After spending nearly two decades in wealth management/distribution, Vasant Kulkarni took the entrepreneurial plunge as an MFD in 2014. In a competitive market like Mumbai, Vasant wanted to carve a niche for himself by focusing solely on people who have never invested in mutual funds.
To reach out to his audience, he runs educational teaser campaigns on Facebook every Friday to Monday. He says that while the conversion ratio from Facebook is low, this activity helps him build his brand image. “Our focus is only on reaching out to Marathi speaking population. Except for official communication, all my media presence, be it Facebook campaigns, authored articles, YouTube videos are produced in Marathi. Maharashtra has around 10 crore population. Of this at least 50 lakh people would be investing in mutual funds. We want to reach out to people who are not investing in mutual funds,” explains Vasant.
Vasant pursued Engineering from the Indian Institute of Industrial Engineering in Mumbai. During his engineering days, he was drawn towards the world of investments which led him to change track and pursue PGDM in Finance and General Management. He has spent most of his career in mutual fund advisory.
Vasant was clear that he wanted to distinguish himself from his peers through research-based advice. He heard about Morningstar Adviser Workstation gave it a try. Vasant has been using AWS for three years now.
Currently, Vasant manages assets under advisory of Rs 65 crore in mutual funds with a team of ten that operates from Mumbai’s suburban Kandivali. They manage 700 investors. More than 20% of his new incremental investors are coming from beyond 30 locations. Vasant claims that his business is clocking 40% growth every year. What’s the reason behind this stupendous growth?
Vasant has been using the Investment Proposal feature in AWS extensively for his existing and new clients. So far, he has prepared 1,000 investment proposals for his clients. He says that AWS helps him onboard new clients faster and build sound portfolios. When he meets a prospect, he uploads their existing portfolio into AWS which helps him identify stock overlap and where the portfolio is lacking. He makes the necessary rebalancing by adding new funds and pruning overlapping and underperforming funds.
Vasant explains how he was able to prepare and execute an investment report by rebalancing clients’ existing portfolio in a matter of five minutes. “I was in a conference call with a fund manager and one of my clients who is from Hong Kong wanted to invest a lump sum of Rs 10 lakh. I could have recommended him a few funds on the phone itself. But I downloaded his existing portfolio and uploaded this report on AWS and used Model Portfolios to add this corpus into the client portfolio. An investment report was generated and sent to the client in just minutes. Client approved it on What’s App and we invested through BSE StAR MF platform.”
He shares another anecdote of how one of his retired clients achieved his goal. “I have a client from Sangli. He wanted a regular income and capital appreciation. We made a recommendation based on Morningstar AWS recommendation report. This helps us take a concentrated bet. If we add too many funds, one fund performs while some others don’t.”
Vasant likes to educate people about investments. He runs a column in Loksatta (A Marathi newspaper) where he reviews one fund every month. Using Morningstar’s What’s in What’s out tool, Vasant wrote an incisive review on a Large Cap Fund which earned him rave reviews. “One of the oldest funds in the industry completed 35 years. I wrote that only one stock (Motherson Sumi) was added in that fund in the last six months by using Morningstar AWS data. This was highly appreciated by industry experts.”
Vasant believes that any business requires initial investment and MFD/advisory practice is no different. In order to efficiently use their time, Vasant suggests IFAs outsource tasks that can be automated. “IFAs spend so much time doing research manually. They should use technology as it saves a lot of time. Moreover, you minimise the error. Clients are impressed by seeing the investment proposals prepared by using AWS as they don’t see other IFAs sending such reports. This helps us convert new clients easily as well as increase wallet share from existing clients,” says Vasant.
Besides helping his clients generate superior risk-adjusted returns, Morningstar AWS is also helping him have a better understanding of funds and have healthy discussions with fund managers. “When I interact with fund managers and ask them questions, they appreciate the in-depth analysis which I present that is backed by data.”
Vasant observes that investors do not generally spend time on doing research before investing in mutual funds and simply go by past performance. From his research, Vasant observes that most Large Cap Funds are struggling to beat their benchmark. “It is better for investors to invest in passive funds if they wish to take exposure in the large cap space as active Large Cap Funds are not able to generate alpha and charging a TER which is way higher than passive funds. in the Mid and Small Cap space, investors can stick with actively managed funds.”
Subscribing to Morningstar AWS has paid him rich dividends and he encourages his peers to invest in research capabilities. “Unfortunately, MFDs don’t want to invest in buying research. Many of them are using the old-age methods of doing research from different websites. But they don’t realise how much time they are spending doing this research which can be done in few minutes using technology. When we show clients such charts and reports they are really impressed with our presentation. The investment in research very much pays off as we are able to add new clients in a jiffy and increase wallet share from existing clients.”
His staff is also well versed in using Morningstar AWS which helps him prepare investment reports on the go. His daughter Shreeya Kulkarni is currently pursuing Bachelors in Financial Market and plans to join the business after she completes her graduation. Shreeya is currently learning the ropes of the practice and spending time getting familiar with AWS.
Vasant regularly uses Portfolio Scatterplot through which he clearly comes to know which funds are underperforming the benchmark.
Using AWS Fund Manager Tool, I get a better understanding of any fund manager’s past history, the number of funds/AUM managed by him/her, and the alpha generation track record.
Vasant has ambitious plans for his business. He wants to create a separate venture for advisory clients for which he has applied for a corporate RIA license from SEBI. To bring overseas investors into India, he plans to set up an office in the USA by applying for RIA license from the Securities and Exchange Commission.