After a decade of falling behind, UTI AMC begins its turnaround under a new chief

This is a Mint Premium article gifted to you.Subscribe to enjoy similar stories.

India's oldest asset manager is trying to stage a comeback after a decade of falling behind faster-growing rivals.

UTI Asset Management Co., which has been weighed down by poor performance, lower share of equity assets, and weak sales, believes years of rebuilding its technology, workforce and distribution are finally behind it.

Under newly appointed managing director and chief executive Vetri Subramaniam, the company is now betting that stronger execution can revive growth.

“UTI is like having a cement plant with a capacity of eight lakh tonnes but producing only four lakh tonnes,” Subramaniam told Mint. “The key question is whether we're fully utilising our potential. Right now, we're not.”

Over the past decade, UTI AMC's mutual fund assets have grown 3.7 times to about ₹3.9 trillion, compared with 11.8 times for SBI Mutual Fund and 10.2 times for Kotak Mahindra Mutual Fund.

Subramaniam, who took charge in February ahead of the annual planning cycle, likens his career to football—having progressed from team captain as head of equities to manager as chief investment officer, and now to running the club as chief executive.

“For the first time, UTI has a CEO who comes from the core business itself, managing money. Every previous chief was brought in to fix something: structure, governance, ownership. Vetri is different,” said Dhirendra Kumar, founder and chief executive at Value Research.

“He is an insider, and he is an investor first. In a business where the customer ultimately pays for performance, that is a real edge,” Kumar added.

Prior to his appointment, the most visible problem was poor performance with larger schemes failing to deliver higher returns.

UTI’s largest equity scheme—flexicap fund has delivered a 10-year CAGR return of 11.41% versus the benchmark return of 13.89. Its five-year CAGR returns are 5.82% versus 12.4% for the benchmark.

“Investors are mature now, may tolerate a few years of underperformance. And say if UTI outperforms in the fifth year, it doesn't mean that competing funds will underperform. “Those funds may continue generating healthy returns, making it even harder for UTI to catch up.”

Distribution was another weak link. "While the in-house sales team was present, their pace to get more business was nowhere close to what other mutual funds had," a UTI ex-official said, adding that they mostly had many senior people on the sales team.

A larger section of the 184 employees who took voluntary retirement scheme (VRS) last year was primarily from sales and quasi functions such as operations and support, said Vetri.

The new hires who replaced the senior workforce were younger, with their average age at 31.4 years in FY26, per the company’s annual report. “Managing relationships with distributors, fintechs, family offices and high-net-worth customers needs a new talent pool," Vetri added.

The underperformance was also visible in UTI's earnings. Its net profit has declined at a compounded annual rate of about 1% over the past five years, even after adjusting for the one-time impact of the VRS. If one takes a CAGR for the last four years before FY25, UTI was still lagging.

In contrast, Nippon India Mutual Fund, HDFC Mutual Fund and Aditya Birla Sun Life AMC posted profit CAGRs of about 18%, 18% and 13%, respectively.

UTI AMC's lower profitability was due to low share of equity assets in its mutual fund business. As of March, 47% of its mutual fund closing assets were in ETFs and index funds.

Equity assets accounted for just 24% of UTI's total assets, compared with 66% for HDFC, 56% for ICICI, and 46% for SBI. While SBI also manages Employees' Provident Fund Organisation (EPFO) money, it has been able to grow its active equity assets.

A higher share of ETFs and index funds also weighs on UTI's yields, as these products charge significantly lower fees than active equity funds.

After spending nearly a de...