The new rules framed by the Securities and Exchange Board of India (SEBI) mandating that Mutual Funds disclose the remuneration paid to the fund managers and other top brass has not gone down well with the mandarins of the mutual funds.
Sundeep Sikka, the head honcho of Reliance Mutual Fund, voiced the irritation of the mandarins when he tweeted “Too frequent & disruptive regulatory changes for MF distributors can have a very negative impact on growth of AMC industry itself.”
Too frequent & disruptive regulatory changes for MF distributors can have a very negative impact on growth of AMC industry itself.
— Sundeep Sikka (@sundeepsikka) March 21, 2016
Sundeep Sikka was supported in his view by Aarti Krishnan of Hindu Business Line who opined that “Too Much Info as bad for MF investors as too little!”
— Aarati Krishnan (@AaratiKrishnan) March 21, 2016
While a few mutual funds have complied with SEBI’s directive in letter and spirit and disclosed the information without any reservations, many are making it as difficult as possible for nosey parkers to access the information.
PPFAS Mutual Fund is the most transparent of the lot. Neil Parikh, its top brass, readily shared the link for the compensation paid to the fund managers.
— NEIL PARIKH (@npparikh6) May 1, 2016
A peek at the link reveals that Rajeev Thakkar, the CIO of PPFAS MF, takes home Rs. 1.24 crore while Neil Parikh, the CEO, takes home only Rs. 33.62 lakh. Swapnil Walimbe, the CCO, takes home Rs. 26.10 lakh.
Peerless Mutual Fund is sailing in the same boat as PPFAS with Rajiv Shastri, its CEO, and Vilas Solanki, the Head of Ops, taking home salaries of Rs. 1.20 crore and Rs. 30 lakh respectively.
In contrast, Prashant Jain, the whiz-kid fund manager with HDFC Mutual Fund, pockets a fortune of Rs. 22.62 crore. However, even he is second place because Milind Barve, the MD of the Fund, rules the roost with a pay package of Rs. 26.21 crore.
The other fund managers of HDFC MF pocket salaries ranging from Rs. 13 crore to Rs. 5 crore. As many as 38 persons receive remuneration in excess of Rs. 1 crore.
Prima facie, the remuneration levels appear to depend on the AUM of the Mutual Fund and the celebrity status of the fund manager. The performance of the fund may also have a bearing.
Some Mutual Funds are following a sneaky practice to ward off nosey parkers.
Reliance Mutual Fund promises to send an OTP to a mobile number. However, the OTP never arrives and the nosey parker is left clueless. Ultimately, he gets frustrated and abandons the attempt.
DSP Blackrock Mutual Fund has such a complex verification process that even the most determined nosey parker will feel discouraged. It also has a stern legal warning that “no part of this data should be reproduced, shared, published, distributed, displayed, performed, copied or stored for public or private use in any information retrieval system, or transmitted in any form by any mechanical, photographic or electronic process, including electronically or digitally on the Internet or World Wide Web, or over any network, or local area network.”
— Mahesh (@invest_mutual) May 1, 2016
DSP Blackrock’s complicated process and warning did not go down well with some experts who are irked that regulatory information is being sought to be kept a secret.
— kitsharma (@kitsharma) May 1, 2016
@nooreshtech But pathetic that a statutory disclosure cant be disclosed to / shared with public! Cant even find the link of some top AMCs
— Mahesh (@invest_mutual) May 1, 2016
Ajit Dayal, the head of Quantum Mutual Fund, has publicly welcomed SEBI’s move on the basis that the disclosure would give retail investors more confidence in the industry.
“Disclosure of salaries is a good thing. We believe the investor has the right to know the extent and the nature of expenses that the fund incurs for managing the investor’s money.” He added that “Quantum has no issues in disclosing what we pay our employees and we welcome this move that encourages greater transparency in the system.”
However, when I last checked Quantum’s website, the information was not yet uploaded. Quantum’s website reveals that the salaries of the fund managers ranges from Rs. 35.85 lakhs to Rs. 77.12 lakhs.
The information appears to be absent from the websites of the Birla Mutual Fund, SBI Mutual Fund, Mirae Mutual Fund and Sundaram Mutual Fund.
It will be interesting to see whether the remuneration commanded by other whiz-kid fund managers like Sunil Singhania and R. Srinivasan is comparable to that paid to Prashant Jain and the extent of variance. We must also know who the top dog of the Sector is. Any bets?