Our dharma is our fiduciary duty, trust is the core of mutual fund industry: Navneet Munot

MC Mutual Fund Summit

When it comes to mutual funds, HDFC AMC MD & CEO and AMFI Chairman Navneet Munot noted that trust was the cornerstone of the industry's growth. "If you want growth, want markets to do well, and you cannot put trust as the foundation of that, markets will collapse," Munot said while speaking as a part of a panel at Moneycontrol's Mutual Fund Summit held in Mumbai on June 23.

On concerns over the surge in new fund offers (NFOs), Munot noted that "the four most dangerous words in the industry are: this time is different" and the five most dangerous words is "everyone else is doing it".  He explained, "You shouldn't be doing something because everyone else is doing it. You shouldn't be doing an NFO because this is the easiest thing to sell. It should be something that your investment team has a conviction in. It should be something where you think that at least a segment of investors and a segment of partners have a space for it in their portfolio, and you have a capability to match that." He credited SEBI's regulatory guardrails for ensuring long-term investor protection but stressed that the responsibility doesn’t end there.

"We are highly regulated, audited. We have all the regulation and code of conduct. But regulation is not enough. That is where the role of culture, having a sense of purpose is important for all the stakeholders," he said. Munot added,  "Adam Smith says that Trust is the oxygen of capitalism. If you want growth, want markets to do well and you cannot put trust as the foundation of that, markets will collapse. It is the collective responsibility of the industry."

He reiterated that managing other people's money is "amongst the most noble professions in the world", and that there can be no compromise between investor interests and shareholder returns. "You cannot have a business where you do not put the customer at the centre of all that you do. Our business, out dharma is fiduciary responsibility." he added.

While the growing number of funds may compete during the day, when it comes to investor interest, Munot added that the industry is united and aligned. "We all believe that truth is the foundation, transparency is the path and true north is the compass," he said.

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