Stocks

Union AMC aims to double AUM, targets ₹10,000 crore

Suresh P Iyengar Mumbai | Updated on January 06, 2021

G Pradeepkumar, CEO, Union AMC

Market valuations are getting expensive, says fund house

Union Asset Management Company plans to double its asset under management to ₹10,000 crore after the amalgamation of Andhra Bank and Corporation Bank with Union Bank, the lead sponsor of the fund house, along with Japan's Dai-ichi Life.

It has also adopted an open architecture for selling its financial products rather than depending only on the bank branches led sales approach. The fund house has also hired 40-member team to drive business growth.

Betting on bank branches

G Pradeepkumar, CEO, Union AMC said the number of branches distributing the fund house schemes will more than double to 9,500 from 4,500 post the merger of two banks with the Union Bank.

With deep penetration of bank branches, he said the retail portion of the AUM has touched 34 per cent against the industry average of 20 per cent while that of High Net worth Investors were at 33 per cent against industry’s 31 per cent.

Its AUM from beyond top-30 touched 39 per cent against 16 per cent of industry average. In a recent new fund offer, he said application received through non-associate distributors doubled to 43 per cent, he said.

Market outlook

Though investors have booked profit from equity funds in recent times, Pradeepkumar said the money has been parked in short term funds and will be ploughed back at the opportune time. The fund house believes that the market valuations are getting expensive with the consistent rally even as risk of softer interest rate regime being tested by rising inflation.

Vinay Paharia, Chief Investment Officer, Union AMC said equity investors should be cautious and should not enter the market unless they have a three-year investment horizon as markets are trading at a significant premium to their estimated fair value compared to nominal GDP growth prospects.

Bullish on IT, telecom

The fund house is overweight on IT and telecom sectors and underweight on utilities and consumer discretionary. Financials, Industrials, Consumer Discretionary were the best performing sectors in November, but were underperformers till last October.

Conversely, he said healthcare, information technology and energy were under performers in November, but was strong out performers till October end. Thus, he added the worst performing sectors on a year to date basis delivered the best returns and vice-versa in November.

“We recommend asset allocation products as preferred means of investment in the current market environment,” said Paharia.

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Published on January 06, 2021
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