Mr. Asad, while I cannot comment in which of the two funds you could invest, I would like to take this opportunity to clear the air on the Rs. 50 crore net worth issue that seems to be in the minds of investors like you. I understand when it comes to your hard earned money, you would want to make sure not just you get the most of it but also be rest assured about the fund house you are investing in.
Ever since SEBI – the mutual fund regulator in India has asked all the AMC to have a minimum net worth of Rs. 50 crore, some of our investors have raised their concern on how we plan to meet that requirement.
At Quantum, we believe our role is to be asset managers and not asset gatherers, as an AMC it is more important to take care of our investor’s money prudently, offer investors user friendly investment platforms and maintain transparency in our processes. In the words of our chairman Mr. Ajit Dayal, mentioned in a note to QMF investors – “We (Quantum Advisors – sponsors to Quantum AMC) will keep our capital ready to support Quantum AMC. Quantum Advisors is committed to offering the tens of thousands of investors in the Quantum Mutual Fund a platform that is: (i) unique in its focus on lowering the costs paid by investors, (ii) giving investors a highly successful alternative compared to the opaque system perpetuated by the large fund houses for their benefit, and (iii) ensuring that your savings are deployed in our few, simple products to help you reach your long term financial goals."
Lastly Mr. Asad I would like to conclude by reassuring you that, we are in a business…we are committed to that business...and if that means fulfilling some target…we will fulfill those targets. We will fulfill those targets even though we believe that asking Mutual funds to have Rs 50 cr networth is not a good proposition. Since 1994, we have argued that the minimum net worth for being in the AMC “business” should be Rs 1 crore – since a Mutual Fund is a pass through medium, but various practices result in Capital Adequacy norms getting dominated in the regulatory process! Someday, the net worth may be reduced to Rs. 1 crore while de-linking capital adequacy norms with net worth but linking with practices followed and customers may get more choices..
Moreover while I cannot comment on the fund that you have to invest, I noticed that you had a comment on low expense ratio of QLTEF. I just want to add here that between two funds that largely meets your requirement, the one with low expense ratio is always good. Read my article `Mutual Funds - Dog and the bone story`
to understand the impact of high expense ratio.