- Sebi makes salary disclosure compulsory to boost transparency
- Sebi must focus on lowering fund expense ratio: Value Research
India’s biggest fund manager is also the highest paid.
Prashant Jain, who oversees $27 billion at HDFC Asset Management Co., took home 61.7 million rupees ($931,000) in salary and 163 million rupees in stock options in the year ended March 31, figures posted on the fund’s website for investors show.
ICICI Prudential Asset Management Co., the second-largest fund, paid its Chief Investment Officer S. Naren 48 million rupees, while Sunil Singhania, the head of equity investments at Reliance Capital Asset Management Ltd., the third-biggest, got 33.6 million rupees and a one-time payout of 46.5 million rupees, according to data on their websites.
The disclosures come after the Securities & Exchanges Board of India made it mandatory for money managers to publish compensation details of executives earning more than 6 million rupees annually. The regulator wants to increase transparency in a market where 45.4 million, about ten times the population of Singapore, own mutual funds. The new rule took effect this week.
“Top-management compensation is disclosed globally as a measure of good practice, and Indian funds should have no hesitation in disclosing it,” Manoj Nagpal, chief executive officer at Mumbai-based Outlook Asia Capital Pvt., an investment consulting and wealth management firm. Fund “CEO salaries were being disclosed in annual reports in any case,” he said.
Retail investors have been a force behind mutual funds’ growing heft since Prime Minister Narendra Modi took office in May 2014. As many as 5.45 million accounts were opened in the fiscal year ended March, versus 2.5 million in the 12 months through March 2015, data from the regulator show. Total assets have almost doubled to $205 billion in the past five years, data compiled by Bloomberg show.
“We have directed all our members to disclose the information on their websites,” C.V.R. Rajendran, chief executive officer of The Association of Mutual Funds in India, said in a phone interview in Mumbai after meeting Sebi Chairman U.K. Sinha on Monday. “No impediments will be created in providing the data."
Maneesh Dangi, co-chief investment officer for fixed income at Mumbai-based Birla Sun Life Asset Management Co., was the highest paid employee at India’s fourth-largest fund. His salary of 38.7 million rupees exceeded 37.3 million rupees earned by Chief Executive Officer A. Balasubramanian. Co-chief investment officer for equities Mahesh Patil received 33.8 million rupees, according to figures on the fund’s website.
Milind Barve, managing director of HDFC Asset, received 62.5 million rupees in salary and 200 million rupees in stock options. ICICI Prudential Chief Executive Officer Nimesh Shah got 54 million rupees, while Reliance Mutual’s Chief Sundeep Sikka took home 35 million rupees. Sikka also received a one-time payout of 102.5 million rupees, according to data on the fund’s websites.
Navneet Munot, chief investment officer at SBI Funds Management Pvt., the fifth-biggest money manager, earned 36.7 million rupees, while Chief Executive Officer Dinesh Kumar Khara received 5.2 million rupees, figures show.
While compensation for money managers is typically tied to the amounts they oversee and the returns they produce, the disclosures may not help investors make better decisions, according to Value Research Ltd.
“All funds stay within the expenses ratio mandated by Sebi, and if the regulator wants to lower costs, it should simply lower this cap,” Dhirendra Kumar, chief executive officer of the New Delhi-based company, said by phone. “Singling executive compensation out of all these is puzzling. Sebi should focus on bringing down the expense ratio instead.”
Jain manages HDFC India Equity Fund, India’s biggest equity fund with 144 billion rupees in assets. The fund has returned 23 percent annually in the past two decades, versus the 10 percent yearly return in the S&P BSE Sensex, data compiled by Bloomberg show. Still, the fund has beaten only 36 percent of its peers over the past three and five years, the data show. Jain has been with HDFC Asset for over two decades.
ICICI Prudential Value Discovery Fund, which has 112 billion rupees in assets, has beaten 93 percent of its peers in the past five years. Reliance Growth Fund, which has 49 billion rupees in assets, has beaten 64 percent of its rivals in the past three years. It has risen 23 percent annually since its start in September 1995 through March 31, the data show.
Spokespersons for HDFC Asset, ICICI Prudential and Reliance Asset confirmed the salary details.