Skip to Navigation Skip to Main Content Contact us
Skip to Navigation Skip to Main Content Contact us
  • Mutual fund managers who invest their own money in the schemes they manage

    Quote by Rajeev Thakkar in The Economic Times Wealth, Auguast 29, 2016

       read ( words)

    Mutual fund managers who invest their own money in the schemes they manage
    Should you consider a manager’s investment when you buy a fund? Not really, because such investments are not a guarantee of future performance
    If a fund manager is bullish on the funds he manages, he would invest his own money in the schemes. The new scheme information documents (SIDs) that fund houses have released on their website show how much 'skin in the game' fund managers have. The redoubtable Prashant Jain of HDFC Mutual Fund heads the list of fund managers bullish on his own funds. He has an estimated Rs 107 crore invested in different schemes of the fund house (see table) while Sankaran Naren, CIO of ICICI Prudential Mutual Fund, has over Rs 20 crore invested in the ICICI Pru Dynamic Fund.

    Some managers of smaller funds are more bullish than Jain and Naren. Rajeev Thakkar, CIO and director, PPFAS Mutual Fund, has more than Rs 7 crore invested in the PPFAS Long Term Value Fund. This is more than 1% of the scheme's total AUM of Rs 664 crore. "Many people see fund professionals as perma bulls who are permanently bullish on equities. The disclosures of personal and sponsor investments tell the world whether they believe in their own talk," says Thakkar.

    Mutual fund managers who invest their own money in the schemes they manage

    At the same time, there are funds with very little or no investments by their fund managers or members of the AMC board. "Many of the close-end funds that were launched in recent years have no investments by key employees or fund managers though they were peddled very strongly by some AMCs," points out Manoj Nagpal, CEO of Outlook Asia Capital. Even open-ended funds have not go much from fund managers. Nagpal says it is strange to see that fund managers or key employees not investing in some large schemes even though the same individuals talk about why the fund is a great investment.

    Should you consider a manager's investment when you buy a fund? Not really, because such investments are not a guarantee of future performance. "Fund managers and analysts look at whether promoters and employees of a company are buying or selling its shares. While this cannot be the only factor, a fund manager's bullishness is surely one of the things to look at," says Thakkar.

    Some fund houses are also actively encouraging employees to invest in their schemes. At ICICI Prudential Mutual Fund, the bonuses of senior management are invested in mutual fund schemes and redemptions are allowed in a staggered manner across 3-4 years. At Kotak Mutual Fund, employees have taken a voluntary pledge to invest in funds from the AMC. "We want to tell our distributors and investors that we practice what we preach. Just like some restaurants put up a sign saying "The owner eats here", this is a confidence boosting measure to create trust among distribution partners and investors," says Nilesh Shah, Managing Director of Kotak Mutual Fund.

    The original article could be seen here.

    comments powered by Disqus

    Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
    © 2019 PPFAS Asset Management Private Limited. All rights reserved.
    Sponsor: Parag Parikh Financial Advisory Services Private Limited. [CIN: U67190MH1992PTC068970], Trustee: PPFAS Trustee Company Private Limited. [CIN: U65100MH2011PTC221203], Investment Manager (AMC): PPFAS Asset Management Private Limited. [CIN: U65100MH2011PTC220623]