HDFC Fund Manager Prashant Jain

Published on Mon, Aug 02, 2010 at 09:13   |  Updated at Mon, Aug 02, 2010 at 16:06  |  Source : Forbes India

Prashant Jain is the biggest and the best fund manager in the country. 

For the ninth year running, the fund he manages is top of the charts

Prashant Jain reminds you of the Energizer bunny. Sure, he looks nothing like the lovablecharacter straight out of the long-running television commercial. But his nine-year winning streak at HDFC Mutual Fund is the talk of the mutual fund industry. And why not? With a corpus of Rs. 86,600 crore, it is the 800-pound gorilla of the business. Which is why, every move its 42-year old executive director and chief investment manager makes is followed actively by investors, analysts, the media and even those in his peer group. 

Two of his funds, HDFC Equity and HDFC Top 200 have delivered returns of 28 percent over the last decade and are, without doubt, the best-run funds in the India. He has followed his convictions even if it meant underperforming in the short-term — like he did in 2007. Be that as it may, he has consistently emerged tops. Little wonder then, he is often voted as the one of the best CIOs by research houses like Morning Star, Mercer and several media publications. And if all that isn’t enough, the gold standard in the business, Lipper — a mutual fund research and rating firm — reckons HDFC Equity, has for each of the last five years , been the star performer in the 10-year category.

Now, Jain is the kind of man who doesn’t dwell on these facts. But fact is the sizes of these funds are increasing geometrically to its returns. HDFC Equity fund has a total corpus of Rs. 6,734 crore; the Top 200 fund is now over Rs. 8,020 crore. The latter, just moved ahead of Reliance Growth Fund, until then the biggest scheme in the country with total assets under management at Rs. 7,681 crore.

 

The problem as everybody sees it is this: Beyond a certain size, it becomes harder to beat the market because mutual fund managers typically bet on mid-cap stocks to boost returns. At the same time, they have to ensure that they don’t bet the house on it. Normally, when the corpus is small, there is no problem. However, as a fund grows, the asset manager faces a dilemma.

If he maintains investments in mid-caps, he ends up locking in very large sums of money there. So, assuming the market falls for whatever reason, there’s a good chance he won’t liquidate the stock on time. And if investors insist on redeeming their units, it becomes tough to rustle up the cash, resulting in a liquidity crisis.

Until now, Jain has performed an incredible balancing act. “Prashant Jain is one of the most balanced fund managers you can come across in the country,” says Hansi Mehrotra, investment consultant, Mercer. “He has delivered high returns with low risks. If you look at all the risk and return parameters, he comes off as a winner. He is truly consistent in his performance,” she continues.

Regards

Barathwaaj

Chennai: +91  98418 - 25188