HSBC Asset Management India Outlines Growth, Investment Strategy, and Industry Outlook

MUMBAI — The mutual fund industry in India has experienced notable growth over recent years, transitioning from a push product to a pull product. Pre-Covid, the industry recorded around two crore mutual fund investors, a figure that has since crossed six crore unique investors. Amid these regulatory and market shifts, individual asset management companies continue to adapt their strategies regarding product offerings, distribution, and investor education.

Kailash Kulkarni, Chief Executive Officer of HSBC Asset Management India, noted that the firm’s assets under management (AUM) reached nearly double its previous size following the acquisition of L&T MF, growing from approximately ₹80,000–81,000 crore to its current scale. While HSBC previously maintained limited third-party distribution, the integration brought significant strength in that area. Kulkarni stated that the firm maintains a selective approach to New Fund Offers (NFOs), launching them only when a product is unique or fills a genuine market gap rather than pursuing broad volume.

Highlighting differentiated offerings, Kulkarni pointed to products such as a pure consumption fund and an India Exports Fund, where an exporter is defined as a company generating at least 20 percent of its revenue from exports. More recently, in the specialised investment fund category, the firm adopted an alternative approach by avoiding direct equity exposure. Instead, the equity component is introduced via arbitrage and REITs, while the balance is deployed in high-quality fixed-income instruments designed to deliver fixed-deposit-plus returns with equity-oriented taxation.

Addressing retail investor habits, Kulkarni observed that mature investors with five or more years of market experience typically maintain diversified portfolios. Conversely, newer and younger investors often examine one-year trailing returns and invest through digital applications. Kulkarni emphasized that investors need to look beyond trailing returns, as past performance does not guarantee future results. First-time equity investors are advised to undergo risk assessments, align investments with personal financial goals, and consider diversified or index funds based on their risk appetite.

In terms of geographic expansion, HSBC MF maintains a presence in 58 cities alongside a distributor network in smaller markets. Kulkarni highlighted that mutual fund distribution is increasingly viewed as a viable business in smaller towns, where building an AUM of ₹30-40 crore can generate meaningful annual earnings. Furthermore, second-generation family members of established distributors are showing interest in entering the sector due to its long-term potential.

Regarding industry challenges, Kulkarni stressed the importance of simplifying communication for common investors who may find financial ratios and jargon difficult to navigate. Goal-based investing and investor education remain critical priorities to prevent retail participants from chasing short-term returns or relying solely on informal advice.

On the competitive landscape between active and passive management, Kulkarni acknowledged the rapid growth of passive funds and exchange-traded funds (ETFs), noting that a substantial portion of these flows stems from government-led investments. He anticipates that while passive products will become an integral part of asset allocation over the next four to five years, active management retains strong relevance in India as investors seek alpha.

Discussing technology, Kulkarni stated that artificial intelligence serves primarily to improve operational efficiency rather than cut costs. AI tools assist analysts in scaling research coverage, enhancing management information systems, and optimizing analytics, while the firm's core philosophy remains focused on bottom-up stock picking and long-term value creation.

"The expansion of India's mutual fund investor base past six crore unique investors reflects a structural shift in household savings toward financial assets. However, as institutional leaders like HSBC point out, the industry faces a vital education challenge. Chasing trailing one-year returns without proper risk assessment can expose retail investors to unnecessary volatility. Long-term wealth creation requires adherence to disciplined SIPs, goal-based planning, and simplified investor communication rather than speculative reactions to short-term market cycles." — Dr. Shishir Gupta, Founder & CEO, StartupLanes