In the Indian mutual funds (MFs) industry, 20 years is an important milestone. In the past few years, a few private sector fund houses have crossed this milestone—they had entered the business after a few state-run fund houses were launched in the 1990s. One such asset management company (AMC), which completed two decades in the second week of March, is Sundaram Asset Management Co. Ltd. Mint spoke to Harsha Viji, the fund house’s managing director, about the journey so far and future plans.
Sundaram AMC has just completed 20 years. But it has for long been a mid-sized fund house and is also called one. How many years do you think are there before it enters the big league (top five AMCs)?
We have never focused on scale for the sake of it. The key has always been to build a strong retail franchise with consistently performing funds. Sundaram Select Midcap (a mid-cap fund), for example, has for years generated long-term returns among the best in the industry. We have a commitment to the business—in the last decade, there have been more than two dozen entrances and exits in mutual funds and we have done well throughout.
Do you think that in the Indian AMC industry, profitability and size are different goals, and both can be achieved meaningfully?
You are right in the sense that larger fund houses are on an average much more profitable—it is a scale business. Profits are important to build a sustainable business and to invest in distribution and reach. We have been consistently profitable for the past 20 years and our retained earnings have fueled growth—branch expansion, greater distributor reach, and investments in our Singapore subsidiary to serve international investors.
Looking back at the past 20 years, and especially the five years that you have been here, what are the things that you wouldn’t want to do in the future?
Investors want different asset classes at different periods of time. Cash-equivalent funds, debt funds, arbitrage funds, hybrids, mid- and small-cap funds and large-cap funds, all have their time, and we are clear that we will remain a diversified fund house rather than a niche one. We have done a lot towards this, and will do more.
We have strong plans for growth. We have Rs.25,000 crore in assets now, and Rs.50,000 crore in three years, though a stretch, is feasible. The temptation is to ‘buy business’. However, we are clear we will not do deals at a loss and will stick to sustainable growth.
