“LIC Nomura Mutual Fund’s schemes have started doing better than the market benchmark over the past six months,” said Nilesh Sathe, Chief Executive Officer. Earlier all schemes were in the fourth quartile of performance when compared with other funds in the industry.

Now they have moved to the third or second quartile in the returns they have delivered.

Sathe said in April, the fund’s assets under management grew 31 per cent against the industry average of nearly 10 per cent. Its AUM was around ₹11,500 crore. The largest chunk of the investments had come into liquid funds, he said.

Retailers yet to return

Asked if the improvement also indicated the return of retail investors to the market, he said that had not yet happened, although the exit of existing retail investors had stopped. About 20,000 additional folios had been added in the last year to reach a level of 3.18 lakh folios, he said.

Sathe attributed the improvement in performance of the fund to systems and processes put in place during the past three years. Earlier, the MF was run mainly by executives on deputation from the investment department in the parent LIC. This affected continuity and often led to indifferent results at the MF since the psyche of the two institutions was different, Sathe said.

At LIC, investments were made with the long-term buy and hold strategy, whereas that would not have worked very well with an MF. Now, recruitments are made mainly from the market at competitive rates and the number of persons deputed from LIC has come down drastically from around 64 out of a staff of 250 three years ago to just five people currently.

This would go down to two next year (himself and his assistant), Sathe said. An annual appraisal system which rewarded performers (under a normal bell curve model) and the taking of calculated risks had started yielding results now, he said.

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