Small AMCs strive to stay relevant in an industry dominated by large players

MF segment dominated by large entities but the smaller ones have no intention of giving up

The assets under management (AUM) of the domestic mutual fund (MF) sector have for the first time breached Rs 11 lakh crore.

However, as in most other sectors, almost 80 per cent of the MF assets are managed by the top 10 entities. The other 33 asset management companies (AMCs) battle for the rest.

The going has always been tough for the smaller ones but with recent regulatory changes such as a higher capital requirement of Rs 50 crore, things have got even more so.

Round-the-clock helplines, putting in more funds, direct investing and specialised exchange-traded funds (ETFs) are some steps taken to stay afloat. Indiabulls MF, which manages assets worth around Rs 3,000 crore, offers missed-call portfolio statements and 24-hour call centres. It recently saw infusion of capital by its sponsor, Indiabulls Housing Finance, to take its net worth to Rs 61 crore, to meet the new Rs 50 crore minimum capital requirement.

CARVING NICHE
Fund houses’ mantra

• INDIABULLS AMC: Offers missed-call portfolio statement, high-yield real estate AIF
• QUANTUM AMC: Never mis-sell products, be transparent, deliver sensible returns
• UNION KBC: Expand distribution, setting up an offshore fund in India
• EDELWEISS AMC: Providing low-volatility equity solutions, ties up with MSCI to launch its range of ETFs in India
• IIFL AMC: Focus on MFs, AIFs and PMS
• MOTILAL OSWAL: More skin in the game as parent, founders route investments through AMCs

“Investors prefer consistency in performance, service standards to address their queries and products that can suit their short-term objectives and long-term goals,” says Akshay Gupta, chief executive officer (CEO).

Quantum MF, one of the smallest but profitable, has carved out a niche by promoting the concept of direct selling and paperless transactions. “We will never mis-sell our products with a desire to grow AUM and we will stick to our mission to be transparent and aim to deliver sensible, risk-adjusted, long-term returns,” says Jimmy Patel, CEO.

G Pradeepkumar, CEO at Union KBC MF, says it plans to expand distribution reach and is considering setting up an offshore fund in India.

The net worth of both Quantum and Union KBC are below the threshold of Rs 50 crore. Both plan to augment it before the 2017 deadline set by the Securities and Exchange Board of India. Edelweiss MF and Motilal Oswal AMC have already enhanced their net worth to meet the new rule. Edelweiss MF has positioned itself as a provider of low-volatility equity solutions and smart investment options. The fund house has also tied up with MSCI to launch its range of ETFs in India. New entrant Motilal Oswal AMC says it believes in putting more skin in the game. Founder Raamdeo Agrawal says the surplus cash of parent Motilal Oswal Financial Services and his personal investments are now made through their AMC division. Taurus MF, one of the oldest private sector ones, aims to reach a net worth of Rs 75 crore before March 2017, from Rs 20 crore at present. India Infoline AMC, a new entrant, has met the new threshold and says it is also focusing on alternative investment funds and portfolio management services, targeting wealth individuals, beside institutional investors.