Investors trust people, not AMCs
The corporate identity and the human resources involved in an AMC appear to play a more significant role in contributing to its growth than anything else. And that perhaps also explains the financial sector’s penchant for formal dress-code and impeccable appearance.
However, in the densely connected world, an AMC probably needs to be impeccable in more than appearance. The AMCs who garnered attention for the wrong reasons are amongst the rest of the tumbling 6, whose AUMs slipped in last year.
Aditya Birla Sun Life Mutual Fund recorded the largest decrease in AUM. Its AUM reduced from ₹2.99 lakh crore to ₹2.82 lakh crore, a massive 6% drop between December 2021 and December 2022. In the mid of 2022, Ajay Srinivasan quit as Managing Director of Aditya Birla Capital, the holding company for the financial services businesses of Aditya Birla Group that include Aditya Birla Sun Life Mutual Fund as its subsidiary. In 2022, Aditya Birla Sun Life Mutual Fund dropped from 4th position to 6th position due to redemption of funds by investors.
Similarly, Axis Mutual fund AUM declined amidst the front running and corruption charges against its fund managers. The AUM of Axis Mutual Fund slid from ₹2.53 lakh crore to ₹2.48 lakh crore, a 2% drop between 2021 and 2022.
With the departure of its longstanding Chief Investment Officer (CIO) Prashant Jain, HDFC Mutual fund, India’s third largest mutual fund saw its AUM decline from ₹4.5 lakh crore to ₹4.45 lakh crore within a year. Similarly, Franklin Templeton Mutual Fund that was in news a few years back for wrong reasons is still facing investors’ redemption and between 2021 and 2022 its AUM declined from ₹66,988 crore to ₹63,992 crore, a drop of 4.5%.
Bill Gates had said, “The inventory, the value of my company, walks out the door every evening.” And Narayan Murthy echoed the same sentiment by saying, “Our assets walk out of the door each evening, we have to make sure that they come back the next morning.”
While both of them are referring to the IT sector, the words perhaps resonate more with the Financial Sector, especially Asset Management Companies.