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‘We assure there will be no change to our combined high-performing funds’

Ravi Menon, chief executive officer, HSBC Asset Management India Pvt Ltd.Premium
Ravi Menon, chief executive officer, HSBC Asset Management India Pvt Ltd.

  • L&T MF is a great fit in terms of where we are, the kind of strengths that we have, and what they bring to the table. They have a large customer base of 2.4 million and close to 29 open-ended schemes, of which we have about 17 funds in common. So, there are almost 12 new funds that we will get

HSBC Holdings Plc’s Indian asset management unit recently announced plans to acquire the mutual fund business of L&T Finance Holdings Ltd for about 3,191 crore. According to the British lender, the transaction will boost its business in India, where the mutual fund industry has witnessed a doubling of assets under management (AUM) to 37.34 trillion as of 30 November 2021 from 16.50 trillion as of 30 November 2016. 

Ravi Menon, chief executive officer, HSBC Asset Management India Pvt Ltd, spoke to Mint on the fund house’s plans and targets for India business as well as the amalgamation of the schemes post-merger. 

Edited excerpts:

In what ways L&T Mutual Fund is a good fit for HSBC AMC?

L&T is a great fit in terms of where we are, the kind of strengths that we have, and what they bring to the table. To start with, they are in the ballpark of about 80,000 crore (assets under management) and we are at about 13,000 crore. Their sheer scale and size are very significant. The scale and size are arising from a large customer base that they have at almost 2.4 million. Also, L&T MF has close to 29 open-ended schemes, of which we have about 17 funds in common. So, there are almost 12 new funds that we will get.

On the flip side, we have our capabilities on products, in terms of, international products, and through the fund of funds, which they don't have. So, we bring that to the table. Globally, HSBC is very, very focused on ESG.

In terms of fund managers, how would you decide, who would continue to manage which fund?

The way we look at it, as the other attractive part of the transaction. It is the talent that we are acquiring. And if one looks at the absolute number of people, on both sides, these are not very large teams. And I think that's the whole attractiveness of this business. With the plans that we have, there are going to be significant opportunities for all our colleagues on both sides. How you decide one in terms of managing and co-managing, I think all of that will be in discussions, which will take place as time progresses.

What are your plans and targets for the merged entity?

We all operate with operating plans. So that's just one part of the story. The issue is, what is our strategy? And what is this transaction helping us achieve in terms of the big picture story, but also a fairly immediate story, and that rolls in from our group strategy to what we define as our Asia strategy where we aspire for the leadership position. In India, specifically, what does that mean is that we want to be in the near term, a top 10 player, and in the medium term, a top-five player.

Historically, your schemes have not sort of topped the performance charts. A lot of L&T investors may have apprehensions about how the performance will become once the acquisition happens. How do you reassure those investors?

What is working well will continue with no changes. Fund performance is a function of the time period one looks at. For example, the HSBC Large Cap Fund since its launch is one of the best performing funds in the country. Our equity funds are mostly in quartile one or quartile two on a year-to-date basis, according to Morningstar. We offer a prudent and well-researched process for investors looking to invest for the longer term. Our multi-asset portfolios, a unique offering of dynamic asset allocation portfolios, are rated four-star by Morningstar and so are three of our funds in fixed income.

We can assure our investors and distributors that there will be no change to our combined high-performing funds and every effort to improve the others.

ABOUT THE AUTHOR

Abhinav Kaul

Abhinav Kaul writes on cryptocurrencies and mutual funds at Mint. His previous stints include ETMarkets, Reuters Bangalore and Press Trust of India.
Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
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