India's 'rock star' money manager is world beater

When Indian money manager Madhusudhan Kela goes out marketing his funds, he gets cheers as well as cash.

His 39 billion-rupee ($973 million) Reliance Growth Fund is the top performer in the country this year, advancing 23 percent, and ranks No 1 among similar funds in the world by Lipper Inc based on its returns during the past five years.

"He's the only fund manager I know who gets applauded when he comes on stage to talk to distributors about a new fund," said Parag Shah, who runs VUK Invest Consultants Pvt, a mutual fund distributor in Mumbai. "He has an image of a rock star."

Since Kela joined Reliance Capital Asset Management Ltd in 2001, the Mumbai-based firm's assets have grown 1,500 times to 598 billion rupees, making it India's biggest money manager. Kela puts his success down to executives at lesser-known companies such as drugmaker Divi's Laboratories Ltd, pipe producer Jindal Saw Ltd and software developer Educomp Solutions Ltd.

"You have to identify the jockey," Kela, 38, who oversees the equivalent of $4.7 billion in total at Reliance, said in an interview. "Once that's done, the jockey will ride the horse."

The Growth Fund's return in 2007 compares with 16 percent for its benchmark, the Bombay Stock Exchange's BSE-100 Index. That makes it the best equity fund in India among 37 with more than $500 million in assets, according to data compiled by Bloomberg.

The 31 billion-rupee Reliance Vision Fund, another fund overseen by Kela, is the second-best, advancing 21 percent.

Over the past five years, both funds have notched up returns in excess of 50 percent annually, based on Bloomberg data.

Maintaining his status may be tougher. Last year, the Growth Fund returned 41 percent, only matching the advance in the BSE-100 Index. Indian stocks are getting more expensive as the market swells and Kela predicts their advance will slow to between 15 percent and 20 percent annually in the coming years.

Bloomberg New

(China Daily 07/27/2007 page16)