It may be a first move of sorts. A fund manager of a large house has quit to join a financial products distribution firm.
DSP mutual fund’s head of fixed-income, Saurabh Bhatia has resigned and joined Sapient Wealth as the head-macro strategy and fixed income.
Sapient is one of India’s largest distributor of financial products and has been growing rapidly over the past three-odd years.
Not a usual move
Bhatia’s moving to a wealth management assumes significance, as fund managers typically join private equity firms or set up their own portfolio management services, if they move out of the mutual funds (MF) industry. So, the head of fixed income in a mutual fund moving to a wealth management firm is quite unusual.
Although Sapient Wealth has been around for 12 years, it started to corporatize itself only a few years ago when individual distributors and their firms started to merge into Sapient. In 2019, Guwahati-based BND Wealth Management founded by Pallav Bagaria along with three other partners (with assets of around Rs 680 crore and 2,000 customers) joined hands with Mumbai-based Aargus Advisors (set up by Paresh Kariya and his partners; assets of over Rs 400 crore and 2,000 customers) and merged into Sapient. Then, in 2020, Mumbai-based independent distributors Dhruv Mehta and Roopa Venkatakrishnan joined Sapient.
In his new role, Bhatia will devise fixed-income strategies for corporate and large individual clients of Sapient. Bhatia will curate debt products – both from the primary as well as the secondary markets – and build a debt research team. This team will primarily help Sapeint in catering to its large cooperate clients that invest their treasury corpuses.
Making sense of distribution platforms
Sapient is a small breed of distribution firms that have brought individual distributors together, especially in recent years. One of the triggers has been the consistent nudge and push by the capital market regulator, Securities and Exchange Board of India (SEBI), to lower MF schemes’ expense ratios. SEBI’s role has been to cut the distribution cost of selling mutual funds. At the same time, SEBI has also tightened the registered investment advisor guidelines and made it harder for distributors to give advice beyond the bare minimum, without the advisor’s license.
But those are not the only reasons. In an earlier interview to Moneycontrol, Venkatakrishnan had said that individual distributors coming together also bring in synergies. “Somebody may be good in equity funds, some others may be good at debt funds. A variety of such distributors coming together helps widen the bouquet of products that we can ultimately offer to our customers,” she had said. Individual distributors coming together also gives a sense of continuity to investors, in case their distributors or advisors choose to retire or, worse, pass away unexpectedly.