'Let's not use data to scare people': Edelweiss CEO rejects claims that India's MF fund managers lack experience

Edelweiss Mutual Fund MD & CEO Radhika Gupta on Monday pushed back against claims that India's mutual fund industry lacked experienced fund managers, calling the conclusion "false" and based on flawed analysis. "I am disappointed to see this false conclusion that 'Indian fund managers aren't experienced' based on a strange analysis," Gupta wrote on X. 

The CEO pointed out that the method used in the analysis does not account for the total years of experience a fund manager has but instead focuses only on the time spent managing a particular scheme. She questioned whether investors should consider a fund manager’s entire professional experience or just the years spent with a specific scheme.

Gupta noted that the findings could be particularly biased against younger asset management companies (AMCs), which may have hired highly experienced fund managers but lack long-term scheme track records. She also challenged the assumption that having the same manager for an extended period necessarily benefits investors. She argued that if a scheme has performed well under multiple fund managers, it reflects strong AMC processes and minimizes "key man risk."

She further explained that the analysis failed to differentiate between fund managers handling short-term debt funds or passive funds, where experience levels may not significantly impact performance. "You don’t want very experienced managers there; otherwise, you get costs," she said.

Gupta added that most AMCs have highly experienced chief investment officers (CIOs) with over 20 years of experience in managing markets, portfolios, and liquidity cycles. Additionally, she pointed out that CEOs in the industry are also seasoned professionals. "We are a large industry managing a lot of money well for crores of investors. Let’s not use data to draw conclusions that scare people. Markets already give us enough drama," she cautioned.

The debate started after financial expert Kirang Gandhi wrote on LinkedIn that India’s mutual fund industry is witnessing a shift, with a growing number of young fund managers. Citing Fidom Research data from October 2024, he highlighted that nearly 80% of fund managers have less than three years of experience, while only 165 fund managers have more than a decade of expertise. His argument raised concerns about whether younger fund managers could effectively manage investors' money without years of experience.

However, Mid & Small Cap specialist B Padmanaban dismissed these concerns, calling the discussion "unnecessary." "The conclusion that investors should allocate funds only to those with greater experience is inappropriate, and there is no evidence supporting this if someone is looking at performance!" he wrote on X.

Padmanaban further stated that AMCs need to push back against such "false information." He argued that success in fund management is not solely about knowledge but about how quickly managers learn from their mistakes. "A lot of news about the risk has come from people who have never managed small or midcap funds before," he said.