Lotus CIO quits ahead of fund bloom

MUMBAI: Lotus India Asset Management is short of a chief investment officer (CIO) even before it has launched its first scheme. Its CIO Sandip Sabharwal has tendered his resignation and has already been relieved of his responsibilities on Thursday.

“He has cited personal reasons for the move,” Ajay Bagga, CIO, Lotus India Mutual Fund told ET.Mr Sabharwal was not available for comment. He had joined Lotus last year after a nine-year stint as fund manager at state-owned SBI Mutual Fund. Lotus India AMC, a joint venture between Fullerton Fund Management Group and Sabre Capital Worldwide, received permission from the Securities and Exchange board of India last month to commence operations in India.

The domestic mutual fund (MF) industry continues to witness high attrition due to a combination of factors. The boom in the stock market has led to increased demand for MF products across all segments of investors, prompting many AMCs to scale up their operations.

Also, many global fund houses are lining up to enter India and gain a foothold in this fast growing industry. All this has led to a severe shortage of manpower, mainly on the fund management side of the business. Earlier this week, Anil Sarin quit as fund manager at Prudential ICICI Mutual Fund. He is learnt to have joined a venture capital firm.

As with many other sectors, which are facing a talent shortage, the story in the MF industry is the same. Due to the stock market slump, after the internet bubble burst in early ‘00, the talent pool has not expanded. Foreign institutional investors (FIIs), venture funds and hedge funds have all been dipping into the same talent pool, pushing up salaries to stratospheric levels.

Today, an analyst at an asset management company with 3-5 years of experience gets between Rs 7-9 lakh per annum as a fixed part of his compensation package and another 50-60% as part of the variable package depending on his performance.
Analysts with 6-8 years of experience can command Rs 15-20 lakh as fixed pay, and a good chunk as performance-related incentives.

Fund managers are reported to be drawing between Rs 25-50 lakh as their fixed annual package based on their seniority, while chief investment officers get around Rs 80 lakh or in some cases Rs 1 crore or above, depending on their track record.

At the top of the pecking order is chief executive officers. At least five major private sector MFs are scouting for CEOs, and the market rate for this rare breed of professionals is said to be as high as Rs 2-3 crore per annum.