ICICI MF asset gap with HDFC reduces by half

Difference down to Rs 6,200 cr from Rs 14,000 cr a yr ago

The race for the top position in the Rs 13-lakh-crore domestic mutual fund (MF) sector is hotting up, with ICICI Prudential MF narrowing the gap with market leader HDFC MF by more than half.

According to the latest data, the gap between the average assets under management (AUM) of the two asset management companies (AMCs) is only Rs 6,200 crore. A year ago, HDFC MF was ahead by about Rs 14,000 crore.

For the quarter ended September, HDFC Mutual Fund’s average AUM was Rs 1,70,837 crore, while that of ICICI Prudential MF was Rs 1,64,628 crore.

Since September 2013, ICICI Prudential MF’s AUM has nearly doubled, while that of HDFC MF has increased 65 per cent.

HDFC MF, however, is comfortably ahead in the more profitable equity segment. Though fund houses are yet to disclose the break-up between equity and debt for the September quarter, sources estimate ICICI Prudential MF’s equity assets (which includes balanced but excludes arbitrage funds) at Rs 54,000 crore, HDFC MF’s equity AUM is nearly Rs 70,000 crore.

These numbers couldn’t be independently verified.

In terms of assets, ICICI Prudential MF had dislodged Reliance MF as the second-biggest fund house during the quarter ended March 2014.

“It is our constant endeavour to provide good investment experience by maximising risk-adjusted returns. The focus is on having an independent and robust risk-management framework, along with a strong fund management team. This, coupled with the confidence and trust of our investors and distributors in our brand, translated in achieving healthy business growth for us,” said Nimesh Shah, managing director and chief executive officer, ICICI Prudential AMC.

Many in the sector say ICICI Prudential MF went through a challenging phase after the 2008 global financial crisis. The fund house was also hit when its deputy managing director, Nilesh Shah, quit in December 2010.

The fund house’s move to appoint S Naren as head of the investment team worked, as schemes fared well under him.

Dhirendra Kumar, chief executive of fund-tracking firm Value Research, says, “In the past couple of years, ICICI Prudential AMC has got its act together and re-organised its investment management. Its equity management is much better organised than earlier. The fund house’s schemes are at the fore in many categories. However, during the same period, HDFC Mutual Fund’s schemes gave a lacklustre performance.”

Through the past two years, ICICI Prudential MF has been aggressively launching closed-end schemes, while HDFC Mutual Fund has refrained from such schemes. Fund houses have mobilised quick assets by launching closed-end new fund offers through the past two years.

HDFC Mutual Fund declined to comment for this story.