This MFD built close to 400 crore AUM in less than 3 years!

By Ravi Samalad |  26-07-21 | 

Sridhaba Mahapatro grew up in Orissa and moved to Hyderabad to take up his first job. He started his career with Karvy Consultancy in its sales division in 2001. In his 17 years of professional stint, Sridhaba worked across wealth management firms, banks and asset management firms where he was driving sales. In this journey, Sridhaba nurtured good relations with his clients, who still vouch for his transparency and client-first approach.

While working in AMC/banking space, Sridhaba realised there was a void in what his clients were looking for and the services offered by these firms. “Institutions were concentrated on selling products and thus their focus has been short term. Clients want to achieve their financial goals and look for holistic advice which institutions were mostly not able to fulfill,” observes Sridhaba. This sowed the seeds of venturing out on his own and gave him an opportunity to provide what is best for his clients. Few of his clients also encouraged him to strike out on his own.

Sridhaba started his independent practice in 2018 in Hyderabad. A year after Vinay Pendyala, one of his ex-colleague joined him in early 2020. Most of his clients whom he had been servicing for decades were happy to entrust him with their finances. Interestingly, he has built assets under management close to worth Rs 400 crore across different financial products in three years, which catapulted him among the top three distributors in Hyderabad in Individual MFD category. “I have been able to grow my business in such a short span purely due to my relations with clients and unbiased product distribution. I offer them bespoke solutions. The fact that I’m independent and not acting for targets cements the trust,” says Sridhaba.

A majority of his clients are high net worth individuals. Sridhaba is focused on the segment he wants to cater to. “When you have a particular set of clients, says HNI/UHNI, you get referrals from a similar background. If you cater to all types of clients, you won’t be able to focus and particularly not able to service the clients well. We are happy with catering to 100 clients rather than spreading our wings to acquire 500 clients.”

Financial planning is not an exact science

He believes that the textbook rule of thumb of financial planning cannot be exactly replicated in real life. “Equity investing rule is 100 minus age. But each individual has a different risk appetite and their ability and willingness to take risks are different. Everyone has a different goal. Two individuals of similar age can have completely different goals and risk appetite. There is no fixed formula or bucket into which investors can be put into. The financial plan evolves as per the client’s life cycle.”

He elaborates by citing an anecdote about his clients. “Some of my clients wanted to start a new venture so the need for liquidity was high. Now, their business has started doing well. They are willing to increase exposure towards high risk-high reward products. Some of my clients see continuous inflow and outflow of capital. So they invest part of the investable corpus in money market category for working capital needs while the remaining is invested for long term. Thus, the willingness to take risk in equity market evolves as per the client’s situation.” Whereas Sridhaba feels everyone should work on their Financial Goals and a good financial plan will help to achieve.

Opportunities galore

Since 2014, Sridhaba says that Hyderabad city has seen a steady boom in the real estate market with the entry of many domestic and multinational firms in the city, which has generated job opportunities. “In the last five years, Hyderabad has seen the highest increase in prices of real estate due to regulatory and political clarity. The city has a vast area to grow. From 2014-15, there has been steep growth in real estate prices. Thus, people here have an affinity for real estate as they have made money in this asset class.

However, the mutual fund and other portfolio management products as an asset class is still an under-penetrated product in Hyderabad. Hence, the potential is huge, whether you wish to cater to the millennial workforce, businessmen and other professionals.” 

Fund Evaluation Process

Here are some of the checks and balances Sridhaba applies while researching and recommending financial Products for his clients:

  • Avoid funds with a lock in period unless the client truly needs it.
  • The portfolio should have a minimum track record of three years.
  • Equity fund should have assets under management of at least Rs 1,000 crore; Debt fund should have at least Rs 2,500 crore AUM.
  • Regular communication with portfolio managers to understand how they are navigating portfolios and to understand their investment philosophy.
  • Avoid funds that have been merged or gone through multiple changes in nomenclature/ fundamental attributes unless they have been beneficial for clients.
  • Minimum manager tenure managing a particular fund should be three years.
  • In the short term and ultra-short-term funds, choose funds that have exposure to AAA-rated paper
  • Focus on risk management, minimising risk rather than chasing returns.

The above guidelines are not cast in stone and are more of initial filters which Sridhaba applies. His due diligence has held him in good stead, particularly in avoiding the funds which faced credit events in their debt funds. “None of my clients had exposure to funds which faced credit challenges. Of course, you can’t predict what lies ahead, but focusing on minimising risk helps.”

International Investing

While Sridhaba believes in providing diversified portfolios to clients, he is yet to embrace internationally at this juncture. “International diversification is good, but I believe that Indian markets are poised to do well. Moreover, we are able to understand the businesses operating in India and the challenges and opportunities they have. This is not the case with international funds as most funds are investing in a target fund which is managed by the overseas fund manager.”

When Foreign Institutional Investors are heavily investing in India for better return at this time….Why invest in international funds now, he asks.

ESG Investing

When asked about his views on the emergence of sustainable funds in India, Sridhaba is seeing an increased curiosity from clients for such funds. He would like to see at least three-year track record of such funds before committing client money to such strategies. “Simply adding ESG suffix in fund nomenclature does not ensure the outcome you would like to have. Even existing funds can adopt an ESG screening approach to achieve the same outcome.”

Road Ahead

While Sridhaba and his colleague Vinay currently manage the fledgling practice, Sridhaba is in the process of institutionalising his practice which will help the firm set up processes and systems. He also plans to expand his team by growing geographically. Sridhaba believes that the next driver of growth for the mutual fund industry will come from tier 2 and tier 3 cities. He plans to set up offices in Vijayawada, Vizag and Odisha where he sees good potential.

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Brajesh Kumar
Jul 28 2021 06:27 PM
 Impressive! How can I get in touch with him for investment advice? I am based in Noida.
Thanks
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