Tata Mutual Fund has parted ways withCredit Suisse as its offshore fund management partner in May, an official spokesperson from the Indian asset manager told ET."The change is being effected on the basis of the fund manager's macro-economic and infrastructure outlook," the Tata MF official said. "We're in the process of reallocating funds... this change in fund manager has no bearing on our relationship with Credit Suisse or any other services provider," he said.
However, according to industry sources, the investment team of Tata MF was not happy with the contribution of Credit Suisse towards the overall performance of the funds.
Credit Suisse was managingTata MF's Growing Economies Infrastructure Fund and Indo Global Infrastructure Fund.
Credit Suisse officials declined to comment on the development.
This is not the first time that Tata MF has changed its offshore fund management partner. In 2009, it removed US-based asset manager Invesco Global citing poor fund performance. At that time, Invesco had invested a lion's share of the investible corpus in Chinese stocks that were undergoing a bearish trend.
The absence of an offshore fund manager has forced Tata MF to liquidate its foreign assets and hold large piles of cash in the two international funds.
As on June end, Tata Growing Economies Infrastructure Fund Plan A held 66% of its asset under management in cash. Plan B of the same fund, which has mandate to invest 35% of corpus in international securities, maintained about 35% cash levels. Tata Indo Global Infrastructure Fund, which has the mandate to invest 35% in overseas equities, held 27% cash on June end. Both the funds acted as feeder funds into Credit Suisse Emerging Markets Infrastructure Fund, which has generated 7.8% over the past one year.
Despite high cash-levels, Tata Growing Economies Infrastructure Fund (Plan A) has returned over 4% vis-a-vis infrastructure funds category returns of 16.4%. TataIndo Global Infrastructure Fund has generated minus 4.4% return against category returns of minus 8.4%. In terms of value, investors in Indo Global Fund are logging significant losses as net asset value (NAV) of the fund has been locked in a range of Rs 7 and Rs 8 for more than a year. Investors had invested in this fund at a notional NAV of Rs 10.
"From what we see, the domestic portion is weighing heavy on the performance of both funds. The Credit Suisse fund has generated decent returns over a year's time. The underperformance of domestic portion could be because of the bleak outlook on infrastructure sector," a fund researcher said.
According to fund distributors, several investors have redeemed their investments from both these funds. The assets under management of Indo Global Infrastructure Fund have fallen from Rs 2,359.40 crore as on December 2007 to Rs 858 crore last month. The asset base of Tata Growing Economies Infrastructure Fund has dipped from a high of 41 crore in October 2009 to Rs 28 crore in June 2011. Plan B of the same fund, at one point, had assets worth Rs 173 crore. The plan now has assets worth just about Rs 109 crore.
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