Ten newbies that could shake up the mutual fund industry From Rakesh Jhunjhunwala and Nithin Kamath to Sachin Bansal...several firms backed by investment giants have applied for mutual fund licenses, and some have already got SEBI's go-ahead
December 10, 2021 / 01:13 PM IST
The Rs 37 lakh crore mutual fund industry, which has for the longest time been dominated by bank-sponsored fund houses, is seeing a huge interest from new players. As many as seven firms have applied for MF license with the Securities and Exchange Board of India (SEBI). Two have got in-principle approval and four have already rolled out their MF businesses. A new set of players - PMS providers, discount brokers, technology-focused financial firms - are looking to enter the MF industry with their own game plan.
Kenneth Andrade's PMS - Old Bridge Capital Management - is the latest firm to apply for a mutual fund license. After spending eight years at IDFC MF as their star fund manager, Andrade left the industry in June 2015 to start his own portfolio management services. Andrade is known to be an aggressive, but judicious stock-picker. He does not shy away from taking high-conviction sectoral bets, usually in sync with the broader economic scenario.
Alchemy Capital Management, which is co-founded by Rakesh Jhunjhunwala, has also applied for an MF license with SEBI.
Country's largest broking firm in terms of active users, Zerodha, has got the in-principle approval from SEBI to start its MF business. The discount broking firm, which is led by Nithin Kamath, will be focusing on low-cost passively-managed funds. Kamath has said that he wants to bring in more efficiency in products such as exchange traded funds (ETFs).
Sachin Bansal-backed Navi MF will also focus on launching low-cost passively-managed funds, especially index schemes. The fund house has already filed for industry-first segments such as an electric vehicle fund and a total market index fund. The Navi Total US Stock Market FoF will give Indian investors exposure to a Vanguard fund.
Angel Broking is another firm to apply for an MF license. Broking firms have been showing interest in getting into the asset management business as they can use their distribution network to their advantage.
NJ Wealth, the country's largest mutual fund distributor led by Neeraj Choksi (left) and Jignesh Desai, has also entered the asset management business. NJ MF will launch passively-managed, rule-based funds. In industry parlance, these are called smart-beta or factor-based funds.
Prashant Khemka-led White Oak Capital is another PMS getting into mutual funds. SEBI has allowed the firm to start the MF business after it completed its acquisition of YES MF. The house house will focus on actively-managed funds and may later launch international schemes. This will also be a return for Khemka to the MF business. He was a co-CEO of Goldman Sachs India MF. The mutual fund foray will be headed by Aashish Somaiyaa, former CEO of Motilal Oswal MF.
Discount broker Samco Securities has also got the clearance from SEBI for its mutual fund foray. The fund house has already filed for a flexciap fund. Samco MF founder Jimeet Modi says the fund house aims to give investors experience of true active fund management, as its funds will not have much overlaps with benchmark indices in terms of stock selection.
Financial services giant Bajaj Finserv has received in-principle approval from SEBI to set up its mutual fund business. Bajaj Finserv may gradually gain a solid footing in the MF industry given its wide distribution reach. Bajaj Finance, its sister concern, has a presence in 2,392 locations, including 1,357 in rural areas, small towns and villages. This vast branch network could help it penetrate geographies beyond the top-30 cities, known as B-30 locations in MF industry parlance.
Nearly 18 years after quitting Alliance Capital Mutual Fund as its chief investment officer, Samir Arora is eyeing a comeback to the mutual fund industry and has applied for a MF license through his PMS firm - Helios Capital.