Despite the influx of passive funds in the mutual funds market, Shriram Asset Management Company (AMC), part of the Shriram Group, will primarily focus on being an active-only fund house, according to a senior company official.
“Fundamentally, we are an active fund house and that is our positioning. If we can generate alpha for investors with the right kind of investment process, there is a good reason for us to be an active fund house,” Kartik Jain, MD & CEO of Shriram AMC, told FE.
Active funds are managed by professional fund managers who select stocks to outperform the market, while passive funds replicate the performance of a specific index (like Nifty50). Since no fund managers are involved, these funds come with lower management fees.
One of the oldest fund houses in the country, Shriram AMC made its debut in the passive space with the launch of a liquid exchange-traded fund, ‘Shriram Nifty 1D Liquid ETF (Growth)’ earlier this week.
Jain said the fund is focused on high net worth individuals, active traders and family offices which want to park surplus funds for shorter tenures. Retail investors looking to park their surplus funds can also invest, as it provides higher returns and immediate liquidity compared to bank FDs.
Shriram AMC’s focus on active funds comes at a time when the mutual fund industry is seeing a surge in passive schemes, including index funds and ETFs. According to Sebi data, the number of ETF schemes saw a three-fold jump to 192 as of May 2024, from 76 in March 2020. Net assets under ETF schemes stood at ₹6.97 trillion as of May 2024, up from ₹1.46 trillion.
Zerodha AMC, the recent entrant in the mutual fund business, has decided to focus only on passive funds while Mukesh Ambani’s Jio Financial Services has tied up with BlackRock to focus on index funds.
“Some fund houses are looking at building passive books given the nature of their customers and strategy. They are fundamentally passive in their entry strategy. We are basically an active fund house,” Jain said.
The company is open to adding more ETFs or launching index funds if the product can address a specific unmet demand. “Of the 44-plus AMCs, only 8-9 have liquid ETFs, and within that, only three offer it as a growth option. Hence, we launched the Nifty 1D ETF,” Jain said.
Currently, Shriram AMC has six funds, including two equity funds, three hybrid funds and one fixed-income fund, with total assets of over Rs 700 crore.
Jain said in addition to the latest ETF, the company has also registered for another overnight fund with Sebi and is evaluating options in equity and other areas.