to launch our first product in the second quarter of this FY.
Where do you want to see NJ India Mutual Fund five years down the line? How have you planned to achieve this?
We expect NJ Mutual Fund to be a valued participant in the industry and contribute meaningfully to the choices available to investors. We plan to achieve this by offering clearly differentiated products that offer diversification and generate above average risk-adjusted returns.
What will make NJ Mutual Fund different from others?
With our data driven and customer centric philosophy, we will offer only rule based and passive investment products though NJ Mutual Fund. As India’s first and only rule based mutual fund, our products and positioning is clearly differentiated from the rest of the industry. There are meaningful differences in the organisation structure, the skill sets and the approach needed to manage money actively and through a rule based approach. These differences will be visible in almost every aspect of our existence.
Over the years, we have created a proprietary factor library and factor scoring methodology that allow us to create single-factor and multi-factor portfolio and indices without any external dependence. We also use advanced analytical techniques to identify factor tilts in individual stocks and portfolios, which can validate our results and finetune our methodology on an ongoing basis.
Why has NJ Mutual Fund decided to focus on rule-based & passive products?
As things stand, almost the entire retail equity mutual fund industry and almost all retail equity mutual fund portfolios are dominated by actively managed funds. This also means that there are many viable and complementary options available to investors in this space. On the other hand, while some participants do offer rule based products, these are not backed by the deep organisational differences required to manage these efficiently, leaving a clear gap. We intend to fill this gap.
We believe that a truly rule based investment approach will provide a diversification to investors.
How would you ensure that the new business is not in conflict with your principals and other AMCs?
The NJ Group has worked closely with the mutual fund industry for more than two decades, currently contributing more than Rs 95,000 crore to the MF industry’s AUM. We cherish the deep relationships that we have formed with industry participants over these years. We are confident that we can contribute to the industry as a participant as well and adopting a clearly differentiated and unique positioning allows us to do this without any conflict. In our position as India’s first and only rule based asset manager, we complement the offerings of existing participants. We are very clear that our products offer a diversification opportunity to investors whose portfolios are currently dominated by actively managed funds. Other than compounded returns, diversification is the only real magic and it is our intention to ensure that investors benefit from it in all possible ways.
