'Mid-Cap Mogul' Kenneth Andrade quits IDFC AMC

Second high-profile exit in the MF sector in recent years after Franklin Templeton's K N Sivasubramanian

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Kenneth Andrade (46), head of investments at IDFC Asset Management Company (AMC), has put in his papers. Without sharing much details, the AMC said in a statement that he has decided to move on from the company to pursue entrepreneurial opportunities in investment management.

Andrade joined IDFC AMC in February 2007 and has been considered one of India’s best fund managers. His peers and independent experts admire him for his differentiated approach to investments. Forbes called him ‘The Mid-Cap Mogul’ in 2011.

His sudden exit is not only a shock for the fund house or the sector, but also investors who had come in solely because of Andrade.

One-and-a-half-years ago, another star fund manager, K N Sivasubramanian, the chief information officer of Franklin Templeton, had also made a similar surprise decision. Sivasubramanian moved because of personal reasons.

The Funds that Andrade directly managed include IDFC Premier Equity, IDFC Equity Fund, and IDFC Equity Opportunities. Put together, he looked after assets worth Rs 7,700 crore. IDFC Mutual Fund is the country’s eighth largest fund house with an asset under management size of Rs 51,700 crore as of March 2015.

Dhirendra Kumar, chief executive of mutual fund tracking firm Value Research, says, “Funds that he managed have given one of the most consistent returns in the industry. It is despite the fact he witnessed extreme swings in the market during his eight years of his stint at IDFC MF. I believe investors should be worried and they need to be watchful.”

“It's a big loss for IDFC AMC. At any fund house, you need to have longevity which Kenneth provided for all these years. It is to be seen whom the fund house finds as his replacement,” says one of his peers.

A soft-spoken personality (to the point where people often had difficulty hearing him), Andrade had previously worked with Kotak Mutual Fund and Sharekhan prior to joining IDFC MF.

He is known for differentiated picks, and running apart from the crowd. For instance, Andrade's latest top holdings in IDFC Premier Equity Fund included Page Industries, SKS Microfinance, VA Tech Wabag, Blue Dart Express, Ashok Leyland and Vardhman Textiles, among others.

In one of the Morningstar conferences last year, Andrade had said, “Once you've been able to identify the right company, effectively you sit on it for an extremely long period of time, during which time you watch for execution; because good execution usually shows up in valuations... effectively, the investment thesis always begins when you have a lower amount of money to lose; so you need to get your pricing right. I think that's probably the best strategy that's worked for me.”

According to Kumar, there was not any pattern emerging from Andrade's stock picks as is the normal case with many other fund managers. “His unique way of thinking reflected in his portfolios. He came from nowhere to make a big difference and drove up the performance at IDFC,” he adds.

Top executives in the sector admitted the job of a fund management has several untold pressures as one is subject to public scrutiny. “The profession, in itself, demands a lot of your time. And there comes a time when one thinks to step out of a fund manager's shoes and do something different. This could be true in case of Andrade, too,” explains one of the CEOs who requested anonymity.

The CIO cited above agrees. “No profession is without downside risks. We can continue till a certain time. And when we feel there is something better which can be done, we tend to move on.”