Bajaj Finserv MF, India’s newest, to launch today

India’s newest mutual fund house is here. On June 6, Bajaj Finserv, India’s 43rd asset management company (AMC), will be launched

India’s newest mutual fund house is here. On June 6, Bajaj Finserv, India’s 43rd asset management company (AMC), will be launched. Bajaj Finserv AMC is a subsidiary of Bajaj Finserv, the holding company for the various financial services businesses under the Pune-based Bajaj Group. This will also be the first fund house to be headquartered in Pune. Typically, mutual funds houses are based out of Mumbai, though some new-age fund houses are coming up in Bengaluru as well.

Building a product basket

It has got capital market regulator Securities and Exchange Board of India’s (SEBI) approval to launch seven schemes, at the moment. Three of these are debt schemes (a liquid fund, an overnight fund and a money market fund) and three are equity-oriented (a balanced advantage fund, a large- and mid-cap fund and a flexi-cap fund). The fund house has also got an approval to launch an arbitrage fund. Shorter-duration debt funds are essential in a mutual fund’s basket as it helps investors to start systematic transfer plans (STPs). An STP helps investors transfer an equal amount of money from a debt fund (usually a liquid fund or a similar scheme) to an equity fund.

The new fund house is among the long list of newly set-up fund houses in the Rs 40-trillion Indian mutual funds industry. Between 2021 and now, five mutual funds have entered the industry. In 2019, ITI and WhiteOak mutual funds launched their first schemes. In 2021, NJ and Trust mutual funds launched their first set of schemes. Samco mutual fund launched its first scheme in 2022.

Supermarket; not niche

As per industry officials, Bajaj Finserv aims to be present across equity and debt mutual fund schemes. The product basket it is putting together at the moment also indicates that the fund house aims to walk the tried and tested path of launching schemes across equity and debt segments. This is a bit of a departure from what some of the recently-launched fund houses have done. For instance, Samco and WhiteOak mutual funds appear to be focusing on equity-oriented funds at the moment, with the exception of shorter-duration debt funds they have launched, to facilitate STPs. Trust Mutual Fund has, so far, focused only on debt funds. Navi Mutual Fund, which acquired Essel Mutual Fund in February 2021, has been focused on rolling out passive schemes for the time being.

“Bajaj Finserv aims to be a large mutual fund house. My sense is that it wants to be among the 10 largest fund houses in the country. That being the ambition, no fund house can just focus on a single asset class, unless you are PPFAS (Parag Parikh Financial Advisory Services) mutual fund and build a formidable track record. What I also understood from their initial engagements they are going to work more on 'behavioural finance' which is a welcome move,” said Pallav Bagaria, director, Sapient Wealth Advisors and Brokers.

Baja Finserv declined comment for this story as it is slated to formally launch the fund house on June 6 through a press conference. But the way it has built its fund management team shows that it is serious on having a presence across asset classes. Nimesh Chandan is the chief investment officer. In his earlier stint, he headed the equities fund management at Canara Robeco mutual fund and comes with a good track record. Sorbh Gupta is the senior fund manager, equity, and Siddharth Chaudhary is the senior fund manager, fixed income. Both Gupta (ex-Quantum MF) and Chaudhary (ex-Sundaram MF) will report to Chandan.

Ganesh Mohan, who will head the fund house, is an insider. He was earlier group head of strategy of Bajaj Finserv from 2015 till October 2021.

Can the fund house differentiate?

Word on the street is that the fund house has already started to meet and empanel distributors. A senior distributor based in the South told us that he would wait to see how things go before empaneling with Bajaj Finserv. “The number of fund houses will keep growing, but we cannot split our clients’ money in different fund houses and schemes. I will wait for performance to show up before putting my clients’ money in it. Besides, my clients should also want to demand for this fund for me to sell it,” he says.

But Chandan’s past performance in managing mutual funds and a strong brand name should help Bajaj Finserv build a track record that brings in investors. Time will tell. We’ll keep you posted.