The latest AMFI circular which is expected to spur competition between the mutual fund distributors. What is your take? What is your expectation of the commission rates, etc, how will that move?
Sanjay Shah: It is probably a good move. Industry has been asking for this change since long. I can just give an example that we have been seeing a lot of wealth relationship managers ( RMs), a lot of bank RMs have been taking a call on becoming entrepreneur and this is probably giving a lot of opportunity to those people. In the B2C segment, there are a lot of people who will now look to become a quality advisor in the market.

The second important thing would be, now the advisor cannot say that I will not be able to give proper service to the customer. Earlier, the new advisor was not being compensated properly for giving services to the new customers, which he was acquiring. Now that problem is probably gone. One positive point in the entire scheme of the thing is that the AMFI has kept in some kind of cushion wherein for the first six months of broker code change, the new advisor would not be compensated.

So, even an investor is having a cooling period to understand the new advisor, his services, and he can probably decide within six months whether he wants to continue with the new advisor or not. So, overall, we believe it is a good thing. It will definitely spur competition. The distributors have to pull up their sleeves and become more competitive on product basket, innovations, and services.

In the last 10-15 days, SEBI has categorically called the smallcap, midcap end of the market frothy and nudged the AMFI as well. How have distribution communities such as yours taken this commentary from the regulators? Are you also trying to channel or restrict some flows to the smallcap, midcap category and send it to balance fund or other categories?
Sanjay Shah: At Prudent, since October 2023, we have been telling people to move their money towards the balanced advantage category, multi-asset allocation category and the largecaps.

So there are two things. Say the SIP book, which has already built up, you do not have any control. What you can control and move is only the new lump sum money which comes in. In last two months, in the lump sum category, I have collected 10% in the mid and smallcap, while almost 50% money in Prudent came into dynamic asset allocations, and the large and large and midcap categories. However, the problem lies in the SIP book because currently the SIP book which we have about Rs 700 crore; almost 30% of money in the SIP book is coming from mid and smallcap categories and probably that is something which is going to continuously come to the industry. If I have 30% of the small and midcap book in my SIP, the same must be the number for industry. That means every month you get Rs 5,000 crore automatically without any efforts from the retail investors in the small and midcaps.