INDIA'S BEST FUNDMEN

Prashant Jain
Sanjay Dongre
Sukumar Rajah
Anup Maheshwari
K N Siva Subramanian
Amandeep Chopra
Prashant Pimple
Suresh Soni
Dhawal Dalal
Sandesh Kirkire

BEST FUND BETS

ANOOP BHASKER
Equity Fund Manager of the Year

RITESH JAIN
Debt Fund Manager of the Year

THE STORY OF NFOs

FUND CAFE

SIPs TAKE-OFF

MFs EYE BIG BUCKS

FUND DIRECTORY

FUND VITAL STATS

It's fundamental

With Indian stock markets on a secular bull run, the list of foreign firms wanting to enter the business is growing longer every day. Among the firms in the queue – just to name a few – are AIG, JP Morgan, UBS, Schroders, Dawnay Day and Japan’s Shinsei Bank.

While competition among exiting players is intense, the cost of acquiring assets is rising too thanks to the new set of Sebi regulations, which does not permit amortisation of initial expenses for open-end schemes and charge a portion of the NFO collections as a fee for the regulator. For sure, this will eat into the bottom line of fund companies.

While profitability will remain a challenge for most fund CEOs like it is for most corporate chieftains, they face an even bigger responsibility of developing the asset management business for the long-term. All these years, mutual funds have been fairly or unfairly condemned for various reasons: either for the rampant mis-selling, or for launching new funds when it is not in the interest of investors, or for focussing excessively on corporate investors and compromising on the retail audience.

The changing return profile of debt and equity makes the market potent for asset gatherers. Every segment of the financial services segment seems to be recognising this. While stock broking firms are upping their ante and tapping the high net worth individuals, insurance companies are attacking the retail segment with their poorer investment proposition–the unit-linked insurance plans.

ULIPs now account for at least 75 per cent of insurance policies sold. Mutual funds on the contrary seem to be still focussing on the tax edge and several other business factors that need not be the consideration if the objective is to gain investors’ confidence. We discuss and debate some of these issues at the Fund Cafe where we have got both distributors and fund CEOs on the same table.

Another challenge that fund companies face today is the paucity of experienced and talented fund managers. The heightened churn in the industry is creating as much of a problem for fund companies as for the investor who is wondering whether to trust the fund companies or to chase the fund manager.

The crux of the matter is that while fund companies may have their processes in place, fund management is more of an art than science, and individuals matter more in driving home returns. In this annual issue of the magazine, we have done the first-of-its-kind study, rating fund managers – not fund schemes – based on their performance over the years. That should help investors make the right choices.•

N Mahalakshmi
nmahalakshmi@business-standard.com

HOME    Business Standard • FUND MANAGER • October 2006