InvestorQ : Why do you think the much larger L&T Mutual Fund sold out to a much smaller HSBC Mutual Fund?
Lavanya Subramanian made post

Why do you think the much larger L&T Mutual Fund sold out to a much smaller HSBC Mutual Fund?

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Anamika Sodhani answered.
5 months ago
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This is part of the larger consolidation trend in mutual funds where the smaller funds are getting merged with bigger names. Also, many sponsors are rethinking their calculations about continuing in the mutual funds business and L&T is one of them. Consolidation in the latest wave is moving to a winner-take-it-all structure for mutual funds. For example, the top 15 funds account for 94% of the AUM and the top 10 account for 83% of the AUM.

Mutual funds need to either scale up or consolidate. IN the case of L&T MF the AUM of L&T MF is 7 times that of HSBC. After running the AMC for 20 years, L&T gets a selling price of around Rs.3,188 crore which is paltry considering the kind of value that the IT businesses of L&T created. Hence a large outfit like L&T sees more sense in conserving its capital and allocating it to such focused areas than keep sinking funds into unrelated areas.

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