HDFC MF confident about life after Prashant Jain

news of of Prashant Jain The resignations on Friday caused a stir in the mutual fund industry. He was the Chief Investment Officer of HDFC AMC, which is currently managing more than 4 trillion assets for about 19 years.

Chirag Setalvad, senior equity fund manager, will take over as head of equity at the fund house, and Shobhit Mehrotra, a senior debt fund manager, will take over as head-fixed income. Both will report to the company’s Managing Director and CEO Navneet Munot.

Jain’s Investing Style

Jain followed the value style and invested in sustainable businesses. He first emerged as a fund manager when he shunned highly valued technology stocks in the late 1990s, helping him survive the effects of the dot-com bubble in 2000.

He will also be remembered for avoiding real estate stocks when he was heavily favored by money managers in 2007–08. This resulted in his fund performing better than its peers after the stock market crash in 2008.

see full image

Mint

However, in both cases, Jain’s fund’s outperformance was followed by a painful period of underperformance due to his opposite bets. His funds are now in the news again as the market value is in favor of the stocks. This time is no different. The current outperformance of their fund has been followed by prolonged underperformance for around 4-5 years.

In an interview to Mint in 2020, he had said, “It is indeed true that the performance for the fund I manage has been weak. This is primarily due to overweight conditions in utilities, tobacco and select EPC companies, as well as underweight conditions in consumption companies and retail banks against benchmarks.”

Jain then also shared his investment structure: “I generally follow the following framework: If the business is doing well and the outlook hasn’t changed, but the stock is performing poorly, it probably means that The stock is getting devalued more. In such a situation, generally, one should stay within the limits or increase the risk to control the risk. If the business is performing poorly, then one needs to assess that Whether the reasons for underperformance are temporary or permanent? If temporary, one needs to assess whether the expected return is justified to hold the stock for a long time. If the answer is yes, then the tendency to wait otherwise corrective action is taken.”

As on the date of Jain’s resignation, he was directly managing three funds- HDFC Balanced Advantage, Flexi Cap and Top 100 Funds (Large-Cap Funds) – with a combined asset of approx. 90,000 crores. Jain has been managing Balanced Advantage Fund since its inception in 1994, when it was part of 20th Century Mutual Fund, which was later acquired by Zurich India Mutual Fund, and which was called HDFC Mutual Fund in 2003. was purchased by. Three Funds has given good returns of 18-20% CAGR (Compounded Annual Growth Rate) ever since Jain is managing them.

“Prashant Jain hasn’t changed over the years, even in spite of the criticism. I admire him for this. No great fund manager can be consistent! You find out their level of conviction in difficult times. However it also means that you have to get comfortable with their style and they can work in cycles. At this time, I am not redeeming from HDFC AMC. In fact, with fund managers like HDFC MF and with quality, I am likely to invest more in schemes of AMCs,” says Vijay Mantri, co-founder and chief investment strategist, JRL Money.

Mantri was a senior executive at HDFC AMC before 2007 and worked with Prashant Jain before becoming a mutual fund distributor in 2015. At that time, they did not recommend HDFC MF schemes because of their ‘value’ style of investment. However, the minister changed after the arrival of Covid in 2020, anticipating that a rally in value stocks would take the performance of HDFC MF up as well.

What should investors do?

According to experts, Jain’s exit from HDFC Mutual Fund should not be a cause for much concern for those investing in the schemes of the fund house.

HDFC Mutual Fund is keen to reduce dependence on individual fund managers and adopts an institutional framework. Besides Chirag Setalvad, other senior fund managers of the fund house include Gopal Agarwal and Roshi Jain. Setalvad, who will be the new head of equities, has been with the fund house for more than 15 years. Unlike Jain, Setalvad’s investing style is a mix of growth and value.

Vishal Dhawan, Founder and CEO, Plan Ahead Wealth Advisors, said, “I think it is important to track how funds actually perform before making any decision rather than going straight because of the mixed style. One year’s performance should be tracked before making changes.”

catch all business News, market news, today’s fresh news events and breaking news Updates on Live Mint. download mint news app To get daily market updates.

More
low

subscribe to mint newspaper

, Enter a valid email

, Thank you for subscribing to our newsletter!