August18 , 2022

prashant jain news: Dhirendra Kumar on impact of Prashant Jain quitting HDFC AMC

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“The best year for mutual funds is still ahead. The PMS industry is not going to benefit because the retail presence or the retail appeal of mutual funds is way too big. PMS is very marketing or sales heavy activity and people will figure it out over a period of time,” says Dhirendra Kumar, CEO, Value Research



What does the resignation of Prashant Jain from mean for the investors who followed and almost revered Prashant Jain? Does any risk exist over this development?
HDFC AMC has been able to through the worst of times and this is not necessarily the worst of times for the fund performance. It has made a comeback and has been able to withstand the poor performance for a very long period, simply because there is much more to investors’ experience than just performance.

Today we talk of the SIP or the SIP rage or the SIP momentum or the whole scaling up of SIP by individual investors, but

as an AMC was well ahead of the pack even when it was not so mainstream. That in itself translates into something where investors accumulate and their eventual experience turns out to be very profitable or very rewarding.

For them, that is one. In fact, if you are able to get loyal investors who continually keep investing and then there is a very lean period and then the fund makes a comeback, you end up being a beneficiary of the whole thing. That is why investors have not really ever got out of HDFC Fund in large numbers because of the poor performance.

Besides that, there is much more to be read and understood about the whole culture bit and Prashant Jain leaving I think the integrity, the conviction and being able to stick around for a period of time and maybe the diversity of the whole hand holding and mentoring of the large team which has come up and it is not a small period, it is nearly 20 years.

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How do you see the overall mutual fund industry right now? Stalwarts like Prashant are leaving. Do you see the AUM getting impacted in a way that will be to the benefit of the PMS industry?
No, not really. The best year for mutual funds is still ahead. The PMS industry is not going to canalise because the retail presence or the retail appeal of mutual funds is way too big. PMS is very marketing or sales heavy activity and people will figure it out over a period of time.
Also, these are very early days for the mutual fund industry and the lesson which people should take is that here is a cyclical industry. For the mutual fund industry to really suffer, India should be doing very poorly economically on a medium term and long term basis. If that is not the case, then some will do well, some will not do well. We still have great promise. When I look at these performances I think it is a case for active management despite all the upheavals.

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