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Beyond Prashant Jain: How HDFC AMC has built its succession plan

The fund house has consistently added new fund managers with varying fund management styles to ensure diversity in its fund management team and performance. After its erstwhile managing director Milind Barve’s exit in 2021, Prashant Jain’s exit is another important turn in HDFC Mutual Fund’s life cycle.

July 25, 2022 / 01:46 PM IST
HDFC's Prashant Jain 
(Image credit: Suneesh Kalarickal)

HDFC's Prashant Jain (Image credit: Suneesh Kalarickal)


On July 22, 2022, Prashant Jain, Executive Director and Chief Investment Officer (CIO) at HDFC Asset Management Co Ltd, resigned and stepped down from his role. He is 54.


His role of CIO will now be split as per the succession plan that HDFC AMC communicated to the BSE. Chirag Setalvad, who is currently a senior equity fund manager and has been with the fund house since 2007, will take over as the head of equities. Shobhit Mehrotra, the fund house’s senior-most fixed income fund manager, will take over as head of fixed income funds.


For industry insiders though, Jain’s exit was only a matter of time. Jain has been with the fund house for 19 years since the day HDFC AMC acquired erstwhile Zurich India Asset Management Co Ltd. He was the CIO at Zurich India before the acquisition. Jain spent 10 years at Zurich India, making it a total of 29 years without switching jobs.


But for a few years now, Jain and his former boss Milind Barve who retired last year, have been trying to bring more depth to equity fund management.


Expanding fund management
“Right from the time Milind Barve was around — and under the guidance of Jain — the fund house had put together a plan to bring about different styles of fund management into the house,” says a person close to the developments who did not wish to be named.

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Since around 2020, the fund house has added at least four new fund managers in its team. Gopal Agrawal, the erstwhile CIO – Equity and Chief Strategist at Mirae Asset Global Investments (India), was probably its most high-profile addition when he joined the fund house in July 2020. Agrawal had spent close to 10 years at Mirae, followed by short stints at Tata Asset Management Co Ltd and DSP Investment Managers. Agrawal was among the oldest team members at Mirae and played a key role in turning around the fund house’s fortunes after the fund house nearly collapsed following the 2008 credit crisis.


Also Read | Has Prashant Jain finally managed to revive HDFC Mutual Fund's equity scheme?


Srinivasan Ramamurthy and Amit Ganatra were the other two fund managers who joined in 2020. While Ramamurthy came from Mahindra Manulife Investment Management Ltd, Ganatra came from Invesco Asset Management (India) Ltd. The fund house also elevated two of its research analysts, Anand Laddha and Rakesh Vyas, as fund managers. Laddha manages HDFC Banking & Financial Services Fund. Vyas manages HDFC Housing Opportunities Fund. Laddha has been with the fund house since 2006 and Vyas since 2009.


Late last year, HDFC AMC hired another equity fund manager, Roshi Jain. She was earlier with Franklin Templeton Asset Management (India) Pvt Ltd where she spent close to 17 years. The hiring continued. More recently, the fund house bagged another big name; Rahul Baijal, who was earlier a senior fund manager at Sundaram Asset Management Co Ltd where he spent close to six years.


“Although HDFC AMC’s existing fund managers have always had the freedom to pick and choose their stocks, many would, in a way, end up following Jain’s footsteps. Now, with the new crop of fund managers and a change of guard, the diversity in management would hopefully be more pronounced and evident,” says a second individual who also did not wish to be named.


To be sure, some of the fund managers were also replacements. Vinay Kulkarni, a senior equity fund manager at the fund house and an old-timer there, left the fund house in 2020. Ganatra left earlier this year, while Miten Lathia, another fund manager, left in 2020.


At the same time, the fund house has bolstered its research team. Between 2019 and 2020, the fund house added at least five research analysts, as per an analysis of the addendums issued by the fund house on its website between April 2020 till date.


Going beyond marquee schemes
Although HDFC AMC is India’s 3rd largest fund house with 26 equity funds, just a handful of them were popular. The three funds that Jain managed (HDFC Flexi Cap Fund, HDFC Top 100 and HDFC Balanced Advantage Fund) and the ones that Setalvad managed (HDFC Mid-Cap Opportunities Fund and HDFC Small-Cap Fund) had managed to bring in a large number of investors over the years.


HDFC Taxsaver Fund too has remained one of its more popular funds.


Nearly 71 percent of its total equity assets lie in just five of its largest equity funds. HDFC Balanced Advantage Fund, the fund house’s largest equity-oriented scheme with assets under management (AUM) of Rs 43,079 crore, falls in the dynamic asset allocation category.


The challenge however, was to get investors into the remaining 19 schemes. It is here that the varying management styles of fund managers played the deciding role.


Take the case of Agrawal. He now manages HDFC Dividend Yield Fund (HDYF), HDFC Large and Mid-Cap Fund (HLMF), HDFC Multi-Cap Fund (HMCF) and HDFC Capital Builder Value Fund. Agrawal has managed to turn around all these funds in a short period of time.


For instance, in 2019, HDFC Focused 30 Fund (HF30) — a fund that Agrawal used to manage till recently — had lost 15 percent, compared to the category average loss of 7 percent. In 2021, the scheme returned 40 percent, against a category average of 31 percent and its benchmark index’s return of 32 percent. Now Roshi manages HF30. Between 2018-2020, HLMF underperformed category averages and benchmark indices. Agrawal turned around the scheme and outperformed both, category averages and benchmark indices.


The new crop of fund managers doesn’t just come with a good past track record, but also different management styles. While Setalvad is known for his mid- and small-cap picks, Agrawal is known for his sharp assessment of macroeconomics. Roshi is known for her value style of fund management and the newly-joined Baijal is known for his large-cap picks.


Setalvad and Mehrotra are long-timers and obvious choices for the fund houses to take charge of equity and fixed income funds, respectively. Setalvad began his mutual fund management career at HDFC AMC in 2000 when the fund house launched, and worked there till 2004. He then worked at a US-based private wealth manager till 2007, after which he returned to HDFC AMC and has been there ever since. Mehrotra, too, has been with the fund house since 2004.


Existing investors must stay invested in HDFC AMC schemes as the new crop of fund managers are well-equipped to take over the mantle. Earlier today, Moneycontrol has learnt that Gopal Agrawal and Anil Bamboli will now manage HDFC Balanced Advantage Fund, Rahul Baijal will take over HDFC Top 100 Fund and Roshi Jain will take over HDFC Flexi Cap Fund. 

Additionally, Srinivasan Ramamurthy will decide the asset allocation portion of HBAF. Ramamurthy specializes in managing asset allocation funds ate HDFC Mutual Fund, and he will get to decide how much HBAF will invest in equity and debt. In simple words, HBAF will now have three fund managers.

Kayezad E Adajania heads the personal finance bureau at Moneycontrol. He has been covering mutual funds and personal finance for the past two decades, having worked in Mint and Outlook Money magazine. Kayezad was the founding member of Mint’s personal finance team when it was set up in 2009.
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