Funds show mixed growth in new accounts

ICICI Pru, Birla Sun Life MF and Franklin see 20% in client base in FY16

The growth of investor base for mutual fund (MF) houses was not uniform in 2015-16, despite the sector clocking a rise of 14 per cent in the number of accounts.

Interestingly, average growth at the top 10 was less than the sector's at 12.3 per cent, on a large base. Overall, folio count was 47.7 million at the end of FY16, from 41.7 mn a year before.

The largest fund house, ICICI Prudential MF, the fourth largest one, Birla Sun Life MF, and Franklin Templeton had growth slightly exceeding 20 per cent in investors. ICICI Prudential MF surpassed four mn; Birla Sun Life inched closer to three mn.

Nimesh Shah, managing director of ICICI Prudential MF, says: "From the start of 2015, our view has remained that the markets are likely to be volatile in the near term. Therefore, we have been advising distributors and investors to look at dynamic asset allocation funds. While corporate earnings are yet to pick up, we have been recommending investors to look at equities from at least a three- to five-year perspective."

HDFC MF, Reliance MF, UTI MF, SBI MF and IDFC MF could see growth of only four to nine per cent. However, the first four also have the largest clientele. UTI MF leads with 10.5 mn folios; Reliance and HDFC MF command an investor base of 5.9 mn and 5.6 mn, respectively. Axis MF, a newer fund house and growing consistently at a higher pace, saw its clientele up 63 per cent to 1.6 mn in FY16 from 1.02 mn a year before.

Some smaller fund houses also did exceedingly well. Signifying that investor preference is increasing toward lesser known asset managers with a promising record. For instance, Motilal Oswal AMC nearly tripled its investor base to 195,000 from a mere 69,000 in FY15, growth of 183 per. Mirae Asset had 109 per cent growth, to a little over 200,000.

Aashish Somaiyaa, managing director, Motilal Oswal AMC, says: "We did not take any extraordinary steps to increase our clientele but stuck to basics for market expansion. We focused more on ground activity while engaging with distributors and investors, which helped us. Since our base was low, growth looks high. We might not keep tripling our investor count every year but hope to at least double it in the current year."

Currently, there are a little over 40 fund houses managing assets worth Rs 14 lakh crore. Nearly Rs 4 lakh crore is equity; the rest is in the debt category of funds.