Funny that what was seen as a risk 3 years ago might be seen as a +ve development today. Narratives keep changing based on stock performance and business moves.
The management should have ideally reduced dependence on PJ much earlier and made him CIO without him running individual funds. But then the legacy management was content resting on past laurels and did not put in much effort into launching new products or into energizing their channel sales teams. Many changes being done by the current CEO but these will take time to show up in the AUM number.
Guess the market right now cares more about HDFC AMC recouping market share losses and showing traction in AUM, equity fund performance over the past 2 years has been stellar across categories and steady in the debt segment.
As the market mood improves, the performance of listed AMC’s should improve operationally too. In the positive part of the cycle MTM gains and other income all come together in a virtuous cycle and can spike earnings in an impressive way. Capital market related businesses should be expected to show higher crests and lower troughs compared to businesses that don’t have their operating fortunes linked to the capital market.
Disclosure: Holding
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