Comparative Analysis of Return Optimization Strategies: A Study of HDFC AMC and Nippon Life India AMC (FY2020-2024)

Abstract

This study compares the strategies of return optimization of HDFC AMC and Nippon Life India AMC for the period of FY 2020-2024, characterized through extreme market volatility, regulatory changes, and macroeconomic outcomes. The research design stipulates a descriptive and analytic approach to risk-adjusted performance (itself measured by Sharpe ratio, Jensen’s alpha, standard deviation and beta), as well as strategic indicators: asset under management growth, effective asset allocation, expense ratio, portfolio turnover. At the level of analysis, Our results suggest that Nippon Life India AMC was able to generate higher total shareholder returns (24.7% CAGR) through aggressive tactical allocation, thematic investments, and high portfolio churn (75% avg.)., although they are associated with higher volatility (SD: 58.44%) and are approximately market-sensitive (β: 0.91). HDFC AMC, on the other hand, was a stronger play on operational growth (revenue CAGR: 6.2%; net profit CAGR: 16%) and resilience through value-driven low turnover strategies (55% avg.), large-cap bias and focusing on defensive sectors lead to less risky (SD: 54.64%; β: 0.38). Supporting the effectiveness of active management, both AMCs generated significant alpha (HDFC: 10.3%; Nippon: 10.5%). The study finds that the best return strategy depends on the combination with investor risk aversion and market environment, such as bull (Nippon is a winner) and bear (HDFC saves). The proposed solutions involve hybrid strategy blending; cost-effective, pragmatic risk modelling for AMCs, and real-time asset allocation overlay advice for investors.