Foreign fund houses and the India puzzle
alliance with homegrown DSP Group, but left in May 2018, when the mutual fund was the ninth-largest in India. It isn’t alone. In the past two decades, at least 15 asset management firms of global repute—promoted by banks, insurance companies, investment banks—have walked away from the Indian mutual fund sector.
BlackRock’s parting of ways with DSP was seen less as a vote on the sector’s prospects and more as a strategic call—both partners wanted full control. But a run through the remaining names, and some of those experiences, reveals several underwhelming performances and expectations belied. The private sector was re-allowed into the sector in 1993.
In the past 25 years, total assets managed by mutual funds in India have increased at a compounded annual rate of 17.6%—or effectively doubling roughly every four years. Despite the churn, there are 43 fund houses in India today, up from 31 in March 2007 and 39 in March 2010. What is missing from that list is the biggest global names.
Of the top 10 asset managers in the world, not one is in India today. Three have come and gone—Fidelity, JPMorgan and Goldman Sachs. And BlackRock is now preparing for its second act, in the backdrop of a maturing of the industry.
For them, India is a relatively small market. Each of those top 10 asset managers manages more funds than the Indian mutual fund industry combined (currently about $540 billion). In its press release, BlackRock said its partnership with Jio “aims to transform India’s asset management industry through a digital-first offering and democratize access to investment solutions for investors in India".
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