India's newest AMC, ABN AMRO, has really managed to strike a chord with the country's fund investors. The IPO of the five schemes that ABN AMRO launched initially has been a remarkable marketing success. In all, the AMC has collected over Rs 2,000 crore (the exact figure will emerge only after account reconciliation), the largest ever by an AMC in India. The launch also saw some of the largest ever fund IPOs. ABN AMRO Cash Fund collected Rs 1,123 crore-the highest ever by an open-ended scheme in India (though the largest fund IPO ever was when UTI collected Rs 4,472 crore for its closed-end fund Mastergain in 1992).
While a cash fund from a bank is a 'natural' product, ABN AMRO's equity fund has ended up being the largest IPO by an open-ended diversified equity fund, mopping up between Rs 350 - 400 crore, which really is quite a lot of money for investors to risk on a fund without a track-record. Of course, Indian investors have done such things in the past as well-the largest open-ended equity IPO was that of a sectoral fund, Alliance New Millennium, which had collected Rs 550 crore in its Jan '00 IPO. Other notably large equity IPOs have been the closed-end Morgan Stanley Growth Fund's Rs 981.80 crore in 1994.
While ABN AMRO's marketing team can justifiably pat itself on its back, the challenge for the fund management and research team (Mihir Vora, Head-Equities, Rajiv Shastri Head — Fixed Income, Prateek Agrawal Head - Equities Research and R. Sivakumar, Fund Manager - Fixed Income) begins now. This isn't the easiest of times to be managing debt products and as investors with long memories well know, equity funds which launch with huge IPOs rarely do well in the short and medium terms. And often, there's nothing fund managers can do about it since a large IPO inevitably means high expectations, meeting which will require a combination of hard work and luck.