‘The upside potential is huge for Indian MFs’

Font Size

Print

Feedback

Email

Discuss

: Raj Kothari is a partner at PricewaterhouseCoopers, Toronto. He leads the Investment Management Industry practice in Canada. His professional and business experience spans India, the UK, and Canada. He is also a member of the Canadian Institute of Chartered Accountants and the Institute of Chartered Accountants of England and Wales. Mr Kothari completed his MBA from the City University Business School in London and graduated from the Advance Management Program at Harvard Business School. He spoke to Ashish Rukhaiyar on issues related to the Canadian equity markets and also the mutual fund industry. Excerpts:

Tell us something about the mutual fund industry in Canada. How similar or different is it compared to the Indian MF industry?

In 1990, the total assets under management (AUM) of the mutual fund industry of Canada was approximately US$ 25 billion. This has now grown to nearly US$ 600 billion. However, I believe there is still a lot of room for growth. Take for example the AUM of the MF industry in USA. It is nearly US$ 9 trillion. The population of Canada is roughly 10% of that of the US. So an AUM of nearly US$ 900 billion is achievable.

In Canada, there are around 50 to 60 AMCs, compared to only 30 in India. However, the top 20 AMCs of Canada manage nearly 80% of the total AUM.

On the other hand, I believe that Indian MF industry had a lot of starts and some of them were false starts. Some of the products were not clearly understood by the investor community. The Morgan Stanley product, which came out as an IPO in 1993, is one such example.

However, I believe that things have changed and the growth trajectory is there. The upside potential is huge.

UTI, which is one of the largest AMC in India, is a state-owned entity. Does Canada also have a similar structure. Are there many government-owned AMCs there?

There is nothing like UTI in Canada. AMCs in Canada can be broadly categorised into a) independents and b) financial institutions (banks and insurance companies) sponsored. Independents can also be US companies having 100% wholly-owned subsidiaries in Canada. They do not need a local Canadian partner.

Is overseas investments easy for AMCs in Canada? Is it true that they can launch a fund that can invest in indices of any foreign country?