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

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.

Performance first

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.

Why profits lagged

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.

The ray of light

After spending nearly a decade rebuilding its foundations from technology and processes to people and infrastructure, UTI AMC is now betting that growth will follow.

“Over the last 18-24 month period, we expanded our network from around 190 branches to 255,” said Subramaniam, who succeeded Imtiyazur Rahman as UTI chief.

“We revised the investment manuals which were not revised for two decades. Many systems were built in-house which were switched to better external tech,” he said.

Subramaniam says that the heavy lifting is largely complete and the focus is now on sharpening the go-to-market strategy.

One priority is acquiring younger investors through fintech partnerships. “While many of these investors start with small ticket sizes, they have the potential to become long-term customers,” he said.

UTI is partnering with fintech companies that help users such as auto-rickshaw drivers invest their daily surplus in liquid mutual funds instead of leaving idle cash in bank accounts.

“The idea is to familiarise first-time investors with mutual funds before they move on to other investment products,” he said.

UTI AMC has a diversified shareholder base. T. Rowe Price International is the largest shareholder with a 22.6% stake, followed by Punjab National Bank (15.03%). State Bank of India, Bank of Baroda and Life Insurance Corporation of India each hold 9.85%.