INDIAN INSURER ICICI PRUDENTIAL TOPS FUND MANAGER RETURNS LIST

India-based ICICI Prudential Life Insurance has emerged as the top fund manager for the Indian-government run social security organisation Employees Provident Fund Organisation (EPFO), with returns of 8.72 per cent since September 2008 till the end of August 2010.

Out of the four fund managers appointed by EPFO in September 2008, Reliance Capital (BSE:500111) came at the bottom, giving only 8.54 per cent return, which is even below the prescribed benchmark of 8.55 per cent, a source said.

The source said as per the latest performance evaluation by EPFO, the other two fund managers, HSBC and SBI, provided returns of 8.64 per cent and 8.58 per cent, respectively, during the two-year period under review.

This evaluation of the performance done by EPFO is significant because the term of these four fund manager would end on March 31, 2011.

Since return maximisation on EPFO's huge corpus of Rs 300,000 crore (US$67.5 billion) was the main reason for engaging fund managers, all those who would not perform would not stand a chance to manage funds again for three year from April 1, 2011, the source said.

The source added that the Central Provident Fund Commissioner Samirendra Chatterjee, along with another EPFO official, would soon take stock of performances of the four fund mangers on October 22 in the presence the their representatives.

Earlier the performance of the four fund managers was evaluated on the basis of a composite score which includes 80 per cent weight to return on investment and 10 per cent each to average maturity and asset quality.

This performance benchmark has been developed by ratings firm CRISIL (BSE:500092), the official consultant of EPFO. However, EPFO rejected this method at a meeting of its advisory body, Finance and Investment Committee in July.

The Organisation had pointed out in the performance evaluation report placed before the committee, "it is the actual yield (return on funds invested) generated which is the true parameter for measuring the performance."

EPFO has already started the process of appointing fund mangers for three years starting from April 1, 2011, by constituting a committee for the purpose.

The panel will have three EPFO officials, one representative each for employees and employers on its board. However, the name of the officials and other representatives have not been announced so far.

The committee would appoint consultant who would advise the EPFO on how to go about appointing fund managers for the next term of three years starting April 1, 2011.

It is expected that ICRA (BSE:532835), CRISIL, CARE and FITCH could express interest to advice EPFO to appoint fund manager for next term.