Amidst a changing regulatory environment, mutual fund houses are revising the management for their flagship schemes by appointing two fund managers for managing large schemes.
In the last three months, as many as five mutual fund houses have appointed co-fund managers for managing their large or flagship funds. Slew of funds are star performers in their respective category.
Recently, DSP BlackRock Mutual Fund appointed Resham Jain as co-fund manager of DSP BlackRock Small and Midcap Fund and DSP BlackRock Micro Cap Fund. Vinit Sambre was solely managing DSP BlackRock Small and Midcap Fund since July 2012 while Vinit Sambre and Jay Kothari jointly manage DSP BlackRock Micro Cap Fund.
The AUM of these two funds were at Rs 5,390 crore and Rs 6,206 crore, respectively, as on February 2018.
“Fund houses are getting a co-fund manager as they want to ensure that there is no risk of strategy and style in a fund if one fund manager out of the two quits,” said Vidya Bala, Head of Mutual Fund Research, FundsIndia.
Reliance Mutual Fund, the third largest fund house in terms of assets under management has appointed Dhrumil Shah as assistant fund manager for Reliance Small Cap Fund. Samir Rachh was the sole fund manager of the scheme. This fund was earlier managed by Sunil Singhania.
Among other big fund houses, UTI Mutual Fund has also appointed co-fund managers to oversee its large funds, while among the small ones, DHFL Pramerica Mutual Fund and Principal Mutual Fund have also appointed additional fund managers.
UTI Mutual Fund has appointed an additional fund manager to manage two of its schemes. Vetri Subramaniam and Amit Premchandani have been co-managing UTI Opportunities Fund from Feb 1, while Lalit Nambiar and Vishal Chopda have been co-managing UTI India Lifestyle Fund.
DHFL Pramerica Mutual Fund has appointed Kunal Jain as a fund manager of DHFL Pramerica Insta Cash Plus Fund and DHFL Pramerica Ultra Short Term Fund. He manages the funds with Kumaresh Ramakrishnan. Earlier, Kunal Jain was associated with Indiabulls Mutual Fund.
Similarly, Bekxy Kuriakose and Pankaj Jain are co-managing Principal Smart Equity Fund and Principal Equity Savings Fund respectively with PVK Mohan.
Mutual fund experts claim that in the last few months there was lot of reshuffling of fund managers within the industry which can pose a risk of strategy and style in a fund.
In the last 18 months, fund managers like Anoop Bhaskar, Taher Badshah, Vetri Subramaniam have switched jobs within the industry.
SEBI move
Also, the recent guidelines by the Securities and Exchange Board of India have prompted most fund houses to rejig the portfolio as per the norms, which would require more work.
“The workload of a fund manager would increase as the SEBI’s directive on Mutual fund categorization and rationalization will require them to rejig their portfolio as per the guidelines. Work load can be shared as now fund houses will have to do half yearly rebalancing of the scheme portfolio,” Bala added.
To ensure that all schemes launched by mutual funds are distinct in terms of asset allocation and investment strategy, SEBI proposed categorisation and rationalisation of mutual fund schemes. The SEBI prescription allows fund houses to offer schemes in 10 types of equity funds, 16 categories of bond funds and 6 categories of hybrid funds.
SEBI has clearly defined norms and the asset allocation and the norms that will specify each category. For example, a large cap fund must invest at least 80 percent of the money in large cap stocks. Large cap stocks are defined as top 100 companies in terms of full market capitalization.
As a consequence of the above guidelines, AMCs have to categorise their funds into defined sections. Also, AMCs, particularly those running multiple funds with similar mandates, will either have to make changes to the investment strategies or mandates or merge them with other existing funds.
Franklin Templeton Mutual Fund is the only fund house that ensured two fund managers must manage a single fund since its inception.
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