India’s largest equity mutual fund manager Prashant Jain calls it quits

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

One of India’s longest-serving mutual-fund managers and the only one to have managed a mutual fund scheme since inception for 28 years has decided to move on. Prashant Jain, chief investment officer of HDFC AMC is understood to be leaving the company, it is reliably learnt.

As the CIO of the mutual fund, he was responsible for overseeing total assets under management of Rs 4.12 lakh crore as on June 30, 2022, and directly managing over Rs 1 lakh crore under four predominantly equity schemes.

With an engineering degree from IIT Kanpur and MBA from IIM Bangalore, Jain started his career with SBI Caps before moving to 20th Century Mutual Fund, which was sold to Zurich Mutual Fund in 1998. Zurich MF was later acquired by HDFC Mutual Fund in 2003. One of the oldest mutual fund schemes still managed by Jain is the HDFC Balanced Advantage Fund, which commands a corpus of over Rs 43,000 crore and has clocked a return of 17.87% per annum since its launch in February 1994. The HDFC Flexi-cap Fund and HDFC Top 100 have delivered returns over 18% per annum since their launch in January 1995 and October 1996 respectively.

In September 2020, there were heightened rumours about Jain’s exit from the AMC but they turned out to be a false alarm. Persons close to Jain suggest that he may be setting up his own investment firm. More details could not be ascertained. Jain was not available for comment. A mail sent to HDFC MF did not elicit a response.

Jain’s track record as a fund manager has been controversial. After clocking one of the most spectacular fund performances in the first two decades of Indian mutual fund history, averaging 28% annualised return on his equity and balanced schemes, Jain’s returns took a beating since 2015 after he took aggressive exposure to public sector banks, a call that proved to be wrong in hindsight as the bad asset problem in Indian banking extended for far too long. Fund schemes managed by him which echoed his value bias, with overweight in public sector enterprises, saw value destruction.

The performance appeared to take a toll on Jain, although he remained steadfast in his approach. “There is a very thin line between being early and being wrong, and I have learnt it the hard way many times over,” Jain said in an interview with this author in 2021.

As they say, the game isn’t over until you call it quits. Jain’s doubling down on some of his high-conviction bets during the prolonged pain period paid off, as value stocks made a comeback post-pandemic. For the past year, Jain’s key funds have been back on the top of the charts, and only a couple of days back his corpus burgeoned to over Rs 1 lakh crore making him the largest equity fund manager in the country.

While HDFC AMC boasts of a strong team of fund managers, with CEO Navneet Munot, who himself comes with strong investment credentials, at the helm, an important thing to watch out for will be if the fund house sees significant redemptions following the exit of its longest-serving lieutenant.

Jain’s exit brings down the curtain on the early poster-boys of India’s mutual-fund industry, among whom Jain was the last man standing. Most prominent mutual fund managers of the pre-2000 vintage have quit to establish their own portfolio management companies.

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