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Declining assets put pressure on top management of MF industry

The industry is facing tough time and increasing pressure on fund houses to improve their performance have led mutual fund industry top management personnel exit their companies

June 28, 2012 3:10 IST | India Infoline News Service
Due to declining assets under management (AUM), falling profitability and poor scheme performances have led to constant pressures on senior management of mutual fund houses.

In March 2012, the industry’s quarterly average AUM declined 5.1% to Rs. 6.64 trillion from Rs. 7 trillion in the corresponding period in FY10-11. The boards of trustees of several mutual funds are pushing for pay cuts, skipping bonuses, increasing variable component in salaries and forewarning employees of a possible right-sizing.

The industry is facing tough time and increasing pressure on fund houses to improve their performance have led mutual fund industry top management personnel exit their companies, according to media reports. In the last three months, many CEOs have put in their papers, the reports added.
Piyush Surana of Daiwa Asset Management, Rajan Krishnan of Baroda Pioneer Asset Management and Arindam Ghosh of Mirae Asset exited in April this year. Sameer Kamdar, who was supposed to head ASK Asset Management, resigned in April after a two-year wait for SEBI approvals.

UTI Mutual Fund’s group president & chief marketing officer Jaideep Bhattacharya resigned from the fund house in May. The AUM of UTI—which claims to be the top mutual fund investment company among fund houses in India—had decline 10% between January 2011 and March 2012. India’s oldest fund house was also unable to appoint a full-time chairman and managing director (CMD) in the last 16 months.

Navin Suri, CEO of ING Investment Management (India), resigned on 26th June and decided to continue his career outside India owing to his family commitments.

However, there are others who believe that declining AUM or rising cost alone cannot be reason enough for chief executives to resign.

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