I can never say that Ajit Dayal has “left” or waved “bye bye” as I know he is inseparable to the Quantum’s Philosophy as Warren Buffet is to Berkshire. But yes sometimes you have to physically vacate a position. In a shocking event last week, Creator of Direct Plans Ajit Dayal decided to move and resigned from India’s first Mutual Fund with no middleman.
Under Ajit’s leadership, Quantum Mutual Fund has introduced a direct plan in mutual funds in India in 2006. This was a new idea and taking a cue SEBI also brought Direct Plans in MFs in 2012 to facilitate investors to choose a plan if they want to avail no advisory service or hire an advisor and pay him directly.
These direct plans have made the investing transparent as they eradicate the conflict of interest. It empowers MF investors to choose and pay for advisory directly. This has to lead many advisors to take this path of integrity and become “Advisors” in a true sense from commission agents. Many Robo-Advisors have set up a business around the Direct Concept. It’s a revolution now.
Ajit Escapes Death
It was 1990 Valentine day, and after 14 days of creating Quantum Mutual Fund (It was a Financial Services company then and changed to Mutual Fund in 2006), he missed a flight which got crashed. He was so close to death but something made him live and that something was his wish to –
- Create a Mutual Fund which did not pay commissions to Agents to mobilize. No other MF dared to do so in last 20 years. They went with Direct-to Investor model.
- Walk the long path of Mutual Funds with just one scheme. Some MFs have more than 50 open ended schemes. Now SEBI has taken cognizance of having too many funds to just increase But Ajit Dayal contended with just one fund.
Ajit has more than three decades of experience in the Indian capital market and eight years of experience in the international stock market as an analyst and a portfolio manager. He was also the lead manager of the then USD 2 billion Vanguard International Value Fund.
In fact, Ajit’s dream was to create a Vanguard in India. He in his own words he believed in “bold experiment to follow the path of Honesty, Integrity, Transparency and the aspiration to always deliver sensible mutual fund solutions for your investment needs”.
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I often tell this story about Ajit to my investors. When Brexit happened and UK decided to move away from EU, our entire fund managers glued themselves to the internet to find clues. Ajit arrived in London within 48 hours of the Brexit referendum and he spent next few days on streets to gauge the mood. He actually spoke to many people on the road what they felt.
At times when one CEO’s (Sikka) private plane, culture is going rounds, Ajit being a part of senior management, only fly economy class. Perhaps he like observing his investors from close. So seeing him go before Vanguard creation is a pain.
So what happens now?
Well, Ajit Dayal is not a person who will just bow down. Change is what is constant in nature. Very few people have combined their life’s mission to the corporate world. This is a place where many just enter to do their job and many just to invest and make money (remember Edward Lewis from Pretty Woman).
He has assured investor letter dated 23 Aug 2017, that he will continue his mission of simplifying the idea of investments by making it more transparent and full of integrity. He will keep on engaging with investors to continue his journey.
But yes his journey at Quantum is over for sure as the board has chosen another leader to lead.
Why did he go?
Guessing will be like a soap opera of office politics. I had spent 16 years with MF industry. My experience of seeing the Asset Management business closely says that it is an AUM driven industry. Somehow it’s ok what your ideology is in long term but the industry is as Short Minded like an FMCG company.
Yes, mutual funds have weekly closings, monthly closings, quarterly closing, a product of the fortnight, the focus of the quarter and all those sales jargons that you find associated with any other industry. They contradict culturally with the philosophy of long term investments.
I think same happened with Quantum & Ajit. Till they were fully in command they could control these urges to grow with compromises.
But, when you sell your stake and have representation in the board from another investor (one who has invested for Return on Investment ROI), you got to adopt what market is doing. It’s a pressure I suppose. Some people bow it and adapt themselves and very few don’t.
We all know what Quantum faced when SEBI raised the Capital Limit for MFs from 10 Cr to 50 Crores. Ajit made lot of efforts going from pillar to post call it “killing of small” mutual funds but ultimately they had to bring in Fairfax to support this capital increase.
New management. New assessment and finally Quantum did what they were averse too. They introduced regular plans and appointed middlemen.
This was against the very philosophy that Ajit stood against and spent 10 years advocating and making enemies.
His outspoken nature has made him unpopular with many distributors and asset managers in India. Once he spoke against HDFC MF in the open press. So many would be happy that he leaves.
Well, my way of thinking is – Ajit has more freedom now. He can be a disruptive change.
Direct Plans Ajit Dayal – The Time is Now
May be the creator has left but we all have seen the rise of Direct Plans. They are here to stay and very soon they will be an equal player.
AUM is increasing very fast. The best part is investor which were puppets now had powers with him. They can now choose an advisor with low-cost benefits.
For investors of Quantum
If you are an investor in Quantum Ajit’s advice is that you wait. He says:
“When people say that they invested in Quantum Long Term Equity Fund because of me, it is humbling, but what they really mean – and don’t say it or recognize it – is that they invested in the idea of a mutual fund that would be low cost, would fight for good practices, and would offer simple and sensible solutions for their investment needs. They invested in integrity and competence. I was the face of their trust and they are worried that, after this face that the investors recognize are gone, they will be subject to the whims of just another financial company!”
He clearly says Quantum and the Fund Quantum Long Term Equity Fund (QLTEF) is a process driven fund management. He may have made an exit but the process remains same.
Performance of QLTEF till 31 July 2017
The everlasting impact of Ajit Dayal
I did Financial Planning for one of our clients in Noida, and when we discussed his present investments. I could see he had a lot of stake in QLTEF. In fact, he admitted that he was a “FAN” of this fund house and I should not advise exiting from this fund until required.
Clearly, he was impressed and so was myself. I in fact disclosed to this client that I too am like this fund house. I too have units of this fund since its NFO.
Today I realize that it was Ajit’s everlasting philosophy that I and client hold units of QLTEF so closely to our hearts. And we are just 2 of the thousands. Quantum really has big shoes to fill in.
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