The number of applicants for mutual fund licence keep on rising with Angel Broking, as well as Kenneth Andrade’s PMS — Old Bridge Capital Management — applying for mutual fund licence with the SEBI.
After spending eight years at IDFC MF as their star fund manager, Andrade left the mutual fund industry in June 2015 to start his own portfolio management services (PMS).
When he was a fund manager in the mutual fund industry, Andrade was known to be an aggressive, yet judicious stock-picker. He took aggressive sectoral calls with conviction, as the weights in his portfolio showed.
After Samco Securities starting its mutual fund business and Zerodha getting in-principle approval from SEBI, Angel Broking is another broking house that wants to venture into mutual funds. The broking houses can use the distribution muscle of their platform to grow their mutual fund businesses.
More choices for MF investors
MF investors are suddenly seeing a wave of new fund houses entering the Rs 37 lakh crore MF industry.
To differentiate themselves from existing fund houses, they are trying to innovate and focus on different products for investors.
For instance, Navi MF, which is backed by Flipkart co-founder Sachin Bansal, wants to only focus on passively-managed funds. Similarly, Zerodha also wants to focus on passively-managed funds.
Nithin Kamath, co-founder, of Zerodha, has recently said that he sees scope for making exchange traded funds (ETFs) more efficient in Indian markets.
Also read: Sachin Bansal on why his Navi Mutual Fund is focused on rolling out passive schemes
NJ India, which is the largest MF distributor in India, wants to focus on rule-based funds.
Also read: NJ India: The distributor of schemes will now run a data-driven mutual fund house
Other PMS firms are also taking interest in MF business. Bengaluru-based Capitalmind Wealth and Chennai-headquartered PMS provider Unifi Capital have also applied for MF licences.
Another PMS provider – White Oak Capital Management – acquired YES MF in August 2020. The firm is yet to get the final nod from SEBI to start the MF business.
Why such strong interest in MF business?
The low penetration of mutual funds in India is the major reason that is prompting financial firms to venture into this industry.
A recent Jefferies report stated that assets under management held by the MF industry are just 12 percent of India’s GDP, whereas the global average is 63 percent. Other developing nations such as Brazil (68 percent of GDP) and South Africa (48 percent of GDP) have much higher proportions of mutual fund investors.