Received an emailer from @Quantum_AMC that they are shutting down multiple office branches.
- Will the other AMCs follow suit?
- Will this result in lower fund TER? Passing on the benefits to the investors.
What do you think?
Are they looking to sell off their business?
I don’t know and I don’t think so.
But only @Quantum_AMC can answer with much fixed-rental-costs saved by shutting down multiple branch offices, whether the benefit would be passed on to the investors in form of reduced TER of their funds or will it add to the profits of the AMC?
To understand this better, let me ask @nithin if Zerodha may also consider shutting down branch offices across India (120+ branches and partners all over India) since March-April onwards, the number of new Demat account openings have surged purely on the digital medium while the branch offices were shut due to lockdown?
Will this trend of doing business in a digital way continue even post-COVID times like how technology and digital companies like Google, Facebook work by having zero or select few B2C branch offices.
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Thank you for your comment and questions.
As has been mentioned in our email, the safety of our investors and employees is of utmost importance, and the branches have been closed with the objective of going digital and limiting physical contact as far as possible.
While there will be some reduction in our overall AMC operating costs, these are very small, and do not in any way relate to fund operations and the costing of schemes. Benefits from this reduction, hence cannot be passed on to our investors.
The truth is our operating costs have increased and this spend has been redirected to enhance our digital response capabilities. We continue to retain our Relationship Managers who will be available at all times to guide investors through their journey of wealth creation
With reference to TER, as has been outlined in our article https://www.quantumamc.com/investor-education/quantum-direct/quantum-s-roadmap-for-expense-ratios/qd-589, we have defined for our investors and partners how this will reduce over time as AUM increases.