One of India's most famous fund managers has got the green light to start his mutual fund business
08-Sep-2022 •Chirag Madia
Samir Arora ki ghar waapsi.
By announcing that his firm Helios Capital has received an in-principle approval from SEBI to start mutual fund business in India earlier this week, Samir Arora's re-entry into the Rs 37 trillion Indian asset management business after a gap of 19 years will be a homecoming of sorts.
Arora shot to prominence in the 1990s when his flagship mutual funds - Alliance '95 (an aggressive hybrid fund currently known as Aditya Birla Sun Life Equity Hybrid '95 Fund) and Alliance Capital Tax Relief '96 (later renamed to Aditya Birla Sun Life Tax Relief 96) - outperformed the markets by thumping margins.
Arora will hope to replicate his past success in his second innings, though generating alpha is much more difficult these days - as shown in the number of funds that have failed to beat the benchmark in recent years.
His multi-cap portfolio management scheme - Helios India Rising PMS - has trailed too, albeit in a limited timeframe. Launched in March 2020, the scheme has annually grown at 25.9 per cent since its inception till the end of July this year, as per PMSAIF World data. In that same time period, the S&P Nifty 500 index generated returns of 29.5 per cent.
Arora will also have to contend with the stranglehold of the top market players. While India's mutual fund industry has witnessed some big changes in the last two decades, the top-10 mutual fund houses account for an overwhelming 80 per cent of total assets under management (AUM). AUM is the total investment value of the funds held by a mutual fund house.
But having said that, the proliferation of direct plans and online investment platforms has catalysed disintermediation. It has opened up opportunities for smaller players who build a case for themselves on the basis of strong performance. The most recent example is the rapid rise of Quant Mutual Fund; driven by its blockbuster returns, it has lapped up over Rs 10,000 crore in AUM.
Samir Arora, with his active style of investing, will hope for a similar outcome. While it's difficult to predict the future, his past track record, his flamboyance and a large followership on social media should provide some initial tailwinds.