There is considerable uncertainty over the fate of the top fund team at JM Financial Mutual Fund. People familiar with the matter said strong difference of opinion had developed between the promoters and the fund management team on account of the promoters’ displeasure about the performance of equity funds and other investment decisions.
As a result of these differences, chief investment officer Sandip Sabharwal and sales and marketing head, Bhanu Katoch may leave the firm, according to a number of market participants with knowledge of the matter. A JM spokesperson denied this, saying, “Sandip and Bhanu are very much with JM Financial. These are rumours and there is no truth in it.” Mr Sabharwal strongly denied any such possibility, saying, “this is untrue.”
When contacted, a top JM official said: “Mr Sabharwal has not left the firm and I am not aware that he is planning to leave the firm. But he is free to decide what he wants to do.” This official did not want to be quoted by name.
There is speculation that some members of its fixed income team may also be on their way out.
In the recent past, the performance of fund managers has come under intense scrutiny in the wake of the market meltdown. Recently, some top officials of the Indian arm of a European mutual fund were asked to leave after its international audit team assessed that its fixed income was of inferior quality.
A person familiar with the development said Mr Sabharwal has drawn a lot of flak from JM’s management because many of its equity funds have fallen further than others in the same categories. This in start contrast to the situation in the bull run, when schemes that were managed by him were among the top performers in the industry. For instance, one of its popular funds, JM Basic Fund, which was at one point delivering more than 100% annualised returns, has been struggling of late.
In the last quarter, while the Sensex has fallen a little under 3%, the fund contracted 19%. Industry officials familiar with his investment style said his aggressive exposure to mid-cap stocks may have increased risks. Mr Sabharwal shot to fame in his assignment in SBI Mutual Fund, where he turned around the prospects of its equity funds through his aggressive investment strategy.
He left the firm to join Lotus AMC — now Religare Aegon AMC — where he was asked to leave abruptly after the CBI named him, among others, in a case related to the purchase of Padmini Technologies shares by the mutual fund during the stock market scam in 2001. Mr Sabharwal joined JM soon after that.
Talk of Mr Sabharwal leaving the firm comes at a time when the parent company, JM Financial, has been under the spotlight of late, with the government ordering a probe into Maytas Properties where a JM-promoted private equity fund invested Rs 600 crore.
When asked about his role in this investment, Mr Sabharwal said he had not role to play in JM’s private equity arm’s investments. One of the most affected stocks in the financial sector in the bearish phase, shares of JM Financial closed higher at Rs 21 on Wednesday.
As a result of these differences, chief investment officer Sandip Sabharwal and sales and marketing head, Bhanu Katoch may leave the firm, according to a number of market participants with knowledge of the matter. A JM spokesperson denied this, saying, “Sandip and Bhanu are very much with JM Financial. These are rumours and there is no truth in it.” Mr Sabharwal strongly denied any such possibility, saying, “this is untrue.”
When contacted, a top JM official said: “Mr Sabharwal has not left the firm and I am not aware that he is planning to leave the firm. But he is free to decide what he wants to do.” This official did not want to be quoted by name.
There is speculation that some members of its fixed income team may also be on their way out.
In the recent past, the performance of fund managers has come under intense scrutiny in the wake of the market meltdown. Recently, some top officials of the Indian arm of a European mutual fund were asked to leave after its international audit team assessed that its fixed income was of inferior quality.
A person familiar with the development said Mr Sabharwal has drawn a lot of flak from JM’s management because many of its equity funds have fallen further than others in the same categories. This in start contrast to the situation in the bull run, when schemes that were managed by him were among the top performers in the industry. For instance, one of its popular funds, JM Basic Fund, which was at one point delivering more than 100% annualised returns, has been struggling of late.
In the last quarter, while the Sensex has fallen a little under 3%, the fund contracted 19%. Industry officials familiar with his investment style said his aggressive exposure to mid-cap stocks may have increased risks. Mr Sabharwal shot to fame in his assignment in SBI Mutual Fund, where he turned around the prospects of its equity funds through his aggressive investment strategy.
He left the firm to join Lotus AMC — now Religare Aegon AMC — where he was asked to leave abruptly after the CBI named him, among others, in a case related to the purchase of Padmini Technologies shares by the mutual fund during the stock market scam in 2001. Mr Sabharwal joined JM soon after that.
Talk of Mr Sabharwal leaving the firm comes at a time when the parent company, JM Financial, has been under the spotlight of late, with the government ordering a probe into Maytas Properties where a JM-promoted private equity fund invested Rs 600 crore.
When asked about his role in this investment, Mr Sabharwal said he had not role to play in JM’s private equity arm’s investments. One of the most affected stocks in the financial sector in the bearish phase, shares of JM Financial closed higher at Rs 21 on Wednesday.
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