Coming of age

News reports indicate that the Birla Asset Management Company has bought the right to manage the funds of two of Apple Mutual Fund's equity schemes. The deal has been so structured that while the fund managers of the two schemes would change, the existing trustees would continue to perform their role. It is the first deal of its kind in the industry and indicates the country's mutual fund industry is coming of age. The opening up of the industry had led to the emergence of a number of players and only a handful of them have managed to live up to investor expectations, Birla Mutual Fund being one such player. It is finally consolidation time and several deals of a similar nature could follow, leaving behind only the best and the more serious players in the industry.

Though the asset managers of Apple Mutual Fund have largely failed to live up to expectations, by agreeing to sell the rights to manage the two equity funds, they have acted in the best interests of the unit holders. Going by the track record ofthe Birla Asset Management Company which has seen the net asset value of its Birla Advantage Fund more than double since its launch four years ago, a significant improvement in the performance of the two schemes can be hoped for. The fact that the acquirer agreed to pay a consideration of about Rs 3 crore is proof enough of its seriousness to try and turn the schemes around. The aim behind the acquisition appears to be the large number of investors that have invested in the two schemes and only if the Birla Asset Management Company succeeds in generating good returns for them will it be able to retain them. The move is a good augury for mutual fund investors.

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