NEW DELHI: A day after Jio Financial Services Limited (JFS) and BlackRock announced their entry into the mutual fund sector, shares of Asset Management Companies (AMCs) declined, reflecting investors’ concerns that Jio BlackRock joint venture (JV) could dent the market share and profitability of existing players.
HDFC Asset Management Company shares fell 1.6%, Aditya Birla Sun Life AMC shares declined 0.7%, Bajaj Finserv shares fell 0.8% and UTI Asset Management shares plunged 1.2% on the Bombay Stock Exchange on Thursday.
World’s largest asset manager BlackRock and JFS, the financial services arm of Reliance Industries Limited, announced on Wednesday to form a JV to launch asset management firm. While the announcement has generated excitement in the mutual fund industry, it might take around two–three years to start operations.
The regulator takes around two-three years to give final approval after the submission of an application by a new player. Experts say that entry of a new player might not bring any significant disruption in the industry and there is enough space for many new entrants.
“I don’t see meaningful disruption in the mutual fund industry with the entry of a new player. India’s mutual fund industry is highly regulated, and charges are already very low. So it is not easy for a new player to come in and disrupt the mutual fund industry. I see the entry of Jio BlackRock as a good development for the industry as we may see best practices and efficient execution,” Sandeep Bagla, CEO, Trust Mutual Funds said.
“I do not see any impact on smaller AMCs due to the entry of Jio BlackRock because there is enough room for everyone to grow. A company cannot gain market share just by lower charges. Investors do not invest in equity funds because an AMC is charging low fees. Investors decide about equity funds after comparing returns of equity schemes,” he added.
Jio BlackRock’s foray in mutual fund