Most foreign fund houses miss India growth train

financialexpress.com:

When Invesco decided to sell 60% stake to the Hinduja group earlier this month, it didn’t surprise anyone. That’s because only a handful of foreign fund houses have been able to grow in the country even though the Indian mutual fund industry has already topped Rs 50 trillion (Rs 54 trillion in FY24).

Sample this: Among the top 10 players, only two foreign fund house – Nippon India and Mirae Asset – figures in the list. Worse still, among the top 20 players, only six make the cut. Besides, Nippon India and Mirae, the list includes HSBC, Franklin Templeton, Canara Robeco and Invesco. In other words, while around Rs 52 trillion is managed by the top 20 players, only one-fifth of the asset under management is with foreign players, with the exception of one joint venture, according to data from Value Research.      

Over the last decade, the likes of Goldman Sachs, Nomura, Fidelity and many more have shut shop in India. In fact, the country’s first private sector fund house – Kothari Pioneer – was a joint venture between Pioneer of US and Kothari. In less than a decade, it was acquired by Franklin Templeton.  

Fund houses that Financial Express spoke with, pointed to several reasons for the foreign mutual fund companies exiting India. These reasons include the long gestation period, distribution capabilities, and the need for customised domestic products.

“The Indian mutual fund industry is mainly a domestic proposition wherein foreign asset managers need to adopt the policy of global perspective and local expertise. Indians are savers rather than investors with an assured returns mindset,” said Avinash Satwalekar, president at Franklin Templeton Asset Management (India), which is among the oldest foreign fund houses in India