Prashant Jain, MF industry's poster boy, quits HDFC AMC after 19-year stint

Prashant Jain, the poster boy for the Rs 38-trillion domestic mutual fund (MF) industry, has quit HDFC Asset Management Company (AMC) after 19 years. He was serving as chief investment officer (CIO) at the country’s third-largest fund house, overseeing assets of more than Rs 4 trillion.

Jain has “decided to move on and has tendered his resignation”, HDFC AMC said in a stock exchange disclosure on Friday.

Jain, an alumnus of IIT Kanpur and IIM Bangalore, has been replaced by Chirag Setalvad, who will be head of equities, and Shobhit Mehrotra, who will helm the fixed-income segment. Both will report to Navneet Munot, managing director and chief executive officer of the company. Munot joined HDFC AMC 18 months ago following the retirement of Milind Barve, the fund house’s long-serving chief.

Rumours of Jain’s exit had been doing the rounds for the past two years, which he had always played down. The resignation comes at a time when Abrdn-backed HDFC AMC is struggling to increase its market share and assets under management (AUM), weighing on the performance of its stock.

In the past one year, HDFC AMC shares are down 34 per cent even as the benchmark Nifty50 index has gained 6 per cent. For the quarter-ended June 2022, HDFC AMC’s average AUM stood at Rs 4.15 trillion, down 0.2 per cent compared to the same period last year. 

The fund house ceded its second position to ICICI Prudential MF, which saw its assets jump nearly 12 per cent to Rs 4.65 trillion for the period under consideration. The average AUM growth for the industry was 13.8 per cent.

Jain’s legacy has helped his investors generate outsized returns over a long-term horizon. His largest fund HDFC Balanced Advantage (with a corpus of Rs 43,079 crore) has delivered annualised returns of 17.9 per cent since its inception in 1994. Meanwhile, HDFC Top 100 (Rs 19,910 crore) and HDFC Flexi Cap (Rs 26,511 crore) have given annualised returns of 18.8 per cent and 18.3 per cent since their inception in 1996 and 1995, respectively.

Jain’s ability to deliver sustainable growth over a longer period gave him a cult status among investors and helped propel the growth of HDFC AMC. However, his value-oriented approach has weighed on his scheme’s performance over the last few years as the market preference shifted to high-growth stocks.

His preference for public sector undertakings (PSUs), mainly banks, weighed on his schemes’ performance, often drawing investors’ ire. Over a 3-year and 5-year period, both HDFC Balanced Advantage and HDFC Top 100 have underperformed their benchmarks.

Jain, with over three decades of fund management experience under his belt, joins a series of high-profile fund managers to quit the MF industry. Many of them have forayed into the alternative investment fund (AIF) and portfolio management service, which are largely targeted at ultra-rich investors.