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A Long Way to Go

Launched way back in 1999, ING Vysya Mutual Fund is yet to make its presence felt. Good performance has eluded most of its funds

ING Vysya Mutual Fund is yet to make its presence felt. Launched way back in 1999, the fund house has existed like an also-ran. It started operations with an equity and a medium term debt fund and later added a liquid fund. However, all of them had uninspiring starts in terms of performance.

Till 2003, the AMC's product basket was limited to eight funds with assets worth Rs 1,343 crore. However, since the start of 2004, the fund house seems to have stepped on the gas, tripling the number of funds by launching 16 new funds. The AUM has grown to Rs 2,831 crore. However, despite this success, the AMC is a small player with just 1.42 per cent of the total size of the industry.

However, the fund house is not worried. Speaking to Value Research, ING Vysya Mutual Fund CEO Kavita Hurry said, "We are a long haul player-yes, we were slow starters, but past performance is no reflection of what can happen in the future-with us, with markets and with life! Expect a re-rating of our fund house through superior product design and ongoing consistency in performance in days to come."

The fund house has little to talk about in terms of performance. All its older funds have disappointed investors. For example, all its four funds with a five-year track record are lying at the bottom of their categories. The only trace of cheer comes from the short-term funds categories. The fund house has a decent liquid fund in ING Vysya Liquid. Though it had a poor start, the fund has recovered well.

Move to other categories and the picture loses its sheen. The fund house lacks strength on the equity side. At September end, equity assets accounted for only 6.74 per cent of the total corpus. Of course the successful NFO of ING Vysya Dividend Yield Fund has now increased this share to a respectable 30.99 per cent. However, none of the funds have any significant performance record.

ING Vysya Select Stocks, with which the fund house had started its operations in India, seems to have completely lost its direction.

A five year annualised return is a shocking 3.10 per cent. The fund is rated one star since November 2002. ING Vysya Equity is also a similar story-it continues to lag behind peers by a huge margin.

ING Vysya Tax Savings and ING Vysya Domestic Opportunities funds have started off well but the two, particularly the ELSS, are small funds. The ING Vysya Dividend Yield fund surprised all by mopping up a decent amount.

However, the fund house claims it has its basics in place. "Our equity department is strong. We have a 5-member equity team that undertakes detailed research prior to stock selection and in addition follows a robust process. Most importantly, we have a dedicated platform to sell equity funds in pac form, example, Valuepac. With this we are constantly increasing our base of satisfied clients to whom we cross sell other products," asserts Hurry.

On the balanced funds' side, the fund house has yet another underperformer in ING Vysya Balanced. The highest rating that the fund has earned is a two star and that too a long time back. However, the fund has shown signs of improvement in the recent past. In 2004, it managed to beat the category average.

In 2005, its 31.33 per cent gain was less than the category's average of 32.56 per cent return.

The Way Ahead
The fund house is looking to expand. Currently, the NFO of its LION fund is underway. A contra fund will follow this. The AMC also plans to launch double indexation funds and interestingly, a capital guarantee fund. Undoubtedly these are welcome steps. But the fund house needs to do a lot more on the performance side if it wishes to play any significant role in the Indian mutual fund industry.