Fund managers face the heat as AMCs chase growth

Even as mutual funds' assets under management are at an all-time high and the outlook remains encouraging, particularly in the equity segment, the fund managers have come under "unique" and "unprecedented" pressure.

Retail investors' interest is on a rise and asset management companies are going all out to garner assets and grow them from the current level of Rs 14 lakh crore.

Fund managers are facing the heat of this quest for assets. Money managers, who should ideally be concentrating just on investments, are being saddled with additional responsibilities to garner more sales, say industry players. The "extra work burden" includes making impromptu calls to large distributors and travelling to meet investors and advisors, even on weekends.

Things seem to be so bad that some fund managers have called it quits in the past couple of months. When asked, fund managers on request of anonymity said, such instances are frequent and have put a question mark on their job profile.

"Work pressure has gone up considerably as besides managing the schemes, we have to engage in a lot of other activities such as conference calls with distributors and large investors. We also have to make day trips out of town on weekends," said chief investment officer (CIO) with an AMC, who has more than two decades of experience.

"In my last two decades, life has never been this stressful," said the CIO. One fund manager said he was called for an impromptu conference call with distributors while he was analysing his funds on the day of Brexit poll results. Another money manager said he had to cancel a family vacation to address an investor conference in Chennai.

In a recent interview to Business Standard, CVR Rajendran, chief of Association of Mutual Funds in India (Amfi) had cautioned against the fight for market share. He had said that the mutual fund industry could easily grow five-fold from current levels as penetration levels remained low at just one per cent of India's population.

Heads of AMCs, however, said they were not in the race of asset gathering and scheme performance was the biggest "differentiator" as well as "selling point".

But senior officials in the sales departments think otherwise. "There is immense pressure to report high sales growth and to stay ahead of competition," said sales head of a domestic fund house.

The race to shore up assets can negatively impact scheme performance, warned some. "Handling funds along with additional sales-related responsibilities is tough. It isn't a healthy practice and could impact fund management," said a leading CIO. "Instead of meeting distributors, it would be more valuable if we analysed and met companies, or visited plants."

Independent experts said AMCs should ensure that the core job of fund managers is not impacted.

Kaustubh Belapurkar, director of manager research at Morningstar India, said there may be need of a new role in AMCs. He said, "It goes without saying that the primary job of fund managers is managing money. But given the current market situation they may be required to help the sales and marketing teams… There may be a need to have a specialist role in AMCs to handle distributors or investors and to convey fund managers' views."

Majority of fund managers agree with Belapurkar. "There should be product heads to function as the face of investment team and interact with distributors and investors," said a fund manager.

Fund managers also complained that they have to meet the same set of distributors who interact with other fund houses. "It defeats the purpose of bringing in new faces and regions in the ambit of the mutual fund industry," said a CIO.

Fund managers said the industry has reached the current milestone because of investors' trust in the power of mutual funds as an investment vehicle. "Any action that breaks the investors' trust may push them back in a long hibernation - a situation which will not be good for the mutual fund industry," warned a fund manager.

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