Two managers are better than one

MUMBAI: It is said that in cricket, good fast bowlers often hunt in pairs. Wasim/Waqar, Thomson/Lillee are some of the famous ‘pairs’ in the annals of the game. While the Indian cricket team is yet to find a consistent pair of strike bowlers and opening batsmen, fund houses seem to be coming around to the view that schemes could deliver better returns if managed by a pair of fund managers.

SBI Mutual Fund, Franklin Templeton, HSBC, Birla Sun Life and Reliance Mutual are some of the fund houses that have schemes managed by a pair of fund managers. Today, as many as 19 equity diversified funds have twin fund managers.

Increasing attrition and the need for internal coordination among numerous schemes of a house are forcing funds to go for such arrangements. Apart from being an effective foil to the churning bug, the concept allows a team approach to fund management.

HSBC Equity and HSBC Midcap equity are jointly managed by Jitendra Sriram and Mihir Vora. ET asked Sanjay Prakash, CEO, HSBC Asset Management, as to what led the fund house go in for such a move. “The idea is to share information internally in such a way that it benefits the fund house as a whole.

For example, a manager of scheme A may buy a specific stock and the same stock may be sold by manager of scheme B. They may have their solid reasons for their decisions, but it doesn’t make sense in the larger scheme of things. We implemented this six months ago. So far, the results have been encouraging.”

Additional fund management responsibility also helps in better grooming to take up higher responsibilities over a period of time. Besides, it also helps the fund house in retaining and nurturing individual talent in building high quality team. According to Mr Prakash it adds up as an internal training programme.

When Sundaram BNP Paribas launched its funds — Rural India and S.M.I.L.E. — fund managers J Venkateshan and Krishna Kumar were working alongside N Prasad and Anoop Bhaskar, the senior fund managers. It was only in the last month that the young fund mangers were given independent charge.

For all of its funds, Birla Sun Life AMC has created an internal system assigning responsibilities to research analysts to act as a back-up for the fund manager. “Fund managers are supported by back-up fund mangers to make the investment approach more effective.

Back-up fund manager generally helps in creating a model portfolio, tracking portfolio stocks and review constantly portfolio allocations to various stocks and sectors.” said A Balasubramanian, CIO, Birla Sun Life AMC.

What happens when there are two opinions on a particular decision? Fund houses like UTI make it clear who is in command. They designate primary and secondary managers and this allows for clarity in chain of command.

Adds Sanjay Sinha of SBI MF, who is a joint manager in as many as six different schemes with four different partners, “There are numerous occasions where the joint managers may not agree on a particular stock decision. In such situations, one of them should try and convince the other in a reasonable manner.”