Last week, portfolio manager Morningstar Investment Adviser India made a surprise announcement: It was winding up its portfolio management services (PMS) business in the country. The company, a subsidiary of Chicago-headquartered Morningstar Investment Management, LLC, claimed that it was shutting down in the second quarter of this year as the business was not growing in line with its expectations.
It was only in 2019 that the company launched PMS (portfolio management services) offerings with four model portfolios—active balanced portfolio, active growth portfolio, active aggressive portfolio and active aggressive plus. These four products invest in a combination of active and passive mutual funds with varied exposure to equity, fixed income, international equity and gold asset classes depending on asset allocation mechanism.
Prior to its PMS venture, the firm introduced a web-based platform called Morningstar Adviser Workstation, a B2B service for mutual funds distributors, among others, by providing tools for investment research, portfolio analysis and investment planning.
The winding-up decision by Morningstar, which advocated long-term investing, within four years of launching the PMS business took many by surprise. Also, the timing of its decision, when the markets are underperforming, is a matter of concern. Existing investors have to either redeem their holdings or transfer that to another of their demat accounts before the specified time.
As per the last available disclosure by Morningstar PMS with market regulator Sebi, the firm has 78 clients with assets under management (AUM) of about ₹77 crore.
At the time of launching the PMS, the firm said it aimed to grow to an asset base of ₹1,000 crore over the next three years. But that did not happen.
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