How will life be after Prashant Jain at HDFC Mutual Fund

One of the popular quotes in businesses is that the organization is larger than the people who work for it. In a sense, that is true. Take the fund management industry itself. There have been so many iconic fund managers who have come and gone. However, the AMCs in particular and the mutual fund industry in general has gone from strength to strength in the last few years with total AUM in the vicinity of $500 billion. Under these circumstances, how much would the exit of Prashant Jain really impact HDFC Mutual Fund?

The exit of Prashant Jain was already being discussed in hushed tones for some time now. Ever since Navneet Munoth was brought in as the CEO of HDFC Asset Management Company in place of Milind Barve, it was being speculated that Prashant would move on. However, it happened more than a year after the change of management took place. HDFC AMC itself has not done too well. Its AUM on a yoy basis was actually down and it is now ranked the third largest fund by AUM, after SBI Mutual Fund and ICICI Prudential MF.
HDFC is leaving no stone unturned to ensure a smooth transition. It has already designated Chirag Setalvad as the head of equities at HDFC Mutual Fund while Shobhit Mehrotra would hold charge as head of debt. Of course, overall direction would still be provided by Navneet Munoth. So HDFC has done its best to ensure that life post Prashant Jain at HDFC Mutual Fund is smooth and the performance of the fund does not get disrupted in any manner. The good thing is that HDFC MF has a huge pool of talent to draw upon, so they should do fine.

But, why would Prashant Jain still matter?

If you talk to insiders in the fund manager industry, there is a feeling of awe about Prashant Jain. Almost every fund manager who has worked with Prashant Jain vouches for his ability to analyse a company from all angles and also think out of the box. Industry representatives who came into contact with Jain vouch for his incredible understanding of the industry they operate in as well as his ability to foresee how the industry will evolve and transform into the future. Not surprisingly, his statements are eagerly lapped up by the mass media.

But there is also an ethical reasoning to why Prashant has a special place in the mutual fund industry. Prashant, along with the likes of Vivek Reddy, KN Sivasubramanian, Bharat Shah and Basudeb Sen; represents the old school of fund management that is still very intellectually driven with a strong belief in long term value investing. In a career spanning nearly 30 years across various funds, Prashant has made sure that his image or his ethical standing in the industry was never compromised. That is a huge achievement.

A fund manager recently described Prashant Jain as the “Don Bradman” of the fund management industry. While that may have been an exaggeration of sorts, Prashant did create many benchmarks in the industry for performance consistency, team stability, value approach, strong conviction etc. Above all, he represented a rare breed of fund managers who were willing to bet deep into the future. He was often willing to go against the popular wisdom in investing if it really fitted into his theoretical tome.

With all his incredible achievements, Prashant Jain was human too and prone to errors. He did make some bad bets in the infrastructure sector in the post GFC period and also went overtly bullish on PSU banks around 6 years back. Both did not yield the desired results and actually backfired. But when you talk of a fund manager whose core funds have delivered more than 17% CAGR returns over 20-25 years, you are pretty sure that everything else is just noise. For a reticent man like Prashant Jain, he has let us performance do the talking.